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2021 Housing Market Concludes With Price Growths, What To Expect In 2022

The winter housing market in the US started heating up again in December, potentially leading to a hot market in the first quarter of 2022. More buyers have become motivated to hop on real estate transactions due to looming mortgage rate increases as well. 

Listing prices in December returned to double-digits similar to what the market looked like during the spring/summer of 2021 when real estate was seeing some of its most competitive transactions since the start of the pandemic. 

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According to data from Realtor.com’s chief economist Danielle Hale, “December data offered a fitting finish to the frenzy of the past year. Annual listing price growth hit double-digits again nationwide and in many of the hottest markets, after four months of single-digit pace this fall.”

“Despite buyer challenges like rising prices, limited inventory and fast-paced sales, real estate activity maintained a brisk pace throughout 2021 as factors like low mortgage rates enabled home shoppers to persist. With rate hikes now on the horizon, buyers may be trying to get ahead of higher monthly housing costs, in turn driving up competition and prices,” Hale explained.

“Our 2022 forecast anticipates affordability challenges this year, but also that trends like rising incomes and workplace flexibility could offer some Americans a better shot at finding a home.”

“For those who weren’t successful in 2021, we expect better luck in the coming months as more sellers plan to enter the market – and if December’s listings are an indication, with high asking prices in mind,” she explained. 

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 In 2021 the demand for homes was much higher than the supply, which drove prices even higher and will likely continue to drive the prices up in 2022. Realtor.com is also predicting that these price increases will cause a lot of affordability issues in the new year. The average price for a home in the US is now 25% higher than it was in 2019.

Within the past two years the average price for a typical 2,000 square foot single-family home increased by 18.6% consecutively. More than 25% of the US’s largest markets saw double-digit home price gains in 2021. 

While the winter is typically a cooling off period for the market, the past two months have seen historically low listing times, as buyer activity continues to outmatch the limited inventory available throughout the nation. 

When compared to the national pace of the market, time on the market was lower in the US’s 50 largest metropolitans with an average of 48 days on the market, seven days less than last years average and 25 days less than 2019’s average. 

Inventory is expected to increase to ideally meet the demand of buyers in America. December data did show more new sellers entered the market when compared to last year’s numbers, a majority of these listings, however, are in cities. 

Inflation Rises To 7%, Marking The Highest Rate Since 1982

From bacon to your ride, everything just got more expensive. According to the U.S. Bureau of Labor Statistics (BLS), inflation rose to 7% last year before season adjustments, and has reached the fastest pace since 1982.

Housing, as well as used cars and trucks, were the biggest contributors to the price increases. Housing rose 0.4% in December and 4.1% last year, while used cars and trucks spiked to 3.5% last month and 37.3% overall.

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BLS noted food also contributed, though it’s gone up less than in recent months, rising only 0.5% in December. The food price index saw a total price increase of 6.3%, while grocery prices hit 6.5% (versus 6.0% for food away from home).

Meanwhile, energy costs saw a positive change as they fell by 0.4%, ending months of continually rises -including huge spikes of 4.8% and 3.5% in October and November, respectively. At the end of the year, the energy cost index rose 29.3%. Minus the costs of food and energy, inflation rose to 5.5% (up 0.6% from November), which CNN Business reports is the highest annual jump since February of 1991.

Some bankers and experts expect inflation to fall anywhere from 2% to 3% in 2022, while the Federal Reserve could start to raise short-term interest rates in the summer if inflation rates continue to see spikes in the coming months.

Continually rising prices across major necessities have made life difficult for lower-income families. BLS showed real average hourly earnings went up just 0.1% from November to December, and decreased annually by 2.4% from 2020 to 2021.

The public has become more worried with prices than the COVID-19 pandemic. According to an AP-NORC poll, 37% of Americans said that the virus was one of their top-five priorities heading in 2022, down 53% from the previous year.

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68% of respondents named the economy as one of their top priorities (no annual change), with 14% mentioning inflation in some way. That’s up from less than 1% last year. 24% also mentioned cost of living, up 12% from 2021.

