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Mo News: Are We Headed For Housing Recession?
Mosheh Oinounou
September 26, 2022
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Hey everyone!
Here's what we're watching as we begin the new week:
In Focus: The state of play with the US housing market. Interest rates are climbing and affordability remains a challenge. And what about the rental market?
Ian is forecast to become a Category 4 hurricane en route to Florida;
Another desperate move by Putin: How Russia is forcing the hand of Ukrainians to vote in favor of Moscow’s invasion;
Iranians continue to hit the streets to protests for the 10th night;
New study on best position to be in (literally) when swallowing a pill;
Behind Costco's big decision on its $1.50 hot dog & soda combo;
And, scene: Remote workers might be overdoing it on the "productivity theater" - wasting their time trying to prove they're actually working... when they're not;
And as always, Good Mood Monday to start the week right.
~ Mosh
🏡 BURSTING THE HOUSING BUBBLE
You may have seen headlines about the Fed trying to intentionally bring on a housing market correction. What's going on?
Federal Reserve Chair Jerome Powell said last week that interest rate hikes are intended to give the housing industry a "reset," but it also may have further confused home buyers and sellers on what to do next.On Wednesday, Powell said he believes the US will need to go through a "difficult housing correction" to make homes affordable again and correct a "big imbalance." ~USA Today
Yes, but......average 30-year fixed mortgage interest rates have doubled from 3.2% to 6.38% over the past six months. That is the highest rate since 2008 and it has made it more difficult for potential buyers to take out mortgages AND made potential sellers reluctant to sell and give up their own historic low rates.
So, it should be no surprise that we also learned last week that U.S. existing home sales dropped for a seventh straight month in August. ~Reuters
Why is the Fed purposely doing this?
Housing costs & rent prices have been a major driver of inflation. The Fed is raising interest rates to discourage people from borrowing, which they believe will drive down demand - and force the cost of goods (including homes) to come down with it.With the Fed hiking interest rates up another 75 basis points, more people are thinking twice about buying OR selling their homes. For Powell, this is great news. It’s a much-needed sign of progress for the Fed that its mission to lower inflation could finally be kicking in.But, some experts fear this could backfire: Soaring mortgage rates are discouraging home buying and pushing people into the rental market instead – which drives inflation higher. I will have more on that below. ~ BloombergHomeowners who secured low mortgage rates when interest rates were near zero are now reluctant to sell and give that up and pay more each month for a new place. ~ Wall Street JournalHomebuyers are being forced to fork over hundreds of dollars more in monthly payments for mortgages-- than they were a year ago -- on the same-priced house.The rate on the popular 30-year fix mortgage is at a nearly 14-year high - that amounts to an additional $900 per month on a median-priced home, and more than $10,000 annually. ~ Yahoo Finance
Price Latest: Redfin has an analysis of the 10 American housing markets where prices cooling the fastest:
But, we still have major affordability issues:
Since 2017, the average home price has gone up by 60% while the average income has risen by less than 15%. “Home prices are significantly out of whack with income levels,” said Andy Walden, a VP at Black Knight, a mortgage database company.
Americans are now spending more than 35% of their median income on monthly principal and interest payments for that newly purchased median-priced home. Historically, we spent closer to 25% on payments. ~CNN
So, should we be renting then?
With homeownership continuing to remain unaffordable, rents have also been skyrocketing. According to data from Zillow, the typical US monthly rent was $2,090 in August, up 12.3 percent from a year before. That is much higher than it was before the pandemic — in February 2020, the nation’s average rent was $1,660.
BUT, after more than a year of massive increases, rent prices in the U.S. may finally be starting to fall. According to numbers from Realtor.com, the median rental price for a two bedroom or less fell (ever so slightly) last month for the first time since November 2021 ~ AxiosEven in Manhattan, one of the priciest housing markets, rent prices plateaued -- though the median monthly rent is still above $4,000 a month.In the mean time, as you consider whether and where to rent, here are the latest numbers on the most and least affordable rental markets (based on percent of monthly budget spent on rent):
Top 10 Least Affordable Rental Markets:
Top 10 Most Affordable Rental Markets:
🗞 THE SPEED READ
Protests continue in Iran as president threatens ‘decisive’ response (Washington Post)
Protests continued in Tehran and other Iranian cities Sunday for a 10th day, with videos emerging of large demonstrations despite tightening internet restrictions and an expanding clampdown by security forces, monitoring groups said. They have spread to all of Iran’s 31 provinces and are the largest since nationwide demonstrations three years ago that were met with a deadly security response that killed hundreds. In the latest protests, at least 41 people have been killed, according to Iran’s state media, including police officers, though human rights groups believe the death toll might be in the hundreds. Reliable information continues to be a challenge as the Iranian government has been shutting off internet and mobile data.
