New tool reveals swaths of American coastline are expected to be underwater by 2050: ‘Time is slipping away’
Brittany Davies – October 31, 2023
If you ask Climate Central — which has a coastal risk screening tool that shows an area’s risk for rising sea levels and flooding over the coming decades — Texas’s coastline is in trouble.
The new map-based tool compiles research into viewable projections for water levels, land elevation, and other factors in localized areas across the U.S. to assess their potential risk.
The predictive technology indicates that, under some scenarios, many of Texas’s coastal areas, such as much of Galveston Island, Beaumont, and the barrier islands, will be underwater during floods by 2050.
What’s happening?
Coastal areas face threats from rising sea levels caused by melting ice caps and warming oceans, as well as flooding from storms intensified by changing temperatures. The Environmental Protection Agency (EPA) estimates more than 128 million people live in coastal communities, many of which will be severely impacted by the effects of higher tides and dangerous storms.
CNN reports that coastal flooding could cost the global economy $14.2 trillion in damages, not including loss of life and well-being, by the end of the century. The loss of land due to sea level rise is also detrimental to the entire ecosystem, disrupting important wetlands and freshwater supplies.
Why is this concerning?
The coastal risk screening tool provides startling insight into how many areas will likely be affected by rising tides and floods, especially if nothing is done to mitigate Earth’s rapidly rising temperatures. As 2050 quickly approaches, time is slipping away to prepare and protect communities and ecosystems from the rising waters.
Planning, approving, and implementing new infrastructure and other major projects to keep communities safe can take years to complete. Because the wheels of bureaucracy turn slowly, cities need to start planning now before they find themselves in too deep.
What’s being done to reduce the risk?
Many of the most vulnerable regions are densely populated and people are already dealing with personal and economic damages from intensified flooding. While some may be able to move or make changes to their homes and communities to prepare for rising waters, not everyone has the means or desire to make these changes.
Several actions may be taken by individuals, organizations, municipalities, and the government to reduce the impacts of coastal flooding. The first step is understanding where the vulnerabilities are, indicates Peter Girard of Climate Central. Protecting existing wetlands and utilizing nature-based solutions such as living shorelines or sand dunes can lessen the impacts of flooding, storm surges, and erosion.
Community developers are encouraged to consider those most vulnerable when implementing coastal resiliency strategies such as shifting populations or building flood walls. Individuals living in flood zones should learn about the risks and obtain insurance protection if available.
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Idaho is the most ‘overvalued’ housing market in the U.S., says Moody’s Analytics. Here’s where Utah ranks
Katie McKellar – October 30, 2023
New homes in Eagle, Idaho, are pictured on Sept. 23, 2022. | Ben B. Braun, Deseret News
Even though the housing market is in the midst of a correction thanks to the rapid rise of mortgage rates that began in mid-2022, U.S. home prices are still overvalued — and some local markets are more overvalued than others.
That’s according to a new analysis from Moody’s Analytics, which estimates national median home prices are about 15.7% over their fundamental value. The firm’s economist Matthew Walsh predicts they’ll decline another 4% to 4.5% in coming months, Insider recently reported.
Based on Moody’s model — which accounts for variables such as construction costs, household formation rates and where home prices currently stand compared to median incomes — Insider ranked all 50 states, plus Washington, D.C., from least overvalued to most. One state in the West sank to the very bottom.
Idaho ranked 51st as the most “overvalued” local housing market as of the second quarter of 2023, with a median home price estimated by Redfin of $467,000, Insider reported.
Moody’s model estimates Idaho’s home prices exceed their fundamental value by 41.87%, according to Insider. Higher than 10% is considered overvalued and those more than 20% higher are considered extremely overvalued.
“If you look at Idaho over the past three years, you’ve had this extreme run up in home prices since the pandemic began,” Walsh recently told the Daily Mail. “So if you look at that relative to the demographic drivers — the household formation and the income growth there — that run up has been so much more extreme which is why we see the inflated valuation of houses there.”
It’s not the first time Idaho has made headlines for its home prices, which boiled over as low interest rates during the COVID-19 pandemic sent the West’s housing market into a frenzy. Housing markets in the West were also among the first to see the most dramatic price declines as interest rates skyrocketed amid the Federal Reserve’s battle with inflation.
