February 2016 H OUSING N EWS R EPORT
FINANCIAL BRIEFS
Fed Considering Negative Interest Rates As interest rates turn negative around the world, the Federal Reserve is asking U.S. banks to consider the possibility of negative interest rates. Fed officials have made clear that they are a long way from contemplating a reduction in rates below zero in their benchmark overnight policy rate. But they have suggested they’d be more open to such a move than in the past should the economy deteriorate significantly. The European Central Bank and the central banks of Switzerland, Sweden and Denmark have nudged some official lending rates negative without repercussions, and Fed officials have publicly taken note. In January, the Bank of Japan became the latest monetary authority to push rates into negative territory. “As a result of the severe decline in real activity and subdued inflation, short-term Treasury rates fall to negative ½ percent by mid-2016 and remain at that level through the end of the scenario,” warned the Fed in a report released Jan. 28, exploring three financial scenarios.
Cash Sales Get U.S. Scrutiny Concerned about foreign illicit money pouring into luxury U.S. real estate, the Treasury Department said it would begin identifying and tracking secret buyers on high-end properties in Manhatan and Miami-Dade County, Florida. It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which benefits enormously from wealthy secretive buyers. “We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” said Jennifer Shasky Calvery, director of Financial Crimes Enforcement Network, the Treasury unit running the initiative. The program starts in only two markets and runs from March through August. If the Treasury finds that many sales involved suspicious money, the government will develop permanent reporting requirements across the country.
SOURCE: Treasury Department
SOURCE: Federal Reserve
REO Inventory and Case-Shiller Home Price Index - 2007 - 2015
1,200,000
200
RealtyTrac REO Inventory
S&P/Case-Shiller Composite - 10
S&P/Case-Shiller Composite-20
190
1,000,000
180
170
800,000
160
600,000
150
140
400,000
130
120
200,000
110
-
100
SOURCES: RealtyTrac, S&P/Case-Shiller
13
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