This week, we look at how consumers feel about buying a home, vs. how many homes are actually being sold, vs. the affordability of available homes. There’s also a surprising concession from the Fed on climate change, and an encouraging forecast on how we can get to net-zero, fast. And since November is giving us an extra Monday, a bonus link: a thought-provoking video about what it all might look like in a couple generations.
Positive Home Purchase Sentiment
Fannie Mae’s latest Home Purchase Sentiment Index reveals that Buyers and sellers agree: it’s a good time to enter the housing market. The index is still considerably lower than it was this time last year (that was a different world, wasn’t it?). But it has bounced back a lot since it plummeted to record lows in April of this year. The optimism, partly based on record-low mortgage rates, is offset by some caution from consumers. They’re more worried about personal finances and job security than they were a month ago.
Declining Mortgage Applications
And while mortgage applications are still up 16 percent over a year ago, they’ve been gradually declining over the last couple of months. They’re now at their lowest level in six months. Declining inventory and increasing prices have put a damper on home purchases. Refinance applications, though, continue to increase, with November reaching the highest level since August.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) shows a decline in affordability for the third quarter of 2020. According to the report, “58.3 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning an adjusted U.S. median income of $72,900.” It hasn’t been that low since the fourth quarter of 2018.
The Fed Addresses Climate Change
The Federal Reserve has admitted for the first time that climate change represents a serious threat to financial stability. You can read the statement from Fed Governor Lael Brainard in this article, which also includes a forecast on what the Biden administration may do to combat climate change and reduce carbon.
The WEF Addresses Climate Change
Transitioning the whole world to zero carbon sounds like an expensive undertaking. But the World Economic Forum estimates a pretty reasonable price tag of just 1.5 of global GDP to pay for it. The infographic below sums up a lot of what’s in the article, but it’s worth clicking through to read.
The Third Industrial Revolution
Okay, so this is a pretty long watch. But there is a ton to learn if you take it piece by piece. Being more on the “How can I afford net zero?” side of things than the economic theory side of things around here, I’d actually never heard of Jeremy Rifkin before. I’m still digesting here, honestly, and not prepared to offer an opinion besides the fact that he offers some amazing food for thought. It would be awesome to open up a discussion in the comments, though.
To sum up, Mr. Rifkin believes we are ready for a third Industrial Revolution, revolutionizing energy, transportation and communications. Energy, by everyone being able to locally generate their own clean power (yes to that!). Transportation, by car-sharing, smart highways, and new driverless transport (to name a few). Communications, by equal internet access for everyone. He envisions a future in which everyone and everything are connected in the “Internet of Things” and a new sharing economy develops, when we no longer have a need to compete for resources. (In case that sounds Utopian, he explicitly states that it’s not.)
We hope you’ve enjoyed this week’s links and that you have a lot to be thankful for. Check back for more news the first week in December. Meanwhile, what’s your opinion? Will the world make it to zero soon enough?