Love, Money + Real Estate #32
Financial Literacy Month, Real Estate News, and Spring Sprung
Greetings, friends.
I’m finally sitting out on the porch, drinking my morning coffee. It’s a beautiful Spring day in Chicago, with temperatures in the 70s (or higher) all weekend. Spring has sprung, and there’s no turning back.
Now, onto the news of the week.
Interest Rates Skyrocket - And Homebuyers Pay
If you want to buy a home, you’ve got to be shaking your head at the latest inflation numbers. They seem stubbornly fixated above where the Federal Reserve Bank wants them. That, in turn, has kept the Fed from lowering interest rates.
In fact, it’s likely pushed one or two of these interest rate reductions off the table completely this year. Which sent bond traders into a tizzy. As a result, interest rates cracked 7% again and are now around 7.4% for a 30-year fixed-rate mortgage. And, that’s if you have a credit score north of 760. For those with the average credit score of 705, you’ll pay something closer to 8% for your mortgage.
This would be doable, except that home price valuations keep climbing. Some data points from the past week:
Luxury real estate prices hit an all-time high, increasing more than 2%. Redfin says this was their best year-over-year gains in three years. The median price of luxury homes hit an all-time record of $1,225,000 during the period.
According to a new LendingTree report, just 1.48 million new homes were built from 2020 to 2022.
Recently built housing units make up the largest share of homes in three South metros — Austin, Nashville, and San Antonio. In these metros, 5.97%, 5.04% and 4.74% of housing units, respectively, were built from 2020 through 2022.
Recently built housing units make up the largest share of homes in three South metros — Austin, Nashville, and San Antonio. In these metros, 5.97%, 5.04% and 4.74% of housing units, respectively, were built from 2020 through 2022.
"Ultimately, home prices in the United States are unlikely to become truly affordable until more new homes are built. The more housing supply there is, the less upward pressure there’s likely to be on prices and the more affordable buying a home will be. Unfortunately, as LendingTree’s study shows, most areas aren’t building particularly large amounts of new housing and we have a long way to go before we’ve introduced enough supply to bring prices down.” - Jacob Channel, LendingTree senior economist and report author.
High prices and mortgage rates drove the median monthly housing payment to a record $2,843, up 13% year over year, Redfin noted.
This week, the U.S. Department of Housing and Urban Development (HUD) published a Federal Flood Risk Management Standard (FFRMS) final rule in the Federal Register to help communities prepare for and reduce flood damage.
“Also, this rule revises HUD's Minimum Property Standards for one-to-four-unit housing under HUD's mortgage insurance and low-rent public housing programs to require that the lowest floor in newly constructed structures located within the 1-percent-annual-chance (100-year) floodplain be built at least 2 feet above the base flood elevation (BFE) as determined by best available information.”
Financial Literacy Month - Emergency Savings Accounts
As we end Financial Literacy Month, I think we can all agree, saving money is getting tougher. The good news: employers are now putting a focus on emergency savings accounts - with a bit of a boost from Uncle Sam.
Starting this year, the Federal government is allowing companies to enroll employees in payroll deduct emergency savings programs that are linked to their retirement accounts. The rules are “clunky,” as the New York Times puts it.
The good news is there are other offerings companies can take advantage of to help employees save more in basic emergency accounts. If your employer doesn’t already offer an emergency savings program, go to HR and ask them to look into it. Your future self will thank you.
Hot Reads from ThinkGlink.com and Best Money Moves
A few things we’ve been writing about this week:
4 Ways to Support Employee Mental Health and Wellbeing
Boosting Employee Engagement: How Financial Wellness Leads to Productivity
Vacant Homes and Empty Storefronts: Why so many?
Inherit Property by Will or Receive by Deed?
Neighbor Problems: Dirty Fences
Have a question for me? You can email at Questions@thinkglink.com or just leave a comment.
Feel Good Finish
A couple of weeks ago, I flew to Dallas for the American Heart Association’s Scholars Program final meeting of the year. Under its Office of Health Equity, the organization provides financial scholarships and wraparound services to enrolled students who are making a difference in their communities today. (Applications are open for the 2024-2025 class right now!)
It was an honor to meet these impressive young adults, all of whom are looking at entering some part of the medical profession, either as researchers, doctors, nurses, or pharmacists.
I spoke about Best Money Moves and what we do to support young people with financial education, tools, resources and solutions for life’s difficult financial choices. It was so cool to see some of them show off their investments on their phones, although the “crypto counters” were making some of them anxious!
Years ago, I settled on a career mission: To help people make smarter decisions with their money. I live that mission every day with the work we do at Best Money Moves, my syndicated newspaper column, Real Estate Matters, and my new column for Slate Magazine, PayDirt. (More to come on that next week.)
But when I get a chance to meet people in person, to talk through their financial issues and help point them in a different direction, it’s really a feel-good moment.
I hope you get a few of those moments in your week.
Type to you again soon.