Monday Morning Cup of Coffee: Ben Carson backtracks on plan to raise rents for poor
Plus what to expect in world economy’s most important week
Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.
The U.S. Department of Housing and Urban Development released a plan in April that HUD Secretary Ben Carson says will push millions of low-income households toward self-sufficiency.
Under the current system, Carson explained many low-income earners are discouraged from, or even penalized for, finding higher-paying jobs as they would lose their current benefits and perhaps be worse off than when they earned a lower income.
But HUD’s proposed plan quickly earned criticism as an analysis by the Center on Budget and Policy Priorities showed it would raise rates for the poorest Americans by about 20% and would raise the minimum rent from $50 to $150 per month.
However, now it seems Carson is reconsidering that plan. At the Bipartisan Policy Center Friday, he said additional funding from Congress eliminated the immediate need to raise rents.
“The reason we had to consider raising rents at all is because we were dealing with a $41 billion budget,” Carson said. “And in order to be able to keep from raising rents on the elderly and the disabled, and in order to not displace people who are already being taken care of, that was necessary.”
“Now that the budget has been changed, the necessity for doing that is not urgent,” he said.
Much bigger changes could be in store this week as the world economy prepares for its most important week this year.
For starters, Monday morning will show the first look at investors’ opinion of everything that happened at the G-7 summit. Judging by President Donald Trump’s Twitter feed after the summit, it did not go smoothly.
PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, “US Tariffs were kind of insulting” and he “will not be pushed around.” Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!
— Donald J. Trump (@realDonaldTrump) June 9, 2018
Mortgage Bankers Association President and CEO David Stevens already passed his judgment on the recent events, saying history is watching.
Threatening our allies and friends while demanding that we get closer to Putin who literally murders the opposition, intervenes in US elections, and rips off his people to feed the oligarchs while supporting Assad is outrageous……history has it’s eyes on us #stopthis
— David H. Stevens CMB (@DavidHStevens) June 10, 2018
And U.S. economists still wonder if rising threats of trade wars will threaten the economy, even sending the country into its next recession.
But the G-7 summit isn’t the only thing investors will be watching. This week, Trump will have his historic meeting with North Korea, where he will try to negotiate a peace deal and convince the country to give up its nuclear weapons.
Here in the U.S., the Federal Reserve will meet and is expected to announce an increase to the federal funds rate Wednesday. This will be the second rate hike this year, out of the projected three to four rate hikes for 2018.
Click here to see other major events this week that combine to make it the most important week this year for the world economy.
Over the weekend the St. Louis Fed tweeted out a graph showing how many new homes have been sold in seven price ranges since 2002.
The results are eye-opening. While new homes priced under $150,000 made up a large portion of the market from 2002 to around 2007, the chart below shows the price range has now nearly disappeared entirely.
The story is much the same for homes priced from $150,000 to $199,999. Homes priced between $200,000 to $299,999 decreased slightly.
On the other hand, homes in the $300,000 to $399,999 range, $400,000 to $499,999 range, $500,000 to $749,999 range and the $750,000 and above range all saw a slight increase in new homes sold.
Because there is a higher concentration of homes available in the upper-end markets, first-time homebuyers continue to struggle. A recent study from the National Association of Realtors and realtor.com shows in some markets, first-time homebuyers can only afford about 20% of the housing stock.
Meanwhile, homeowners continue to rejoice as tappable equity surged to its highest dollar amount on record, far surpassing its previous 2005 peak, according to a recent Mortgage Monitor Report from Black Knight.
Former Consumer Financial Protection Bureau Director Richard Cordray, who recently secured the Democratic nomination for Ohio governor, announced his plan to help make college more affordable in the state through the use of community colleges.
Cordray explained that while community colleges are a cheaper alternative to a four-year university, and could provide different alternatives such ask skills training, according to an article by Ben Garbarek for ABC.
From the article:
“We need different paths,” Cordray said. “We need certification programs. We need skills training. We need two-year degree programs and we need two years as a step to a four-year degree which community colleges can also provide.”
Community college officials said more students are looking to start their college career with them as tuition costs continue to climb.
As former head of the CFPB, Cordray is no stranger to the chaos student debt continues to cause in the housing industry, and the growing crisis.
In fact, HousingWire’s March issue outlined the long-term consequences [subscription required] of student debt on the housing economy. As it turns out, student debt is taking a much larger toll on the housing economy than previously thought.
As college becomes more expensive, less homebuyers from every generation are able to afford buying a home, and many graduates are expected to eventually default on their student loans, creating yet another obstacle for homeownership.
Remember to keep watch during the world economy’s most important week, and have a great Monday!
Source: Housing Wire