Last year, when mortgage rates began rising from 3% to over 6%, Moody’s estimated Boise’s market was overvalued by an estimated 76.9%, Fortune reported. At the time, Moody’s estimated there were over 210 housing markets across the nation that were “significantly overvalued,” or overvalued by more than 25%.
That suggests home prices in Boise may have further to fall, especially with mortgage rates today that hover well over 7%, some days exceeding 8%, according to Bankrate.com.
In a May commentary, Walsh wrote most U.S. metro areas continued to be overvalued even as prices ticked down amid the housing market correction. However, the number of fairly valued metro areas also continued to climb as prices “fall back toward their equilibrium value in many markets.”
“Despite the improvement, overvaluation remains more widespread than during the height of the 2000s housing bubble. Today there are more than 300 metro areas that are overvalued or extremely overvalued compared with 260 during the final quarter of 2006,” Walsh wrote.
In that commentary, Walsh also pointed to Boise as topping the list as the most overvalued. At the time, prices exceeded their estimated fundamental value by more than 54%. Walsh noted that was a “sharp reduction” from the prior quarter when Boise was overvalued by more than 63%.
In February, Moody’s Analytics projected home prices would continue to fall 5% to 10% from their 2022 peaks by the beginning of 2025, and predicted the most “highly overvalued” metro areas — such as Boise, Phoenix, Austin and Nashville — would see the largest declines.
However, that same Moody’s analysis also noted these price corrections are “not a crash.”
“House prices will not crater like they did during the Great Recession,” the February analysis said, predicting home prices will fall back to late 2021 levels in early 2024. “Only this year’s gains will be wiped out by declines. For perspective: in 2025, when the next low is reached, we expect prices nearly 30% higher than they were at the beginning of 2020.”
Where does Utah rank?
In the Insider list based on Moody’s model, Utah ranked No. 40 — 11 spots below Idaho in terms of overvaluation. Moody’s estimated Utah’s home prices exceed their fundamental value by 26.31%, Insider reported.
Utah, like Idaho, was also hit hard by the pandemic housing rush and saw some of the biggest home price declines as interest rates rose.
In August, after six straight months of growth, home prices in most of Utah’s Wasatch Front counties tipped down. In Salt Lake County, the median price of all home types fell to $520,000 that month, a nearly 10% drop from a year ago and nearly 2% down from July, according to the Salt Lake Board of Realtors. With rates rising and demand set to fade even more heading into winter, Utah could see even more price declines in coming months.
To put those declines in perspective, however, Utah’s home prices surged by 72% over the past five years, according to the Federal Housing Finance Agency. In the two-year period from 2020 to 2022 alone, the median sales price of a home in Utah rose almost 50%, up from $336,300 in February 2020 to $500,000 the same month in 2022, according to estimates from the University of Utah’s Kem C. Gardner Policy Institute.
Utah’s housing experts have predicted Utah would be impacted somewhat by the national housing market correction — but they also expect Utah’s home prices to remain stubbornly high, largely thanks to the state’s years long housing shortage that they say is poised to worsen as home building contracts. In a recent report from the Kem C. Gardner Policy Institute, housing researchers predict Utah’s housing shortage will likely increase to over 37,000 units by 2024.
‘A remarkable role model’: Warren Buffett and Bill Gates call this fellow billionaire their hero — here are 3 big lessons to learn from Charles Feeney
Serah Louis – October 29, 2023
‘A remarkable role model’: Warren Buffett and Bill Gates call this fellow billionaire their hero — here are 3 big lessons to learn from Charles Feeney
He was known as the billionaire who gave it all away.
Charles “Chuck” Feeney made his much of his riches selling booze, cigarettes and perfume. The co-founder of the Duty Free Shoppers Group died on Oct. 9 at the age of 92, but fulfilled his pledge to donate the bulk of his $8 billion fortune long before his death.
“Chuck Feeney is a remarkable role model, and the ultimate example of giving while living,” Bill Gates told Forbes back in 2012.
Here’s what you can learn from how Feeney managed his money.
Diversification
While building his massive fortune, Feeney didn’t just focus on his global network of duty-free airport stores — he was a prolific investor as well.
By the early 1980s, he was profiting from hotels, property and retail, and he later invested in some tech start-ups. It wasn’t until 1996 that he sold his stake in Duty Free Shoppers for a tidy $1.63 billion that went to his foundation, Atlantic Philanthropies, a deal that multiplied in value by investment returns later, according to the Wall Street Journal.
