The economy is strong! But Can People Afford Homes?

In May this year, employers in the U.S created 390,000 employment opportunities. The act boosted the economy from high inflation and interest rates. Unemployment rates are still at 3.6%, slightly higher than the half-century low.

CURRENT ECONOMIC STATES AND TRENDS

In May 2022, the labour job market ruled out the prediction that the market would continue to face high inflation and interest rates. Last month experienced a lot of changes in the economy amid healthy economic growth. The Federal that month could study the speedy rate hikes and experienced stock market indexes falling after the government released the new jobs.

For the last two years, the U.S government have been trying to attain economic recovery that was affected by the covid 19 pandemic, which disrupted almost every business. There was a need to hire more people in May this year because most businesses saw an increase in customers buying despite the high inflation rates. Employment would thus increase the efficiency of most businesses.

Among the sectors that announced new job opportunities were construction, with about 36,000 job vacancies. The people who bought new homes and had not built due to labour shortages were at an advantage with an increased labour force in the market. Other areas that added opportunities were the shipping companies having around 47,000 new job positions to help deal with the growing number of online commerce users. Entertainment venues and restaurants added about 84,000 new jobs.

Over the last two years, the economy has been fighting high inflation, increasing rapidly. It could be why people aged 50 and above are unwilling to retire. To fight inflation, the government increased hourly wages by 10 cents but still, this would not help keep up with inflation rates evident in almost every business. This is because inflation rates increase very fast, and the increase in wages is at a lower rate, thus the big difference.

Interest and inflation rates have affected most businesses because there have been incidences whereby people are giving up low-paying jobs for high-salary jobs, and the occurrences are increasing significantly. However, such cases were evident even during the pre-pandemic years. Most employers say that potential employees want to be paid more than their qualifications, putting the business at risk of dwindling if the matter is not dealt with. However, entrepreneurs such as Tom Gimbel, the CEO of LaSalle Network and Jackie Bondanza, head of Hound Town, intend to expand the business by having branches in other parts of the country

and increasing job opportunities. However, they remain unwilling to pay more than they can afford to ensure the company’s future security.

Economic activities are an important aspect of any given state as it influences the lifestyle of citizens. The Federal has questioned whether people can afford to build homes with the current economic trends. Well, the answer differs in different States of the U.S. During, and after the pandemic, commodities prices increased, including housing. Residents of cities such as San Fransisco and other expensive cities responded by shifting from the area to more affordable states.

After the pandemic, statistics show that most highly paid residents had accumulated a lot of money in their savings accounts. Such massive savings was because there were reduced spending when most businesses were closed down when the world health organization pronounced Covid 19 a major threat.

CHALLENGES FACING THE HOME BUILDING.

With the huge savings, most residents could still not build homes, and that scenario continues to date. An economic shift in the country causes the problem, and both high inflation and interest rates make the saved money insufficient. It is also why most people are shifting from coastal areas to the suburbs, which are affordable places for most employees. Though the places still face an increase in inflation rates, it is worth noting that the consequences are not as extreme as in the coastal cities such as San Fransisco.

The real estate sector is the most affected due to the pandemic. The pandemic brought awareness to residents, and because of future uncertainties, most residents prefer to own a home. An increase in the number of homebuyers in the market automatically declares real estate a seller market. The inventory level was high due to an imbalance between demand and supply. The case was evident both in the coastal areas and the suburbs. The government tried to support real estate by reducing interest rates. Still, the problem remains adamant due to the low number of homes and properties on sale, which is not directly related to interest rates.

A seller market negatively affects buyers because commodities sometimes go higher than the listed price, and financially constrained buyers are adversely affected. Mortgages, for instance, are sold way above the listed price, which is currently a common case in most of the U.S. Building materials costs are also very high, which is why people already having property have put the building process in waiting, hoping there will be lower inflation levels in the coming years.