In response to COVID-19 related economic struggles many Americans are facing, Congress passed the CARES Act. One benefit to Americans that was to come from this $2 trillion act that was made law in March 2020, was a ban on evictions on many rental units in the United States. Effective until the end of July, federally financed properties, such as rental units backed by Fannie Mae and Freddie Mac, landlords were restricted from evicting their tenants.
One glaring issue with the act, according to an article published by CNBC.com is, ” the law failed to protect many struggling tenants during the pandemic because there was little effort to ensure that landlords followed it.” The act does not detail any penalty for violating it, so it, in some cases, has been treated as more of a “guideline”. Landlords across the country have moved forward with evicting their tenants, many of which did not realize they were protected by the CAREs Act and did not hire legal representation to assist them with challenging the eviction.
The effects are devastating. As one example, in Iowa, he article indicates “Data provided to CNBC by Iowa Legal Aid shows that during one week in July in Polk County, where Des Moines is located, 40% of the families forced to leave their homes were through evictions that violated either the state or CARES Act moratorium. “
President Trump signed an executive order shortly have the CARES Act expired, yet many experts in the housing advocate field indicate that it provides protection to even fewer renters and still does not provide guidance to ensure its enforced.
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Photo Credit: Morning Brew
The Federal Reserve is changing its policy with regards to how it quickly it responds to inflation. Historically, once inflation reached increased by about 2%, the Feds would raise interest rates. Now, in an effort to support the economy, the central bank is pushing the threshold of inflation beyond the 2% target.
This change, according to an article published by CNBC.com, is a way for the Fed to encourage spending by allowing Americans to continue to borrow money at low rates. According to professor of Finance and Economics, Laura Veldkamp, “This is meant as a stimulus, as a way of getting people to spend more.”
By allowing rates to stay lower for a longer period of time, many lenders can pass the low rates on to their consumers. For example, credit card rates have fallen to 16% on average, personal loans are reporting rates as low as 12.07% and HELOCs have rates below 5%.
As reported in the article, the downside to the change in policy is the effect increased inflation will have on long term bond prices. The chief financial advisor for Bank Rate, Greg McBride states that these longer term bonds will be more prone to large price declines. Yet, ““With low inflation the Fed’s focus now, that’s a concern for another day…”
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This year, the real estate market has made significant improvements in many areas of the United States. According to an article published in USA Today by Thomas C. Frohich, the median home price was at the highest since 2007 at the end of 2015, and increased another 4.9 percent by the end of 2016’s second quarter.
There are several U.S. cities reflecting this growth in housing prices, such as Boulder, CO, which had a 18.5 percent home price increase over the past year. However, there are still many cities that are not reporting the same home pricing increases. In fact, some cities, such as Atlantic City-Hammonton, NJ are seeing declines in home values.
The National Association of Realtors (NAR) reviewed home prices in close to 200 U.S. metropolitan areas. A list of the fastest growing markets as well as the real estate markets on the decline were compiled. Topping the list of growing cities behind Boulder, CO were Elmira, NY, Springfield, IL and Port St. Lucie, FL. Cities with the most significant decline in prices besides Atlantic City were Binghamton, NY, Erie, PA and White Plains, NY. Economic factors such as unemployment often seemed to be tied to the home prices in an area. Inventory, demand and location are other factors that drive home prices up or keep them low, even declining.
To read the entire article and see the entire listing of growing and shrinking cities, click here.