Feeney followed the golden rule — don’t put all your eggs in one basket — and grew his wealth by diversifying his investments.
Similarly, while you’re buying stocks, make sure you’re not sticking to one company or sector. This will provide some shelter from any unexpected dips in the market. Do your research and build a balanced portfolio of companies or ETFs.
Frugality
Feeney went from purchasing luxurious multimillion-dollar homes — including in London and the French Riviera — to renting a two-bedroom San Francisco apartment with his wife.
Like many folk of his ilk, he once spent his time cruising on yachts and private jets — but decided in his later years to cut back and focus on his philanthropic efforts.
For Feeney, value was more important than showing off his wealth. He flew coach because he wasn’t getting anywhere any faster by opting for a first-class ticket. He wore a $15 watch and used plastic bags in place of a briefcase.
“I just reached the conclusion with myself that money, buying boats and all the trimmings didn’t appeal to me,” he was quoted saying in a 2007 biography about his life, “The Billionaire Who Wasn’t.”
Most importantly, Feeney was intentional with his spending, leaving enough funds behind for his investments and donations.
This is a crucial tenet for managing your money (even if you don’t have billions in your bank account). Consider creating a budget and monitoring your monthly expenses so that you’re leaving some of your income behind for your financial goals, too, such as your emergency savings or nest egg.
Charitable giving
Once dubbed “the James Bond of philanthropy” by Forbes, Feeney is perhaps best known for his charitable giving — despite his attempts to hide it for many years.
Feeney donated to a range of causes, including AIDS relief in South Africa, Operation Smile’s free surgeries for children with cleft lips and palates and earthquake relief in Haiti.
“People used to ask me how I got my jollies, and I guess I’m happy when what I’m doing is helping people and unhappy when what I’m doing isn’t helping people,” Feeney told Forbes.
There are potential financial benefits to charitable giving as well come tax time, as you may qualify for a tidy deduction on your next return.
The city landed that title through multiple metrics including its inflation rate and the cost of gas. The report also considered living costs from annual housing costs, median gross rent and high fees associated with homeownership.
The report said home prices exceed the national median sale price and added that many in San Diego’s downtown area must pay homeowners association fees to maintain living in housing complexes.
“Living in San Diego is not particularly affordable,” the report reads. “San Diegans are willing to pay these elevated prices, though, often referring to the cost-of-living differences as the ‘sunshine tax,’ or the price of enjoying a year-round temperate climate.”
Los Angeles was ranked the second most expensive city, followed by Honolulu and Miami. California actually made up seven of the top ten spots in the report and around half of the top 25. New York City, the most populated U.S. town, earned the 11th spot.
According to the report, the cities at the top of the list require the most amount of wealth in order to live comfortably.
What are the most expensive cities in the US?
These are the 25 most expensive American cities according to the U.S. News & World Report. For information on each city’s various qualities like value and quality of life, click here.
The ‘great wealth transfer’ isn’t $72 trillion but $129 trillion, BofA says—and the government gave most of it to baby boomers
Hillary Hoffower, ChloeBerger – October 28, 2023
Ippei Naoi/Getty Images
You’ve probably heard about the “great wealth transfer.” It’s the $72 trillion stack of assets that baby boomers are sitting on and going to pass onto millennials someday, thereby solving many of the economically beleaguered younger generation’s problems. But there was another, even more “massive” wealth transfer from the government to the baby boomers over the last 40 years, according to Bank of America Research.
The investment bank isn’t alone in coming to this conclusion. No less a figure than Ray Dalio, the billionaire and former leader of what was for many years the world’s biggest hedge fund, wrote on his LinkedIn page in August about a “coordinated government maneuver” that left household balance sheets rich and the state effectively broke. Dalio did not mention the boomers, or any generation, by name, but BofA has now done him one better.
Boomers have quite simply been the biggest beneficiary of a “massive wealth transfer,” wrote the BofA team led by Ohsung Kwon, echoing Dalio’s observation that trillions of wealth flowed from the public to the private sector thanks to government policy since the 1980s, when boomers were in their prime working years. BofA pointed to the ballooning government debt—from 31% of GDP to 120% during that period—and the 10-year Treasury yield shrinking from 12% to 4.6% today (it’s actually 4.9% as of press time).
