U.S. homeowners are staying in their
residences much longer than before, keeping a glut of housing inventory off the
market, which helps explain why home sales have been sputtering.
Homeowners nationwide are remaining in their homes
typically 13 years, five years longer than they did in 2010, according to a new
analysis by real-estate brokerage Redfin. When owners don’t trade up to a
larger home for a growing family or downsize when children leave, it plugs up
the market for buyers coming behind them.
More homeowners staying put has helped cause housing
inventory to dwindle to its lowest level in decades, which has also
helped push up prices on homes for sale. Adjusted for population, the
inventory of homes for sale is now near the lowest level in 37 years of
record-keeping, according to housing-data firm CoreLogic Inc.
Fewer homes for sale is a big reason why
even ultralow mortgage rates, record levels of home equity and a strong
job market haven’t jump-started the sluggish housing market.
In the San Francisco metropolitan area, a typical
homeowner stays 14 years, up from less than 10 years in 2010. Inventory in the
same period has plunged more than 46%.
Meanwhile, the Seattle metro has seen a huge influx
of new jobs, and housing supply hasn’t kept pace. Homeowners there are staying
more than three years longer than they did in 2010. The inventory of homes for
sale in Seattle has declined more than 50% over the last nine years, while home
prices have risen more than 80%, according to Redfin.
But this isn’t just a problem in pricey coastal
markets. Homeowners are staying longer in every one of the 55 metros that
Redfin studied. Cities where it was once relatively easy to buy a home are
seeing owners staying much longer, creating a serious inventory crunch.
Around Salt Lake City, owners now typically remain in
their homes for more than 23 years, or nearly nine years longer than they did
in 2010, according to Redfin. The shortage of homes has helped drive the median
home price up nearly 75% in the same period to around $340,000.
In 1986, Congress enacted a law to bar hospitals from
turning away patients who are unable to pay. Any hospital with an emergency
room that participates in federal health programs must evaluate and stabilize
every patient who comes through the door, including those who are uninsured,
indigent, addicted to drugs, or mentally ill.
No institution has a similar obligation to ensure
that those people have a safe place to sleep. As a society, we’ve effectively
decided that people shouldn’t die on the street, but it’s acceptable for them
to live there. There are more than half a million homeless in the
U.S., about a third of them unsheltered—that is, living on streets, under
bridges, or in abandoned properties. When they need medical care or simply a
bed and a meal, many go to the emergency room. That’s where America has drawn
the line: We’ll pay for a hospital bed but not for a home, even when the home
would be cheaper.
Jeffrey Brenner is trying to move that line. He’s a
doctor who for more than 25 years has worked largely with the poor, many of
them homeless. Recently, his place in the health-care system has shifted. After
decades in shoestring clinics and nonprofits, he’s become an executive
at UnitedHealth Group Inc., America’s largest health insurer. Brenner is
expected to contribute to its bottom line. He plans to do it by giving people
places to live.
The research and development lab for this experiment
is a pair of apartment complexes in a down-at-the-heels corner of Phoenix
called Maryvale. Here, Brenner is using UnitedHealth’s money to pay for housing
and support services for roughly 60 formerly homeless recipients of Medicaid,
the safety-net insurance program for low-income people. Most states
outsource their Medicaid programs to private companies such as UnitedHealth,
paying the insurer a per-head monthly fee—typically $500 to $1,000—to manage
members’ care. The company’s 6 million Medicaid members produced $43 billion in
2018, almost 20% of total revenue.
It’s a profitable business overall. But the most
expensive patients, who often present a complex blend of medical, mental
health, and social challenges, cost UnitedHealth vastly more than it takes in
to care for them… And despite their extreme costs, these patients often get
poor care. “This is just sad. This is just stupid,” Brenner says. “Why do we
let this go on?”
Sitting in a vacant studio apartment on the second
floor of one of the complexes, Brenner shows me data on a patient named Steve,
a 54-year-old with multiple sclerosis, cerebral palsy, heart disease, and
diabetes. He was homeless before UnitedHealth got him into an apartment. In the
12 months prior to moving in, Steve went to the ER 81 times, spent 17 days
hospitalized, and had medical costs, on average, of $12,945 per month. In the
nine months since he got a roof over his head and health coaching from Brenner’s
team, Steve’s average monthly medical expenses have dropped more than 80%, to
After testing the idea in Phoenix, Milwaukee, and Las
Vegas, UnitedHealth is expanding Brenner’s housing program, called
MyConnections, to 30 markets by early 2020. It’s a business imperative.
The goal is for them to “graduate” within a year to
paying their own rent. (Most get a disability check; those who don’t get help
from MyConnections to apply.)
Brenner aims to reduce expenses not by denying care,
but by spending more on social interventions, starting with housing. How to do
it is still largely uncharted. “I don’t think we’ve figured any of this out,”
he says. “We’re at a hopeful moment of recognizing how deep the problem is.” A
trip to any big-city ER reveals the magnitude of the challenge.
