Discussing rising homes prices and tight inventory of homes for sale, a new mortgage machine and the loss in manufacturing jobs…
If cities want to retain a middle class, experts say, they will have to make it happen on their own.
The casualties in this war are mostly the middle class. In 2016, rents continued their years-long rise, incomes stratified further, and the average price to buy a home in major US cities rose. The strain pushed the middle class out of cities like Boston, San Francisco, Los Angeles, New York, Austin—the so-called “hot cities.” Some families move to the suburbs. Others flee for less expensive cities. But across the US, the trend holds: cities are increasingly home to high-rollers who can pay the high rents or down payments and lower income people who qualify for subsidized housing.
Macroeconomists say this a good problem to have. These cities are growing. People want to live in them. Stagnating economies in the Rust Belt might envy this kind of trouble. From the perspective of the overall wealth of cities, the middle class being pushed out doesn’t matter. But it matters on the human level, the neighborhood level. The effects on inequality, mobility, and the demographic composition of cities are very real, their causes multifold, and the solutions difficult.
As much as we may think there is a problem finding affordable homes in the Anderson SC, area, it is much better than other areas of the country. I am not saying it isn’t an issue around here just that things could be much worse than they are…
Speaking of Tight Inventory of Homes for Sale
Since I just spoke about how tight inventory is driving home prices up in big cities, I think I should point out how the November 2016 Existing Home Sales Report from NAR shows how a lack of inventory can cause rising prices.
The reason a low number of homes for sale affects prices is due to simple supply and demand. To put it very simply, if there is high demand but a low supply, prices go up.
Year-over-year inventory levels of homes for sale have dropped for the last past 18 months. A normal supply of homes is 6 months but accodring to the November Existing Home Sales Report, there is only a 4 month supply of homes for sale in the U.S. In December 2016, there was a 5 month supply of homes for sale in Anderson (remember this is talking about ALL prices ranges).
The median price of U.S. homes sold in November was up 6.8% from the previous year. This is the 57th consecutive month with year-over-year gains for U.S. prices.
NAR’s Chief Economist, Lawrence Yun said:
Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017. Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country.
There is a silver lining to rising home prices. Because more homeowners are regaining equity, it means they are able to sell their homes. This could help with the tight inventory of houses for sale.
However, for the time being, demand is still outpacing supply. Especially in our area as the inventory of homes for sale in the Anderson area has been decreasing for a long time.
In the years since the crisis, many of the nation’s largest banks pulled back their mortgage-lending activities. Quicken Loans pushed in. Today, it is the second-largest retail mortgage lender, originating $96 billion in mortgages last year — an eightfold increase from 2008.
Privately held Quicken, like some of America’s largest banks before it, has also landed in regulators’ cross hairs. In a federal false-claims lawsuit filed in 2015, the Department of Justice charged that, among other things, the company misrepresented borrowers’ income or credit scores, or inflated appraisals, in order to qualify for Federal Housing Administration insurance. As a result, when those loans soured, the government says that taxpayers – not Quicken loans – suffered millions of dollars in losses.
Quicken Loans today is the F.H.A. insurance program’s largest participant.
Executives at Quicken Loans deny the charges, maintaining, among other things, that the government “cherry-picked” a small number of examples to build its case. In an aggressive move, the company pre-emptively sued the Department of Justice, demanding a blanket ruling that all of the loans it had originated met requirements and “pose no undue risks to the F.H.A. insurance fund.”
Not very flattering article about Quicken. But it is something I thought that should be shared…
Automation is a long-run problem that demands a long-run solution. Convincing manufacturing companies to keep — or bring back — jobs, one company at a time, is not going to restore the millions of jobs that have been lost to technological change. We must reorient educational institutions and job training around “human” skills that are difficult to automate. These skills include creativity, complex problem-solving, and the ability to work with others in fluid, team-based settings.
Is manufacturing just like agriculture was? And if so, what can take the place of manufacturing to provide a way for people to earn a living?