So how many trillions? Over this period, BofA calculates, U.S. household net worth has skyrocketed from $17 trillion to $150 trillion. Boomers, alongside “traditionalists,” hold two-thirds ($146 trillion) of that total net worth. This means that government policy has resulted in a $129 trillion wealth transfer into the pockets of those boomers and older Americans, BofA said (it didn’t clarify the exact apportionment of wealth between these two groups).
At the top of the ladder
Just over a quarter of this wealth is held in financial assets such as real estate. No surprise there, considering that nearly all boomers locked in a low 3% mortgage rate, unlike those poor millennials—the only group that took on meaningful mortgage debt since 2021, now in the 8% range. Fortune has reported extensively on how millennials have not enjoyed a boomer level of success as they struggled to afford to buy a home for years before facing off with an overpriced, ultra-competitive pandemic housing market.
BofA’s findings are more evidence that boomers have had it pretty good, economically speaking. In addition to low interest rates and inflated housing prices boosting asset value, a 2020 Deutsche Bank report found that boomers shelled out less for education than millennials did and won’t have to pay for the environmental damage caused by the carbon emission-releasing companies they invested in.
While boomers have still had their fair share of economic challenges, like the Great Inflation of the 1970s, BofA found they ultimately benefited in the long run from an economy that’s set them up pretty nicely for wealth accumulation. In a 2021 memo to clients, billionaire (and boomer) Howard Marks wrote that the generation is so big that they’re still wielding enough political and financial power to advocate for a system that works for them, “Boomers have been and still are consuming more than their fair share of the pie. This will leave future generations saddled with substantial debt stemming from expenditures they didn’t benefit from proportionally,” he wrote.
Of course, four of the last five presidents are part of the baby boomer generation, and Congress is largely made up of boomers, if not traditionalists like the recently deceased Dianne Feinstein, with millennial figures such as Alexandria Ocasio-Cortez and Jon Ossoff the major exception. President Joe Biden, of course, is what BofA would call a traditionalist, But George W. Bush, Bill Clinton and even Barack Obama were all technically boomers.
As Jill Filipovic, author of “OK Boomer, Let’s Talk,” told Salon in an interview, boomers climbed the ladder and then “pulled it up behind them.” Standing at the lowest rung, three-fourths of millennials (and 82% of Gen Zers) feel they’re navigating economic struggles shaped by their parents, per a survey by OnePoll on behalf of National Debt Relief.
At the bottom of the ladder
Dealing with a hefty price tag for a college education and ensuing student debt, many young adults graduated into a post-recession thorny job market, bouncing around to find a well-paying role. Forced to tack on other gigs to make ends meet, many still aren’t seeing the fruits of their labor; a separate BofA report finds that the extra income isn’t giving them much more spending power.
The housing market is no rosier of a scene; while some millennials have made up some ground and started to househunt, many were pushed back to the last rung of the ladder when they were outbid by boomer cash offers. It’s led many young adults to depend on their more financially stable parents to afford a house. No wonder most millennials (and Gen Z) feel the economy is hurting their ability to be financially independent and like they’re falling behind.
“Millennials, and now Gen Z, have grown up amidst global and financial turmoil,” Suzanne Schmitt, Head of Financial Wellness at New York Life, told Fortune. “These two cohorts have witnessed economic changes in their formative years and may be more risk-averse when it comes to financial habits than their predecessors.”
There’s a silver lining, though, in the other great wealth transfer that is still pending. This could make millennials five times wealthier in 2030 than they were at the start of this decade, according to a Coldwell Banker estimate. Others are less optimistic. A survey from Alliant Credit Union finds that half of millennials think they’re inheriting at least $350,000 from their parents, while half of boomers report say they’ll give away less than $250,000. As Americans live longer and struggle to afford retirement during inflationary times, it’s likely the nest egg chips away a bit more. Even if there’s a large lump sum, many millennials don’t feel equipped to handle it.
Perhaps, then, that wealth transfer won’t be as “great” as the ones boomers already received, the one Bank of America called downright “massive.” It may not be repeated anytime soon.
