Inflation:

The U.S. Inflation Rate has dropped to 2.44% from 2.5% last month. This marks six (6) consecutive months of decreases. The next reading is on Nov 13, 2024. The goal of the Fed has been to bring inflation down to 2% from its high of 9.06% in June of 2022. The next FOMC meeting is November 6th and 7th. There is consensus that there will be a further 0.25% rate decrease.

City of Yes: Next Steps

The NYC Council will hold public hearings on Mayor Eric Adams’ "City of Yes for Housing" plan, which seeks to amend zoning rules to facilitate housing development across the city. The plan aims to increase housing supply by allowing larger buildings and conversions, but city council members are arguing that it fails to address affordability concerns. Council Speaker Adrienne Adams wants more affordability and stronger tenant protections. Approval by the Council is the final hurdle for the plan to move forward.

What happens next? - On Monday, October 21 and Tuesday, October 22, the New York City Council’s Subcommittee on Zoning and Franchises will hold 2 days of public meetings on the Department of City Planning’s “City of Yes Zoning for Housing Opportunity” citywide zoning reform proposal. October 21 will be reserved for testimony from Administration officials and October 22 will be a public hearing reserved for testimony from the public. If you are interested, reach out to me for the link to be involved in this process.

485-x & 467-m Updates:

The Department of Housing Preservation and Development (HPD) has released proposed rules for two new programs: 485x, a tax exemption replacing 421a, and 467m, an incentive for converting office spaces to residential use. These rules need to be finalized before HPD can approve any applications for the programs. (this should be finalized in January)

One key change is that the city is lowering the income eligibility for affordable apartments. Instead of being available to households earning up to 80% of the area median income (AMI), affordable units will now be offered to those earning up to 77% of AMI. This adjustment is intended to make more lower-income families eligible for these apartments. Although HPD believes this won’t disrupt financing for projects, it will have a slight impact on developers bottom line.

Financial Market Snapshot:

• Federal Prime Rate: 8%
• Secured Overnight Financing Rate (SOFR): *many Construction Loans are tied to SOFR & lenders typically charge a spread above the SOFR rate.
• 1-Month SOFR: 4.83%
• 3-Month SOFR: 4.65%
• 6-Month SOFR: 4.44%
• 1-Year SOFR: 4.12%
• United States Federal Funds Rate: 4.75% to 5%
• United States Annual Inflation Rate: 2.44%, down from 2.5% last month
• US 1-Year Treasury Rate: 4.17% up from 3.955% last month
• US 2-Year Treasury Rate: 3.927% up from 3.605% last month
• US 10-Year Treasury Rate: 4.0% up from 3.67% last month
• Treasury Bill Auction Rates:
• 4-Week Term: 4.755%. Down from 5.17% last month
• 8-Week Term: 4.655%. Down from 5.15% last month
• 17-Week Term: 4.41%. Down from 4.81% last month
• 26-Week Term: 4.305%. Down from 4.53% last month
• 52-Week Term: 3.78%. Down from 4.15% last month
• US Bonds:
• 20-Year Bond: 4.039% (dropped from 4.16% last month)
• 30-Year Bond: 4.015% (dropped from 4.25% last month)
• Mortgage Rates:
• 30-Year Fixed Rate: 6.64%. Up from 5.95% last month
• 15-Year Fixed Rate: 6.10%. Up from 5.6% last month
• 5-Year ARM: 6.55%. Up from 6.1% last month
• Ground Up Construction Rates: 8%+
• Hard Money Lending Rates: 11%+
• Highest Interest Rate for Bank Savings Account: 5%