That worry has translated into anger against President Joe Biden and his administration. FiveThirtyEight calculations show a 51.5% disapproval of Biden — up 50.5% from Dec. 19 and 47.6% in August — while 43.1% approve. Inflation will play an inevitably crucial part in this year’s upcoming midterms as the Democrats attempt to continue their hold on Congress.

In response to the report, the White House shifted the blame towards corporations, the ongoing supply chain problems, and the pandemic’s economic slump. “Today’s report — which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling — demonstrates that we are making progress in slowing the rate of price increases,” Biden said in a statement.

“At the same time, this report underscores that we still have more work to do, with price increases still too high and squeezing family budgets.”

Biden also stated that other nations are burdened with hiking prices, as well. The U.S. certainly isn’t the only country to be experiencing inflation troubles – among 46 countries analyzed by Pew Research, 39 of them had higher 2021 third-quarter than the third quarter of 2019. However, the U.S. was one of the top three countries in inflation increase during that period (close to +4%).

Record-Breaking 4.5 Million US Workers Quit Their Jobs In November 

According to the US Department of Labor, a record-breaking number of employees quit their jobs in November while the total amount of employment openings continued to drop, the department reported this Tuesday. 

Around 4.53 million Americans resigned from their jobs throughout the month of November, according to the DOL’s Job Openings and Labor Turnover Survey. This marks an 8.9% increase in resignations when compared to October. The data also shows November beating September’s record of resignations, which peaked at 4.36 million. 

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The recent months of Americans resigning has been labelled as the Great Resignation. Workers have been leaving their positions for a multitude of reasons, including not enough pay/benefits, lack of health and safety precautions, and increased mobility in the labor market. Job openings in America currently outnumber the amount of citizens looking for work. 

In October there were around 11.09 million job openings throughout the nation, and around 10.56 million in November. This time last year the job opening rate was around 4.5%, and has since increased to 6.6%. 

“The Great Resignation shows no sign of abating, with quits hitting a new record. The question is why, and the answers are for starkly different reasons,” said Robert Frick, corporate economist at Navy Federal Credit Union. 

“COVID-19 burnout and fear are continuing, but also, many Americans have the confidence to quit given the high level of job openings and rising pay.”

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A separate economic report from the ISM Manufacturing Index showed that manufacturing rates throughout December were slower than initially expected. The index registered a 58.7% rate, 1.3% lower than the 60% expectation. 

The index also showed major decreases in supplier delivery, which fell by 7.3% last month. While inflation in general is running at its highest level in nearly 40 years, the index also showed a shocking decrease in prices; 14.2%.

The employment index within manufacturing, however, has shown a .9% gain in employment, which is a sign that hiring within the sector is remaining relatively strong. 

As Covid cases continue to surge, the healthcare and social assistance industries are experiencing some of the highest levels of resignation, with a 3% rise in November, the highest percentage on record for that sector. 

The Labor Department is expected to release their closely watched nonfarm payroll count for December within the week. Experts in the field are expecting, and hoping, to see a growth of around 422,000 jobs with an unemployment rate of 4.1%.

Americans Are Resigning From Their Jobs At Record Rates

It’s been recorded that around 4.4 million American workers have handed in their resignation during the month of September alone. Certain states are experiencing major spikes in job resignations, so much so that it’s being referred to as “The Great Resignation.” 

The increase in resignation is due to a multitude of pandemic and economic factors. Many parents are dealing with the dual demands of childcare and working full time, so many of them are opting to resign and apply for unemployment so they have enough time in the day to take care of themselves and their families. 

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Some employees are able to find better paying jobs as well, as many companies are reacting to this spike in unemployment by offering raised wages and attractive benefit packages. 

Beyond the pandemic, some states are experiencing a shortage in labor due to aging employees, low workforce participation rates, and other long-term issues that have existed long before the Covid-19 pandemic. 

“A lot of states with elevated quits are states with higher-than-average COVID cases, but a lot of it is due to labor market tightness. Idaho has an extremely aging population — a lot of the tightness in Idaho is that it’s an older workforce. They also have one of the lowest unemployment rates in the country, so that means it’s a very good environment if you are a worker” looking for a new job,”  said Liz Wilke, chief economist at Gusto, which provides payroll and other services to small businesses. 