U.S. consumers are ‘walking towards a cliff’ and the jobs market is beginning to ‘fray at the edges,’ warns market strategist
Eleanor Pringle – October 27, 2023
Justin Sullivan—Getty Images
Forget about the blistering pace of economic growth in the United States this past quarter: Americans are hurting, and one market strategist believes life might be about to get a whole lot worse.
Speaking to CNBC’s Squawk Box Europe, Longview Economics founder Chris Watling argues U.S. households are “walking towards a cliff, basically” and warned the excitement around strong retail sales is not justified. That poses a problem for U.S. growth as spending by consumers accounts for over two-thirds of the economy.
“They’re running out of cash. If you look at excess savings they’ve been run down quite hard,” said Watling, who serves as Longview’s CEO and chief market strategist. “If you look across the income quartiles, the bottom…quartiles are under pressure, [and] probably [have] spent all that excess savings.”
Indeed, backward-looking data suggests U.S. households appear to be in robust condition. According to predictions from the U.S. Census Bureau, retail and food services sales for September 2023 will hit $704.9 billion, up 0.7% from the preceding month and 3.8% higher than a year ago.
Wall Street also enjoyed a slew of positive third-quarter updates from major retailers. Just this week Amazon enjoyed a 13% bump in revenue, while Unilever reported underlying sales growth was up 5.2%.
Watling is unconvinced by such sales success, saying it has been buoyed by a household savings ratio that is now dwindling.
“So it’s not quite all good news,” Watling continued. “Quite the reverse, I think there are some real challenges coming for the U.S. consumer.”
Labor market ‘fraying at the edges’
While the nation’s economy expanded at a 4.9% annual rate from July through September, its fastest in nearly two years, Watling added that some economic indicators are hinting at troubles beneath the surface.
Among them are car repayment delinquency rates for risky borrowers, which have pushed to the highest figure in three decades. Also worrying is a slowdown in the Kansas City Fed’s Labor Market Conditions Indicators (LMCI), which saw momentum drop into negative numbers earlier this year.
“The labor market’s under a lot of pressure,” said Watling. “We had a good payrolls month, but if you look at a lot of the indicators of where the labor market’s likely to go, a lot of them are fraying at the edges—they’re quite soft.”
Continued pressure on both consumers and the labor market could be what “kick-starts” a recession in the U.S. economy, Watling added.
“Bond King” Bill Gross is similarly unconvinced by the seemingly positive picture some datasets are painting.
Earlier this week Gross, former chief investment officer of Pacific Investment Management Co., or Pimco, tweeted that he was predicting a recession in the fourth quarter and urged his followers to return to the bond market.
Watling added that a further headache for the U.S. economy will be its stock market in the coming months, which he believes is massively overpriced.
When asked about the impact of this shaky consumer on Wall Street, he replied: “From our point of view, though, I can see a bounce for a month or two. It’s been quite beaten up; markets have been coming down since July, but I think net-net, you want to be underweight equities if you are looking beyond the next few months.
“Particularly, the U.S. equity market is too expensive; it’s overvalued…The U.S. in aggregate is overvalued—tech’s overvalued.”
He finished: “I think the U.S. is in for tough times.”
Negligent builders and developers might be responsible for hidden peril underneath Florida: ‘Some shady folks still used them’
Rick Kazmer – October 23, 2023
Recently released government data about the Sunshine State could provide a new moniker for Florida — the Lead Pipe State.
That’s because the Environmental Protection Agency (EPA) has found that Florida has more lead pipes in its water systems — 1.16 million of them — than any other state, according to the Tampa Bay Times.
Florida highlights a national problem, as some 9.2 million lead pipes carry drinking water to households around the country, the Times reports. It’s a concern that has lingered for decades with severe health implications.
As a result, the government plans to pump billions of dollars into lead-pipe-heavy states to tackle the problem.
“Every community deserves access to safe, clean drinking water,” EPA administrator Michael Regan told the Tampa Bay Times.
Why are lead pipes dangerous?
Drinking water contaminated with lead can cause heart problems, lower IQ rates among children, and anemia, among a list of other serious health problems, according to the EPA.
Lead was spotlighted in 2014 during the Flint, Michigan, water crisis. Lead leached into the water supply, causing severe health problems for the community.
Why are lead pipes still a concern?
Craig Pittman has been following the lead pipe story for Florida Phoenix, a nonprofit news site. In a recent column, he said that the building and development industry is partially to blame for lingering lead concerns.
