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A Housing Fix or a Jobs Fix? Chicken or Egg?



couple in front of houseNow that health care reform is being given the slow morphine drip which can be characterized as assisted suicide or euthanasia Washington has turned its attention to jobs, jobs, jobs. It seems that everyone has gotten on the bandwagon about the unemployment situation (still in double digits) since there seems to be a “populist” uprising in the country. At least, it seems like everybody.  Personally, I’m a “wait-and-see” kinda guy when it comes to the “‘Just Say No’ to Everything” party that seems hellbent on making sure that nothing happens.  Will they really try to work with Democrats to fashion some kind of program that will help get Americans back to work?

My guess is that the Republicans see continued posturing and bellicose rhetoric as a path to majorities in both houses of Congress and, possibly, the White House.  That may be.  What they forget is that if powers shifts because of these tactics, Democrats will adapt them if they ever become the “loyal opposition”.

Jobs First or Housing?

In a recent post here on AG, Lani Rosales noted the lack of attention housing got in President Obama’s State of the Union address. Lani may be on to something but I’m thinking it may be the other way around.  Jobs will create the income necessary for people to buy homes which, in turn, will spur new home building which, in turn, will create more jobs.  It may actually be a kind of nice upward spiral.  Unfortunately, since employment is a lagging indicator we don’t see the proof of job growth until the recovery is well underway.

That doesn’t address the current issues of massive foreclosures and the huge glut of short sales on the market.  Perhaps with jobs people could make their mortgage payments. This would reduce inventory which would stabilize prices and, perhaps, create demand.  Absent a good jobs program to get people back to work, my guess is that no amount of loan modifications or re-financing will really solve the housing problem.

I agree that there should be a way for people to re-finance out of ARMs and Interest Only loans and other “exotic mortgages”.  To be honest, I’m not sure how that can be done with any great efficiency or that it would really be helpful.

It’s really a perplexing challenge.  In my mind, though, people tend to feel a lot better about themselves and the prospects for the future when they have a job and some income to take care of some of the basics like food and shelter. Once that’s taken care of the rest will follow right along.

“Loves sunrise walks on the beach, quaint B & Bs, former Barbie® boyfriend..." Ken is a sole practitioner and Realtor Extraordinaire in the beautiful MD Suburbs of DC. When he's not spouting off on Agent Genius he holds court from his home office in Glenn Dale, MD or the office for RE/MAX Advantage Realty in Fulton, MD...and always on the MD Suburbs of DC Blog

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  1. ross therrien

    January 31, 2010 at 10:28 am

    Great article and makes perfect sense. Too bad so many repubs, in my area just don’t get it.

  2. Greg Cooper

    January 31, 2010 at 11:01 am

    Ken…..I think recoveries must see job stabilization and growth for housing to stabilize. What are your feelings about specific tax incentives for small businesses as they hire new employees?

    • Ken Montville

      January 31, 2010 at 11:10 am

      Hey, Greg … . It depends on how the incentives are used. If they’re just used to offset the cost of compensation they probably won’t work for very long. If it helps to create incentives for employee health care benefits, it’ll be a big plus. Of course, younger employees probably don’t care that much about health care since they’re invulnerable and employers prefer younger workers because they work for less.

      How about tax incentives for American made products/services which would have a far reaching employment effect? Fat chance.

  3. Dean Ouellette

    February 1, 2010 at 8:43 am

    We need to become a mobile society again. I think we need to fix the housing market to fix the job market. We need to make it easier for people to be mobile again, to make it so they can pick up and travel to the new job if they need to. Now it is difficult because we do not have a mobile workforce who can quickly sell their home and just up and leave for a new job.

    • Ken Montville

      February 1, 2010 at 9:32 am

      Interesting concept, Dean. I’m wondering what that might do for things like stable neighborhoods, schools and the like. I’m also thinking that for people with a traditional FHA or VA mortgage there isn’t really enough equity based on traditional amortization schedules to be able to sell and “break even” after a short period of ownership. We were a highly mobile society once, though.

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The House Judiciary antitrust investigation holds big techs’ feet to the fire

(POLITICS) CEOs of Alphabet, Facebook, Apple, and Amazon set to testify in House Judiciary Committee antitrust investigation hearing today.



house investigation

The House Judiciary Committee is closing in on the end of a year-long investigation into tech giants Google, Facebook, Apple, and Amazon, to evaluate possible antitrust abuses. CEOs from all four companies were set to testify on Monday, July 27, 2020. The hearing has been pushed back to Wednesday, July 29, to allow members of Congress to pay respects to civil rights leader Representative John Lewis (D-GA) who died of pancreatic cancer on July 17.

Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook, and Sundar Pichai of Alphabet (Google’s parent company) have all agreed to testify. This will be Bezos’ first time in front of Congress, whereas all the others have testified before on different matters. Twitter CEO Jack Dorsey was invited to testify by Representative Jim Jordan (R-OH), but is expected to not attend.

The Antitrust Subcommittee began the investigation in June 2019. Each business has been the subject of scrutiny for their roles in dominating their respective industries and playing an outsized role in market competition for smaller businesses. The Committee is interested in evaluating current antitrust laws and whether they apply to, or should be updated for, these mega corporations. They have already heard testimonies from smaller companies like Sonos and Tile about these companies’ alleged monopolistic practices.

The focus of the investigation for Apple is on the App Store, and whether it has implemented policies that are harmful for app developers. Google has a tight hold on the online advertising market. Amazon – which during a five-week period early in the pandemic saw an increase in value equivalent to the total value of Walmart, the world’s largest firm – has been criticized for its treatment of brands that sell on its e-commerce platform. Facebook is being investigated for its acquisition practices, cornering the social media market with purchases like Instagram.

