Re-Stimulate the Economy. Solve issues FOR THE PEOPLE

rubiks cube

FOR THE PEOPLE

Clearly the economy is struggling. There is a Rubik’s Cube of problems that exist in any country. We need to solve the problems now before the economy starts to weaken.

This is just a personal opinion and if you do not see things as I do, it is perfectly fine to disagree.

Do you believe unemployment benefits are more important than the USPS being funded? Pumping up the Stock market with all the government funding is not reality. Yes, I agree that most large companies rely on people to invest in their products and pump up their stocks. However, people are suffering and it is real. Probably 50% of the people do not even have the funds to invest so it doesn’t seem so important to the people in the trenches.

USPS vs. Unemployment

Yes, I agree that we do need our mail. Some live precariously and rely heavily on a letter or some semblance of mail to see them through their day. We have all become subject to being homebound. Our packages being delivered is very important. Our prescriptions and medical needs that do go through the government resource of the USPS still need to get through. But, the USPS has been losing money for years as FEDEX, DHL, and UPS have taken over the packaging industry. So this is not a new problem as far as I am concerned.

The House of Representatives came off of their vacation time early to discuss the USPS.  They voted on a bill for the USPS worth 25 billion. I get it. The postal service needs money. So raise the price of stamps to $0.55. That might provide some relief for their funding needs. In my opinion, it is not logical to disrespect THE PEOPLE by not fixing the unemployment, loss of health insurance, and jobs that should be a more pressing issue.

Price Gouging

Who is really making out right now? Large companies are raising prices every day, a little increment at a time, so it is hardly noticeable. Technology prices are soaring. Stocks in Apple products and anything to do with computers or technology have been boosted tenfold. That’s to be expected as this pandemic has confined people to their homes. But should we take advantage of this pandemic and what affects its had on the people? It is imperative that prices decrease as people are forced to sit home without jobs. Grocery stores and their product sponsors are increasing prices. As some large companies change their production lines to supplement PPE equipment; essential items are not being restocked.

Have you seen isopropyl alcohol or Lysol products on the shelves? Homebound diabetics, hospice patients, and other medical home needs rely on isopropyl alcohol. Go on Amazon or eBay and you can find those products selling for 100% + profit. It is absurd to allow this price gouging. If gas stations get caught price gouging, they get reported. One employee at a local store told me that the managers refuse to put a limit on any products. Look what happened with toilet paper and paper towels when this pandemic began.

Food vs Medicine

The elderly and people that actually need a specific product are forced to go without or give up something else to pay the absorbent cost of the product. The Food Banks, churches, and schools are overloaded with requests to feed families as more are in need. Locally, our schools have been providing some type of lunch bag for its students. To know that at least one meal is being provided to children is helpful. Dollar Generals, Family Dollar, ALDI, SAV-A-LOT, and Walmarts are the places to go to for those looking to find savings. Garage sales are not so prominent on the weekends anymore with this health crisis.

The government needs to act

A slow down in job loss is partly due to the fact that there are not many jobs left in the public sector to cut, except those in middle and higher management. As the public sectors exceed job loss–it will trickle to the private sector if nothing is done. The government should not let the economy linger in a bad state for a long period of time. It will eventually affect the future economy. The government should take on the debt now, while interest rates are so low. We should be borrowing now and the best way is through the federal government’s lower interest rates.

If Congress acts now and provides more assistance, we will not see a crisis in the economic recovery from this coronavirus. When Congress acts slow or fails to put a plan into place, distressed properties may start to trickle with an upward tick. Suppose Congress does nothing? It is unlikely but if Congress decides to do nothing until after the presidential election, big issues may arise. Congress should be aggressive with the zero $$ interest rate. Are we sacrificing future growth?

As many employees work from home, many more are unemployed. There are over 90,000 local governments from the 50 states plus territories serving their residents as best they can. The rural communities have been struggling just as much as the larger cities. However, the tourist cities are seeing a loss of residents as jobs have dried up. As the people pick up and move to the rural communities, it adds to the city’s and towns’ struggling budgets. Creating new infrastructure may seem a step in the right direction, but it can create a plethora of additional costs to those cities and towns.