Despite increased regulations during the decades, he wrote, lead solder, flux, and pipes were still being used. The government ramped up regulations on lead pipes in 1986.
“Even after lead pipes were banned … some shady folks still used them, figuring they wouldn’t get caught because the evidence was literally buried out of sight. Meanwhile, a lot of lead pipes were already in use all around the country,” Pittman wrote.
He talked to civil engineer Alison Adams, who works for the utility company Tampa Bay Water. Adams said the lead is often found after the public utility hookup, because it’s in the materials the builders used.
“Lead pipes were used in the building industry, not in public water supply,” she said. “A utility’s responsibility ends at the meter to a home. Lead pipes were used between the meter and in homes or businesses, including schools, as a matter of construction.”
What’s being done about lead in the water?
The EPA highlighted the lead problem as part of a survey of 3,500 water systems around the country. The Times reported that about $625 billion is needed to upgrade the systems.
President Joe Biden has promised $15 billion to clear out all of the nation’s lead pipes, according to the Times.
It’s a lofty goal that will target states with the most lead. After Florida, Illinois, Ohio, Pennsylvania, and New York have the most lead pipes, the Times reports.
How can I test for lead at home?
The EPA has a guide that outlines how to test your service line for lead. It includes details on the different faucets and fixtures that commonly contain the heavy metal.
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‘The cost of all these things is prohibitive’: Florida may no longer be the prized retirement haven it once was — here are 3 major reasons why you shouldn’t bask in the Sunshine State
Serah Louis – October 17, 2023
‘The cost of all these things is prohibitive’: Florida may no longer be the prized retirement haven it once was — here are 3 major reasons why you shouldn’t bask in the Sunshine State
Folks entering retirement and searching for the ideal place to settle down and relax in their golden years often look toward Florida. The state doesn’t tax income and boasts sunny weather along with gorgeous white beaches. It also offers plenty of amenities like golf, fishing and even bird-watching.
But surprise, surprise, Florida isn’t the top place to retire, ranking eighth in a Bankrate study published in August.
Despite ranking highly for its agreeable climate, the state fell behind when it came to affordability, crime and health care — all crucial factors as you plan where to live as you age.
Here are three big costs that might make you second guess picking the Sunshine State to settle for retirement.
Housing
Some retirees, especially those living on limited incomes, are being priced out of Florida, which has seen a surge in housing demand within the last few years.
In the meanwhile, other states like Iowa — which secured the top spot in the Bankrate study — come with much cheaper home prices. The average home in Iowa is valued at around $212,000, while in Florida it’s around $393,000, according to Zillow.
Residents of the Sunshine State have been tackling rising property taxes as well, especially in coveted retirement communities, since they’re measured based on real estate value.
Dominic Calabro, president and CEO of tax research institute Florida TaxWatch, recently told WFSU News this system is becoming unsustainable.
“At some point, we’re going to make Florida a place where you’re like, ‘Oh, it’s wonderful, but, the cost of food, the cost of housing, the cost of all these things is prohibitive and difficult for people of average means, let alone low-income means,” he said.
Insurance
Florida might be renowned for its warm weather — but it’s also prone to its fair share of hurricanes, tropical storms, flooding and other disasters, which can cause property damage and consequently insurance premiums to skyrocket.
“The average home premium in Florida is about $6,000,” Mark Friedlander, spokesperson for the Insurance Information Institute, told WPLG Local 10 in June. “That is nearly four times the U.S. average of $1,700.”
Half a dozen home insurers went insolvent in the state in 2022, while Farmers Insurance made headlines this summer for pulling out as well, affecting 100,000 policyholders. Insurers have blamed their woes on extreme weather, as well as legal system abuse and fraudulent claims.
Health care
For many Americans, access to affordable, quality health care is extremely important as you age — but it can often depend on where you live.
The average total cost of premiums and potential spending on deductibles across single and family insurance policies hit a high of $9,284 in the Sunshine State, or over 16% of the median household income, in 2020.
Along with 10 other states, Florida officials have also rejected expanding Medicaid under the Affordable Care Act, which offers states extra matching funds if they open up the program to those with low incomes.
Millions Of Homes Sit Vacant Amid America’s Housing Crisis — Here Are The 3 Biggest Reasons
Jing Pan – October 17, 2023
America has a housing shortage. According to Realtor.com, the gap between single-family home construction and household formation grew to 6.5 million homes from 2012 to 2022.
