Ocean City Home Bank CEO delivers annual economic forecast

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Brady predicts uptick in local economy for 2014

Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders. Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders.

OCEAN CITY — While there are some troubling signs in the national economy, Ocean City Home Bank President Steve Brady said he thinks it’s clear sailing ahead for Ocean City’s tourism and real estate market in 2014.

Delivering his 22nd annual economic forecast at The Flanders on Thursday, Jan. 16, Brady said Ocean City – recently dubbed the hottest second home market in the country by the National Association of Realtors – is on the upswing after a terrible blow from Hurricane Sandy.

“New construction permits are up 42 percent,” he said.

While that is primarily due to Sandy, Brady said it was still good news.

“It’s nice to see things happening as you drive up and down the avenues,” he said.

Brady credited Mayor Jay Gillian, city business administrator Mike Dattilo and the hundreds of volunteers involved with OCNJ CARE for their assistance.

“They did a phenomenal job,” he said, of helping to restore the island.

Rentals are up as much as 50 percent from last year at this time and the sales market is stabilizing. With an average sales price of $573,000, 975 units were sold in 2013.

“It’s going to be another good year in real estate,” Brady said.

Nationally, he said, home prices rose faster than expected. Mortgage rates are predicted to stay low. The complicated foreclosure process, he said, is “still an issue.”

Brady noted that 68 percent of homebuyers used a mobile app during their home search, and 89 percent used a mobile search engine at the onset of the home-buying process.

“It’s interesting,” he said.

Despite all the good news, Brady said the national economy can be a drag on business.

“Interest rates continue to tick up,” he said, as the Federal Reserve is tapering off buying bonds. Short-term rates will stay relatively flat, he said, but he predicted rates will rise in the private sector.

Brady said the national deficit, at $17 trillion, continues to be a hindrance to economic growth.

He said that the Dodd-Frank Wall Street reform bill, passed over three years ago, continues to slog the banking industry with 398 rule-making requirements and over 1,500 provisions.

“Regulatory reform continues to be burdensome,” he said. “There are some banks that will be too small to survive. The bill was written as one size fits all.”

Brady said that new “qualifying rules” are complicating the mortgage process. The new rules require lenders to make sure that potential buyers are well qualified – certifying that they have the ability to repay a loan and have a substantial down payment. Brady said the new rules come with good intentions, but the rules have over-reached.

“It will have an effect on the mortgage market,” he said.

If a would-be buyer’s debt ratio is above 42 percent, the lender cannot make the loan.

The unemployment rate is at 6.7 percent compared to 7.8 percent a year ago, the lowest rate since 2008. It should remain between 6.5 percent and 7.5 percent, Brady predicted. He said that the real rate is much higher as millions have given up looking for work.

As for the Affordable Care Act, Brady said there are a lot of details in the bill.

“Who out there knows all the details of Obamacare?” he asked.

The Obamacare website was supposed to cost $99 million, Brady said, yet CGI, the company contracted to build the site, has billed $634 million. This, he said, would be unacceptable anywhere else.

“It’s a very pricey law,” he said.

Brady said that it was a drag on the economy and, with over 1,000 waivers granted, not working.

“There are more changes coming,” he said. “The law was not written properly.”

If a company employs more than 50 fulltime workers, it is required to offer health coverage, or pay a fine of $2,000 per employee.

For a company with 500 employees, the $1 million fine could be far less costly than providing full coverage for employees, Brady said. He said companies are not offering part-time employees more than 30 hours of work per week.

“Employers are going to cut employees and staff,” he said.

There are some good things, Brady said, notably the ability to keep a child on a plan until they are 26 and the required coverage of pre-existing conditions.

Brady said that good news for the region included another successful First Night for Ocean City; and for Atlantic City: the return of the Miss America Pageant, the introduction of online gaming, the arrival of United Airlines to the Atlantic City Airport and a partnership between Stockton College and Cornell University for a hospitality program.

Brady said that Atlantic City’s new mayor, Don Guardian, is the best thing to ever happen to Atlantic City and would benefit Ocean City.

“I worked with him. He’s a really dynamic individual,” he said, adding that the changes Guardian plans will help lure people and businesses back to the city and attract new growth.

“Atlantic City is the key to this area,” he said.

Brady said his hopes for 2014 include civility in Trenton, Washington and Atlantic City, meaningful debt reduction, meaningful entitlement, tax and regulatory reform and fewer hoops to jump through for beach replenishment. He also would like to see cheaper energy – natural gas through fracking.

Brady encouraged everyone to shop locally.

Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders. Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders.

Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders. Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders.

Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders. Claire Lowe / Ocean City Home Bank CEO Steve Brady delivers his annual economic forecast to the Ocean City Chamber of Commerce Thursday, Jan. 16 at The Flanders.


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