Amazon is expected to face additional scrutiny for its treatment of warehouse workers during the pandemic. Facebook and YouTube (a subsidiary of Google) have been the subject of regular criticism about monitoring hate speech on their platforms, and their treatment of the workers responsible for doing so (Facebook in particular).

The hearing is set to occur virtually in order to adhere to social distancing guidelines. Watch the hearing live at 12:00 p.m. EST Wednesday, July 29 on the House Judiciary Committee’s YouTube channel. Please do note the hilarious irony of streaming a Congressional antitrust hearing on YouTube, which is owned by Google, which is owned by Alphabet, which is testifying at said hearing. God Bless America.

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Additional unemployment benefits outside of the CARES Act

(POLITICS) Unemployment is at an all time high in the United States and individuals need to be aware of reapplying for additional benefits.



unemployment broke

June saw some additional jobs in the US and unemployment fell as of early July, but CNBC advised pausing on any celebration just yet, saying that “The employment crisis is still worse than any time since the Great Depression, the country’s worst economic downturn in its industrial history.”

The unemployment statistics in our country right now are really scary – especially for individuals and families that see a looming deadline of July 31 for the supplemental $600/week provided by the Federal Government through the CARES Act put in place in March. There are discussions on extending these benefits as many families have not been able to replace their incomes or find new employment opportunities, but it doesn’t seem like anything has been finalized there yet. Congress is in the middle of a variety of options:

  • Discontinue the additional $600/week but allow those on unemployment to continue to file and receive their state benefits (usually up to 26 weeks or possibly extended up to 39 weeks by The CARES act)
  • Send out additional stimulus checks (Congress is currently exploring a $X Trillion stimulus package)
  • Extend the additional funding (on top of the weekly amount allotted by state) but cut it from $600 to $200
  • It’s also been put on the table in the House of Representatives “The Heroes Act” to extend the additional $600/week until January 2021 ($3 trillion).

There are some additional benefits that are available (different than the funds by the CARES Act), but you may have to reapply for them. So, make sure to check your state’s unemployment pages and your filing status. Some states do not require you to reapply and you can continue on with extended benefits.

According to CNBC, “The additional aid expires after the end of the year. (This is a different program than the one paying an extra $600 a week through July 31.) For some reason, the [Department of Labor] has taken the position that people have to file for the additional PEUC benefits,” said Michele Evermore, a senior policy analyst at the National Employment Law Project.”

No doubt that this can cause additional stress and uncertainty especially when you have questions about your filing and are unable to get through to someone on the phone. With the way that the unemployment cycle is setup, technically July 25 is considered the last date for that cycle (and July 26 for New York), so be sure to check and see what the next steps are for you if you are currently filing.

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How will pausing the reopening of states impact the recovery of the economy?

(POLITICS) The resurgence of COVID-19 has left Americans with a lot of questions about our nation’s economic future. That ambiguity is seemingly a feature, not a bug.



COVID-19 reopening economy

The rest of the world watched as the United States dramatically reopened “the economy” last month. Now, it seems we’ve changed our minds about that.

The White House has repeatedly said that it will be up to individual states to form their own pandemic response plans moving forward. But letting local governments devise their own solutions has produced large gaps in their preparedness, as well as profound confusion around the best practices for balancing the country’s public and economic health.

California, which represents the largest economy in the US and the fifth largest in the world, was one of the first states to put serious quarantine restrictions in place. The decision to relax those orders only came after anti-lockdown protestors demanded that Governor Gavin Newsom reopen the state’s beaches, businesses and churches. Newsom may now regret this capitulation as California just called for a second round of statewide lockdowns.

Other state legislators are slowly following their lead, as the threat is becoming very dire in some places. Florida, for instance, is now a global hotspot for COVID-19 and Miami is being called “the new Wuhan”. The state is also currently struggling against another wave of unemployment, partly because their economy is heavily dependent on summer tourism (which has persisted despite the spike in cases, but not nearly at pre-pandemic levels).

Florida, California and Texas are altogether responsible for 20 percent of all new COVID-19 cases globally.

Every state is fighting two battles here. Coronavirus relief efforts in the US are still seriously underfunded, and most health organizations here lack the resources to effectively test and treat their communities. But the problems that have emerged for workers and small business owners, like evictions and layoffs, have also been devastating in their own right.

In essence, the United States reopened in an effort to curb the nation’s financial freefall and ballooning unemployment. Economists predicted at the beginning of July that reopening would allow the US to avoid a recession, and all would go smoothly. These projections likely did not account for a spike in cases that would halt this economic rebound.

That’s not to say the circumstances here haven’t improved at all over the past months; currently there is no acute shortage of ventilators, and doctors have had some time to refine their strategies for treating the virus. Overall, the national unemployment rate is slightly declining, while working from home is going so well for companies like Twitter and Facebook that they will be permanently switching much of their staff to remote work.

By comparison, though, New Zealand took the pandemic much more seriously than the US did, and they are objectively in a better position now in all respects. Prime Minister Jacinda Ardern cracked down hard and early, closing the country’s borders completely, and instituting rent freezes nationwide. As a result they have virtually eradicated COVID-19 within their borders. A report from S&P Global also expects New Zealand’s economy to recover quickly compared to the rest of the world.

While this tradeoff seems like a zero sum game – as if we have to pick either our health, or our wealth – it is not. In fact, we could very well end up with neither if our lawmakers don’t proceed with caution.

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