And despite the Federal Reserve’s substantial interest rate hikes aimed at curbing inflation, housing affordability continues to elude many areas across the country, with rent prices surging in tandem.
Yet according to a new analysis by LendingTree, millions of homes stay vacant in America.
Using the latest U.S. Census Bureau American Community Survey data, LendingTree found that there are 5.5 million vacant housing units in the 50 largest metros in the U.S. This results in an average vacancy rate of 7.22%.
“In a simplified version of the housing market, vacancy rates should have a strong inverse relationship to home and rent prices,” wrote Jacob Channel, senior economist at LendingTree.
But reality can be different from theory, as home prices remain high in many parts of the country. Channel explained that there are “more nuanced factors” in play, such as location, mortgage rates, unit size and reasons homes are unoccupied.
The study revealed that New Orleans, Miami and Tampa, Florida, have the highest vacancy rates in the country, standing at 13.88%, 12.65% and 12.15%, respectively. In contrast, the lowest vacancy rates are found in Minneapolis; Austin, Texas; and Washington, D.C., with rates of 4.51%, 4.57%, and 4.98%, respectively.
Minneapolis, Austin and D.C. are the only three cities with vacancy rates below 5%.
Why Homes Are Vacant
Given the housing shortage in the U.S., you might wonder why these units remain unoccupied.
LendingTree’s analysis showed that the most prevalent reason (26.61%) for vacant housing units in the nation’s 50 largest metropolitan areas is that they are available for rent.
Meanwhile, 17.04% of housing units remain vacant because they are used only part-time.
Additionally, 7.98% of homes are unoccupied because of ongoing repair or renovation work.
LendingTree also pointed out that in cases where an area exhibits both high vacancy rates and high home prices, it may indicate the presence of distinctive features, such as being a sought-after vacation destination or a prime target for investors.
Housing Affordability In America
With rising interest rates, homebuyers find themselves contending with larger mortgage payments.
According to The State of the Nation’s Housing 2023 report from Harvard University’s Joint Center for Housing Studies, the annual income needed to afford payments on a median-priced home in the U.S. is now $117,100, up nearly $20,000 from last year.
And that means millions of households are now priced out of the market.
“The number of renter households able to afford these higher payments shrunk by 32%, from 7.5 million to 5.1 million, a loss of 2.4 million potential homebuyers,” the Harvard researchers said.
To navigate an expensive housing market, LendingTree suggests shopping around for the best possible rate, considering different loan options and getting preapproved for your mortgage before you start house hunting.
Unretiring: More retirees are going back to work because they want to — or need to
Kerry Hannon, Senior Columnist – October 14, 2023
Richard Eisenberg retired in 2022.
At 65, he stepped away from his job as managing editor for “Next Avenue,” the PBS website for people over 50, where he had worked for a decade.
“I had a rough idea of what my retirement would be,” Eisenberg told Yahoo Finance. “I knew I would be ‘unretiring’ since I still wanted to be doing some writing, some editing, and some teaching, but not all the time.”
So far, he has. Eisenberg, who lives in Westfield, N.J., explores “unretirement” in his expert columns, podcast and teaching posts, including an online NYU master class.
“I’m seeing a lot of curiosity about the idea,” he said. “I’m still a little surprised that it seems like such a foreign concept to people.”
A growing number of retirees like Eisenberg have stepped off the sidelines and headed back to work, especially after many were forced to retire in the pandemic, according to a new report from T. Rowe Price. Around 7% of retirees are looking for work in retirement, while 20% say they’re already working part time or full time.
“In 2021, during the pandemic, that percentage was 10%,” Judith Ward, a certified financial planner and thought leadership director at T. Rowe Price, told Yahoo Finance. “They might have been forced to retire, and now we’re seeing that they are reentering the workforce.”
“Unretiree” Richard Eisenberg teaching students at the NYU Summer Publishing Institute 2023 (Photo courtesy of Eisenberg) (Richard Eisenberg)
The two main reasons for coming back into the workforce are a tale of opposites. While 45% chose to work for social and emotional benefits like Eisenberg, a slightly larger percentage — 48% — felt they needed to work for financial reasons.
Older adults, those age 65 and older, represent the fastest growing group of homeless, while poverty among older Americans has escalated. Policymakers and researchers have also been fretting that the share of older Americans with debt has risen from 38% to 63% since 1990, according to a recent report by the Center for Retirement Research at Boston College.
“Many people retired during the pandemic for a variety of reasons and the financial reality of that is now hitting home,” Chris Farrell, author of “Unretirement” and “Purpose and a Paycheck,” told Yahoo Finance. “Working even a few hours a week can help shore up household finances.”
“They’re taking advantage of the tight labor market to unretire, often by picking up part-time work, flexible gigs, starting their own business, and even encore careers,” Farrell said.
Damascus, Md.-based resident Gary Socha, 69, who retired after being laid off during the pandemic from his publishing job, stepped back in two years ago and is now working part time, four hours a day, as an advertising and event representative.
“It was too early, and my wife is five years younger and still working,” Socha told Yahoo Finance. “And financially… it just seems to make sense to make some more money and make yourself a little bit more secure and more comfortable for when you do retire. I could see doing this for quite a while.”
For other retirees, the lack of retirement planning or saving is coming back to haunt them.
“It’s not uncommon for people to retire without having actually made a retirement plan, and then find some financial surprises along the way,” Mark Miller, a retirement expert and author of “Retirement Reboot,” told Yahoo Finance. “That can prompt some people to go back to work. And the faster pace of inflation we’ve been experiencing also is motivating some people to go back to work, just to help cover their living expenses.”
Source: T. Rowe Price (T. Rowe Price)
How much wealth you have to tap, of course, is the lynchpin. There’s a huge difference by household assets when it comes to retirees who say they “don’t need to work,” according tothe T. Rowe Price report, which surveyed 2,895 401(k) retirement plan participants and 1,136 retirees with a Rollover IRA or a left-in-plan balance.
The report found 37% of retirees with household assets under $50,000 said they don’t need to work versus 55% of those in the $50,000-to-$250,000 category and 72% with assets of $750,000 and above.
Women are particularly vulnerable. In the report, 49% of retired women who were working or looking for work said they need the money compared to 41% of men.
One reason is that many women have less savings to depend on in retirement and lower Social Security benefits because of time out of the workplace for caregiving.
“Typically, lower incomes, higher debt loads — especially student loans — and shorter job tenures are some of the factors contributing to the gender savings gap,” Sudipto Banerjee, T. Rowe Price’s vice president, retirement, and author of the report, told Yahoo Finance at the WISER Annual Women’s Retirement Symposium.
The biggest financial payoffs of additional years of paid work are pushing back retirement account withdrawals, continuing to save, and delaying claiming Social Security benefits.
“Additional income can give you more time to contribute to your savings and it can also help you pay down debt and increase your cash reserves ahead of full retirement,” Ward said. And for those unretirees who haven’t started taking their Social Security benefit, delaying to claim means more money down the road.
“You’ll get a higher benefit, and it’s inflation-adjusted, so that’s a good deal for many people,” Ward said.
Many retirees are looking to continue working in some form, a T. Rowe Price report finds. (Getty Creative) (10’000 Hours via Getty Images)
The feel good part of staying on the job
There’s also the emotional draw of working, which is the second most-cited reason retirees choose to return to work.
Many retirees see part-time work as a good transition strategy with 57% of retirees wanting to continue working in some form, the T. Rowe Price report found. Men, in particular, were more likely to cite social connections as motivation to work.
“A lot of us want to work part-time in retirement,” Eisenberg said. “We want to stay active, have social connections, bring in some income and to stay mentally engaged, but we also want to have time to do other things.”
Plus, there’s the freedom to do what you want to do this time around, Eisenberg said. That means choosing a working route that isn’t stuffed with meetings, administrative duties — all “the parts of our former job that we didn’t like so much.”
And then there are the psychological benefits that work can offer, Robert Laura, a retirement coach, told Yahoo Finance. Several studies have indicated the positive mental effects of working. In fact, among older adults, retirees are more likely to experience depression compared to those who are still working, according to one recent paper.
“Work provides routine, structure, connection, mental stimulus, purpose, and relevance,” Laura said. “These are all things that many people don’t realize they are losing when they leave work and that aren’t easily replaced with golf, grandkids, and crossword puzzles.”
Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.”