Jobs are needed

The cost to build homes and put in new infrastructure to house these new residents outweighs the incoming tax benefits for these rural areas. With less incoming funds to support these areas impacted the most, simple things like trash pick up and water quality may fall to the wayside if they can not afford to pay the employees. Will maintenance of communal areas, parks, and pools be forced to close down as well? Additional people may require additional resources. Those need to be in place before we continue to add homes and apartments into the areas. Based on the social distancing requirements, schools continue to be overcrowded as more space per person is required.

State and local governments are having to downsize as well to adjust during this pandemic. Over 1 million jobs are being lost just in this area alone. State Governments are stating that they are out of money.  President Trump signed an executive order stating the federal govt should provide $300/week unemployment benefits but only if each state were to contribute another $100 for a total of $400/ week. Currently, that executive order has no value.

Job loss and no unemployment equals decreased revenue

Job gains, state and local, will be due to putting people back to work rather than creating NEW jobs. Seasonal adjustments are also happening which can skew the numbers. In this time of uncertainty, the government should not be timid in their actions. The Cares Act needs to be enhanced and reconfigured to allow the money to be used in the most beneficial ways for the people. Without jobs for the people, consumer spending will decrease which will result in decreased revenues. Decreased revenues will dissipate economic growth and put more people into poverty.

Sellers market graph

Graph showing market leverage

 

Housing Inventory

Demographics: Roughly more than 50% of current homeowners are baby boomers. They are the ones that will be ready to sell. The downside of this is that the next foreseeable purchasers, generation Xers,  are not ready to purchase. Generation Xers do not show much interest in owning a home right now and are perfectly content in an apartment or living with parents. Millennials are finding their way through college programs and level entry jobs and too preoccupied to be ready to buy a home as well.

If the government was offering more incentives, that might entice the generation Xers and Millenials. However, it would have to be a substantial incentive to convince them to purchase a home at this point. Lower interest rates are making an impact on the housing market but is it enough?

Is there a downside?

Will we see an increase in foreclosures when the forbearance period comes due? Will there be more significant housing shortages/rentals in your local areas? Typically just under 4 million filed evictions happen each year and only about 1 million go through the full process. Do you suppose there be a jump in that number? The eviction ban does little to protect tenants because there are loopholes that allow a lawyer /landlord to evict. This pandemic may produce 10-15 million eviction fillings but if Congress acts now, avoiding this massive amount of evictions can happen.

FHA just extended the eviction/foreclosure moratorium for government-backed loans through December 31, 2020. Again, is this just delaying the inevitable? Or is this actually helping the people?  Foreclosures should not be so prominent due to the CARES ACT program put in place. Forbearance programs have allowed homeownership to remain intact and Short Sales are a better alternative if needed.

Inflation and interest rates may increase if the eviction crisis leads to panic from homeowners. Credit scores can be damaged if a judgment is filed against a homeowner or tenant. If a tenant does get evicted, it may be difficult to find another place to live in the current area they are being evicted from. Landlords may raise rent prices in lower-income areas, and you are required to report if you have had an eviction. Landlords typically check credit scores to verify what you state in your applications.  Also, landlords may require more money down, such as first and last month rent and a security deposit. Many months of backlog will take place in the local court systems. This will assuredly will buy the tenants some more time to try and work out a repayment plan with their landlords.

In Conclusion:

We, the people, need to make every attempt to stay focused on our future. Not just in the here and now. The government should implement further CARES Act incentives and step up on unemployment. Further assistance is needed with evictions and foreclosures, jobs, and recovering health care for those who have lost what they had. What can we do to ensure the government takes those steps in the right direction and act on the low-interest rates? Would it benefit the people if the government can borrow now? Surely, the debt would be swallowed up in assets they obtain through other countries and government mergers. Collaborations and sustainable ventures will most certainly create new opportunities to gain surplus over the coming years.

 

About the Author

I have been a Realtor in Central Florida since 2006. I live and work in Polk County. I am a straightforward person who refuses to cut corners and places emphasis on honesty and integrity in the home buying and selling process. I firmly believe that it is my duty to serve others and to use my negotiating skills to obtain the best price for the sale of any home. I will take disciplined initiative in all aspects of any transaction, invests timeless effort to build a strong and lasting relationship with all clients, and streamline all aspects of the real estate processes with exceptional skill and diligence. I take pride in professionalism and continue to educate myself and adapt to the ever changing conditions of the real estate market.

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