Soaring home prices are setting off 🚨 ALARM BELLS 🚨
Alarm bells are going off for policy makers due to surging home prices as they remember the rise in 2006 and 2007 followed by the largest recession since the Great Depression.
In 2020 as the U.S. economy shut down, the housing market kept it from collapsing entirely. But as interest rates dropped, demand (and therefore home prices) surged.
Home sales jumped 24% in January from the year before and home prices rose 14%. Remember this is usually a slow month for real estate. And this was also while unemployment sat at twice the rate as its average.
And the movement has definitely caught the attention of lawmakers.
“The dream of homeownership is out of reach for so many working people,” Senate Banking Chair Sherrod Brown, D-Ohio, said. “Rising home prices and flat wages means that many families, especially families of color, may never be able to afford their first home.”
Even economists have begun to voice their concerns:
“I am worried that the price run-up is going to choke off first-time buyers,” said Lawrence Yun, National Association of Realtors chief economist. “This simply cannot continue.”
Brown said that these issues will be top priorities in the months to come as the U.S. comes out of the current recession. He said he will work with the Biden administration to address the high cost of housing and expand access to homeownership to more families.
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Treasury Secretary Yellen abandons Twitter for Medium
During the Trump administration, Twitter was the place to be. That’s where the news broke. Who could forget when former President Donald Trump fired his defense secretary through a Tweet?
Now, Treasury Secretary Janet Yellen says even the recently expanded character limit of 280 isn’t enough space. She is now jumping to Medium to write longer communications. This marks the first time a Treasury Secretary is using the platform.
Check out one of her most recent posts below from this week after the House passed the stimulus relief bill:
The numbers may not immediately reflect it, but today was a pivotal day for the American economy.
From the time the pandemic began up until this very week, the economic data has contained deep pockets of pain. Roughly 18 million people are still receiving unemployment insurance, and nearly one million of the families relying on it say their children don’t have enough to eat.
Upon taking office, we worried that many of these families would be haunted by the COVID economy long after the health emergency was over. We know that when the foundations of someone’s life collapse — when they lose a small business, or the roof over their head, or the ability to eat dinner every night — it can scar them permanently; their ability to earn is forever lowered. I worried this would happen on a mass scale, but now I am confident that it won’t.
With the passage of the American Rescue Plan, Americans will emerge from the pandemic with the foundations of their lives intact. And that is an enormous economic and moral achievement for America.
Indeed, we are now charting a very different course out of this crisis compared to the one a decade ago. Rather than a long, slow recovery, expect we could reach full employment by as soon as next year.
Our Treasury team will be doing everything we can to accelerate the recovery. We are ready to get to work implementing the measures in the Rescue Plan, including economic impact payments, expanded child tax credits, help for struggling renters and homeowners, and support for state, local and tribal governments.
Of course, there will still be tough months ahead, but eventually, this law will help clear away the immediate crisis in front of our eyes, and let us start building a better post-COVID future.
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“She-cession” to derail homeownership growth?
Single women far outpace men when it comes to buying a home. Female buyers accounted for 19% of the homes purchased in 2020, according to the National Association of Realtors. 19% of first-time home buyers and 17% of repeat home buyers were single women, while 11% of first-time home buyers and 9% of repeat buyers were single men.
But then COVID hit. And women’s labor force participation rate hit a 33-year low in January. To put a little perspective on it, last year women outnumbered men in the U.S. workforce, but they accounted for 100% of jobs lost in December.
There are many reasons women lost more jobs – one of which being they were more likely to step down in order to deal with family at home due to the pandemic.
And First American examines whether that could derail single women’s homeownership growth.
“The current health crisis has resulted in economic hardship for many, particularly a negative income shock and high unemployment,” the company said in a blog. “Women have been disproportionately hurt by the pandemic ‘she-cession’ because women, specifically younger and less educated women, are over-represented in service sector jobs and this was the Great Recession for the services industry.”
However, homeownership numbers correlate with older and more educated demographics, which could save the housing market from being affected by the “she-cession.”
“While the pandemic recession has proven devastating for many of these workers, the nature of this service sector-driven recession is unlikely to result in a one-to-one decline in homeownership demand for single women because those being impacted disproportionately by this “she-cession” are much less likely to have been house hunting in the first place,” First American said.
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