Obama’s State of the Union address
During President Obama’s State of the Union address tonight, the President exerted the most efforts on jobs and the economy and while not much was said about housing, he did state that he was sending a plan to Congress to help responsible homeowners to find relief without having to wait for the market to hit bottom, potentially saving each homeowner $3,000 per year. The President noted that the government cannot save housing alone.
Additionally, the President asserted that we need “smart regulations” to prevent irresponsible lending, especially to homeowners that “knew they couldn’t afford” their mortgage.
This fall, real estate media site, Zillow offered Six ideas to revive housing that Congress might actually support, penned by Dr. Stan Humphries, Zillow’s Chief Economist. Of the six suggestions, one looks somewhat similar to Obama’s suggestion above:
“Go bigger on refinancing Fannie/Freddie mortgages. In a speech in Las Vegas on October 24, President Obama promised that the Federal Housing Finance Agency would prod banks to give homeowners who are under water with their Fannie and Freddie mortgages an opportunity to refinance. I don’t object to the President’s plan. I’m just afraid it doesn’t go far enough. Instead of helping only one million homeowners refinance their homes, we should try to help out the 16.5 million homeowners who are under water with their mortgages.
Columbia University professor Christopher Mayer proposes that the government consider giving homeowners who are current on their mortgages permission to refinance, regardless of their credit score. These folks are current on their house payments and the loans are secured by real estate. What difference does it really make if elsewhere in their lives, they’ve missed a credit-card payment or paid late on their electric bills?
Nor is there need to get an appraisal of the house or verify income. Charge them a few hundred dollars to alter the paperwork to reflect the lower interest rate and be done with it. “Reward the people who’ve been really good credits throughout the crisis and have struggled to make it,” says Mayer. The number of households that fit into this category is in the tens of millions.”
Although the President’s proposal sounds like a conservative, less in-depth option than what has been suggested by Zillow, the similarity is obvious. While Zillow is not taking credit for the similarity, Dr. Humphries tweeted shortly after the State of the Union:
Zillow still believes there are five additional moves Congress would approve of. In their own words:
- Facilitate more bulk sales of distressed mortgages backed by Fannie, Freddie, and the FHA to the private sector.
- Let Fannie and Freddie make more than 10 loans to small real estate investors.
- Grant visas to immigrants who buy U.S. homes.
- Allow people to set aside a portion of their retirement funds for down payments.
- Give the market foreclosure clarity.
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.
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.
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…
Job openings hit 14-year high, signaling economic improvement
The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.
Job openings hit a high point
To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.
The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.
Good news, bad news, depending on your profession
That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.
Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.
If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.
If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.
Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.
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