New Hampshire and Indiana are seeing an increase in resignation for similar reasons. Employees are leveraging their benefits and salaries to find more lucrative jobs. Typical hourly earnings increased by 4.9% in October due to these leveraging tactics as well. 

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The top 10 states with the highest resignation rates for the month of September are Hawaii (7.1%), Montana (4.8%), Nevada (4.5%), Alaska (4.3%), Colorado (4.3%), Indiana (4.3%), Idaho (4.1%), Oregon (3.9%), Louisiana (3.8%), and New Hampshire (3.8%).

According to Oxford Economics, for every job opening created in September there were only .74 unemployed people available to take the position, marking the lowest ratio on record. Economists are still confident, however, that America’s workforce will be able to rebuild itself in 2022. 

“One reason for optimism about the labor force re-entry of prime-age workers is that nearly all workers who left the labor force during the pandemic intend to re-enter in the next 12 months, suggesting that most prime-age exiters still view their exits as temporary,” Goldman Sachs analysts noted.

“Workers have ongoing concerns about workplace safety given the ongoing pandemic. It may take some time for some people to feel comfortable returning to work,” they also noted.

Cyber Monday Sales Drop For The First Time Ever In 2021

This Cyber Monday, consumers spent upwards of $10.7 billion collectively on deals from their favorite online retailers. However, according to data from Adobe Analytics, this total marks a 1.4% decrease when compared to the lowest amount spent during Cyber Monday on record. 

Adobe Analytics initially began tracking e-commerce in 2012, and analyzes more than 1 trillion visits to retailer websites. This year’s tally for Cyber Monday marks the first time that the company has recorded a slowdown in spending on a major shopping day during the holiday season. 

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Last Cyber Monday wasn’t much different either, with consumers spending about $10.8 billion online. Last year was more predictable, however, as we were still in the first year of the Covid-19 pandemic, and most people weren’t leaving their house or in a position to spend a lot of money for the holidays. 

Adobe is still expecting that throughout the rest of this year’s holiday season, online retailer’s will see a relative increase in e-commerce activity. More shoppers have been opting to spread out their orders when it comes to holiday shopping to make it easier to pay off certain gifts. 

Between November 1st and Cyber Monday consumers in the US alone have spent about $109.8 billion online, which is an 11.9% increase from last year’s numbers, and the previous year’s. The company is anticipating digital sales to reach $207 billion by the end of the year, which would represent a record hain of 10%. 

Adobe reported that the Cyber Monday sales stats aren’t exactly surprising either. As previously mentioned, more shoppers have been spreading out the days in which they spend their money, as opposed to waiting for “Cyber Week” (Thanksgiving, Black Friday, Small Business Saturday and Cyber Monday) to get all their shopping done. 

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Many larger online retailers have seen these patterns, and have even gone as far as to offer Black Friday deals all autumn and winter. Adobe reported that retailers made about $8.9 billion in online sales this Black Friday, and about $5.1 billion in online sales on Thanksgiving Day. 

According to data from Sensormatic Solutions, another retail tracker, shopper traffic on Black Friday was up 47.5% when compared to last year’s numbers, however, it was still down 28.3% when compared to 2019/pre-pandemic levels. 

“With early deals in October, consumers were not waiting around for discounts on big shopping days like Cyber Monday and Black Friday,” said Taylor Schreiner, director at Adobe Digital Insights.

Adobe predicts that online retail trends will continue to fuel the market throughout the holiday season as deals on major retail websites like Amazon, Target, and Walmart continue to push “Black Friday Deals” throughout the entire holiday season.

Pay Rent Reminder

Billions In Renters Aid Still Available For Struggling Americans 

Six months ago Congress allocated more than $45 billion to the renters’ crisis which was triggered by the Covid-19 pandemic. Most of that money is still available today, in fact, only about a fifth of it has been used so far. 

According to data from the US Department of Treasury, $10 billion of the funding reached households by the end of last month, meaning there’s still around $35 billion in aid unspent and ready to be used. 