With Kalashnikov rifles, Russia drives the staged vote in Ukraine (Washington Post)
Officials in Russian-occupied territories in eastern and southern Ukraine were forcing people to vote “under a gun barrel,” residents said on Saturday as staged referendums — intended to validate Moscow’s annexation of the territory it occupies — took place. The purported referendums are illegal under Ukrainian and international law and would not remotely meet basic democratic standards for free and fair elections. Western leaders, including President Biden, have denounced the process as a “sham” to prepare the ground for Russia’s theft of Ukrainian land.
Hundreds of people have been arrested by authorities as protests against Russia's new "partial mobilization" continue across the country, an independent rights group has said. One report said 724 people were detained across 32 different cities on Saturday alone. Widespread demonstrations have broken out since President Putin announced plans to draft 300,000 men to fight in Ukraine. Unsanctioned rallies are banned under Russian law.
via Jeff Berardelli
Ian Now Forecast To Strengthen To Category 4 In Gulf Of Mexico (The Weather Channel)
Tropical Storm Ian is about to undergo explosive intensification into a major hurricane and will likely become a serious threat for the southeast U.S. this week, including Florida. By Tuesday, meteorologists predict it could reach a Category 4 strength. Florida Gov. Ron DeSantis has declared a state of emergency for the entire state of Florida in preparation for the storm.
Fiona washed houses into the sea, tore the roofs off others and knocked out power to the vast majority of two Canadian provinces as it made landfall before dawn Saturday as a big, powerful post-tropical cyclone. Fiona transformed from a hurricane into a post-tropical storm late Friday, but it still had hurricane-strength winds and brought drenching rains and huge waves that knocked out power to nearly half a million Canadians.
The House committee investigating the Jan. 6 attack on the U.S. Capitol will hold its next public hearing this Wednesday, Sept. 28, just over a month before the midterm elections. It will be the latest in a series of televised efforts by the panel to lay out the case that last year's insurrection stemmed from then-President Trump’s attempts to overturn the 2020 election results. A news release announcing the hearing did not specify the topic or whether there will be any in-person witnesses. Rep. Bennie Thompson, D-Miss., the committee chairman, said earlier Wednesday that he expects the hearing to be the last one, “but it’s not in stone.”
A top Costco Wholesale executive confirmed the big-box retailer has no plans to change the price of its $1.50 hot dog-and-soda combo at its stores despite months of decades-high inflation. Costco CFO Richard Galanti reiterated the cheap price point on the fan-favorite deal would stay in place.
In a new study by Microsoft, nearly 90 percent of office workers reported being productive at work, and objective measures — increased hours worked, meetings taken, and amount and quality of work completed — prove them out. Meanwhile, 85 percent of bosses say hybrid work makes it hard to be confident that employees are being productive. That uncertainty is prompting workers to increasingly show that they’re working — which is decidedly not the same as actually working.
Rather, it’s what some have called “productivity theater” – when workers frequently update their status on Slack or toggle their mouse to make sure the status light in Microsoft Teams is green. En masse, they’re a dizzying waste of time. In addition to their regular working hours, office workers said they spend an average of 67 extra minutes online each day (5.5 hours a week) simply making sure they’re visibly working online, according to a recent survey from software companies Qatalog and GitLab. Workers everywhere are feeling burnt out by this behavior. In other words, fears about lost productivity could cause lost productivity.
Have you been taking pills wrong? Here’s what science says. (Washington Post)
The next time you take a pain reliever for that headache, you may want to consider your posture. Researchers at Johns Hopkins University have found whether you’re standing upright or leaning, as well as which side you’re leaning to, could affect how fast the contents of a pill are absorbed into your body. The bottom line: leaning to your right side after swallowing a pill could speed absorption by about 13 minutes, compared to staying upright. Leaning to the left would be a mistake — it could slow absorption by more than an hour.
A protester lit a portion of the court and his arm on fire during a match at the Laver Cup tennis event Friday, hours before Roger Federer was scheduled to play for the final time before retiring. The activist, carrying a lighter and wearing a white T-shirt with a message about private jets, made his way onto the black court and sat down near the net. The person eventually was carried away by security guards.
AP News
☀️ GOOD MOOD MONDAY
We got an unforgettable image of friendship trumping rivalry from the world of tennis this weekend. As Roger Federer completed his last match, his longtime competitor, Rafael Nadal, was in tears throughout his retirement ceremony. “An important part of my life is leaving too,” Nadal said. "I’m very proud to be part of his career in some way. But even for me, happier to finish our career like friends after everything we shared on court like rivals." The two men joined forces for a doubles match Friday, in Federer's final time on the court. ~ Tennis
Getty Images
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[Top Banner Photo Credit: Getty Images]
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