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U$A! U$A! U$A! Average Americans; First time homebuyers 😉

By March 24, 2021 No Comments

U$A! U$A! U$A! …has a really high credit score

Is the massive stimuli packages going to put a whooping on the nation’s ability to pay off its bills?

Nope, according to a report by Kroll Bond Ratings Agency which just gave America triple-A credit ratings

 (that’s as high as the scale goes, BTW).

You can access the report for yourself by clicking here, but be warned, you’ll need to get a free registration to KBRA content.

KBRA notes that although the US is the world’s largest economy (~$21 trillion), substantially larger than second-place China (~$14 trillion), economic diversification and size render it highly resilient. 

“The U.S.’ structural characteristics – wealth, institutional strength, economic diversification, policy flexibility, and manageable systemic risk — significantly reduce its susceptibility to shocks,” KBRA said in its report. “The U.S. ranks very high in business environment, competitiveness and governance.”

But what about the nasty politics happening all around? Kroll says they’re not worried.

“Rising levels of political polarization include repeated disputes over fiscal and other priorities do not change KBRA’s view of the U.S. credit ratings,” they said. “KBRA believes that the federal government will pay its marketable debt in full and on time despite debt ceiling controversies and shifts in the policy agendas across administrations.”

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What do average Americans do with their stimulus checks?

During the last recession, the Federal government bailed out banks, hoping they’d restart lending to get the economy going. That didn’t work out very well for the average American, so this time around, the Federal government is just out-and-out giving them the money.

Americans are poised to receive a third round of stimulus checks through the new American Rescue Plan Act and data from the Census Bureau’s experimental Household Pulse Survey show past stimulus payments helped ease financial hardship during the COVID-19 pandemic.

So what does the average American do with their stimulus checks? They pay down their debt.

According to the survey, around a quarter of adults in those households were still using those payments to pay for usual expenses as of the first half of June 2020. 

But Household Pulse data also suggest many households may have accumulated debt to make ends meet. 

Roughly 30% of adults reported using credit cards, taking out loans or borrowing from family and friends between June and December to pay for usual expenses such as food, housing and gas.

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Oklahoma City gives first-time homebuyers their best shot

The global economy shrank by an estimated 4.3% in 2020, according to data from the World Bank.

What’s more, the pandemic has caused “a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period”, said a press release issued by the World Bank – a key financial institution within the United Nations system.

However, while the data now points to global economic growth of 4% in 2021, something else continues to shrink: the nation’s housing supply.

For renters, who now see value in becoming a first-time homebuyer, finding a home to buy is harder in some markets than others, according to this blog post by First American economist Odeta Kushi.

“Nationally, the house-buying power of the median renter in the fourth quarter of 2020 jumped up 10 percent to $312,000 from $283,000 one year before,” Kushi writes. “The increase is primarily the result of a significant drop in mortgage rates to a record monthly average low of 2.7 percent.”

“While house-buying power increased, the share of homes for sale that a median renter could afford shrank nationally, falling to 57 percent in the fourth quarter of 2020, down from 61 percent one year ago,” she adds. “Even though house-buying power increased, house price appreciation eroded the affordability boost from falling mortgage rates.”

Kushi’s blog adds that the most affordable city on the list is Oklahoma City, where the median renter could afford 86 percent of the homes for sale. In the fourth quarter of 2020, the median house price in Oklahoma City was $184,000 and the median renter’s house-buying power was $329,000.

By a considerable margin, the least affordable city is Los Angeles, where the median house price in the fourth quarterof 2020 was $737,000, but the median renter’s house-buying power of $373,000 left only 7 percent of the homes sold in Los Angeles actually affordable.

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