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Around 12 million adults are currently behind on their rent payments, according to a recent report by the Center on Budget and Policy Priorities. One analysis over the summer found that the average American renter owed about $3,700, and in some areas rental debts were topping $10,000 per household. 

“There’s certainly remaining need in most states and cities. However, efforts to disburse the money have been challenged by a lack of awareness and cumbersome applications. Still, renters should not give up on getting the help.” said Diane Yentel, president and CEO of the National Low Income Housing Coalition.

Just applying for renters aid can help you stay in your home longer. In at least five states individuals who apply for assistance are entitled to some level of protection from being pushed out of their homes. 

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For renters who don’t know how to apply, The National Low Income Housing Coalition has a state-by-state list of more than 500 organizations that are currently giving out federal money. The Consumer Financial Protection Bureau also has a new online tool to help renters easily apply for the aid. 

To be eligible for the aid at least one member of your household has to qualify for unemployment benefits or attest in writing that they’ve lost income or incurred significant expenses due to the pandemic. 

There also needs to be a demonstrated risk of homelessness, which may include a past-due rent or utility notice. 

Additionally, your income level for 2020 can’t exceed 80% of your area’s median income, although some state’s have prioritized applicants who fall at 50% or lower, as well as those who have been unemployed for more than 90 days. 

You could potentially receive up to 18 months of assistance. If you’ve already been approved for rental funds but continue to be behind, you can reapply. If you are at risk of being evicted you can find low-cost or free legal help with an eviction in your state at Lawhelp.org.

Corporate Google Building

Alphabet, Google’s Parent Company, Earns $65 Billion In Revenue Thanks To Online Ads

Google’s parent company, Alphabet, posted that they earned $65 billion in revenue during the third-quarter, exceeding Wall Street’s initial predictions and doubling their expected profits thanks to online advertisements. 

Over the last three months Alphabet’s revenue rose by 41% to $65.2 billion, marking its largest revenue figure in 14 years. Before the pandemic the corporation posted a profit of $21 billion.

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Alphabet saw its share price increase by 57% as well for the year. This makes it the best performer of all the “FAANG” companies (Facebook, Apple, Amazon, Netflix, and Google). Its advertising revenue alone rose to $53 billion, up from $37.1 billion last year. 

Revenue from Alphabet’s cloud division rose by 45% to $4.99 billion, trailing behind Amazon Web Service and Microsoft Azure. Operation losses for the sector decreased by nearly 50%, from $1.2 billion to $644 million. 

Sundar Pichai, chief executive of Alphabet and Google, said “search is the heart of what we do. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners.”

“Google campuses and cloud services will be run on carbon-free energy by 2030, and Google’s maps function will offer drivers an eco-option to find more fuel efficient routes to destinations and a wildfire system, so that consumers can make quick and informed decisions during emergencies.”

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Chief business officer Philipp Schindler said “it’s clear that uncertainty is the new normal for the global economic outlook, as uneven access to Covid vaccines affect different countries and regions experienced rates of economic recovery. The world is in flux. When it comes to anticipating change, predicting demand and investing in innovation, businesses need as much support now as they did a year and a half ago.”

In shopping, Schindler said, “some regions were experiencing a fourfold increase in search activity. Often those searches preceded in-person visits to stores. Bricks-and-mortar isn’t dead. Instead omni-channel [shopping] is in full force.”

Alphabet also emphasized their commitment to high-quality and accurate journalism, as well as open-access to information for all. Schindler explained that within the last quarter the company has added 120 news providers to it’s 1,000 information sources on Google’s News Showcase. 

Google intends to also purchase a New York City office building for $2.1 billion in the near future, as well as another campus in Silicon Valley, as a means of motivating employees to come back to the office.

Australia’s Prime Minister Says International Travelers Won’t Be Welcome Until At Least 2022

Prime Minister Scott Morrison outlined plans for lifting some of Australia’s toughest Covid-19 this week. Part of this outline stated that foreign tourists won’t be welcomed back until at least 2022. The country will instead be prioritizing the return of skilled migrants and students by reopening external borders when they reach a certain rate of vaccination.  

