New study reveals major population shift
According to a new study, “Demographic Challenges and Opportunities for U.S. Housing Markets” prepared by the Bipartisan Policy Center, the challenges presented with the shifting demographics are complex and call for housing policy that matches the shifts. The policy was founded in 2007 to discover housing challenges and make bipartisan recommendations on housing policy as a response.
Challenge one: population growth
The first challenge to devising housing policies is the expanding population. It is said that between now and 2050, America will add 93 million to its total population, which the National Association of Realtors translates to mean 43 million housing units will need to be added for sale or lease to match the pace of the population growth.
Challenge two: minority homeownership
The report points out that the gap between minority homeowners and Caucasian homeowners is in dramatic flux as a result of the recession. African American homeownership in 2010 is 28 percent lower than 1990-2000. Hispanic homeownership rose during the housing boom, but the recession wiped out all gains, and Hispanic homeownership is now 25 percent lower than Caucasian homeownership.
Because of these losses, the median wealth for the Hispanic and African American population is down by a half to two thirds. The Bipartisan group the widening gap which housing policy (that began decades ago to decrease this gap) must be revised.
Challenge three: Boomers out, Millennials in
It is no secret that the Baby Boomer generation has already begun to downsize their homes, adding 11 million properties for sale (or lease) between 2010 and 2020, and another 15 million between 2020 and 2030.
The “Echo Boomer” generation (also known as the Millennials, children of Boomers) is expected to absorb 75 to 80 percent of these properties, but the challenge lies in the fact that Millennials are highly educated yet are one of the most unemployed and underemployed generations which could present a challenge to the necessary absorption due to delayed home purchases.
Boomers selling to Millennials is already happening widely in the Northeast and Midwest, according to the report, so it is possible to look to these patterns for guidance in coming decades.
Challenge four: rentals
Most reports expect rental amounts and the volume of renters to increase, yet homeownership is projected to stay above 60 percent between now and 2030. The stigma of renting is dying, and the American Dream is no longer the white picket fence and 2.5 kids, so Millennials are not pressured to be homeowners by society as past generations have been.
This will be a challenge as homeowners become renters and young renters stay renters.
Future housing policies
Millennials are the most diverse generation which could go a long way toward reducing the minority homeownership gap, and Millennials are educated yet most do not feel the pressure to own a home or land as in previous generations. The wave of buyers and renters soon to hit the market will shift housing policy, but most importantly, the growing population will have an impact on policy as the nation must meet the demand.
The report notes that demographic trends for housing are “quite fluid,” and that “This fluidity and uncertainty mean, together, that decisions about the shape of housing policy in the U.S. – especially the finance system and tax incentives for owner-occupied and rental housing – stand to have a potentially large effect on the shape of the future U.S. housing market.”
Further, “Housing policies will likely affect individuals’ decisions about whether, when and with whom to form households. Even more, the housing policies that emerge by the end of the 2010s will influence whether many households buy or rent, where they decide to live and whether houses currently owned by Baby Boomers are sold, rented or leave the housing stock entirely. Whether for newly forming households or long-established ones, therefore, housing policies that emerge by the end of this decade have the potential to affect significantly the wealth portfolios of tens of millions of American families.”
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.
Gas prices are down, so are gas taxes about to go up?
Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.
Gas taxes and your bottom line
Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.
Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.
Supporters and opponents are polar opposites
Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.
Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.
While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.
The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.
Is a gas tax politically plausible?
Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”
Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”
Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.
Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.
“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”
Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.
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