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Economic News

Trulia says America’s dream of homeownership is not dead, but changed



How has the dream of homeownership changed?

As threats of a second recession loom, housing remains a critical wound to the economy and political rhetoric heats up leading up to an election year, real estate practitioners are feeling the heat. Do Americans even care about owning a home any more? According to a study, 70 percent still say that homeownership is still central to their American dream which is unchanged from January despite declining economic conditions.

The dream of homeownership has changed, however, as demand for McMansion sized homes over 3,200 feet has declined 36.5 percent in just the last twelve months. Trulia cites a variety of reasons from environmental awareness, practicality and even the political discussion surrounding removal of the mortgage interest deduction (MID). If the MID is no longer offered to homeowners, it could reduce demand on larger homes which Trulia’s newly appointed Chief Economist, Dr. Jed Kolko said “could be a permanent shift.”

Although Americans still want a home, the dream of mansion living is being removed from the national ethos and being replaced by the idea of more compact, city living and as demand shifts from oversized suburban homes, suburbs won’t end up abandoned, rather, the absorption rate will take longer to recover than urban areas, according to Trulia.

Good news, bad news

The good news highlighted by the study is that there is long term demand for housing as the dream of homeownership is still alive. For example, 59 percent of current renters say they aspire to own and over two thirds of respondents over the age of 55 say they still plan on buying a second home.

The largest obstacle to those wishing to by is saving up for a down payment, according to half of everyone surveyed. This presents a problem on Capitol Hill as Congress has proposed requiring all home buyers to put 20% down. Furthermore, nearly one in three respondents cite job instability as a barrier to their owning a home, pointing out the toll unemployment has taken on housing. Independent of income, 36 percent feared they would not qualify for a mortgage.

Based on current data, Kolko told AGBeat that he expects to see the number of Americans aspiring to own a home to stay flat or increase in the next twelve months, noting there is pent up demand in the youngest demographic, many of whom are not living alone, but with parents which has held back demand and lowered expectations, therefore, demand has been deferred to the future.

The takeaway

Americans still want to own homes, but the dream is that of a smaller footprint, more urban living, and finances are the top obstacle that buyers perceive to be standing in their way. People over 55 still plan on buying a second home, and there is pent up demand with Americans under 34 who do not yet live alone. Housing may be limping, but the future looks hopeful based on the perception consumers have about homeownership- the dream is not dead, it’s just a different dream.

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  1. Devery Rielly

    September 21, 2011 at 12:35 pm

    I just never understand why everyone keeps referring to the "Proposed" 20% downpayment? CAN WE PLEASE TALK ABOUT RIGHT NOW??? There are plenty of loan programs that require a very small downpayment (3.5%)to none at all. They are great programs – GREAT! PLEASE PLEASE PLEASE Tell people about HomePath, tell people about VA, tell people about USDA, tell people about FHA. Quit trying to keep people out of the market by scaring them, misleading them and not truly helping them. I would love for a day to go by where I don't have to "dispell" the myths about home ownership that are out there and perpetuated by so called experts in our industry.

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Economic News

How small businesses can keep up with the changing workforce

(ECONOMIC) Trade schools are booming as career outlook grows. College enrollment is down. The workforce is changing. How can small business keep up?



Trade employees in the workforce

College enrollment has dropped off by three million in the last decade, with a drop-off of one million due in the last several years as a direct side effect of the Covid-19 pandemic. This phenomenon clearly does not bode well for the future of the United States’ economy and workforce, with students who attend low-income schools and come from low-income families being the most affected. These changes are disproportionately affecting students from low-income schools and families, the very people who need higher education the most, and are erasing much of the work done in the last decade to help close the income and race gap between students, colleges, and socioeconomic backgrounds.

Enrollment in trade schools is skyrocketing.

Recently, trade schools have seen a 40% bump in enrollment across the board. Many students are enticed by the fact that trade schools are affordable and offer a quick turnaround, with students paying $16,000 or less for their program, and their training taking a year or less to complete. Beyond that, those who complete trade school is all but guaranteed a job on graduation day. Their earning potential is often two or even three times higher than the initial cost of attending the program. As many have found, the same cannot always be said about those who pursue a college education.

While the average cost of college at an in-state and public institution hovers at around $28,775 per year (according to Forbes) and takes an average of four years to complete means that trade students have a cheaper educational cost, (between $16,000 to $33,000 for the entire program, or about equal to just one year of a public college tuition) can get work in their field more quickly, and can usually make more than their educational costs in their first year on the job. Tradespeople make an average of $54,000 fresh out of trade school, which rivals the role average college student’s first salary of $55,000. It’s no wonder so many people are choosing to forgo a formal education for trade school!

The almost insurmountable cost of college combined with ever-growing inflation and a lengthy list of requirements just to get a post-college job, all for a low salary and with students having hefty loans to pay back, also play a key role in the downturn in the popularity of college.

The implication of fewer college-educated people, however, means that over time, the United States as a whole could face an economic downturn, as it gives rise to many more blue-collar workers. This can irrevocably alter the makeup of the workforce. Despite current unemployment rates being among the lowest they’ve ever been, the American people are already starting to see a shift in the labor market.

Already, we see a strain in the labor market when 25% of skilled workers in the U.S. exited the workforce following the Covid-19 pandemic. The economy has become so highly specialized that if the U.S. were to keep up the trend of losing college-educated workers, there could irreversible damage to the United States’ economy, deepening the ever-growing divide between the middle class and the working class, further reducing the ability to affect the global economy, knocking the United States out of the classification of a “global superpower.” To make matters worse, much of the United States labor pool is outsourced, and we are seeing the rise of artificial intelligence and robotics taking over many jobs, especially minimum wage jobs. While none of these factors alone vastly affect the U.S. labor market, this is only the tip of the iceberg.

So what can employers do when the makeup of the workforce starts to shift?

Employers could shift the focus on the years of experience rather than the type of education the potential employees have, as well as offering more extensive on-the-job training, which is already commonplace in some industries. Even for those with a college education, the requirements for entry-level jobs seldom match the salary, with many employers requiring a four-year degree, two or more years of experience, and fluency in different programs which vary from company to company. Employers, if possible, need to offer higher salaries with fewer requirements, as many young people are finding the pursuit of college, plus the various other requirements just to be considered for a barely above minimum wage job, while they’re drowning in student debt fruitless, so they forgo college altogether.

A post-pandemic society looks vastly different, and employers must adapt to keep up.

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Economic News

Boomers retirement may be the true reason behind the labor shortage

(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.



Older man pictured in cafe with laptop nearby representing boomers retirement discrimination.

In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.

Why Boomers are leaving the labor force

CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:

  • Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
  • The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
  • Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.

As Boomers retire, how does this impact the overall labor economy?

According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

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