One of Brenner’s greatest challenges is deciding who
should benefit from the program. Giving patients housing sounds beguilingly
simple, but the economics are a high-wire act. Medicaid isn’t paying
UnitedHealth anything directly for housing assistance. The company spends from
$1,200 to $1,800 a month to house and support each member, so it must save at
least that much to break even on Brenner’s program.
On average about 60 members are enrolled in the
Phoenix sites at any given time. Once a week, Brenner and his team get on the
phone to evaluate potential candidates—anywhere from 2 to 14 people whose names
have surfaced in UnitedHealth’s data. They want patients who are homeless and
whose medical spending exceeds $50,000 annually, with most of that coming from
ER visits and inpatient stays. People living on the streets with less extreme
medical costs may need a home just as much, but it doesn’t pay for UnitedHealth
to give them one.
The company behind the world’s first industrial-scale
maggot farm based on organic waste plans to kick off its international
expansion with a plant in California next year, taking advantage of two global
problems: a shortage of protein and an abundance of trash.
The plant in Jurupa Valley will be
followed by operations in the Netherlands and Belgium, and is part of a drive
by AgriProtein and a handful of competitors
worldwide to tap into demand for high-grade protein for fish and poultry feed
and offer a solution for the unwanted organic waste that cities and farms
“The world is long on waste and short on protein,”
Jason Drew, AgriProtein’s chief executive officer, said in an interview.
The California operation will be modeled on the
facility in Cape Town, which rears black soldier flies on about 250 metric tons
of organic waste daily. The flies’ larvae are then harvested to produce 4,000
metric tons of protein meal a year. At any one time, including eggs, there are
8.4 billion flies in the factory.
The plant also produces 3,500 tons of fatty acid oil
and 16,500 tons of frass, or maggot droppings, which is used as
The payday-loan business was in decline. Regulators
were circling, storefronts were vanishing and investors were
abandoning the industry’s biggest companies en masse.
And yet today, just a few years later, many of the
same subprime lenders that specialized in the debt are promoting an almost
equally onerous type of credit.
It’s called the online installment loan, a form of
debt with much longer maturities but often the same sort of crippling,
triple-digit interest rates. If the payday loan’s target audience is the
nation’s poor, then the installment loan is geared to all those working-class
Americans who have seen their wages stagnate and unpaid bills pile up in the
years since the Great Recession.
In just a span of five years, online installment
loans have gone from being a relatively niche offering to a red-hot industry.
Non-prime borrowers now collectively owe about $50 billion on installment
products, according to credit reporting firm TransUnion. In the process,
they’re helping transform the way that a large swathe of the country accesses
debt. And they have done so without attracting the kind of public and
regulatory backlash that hounded the payday loan.
In the decade through 2018, average household incomes
for those with a high school diploma have risen about 15%, to roughly
$46,000, according to the latest U.S. Census Bureau data available.
Not only is that less than the 20% increase
registered on a broad basket of goods over the span, but key costs that play an
outsize role in middle-class budgets have increased much more: home prices are
up 26%, medical care 33%, and college costs a whopping 45%.
To keep up, Americans borrowed. A lot. Unsecured
personal loans, as well as mortgage, auto, credit-card and student debt have
all steadily climbed over the span.
For many payday lenders staring at encroaching
regulatory restrictions and accusations of predatory lending, the working
class’s growing need for credit was an opportunity to reinvent themselves.
Enter the online installment loan, aimed in part at a
fast expanding group of ‘near-prime’ borrowers — those with bad, but not
terrible, credit — with limited access to traditional banking options.
Ranging anywhere from $100 to $10,000 or more, they
quickly became so popular that many alternative credit providers soon began
generating the bulk of their revenue from installment rather than
Yet the shift came with a major consequence for
borrowers. By changing how customers repaid their debts, subprime lenders were
able to partly circumvent growing regulatory efforts intended to prevent
families from falling into debt traps built on exorbitant fees and endless
Whereas payday loans are typically paid back in one
lump sum and in a matter of weeks, terms on installment loans can range
anywhere from 4 to 60 months, ostensibly allowing borrowers to take on larger
amounts of personal debt.
“The benefit of installments loans is you have more
time to make the payments; the downside is the payments on these high-cost
loans go exclusively towards the interest, possibly for up to the first 18
months,” the National Consumer Law Center’s Saunders said.
The industry, for its part, argues that just as with
payday loans, higher interest rates are needed to counter the fact that
non-prime consumers are more likely to default.
Between Enova and rival online lender Elevate Credit
Inc., write offs for installment loans in the first half of the year averaged
about 12% of the total outstanding, well above the 3.6% of the credit
The surging popularity of online installment loans,
combined with a growing ability to tap into big data to better screen
customers, has helped boost the fortunes of many subprime lenders.
Subprime installment loans are now being bundled into
securities for sale to bond investors, providing issuers an even lower cost of
capital and expanded investor base. Earlier this month
Enova priced its second-ever term securitization backed by NetCredit
loans. The deal paid buyers yields between 4% and 7.75%. