In this episode of Commitment Matters, Mary speaks with Dr. Ted Jones, Chief Economist and Senior Vice President at Stewart Title Guaranty Company. If you’d like to learn more about the company, check out Stewart.com. You can reach Ted by email at firstname.lastname@example.org, read his blog or follow him on Twitter.
During their conversation, Ted or Mary mentioned:
- Ted says the biggest economic concern right now is inflation, with the consumer level at around 7.5% and wholesale level at 9.7%. On average, Americans are making only about 5% more than a year ago.
- Ted believes the American Rescue Plan, passed in 2021, is contributing to higher rates and could have very long-term effects.
- In the last decade (2010-2019), the U.S. added more than 22 million net new jobs and 10.5 million net new dwelling units, which averages 2.11 new jobs per dwelling unit (Ted says ideally, you want 1.25-1.5 new jobs per unit). The U.S. entered 2020 between only 4.2 and 7.2 million dwellings.
- Mary and Ted discuss the difficulties of keeping up with supply and demand, as seen in many industries right now: energy, lumber, home improvement, appliances and housing.
- The Zonda Index is a quarterly report that calculates the affordability of building a new home in any given city.
- After housing, energy is consumers’ highest cost. Between inflation and the Russia-Ukraine conflict, gas prices are at an all-time high, an even bigger influx than seen in 2008.
- Ted estimates that consumers have $2.7 trillion saved up during the pandemic.
- Freddie Mac announced 30-year conventional fixed rate mortgages have dropped 3.76%, about a full percentage from this same time last year (note: the rates are updated weekly).
- The federal debt is at $30 trillion. Ted expresses concerns for rising interest rates, which could set the government back another $1 trillion per year.
- Stagflation is a term used to describe high inflation combined with high unemployment. Ted relates the term in commercial real estate to owning vacant properties during a stagnant economy.
- In a survey, 46% of Americans said they would take a pay cut to continue working from home. Additionally, 35% said if they were forced to go back into the office, they would find a new job. For a full report on remote work stats, click here.
- Last week, two of the top ten metro cities (Austin,TX and Houston,TX) had at least 50% of workers in their office buildings. The other metro areas saw around 30%, which means there’s a lot of empty office space. Ted gives the example of how Amazon, Google and even hospitals are repurposing empty shopping malls to help with their growth.
- The Build Back Better Framework would increase corporate taxes and income taxes on high income individuals to provide funding for various proposed programs. Ted says it may encourage the government to continue to offshore manufacturing.
- Housing prices are at an all-time high, causing a rise in renters and a decline in homeowners. In a survey conducted by Redfin, 52% of millennials and Gen Z first-time homebuyers said they paid for their home with savings of their paycheck. 24% got it from their stimulus payments.
- According to a survey from Mizuho Securities, nearly 10% of stimulus checks went toward buying cryptocurrency or stocks.
- In 70% of U.S. cities, it is cheaper to rent than to own a home, as opposed to three years ago, when it was cheaper to buy.
- Last year, more total commercial real estate was sold in the U.S. than ever before, worth nearly $790 billion. More than $300 billion of that was spent on apartments.
- In a survey of more than 200,000 apartment dwellers, 25% said they would move this year. Of those, 49% wanted a more affordable apartment; 29% wanted more amenities; and 28% wanted more space.
- U-Haul reported Texas as its top inbound destination for movers last year. United Van Lines shows their top ten inbound and outbound states from 2021.
- Ted mentions a new hybrid mortgage from Fannie Mae and Freddie Mac. It has fixed interest rates for five, seven or ten years and can only go up or down 1% per year maximum.
- Ted details an investment opportunity that currently yields 7%. The Series I Savings Bond from Treasury Direct is repriced based on inflation every six months.
- Working in the title industry, Ted warns of cryptocurrency like NFTs, as they are high-risk investments and title companies are in the business of eliminating risk.
- On average, RON transactions are saving lenders $444 per transaction, and saving title companies $100.
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