Love, Money + Real Estate #010
There's no accounting for taste or cents + 2022 Workforce Trends Invite
This week, CNBC’s Jim Cramer announced that in this era of stock market volatility, he’s only going to recommend companies with actual earnings.
Imagine that: Companies that earn money.
It reminded me of a conversation I had decades ago, in the Dotcom bubble era. Someone who worked for a company (I’d classify it today as a fintech) told me (with a straight face) profitability doesn’t matter.
Actually, I applaud Jim and anyone who believes that earnings are important. Especially these days, when investors are nervous about things like the effects of pandemics, war, and rising inflation.
When investors get nervous, market volatility increases. Which makes investors even more nervous. Keep this up and you’ll have a black hole of uncertainty, and everything will come crashing down. Even if you intellectually recognize that you’re better off today than you were two years ago, you might get freaked out by the idea your portfolio is worth 15%, 10% or just 5% less. Even if you don’t plan to tap that cash for decades to come.
At the same time, you might wonder how you’ll make ends meet, as costs seem to rise faster than any pay raise you receive. Add those money worries to health worries (exacerbated by the pandemic which, at this point, has statistically touched every American either directly or indirectly), and you’ve got a world where nerves are frayed and tempers are short.
Financial stress. It sucks.
What helps? Taking a deep breath - and the longer view.
The longer view
If you just looked at the YTD view of the Dow, you might think the market is tanking. And yet, while the Dow is down nearly 8% from January 1, it’s still up over 6% from a year ago. And, if you look at the 5-year view, you see that while there’s volatility, there’s been tremendous growth, too.
Try it for yourself at CNBC.com. Click on any of the indexes to get the chart. Here’s the link for the Dow, NASDAQ, and S&P 500.
The good news is that the market has always come back from these sorts of moments, and gone on to bigger and better heights. Remember: perspective can help diminish anxiety. (Ask me how I know…)
INVITE: Workforce Trends 2022 and beyond
Even as I write this, the world of work is changing. Please join me today at 9a PT/11a CT/Noon ET for a conversation with global futurist and trend-spotter, Joyce Gioia, CEO of The Herman Group.
Joyce has spent her career advising global companies on workforce issues. We’ll walk through her big workforce trends and talk about what they mean for you and your employees. (Or, if you’re an employee, how these trends might impact your career trajectory.)
This is a free webinar. We hope you’ll join us. (And, if you want to listen later, sign up and you’ll get a link to the replay.)
Why Blacks Can’t Take Homeownership for Granted
Jeffery Hayward is the EVP and Chief Administrative Officer for Fannie Mae. This month, he wrote a Perspectives Blog for the corporate website on why racial disparities continue to plague homeownership rates. He starts with a few facts:
The Black homeownership rate is 30 points less than the white homeownership rate, about the same as it was as in 1968 when the Fair Housing Act was passed
Black families who rent are most housing cost-burdened, face a greater risk of eviction than any other demographic group
According to the Joint Center for Housing Studies at Harvard, Black households in America spend more than half their monthly income on housing. (Their 2022 report noted that federal support helped keep renters in their homes during the pandemic.)
But he quickly moves onto why Black families today are so far behind when it comes to homeownership. Biggest reason: Redlining. In the 1930s, the Federal Homeowners’ Loan Corporation literally drew a redline around the neighborhood where he grew up, “deeming it hazardous for mortgage lenders.” They did this with countless neighborhoods nationwide.
In other words, even if his family wanted to buy a home in that neighborhood, and take advantage of government loans, they couldn’t. Imagine being able to afford the American dream but not being able to make that a reality simply because you’re Black.
Hayward walks us through a few small moments of the U.S. history of Black homeownership, as experienced by his own family. It’s a short but eminently worthy read.
Real Estate + Money News You Can Use
We have some friends who are trying to build an addition to their home. It’ll take six months to get the windows. And probably everything else they need. Why? Well, as you may have heard, the home building industry is on fire and there are shortages of all sorts complicating and slowing things down.
So, you might see a brand new home, with large pieces of wood covering the garage. For the next 10 months.
Building a house is complex - with pieces and parts sourced globally. And, getting those pieces and parts here is taking an awfully long time. The New York Times ran an excellent story last week explaining why you might see a brand new, 4 bedroom, 3 bath house with no garage door.
Just be glad you’re not waiting for a Porsche, Lamborghini, Bentley or Audi.
In other news: Did you know that LGBTQ couples can file for survivor benefits? Even if they weren’t technically married?
Watch out Austin, Tx. Apparently, people are leaving the Weird city because housing prices are outta sight. One place they’re moving to: Spokane, Washington, where home prices have climbed about 60% over the past two years.
But, everywhere is more expensive. According to S&P CoreLogic Case-Shiller’s latest report, annual home prices climbed 18.8% in November. That, combined with rising mortgage rates is putting the pressure on home affordability. That’s disproportionately affecting Millennials and Gen Z.
Where should Millennials and Gen Z look? According to Point2Homes, Gen Z can’t afford the median home in any of the 100 largest counties. Millennials are priced out of 66 large counties. Gen X can afford the median home in 70/100 top counties and Boomers are priced out of 89/100.
Despite rising prices and mortgage interest rates, the U.S. homeownership rate surged 1.3% to 65.5% in 2020, the highest annual rise ever, as an additional 2.6 million households became homeowners.
But it ain’t cheap. Redfin reports that 42.5% of homes sold above list price in January, 2022. And, new listings fell 12.4%. More people chasing fewer homes means competition is stiff. That’s why 70% of purchase offers faced a bidding war, the highest percentage in history.
Hot Reads from ThinkGlink.com, BestMoneyMoves.com and LawProblems.com
It’s a sad story - mom owned a farm. Sold it to her son. Took back the mortgage. Then, had to foreclose on her son. Now, they’re squabbling about money, mortgages and whether their relationship can survive what’s coming. Should she give the farm away?
1031 Exchange: Do all partners have to do it?
Electric Car Charging Stations Update (and the original story)
DEI & Financial Wellness: Bridging the retirement race gap
This Week in Wealth
As I’ve mentioned before, I co-host a half hour radio show called “This Week in Wealth” on WGN radio with Tom Fortino, a registered investment advisor and principal in Alpha Wealth Group. Each week, we tackle a different topic related to your money and retirement. Last week, for example, we talked about Planning for an Early Retirement.
We spend a lot of time on how to generate guaranteed income in retirement. In other words, after you retire, your regular “income” will be generated by your Social Security payment, a pension (if you’re lucky enough to have one), and whatever you’ve done to structure regular payments: stock dividends, annuities, etc. If you don’t have enough income, you’ll have to dip into your principle or find another job.
Figuring this out requires quite a bit of planning. If you’d like to listen to me peppering Tom with questions, and his reassuring answers, tune in Sunday mornings at 6:30a CT (stream it live at WGNradio.com). Or, if you like to sleep in on Sundays (and, who doesn’t?) try the podcast.
On a personal note
We spent a few days recently in Sonoma County, enjoying the views, food and wine. Nature is inherently restorative. March is just around the corner, and with it the beginning of Spring. So, get outside and take a deep breath. It’s been a tough couple of years all around.
P.S. Your feedback is always welcome. Feel free to add a comment, like this post, or recommend it to your friends.
P.P.S. And, don’t forget to sign up for today’s webinar: Workforce Workplace Forecast 2022.