Morrison’s benchmark for reopening will be once 80% of the population aged 16 and older are fully vaccinated. He also announced plans to allow vaccinated Australian citizens and permanent residents to fly overseas in November; citizens haven’t been able to leave since March 2020. 

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Australia has been reporting the lowest level of immigration since World War II due to these strict travel restrictions. Australian universities and businesses have been struggling to cope with the lack of international students and tourists who typically support these institutions financially. 

Australia’s travel restrictions, however, has allowed life to return to a fairly normal place due to the lack of infection. As of right now some of its biggest cities, like Sydney and Melbourne, are currently experiencing shutdowns due to minor outbreaks. These shutdowns are what has helped keep Australia’s rate of infection low. 

The difficulty with restricting citizens from international travel is that half of Australia’s population was born overseas, or has at least one immigrant parent. Morrison said the priority will be to get migrants and international students back before tourists, but did not specify when he thinks those groups will be allowed back. 

Before the pandemic, the Australian Tourism Export Council made 33 billion American dollars in a year. That sort of revenue could help Australia’s recovery efforts immensely, which is why the Council is hoping international visitors will be able to return by March. 

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As of right now, however, the lack of specificity in the plan to reopen borders has many workers within Australia’s tourism/travel industry worried. 

“International tourist arrivals have to be part of the plan. Even if they’re not the first priority, we’d like to see how this is going to be worked out. There are many businesses that are just hanging on,” said Daniel Gschwind, chief executive of the Queensland Tourism Industry Council.

Morrison said that the “government would work toward a complete quarantine-free travel for certain countries, such as New Zealand, when it is safe to do so,” but did not give a clear timeline as to when that will happen. Any international travelers that are able to travel into Australia currently must quarantine in a hotel for two weeks. 

Australia is currently battling outbreaks of Covid-19 and its variants while rushing to get as many citizens vaccinated as possible. It’s initial vaccine rollout was slow, but is starting to gain some momentum now.

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Weekly Jobless Claims In US Hit 18-Month Low

The Labor Department revealed this week that weekly jobless claims have decreased to almost pre-pandemic levels. People on state unemployment have also hit March 2020 levels when the pandemic was initially starting and shutting down multiple businesses.

Europe’s Proposed Artificial Intelligence Law Could Cost Its Economy $36 Billion 

A new law proposed for the European Union designed to regulate artificial intelligence could cost the nation up to 32 billion euros; about $36 billion. The payments would be spread out over five years according to a report from the Center for Data Innovation, a Washington-based think tank. 

The Artificial Intelligence Act is a proposed law put forward by the European Commission, the executive arm of the EU. The act is said to be the :world’s most restrictive regulation of AI” according to the center. 

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“It will not only limit AI development and use in Europe but impose significant costs on EU businesses and consumers.”

The Center for Data Innovation argued that a small or midsize enterprise with a turnover of 10 million euros will face compliance costs of up to 400,000 euros if it was to deploy an AI system deemed “high risk.” These systems are ones that the commission defines as “affecting people’s fundamental rights or safety.” 

“That designation sweeps in a broad swath of potential applications — from critical infrastructure to educational and vocational training — subjecting them to a battery of requirements before companies can bring them to market,” the center said.

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The center argues that “compliance borders” will cost European businesses 10.9 billion euros per year by 2025, or 31 billion euros over the next five years. Ben Mueller, a senior policy analyst at the Center for Data Innovation and author of the report suggested that this would be more harmful than helpful to many sectors of the economy. 

“The Commission has repeatedly asserted that the draft AI legislation will support growth and innovation in Europe’s digital economy, but a realistic economic analysis suggests that argument is disingenuous at best.”

“The rosy outlook is largely based on opinions and shibboleths rather than logic and market data,” he added, explaining that AI is already being used by major companies like Google, Apple, and Facebook, but lawmakers in Europe aren’t even aware of the impact this new law could have. 

Mueller explained that the technology has the potential to improve healthcare and climate modeling for the nation, however, it can also be used to give every citizen a “social score.” The law is still in the works and the debates over its actual benefits are ongoing.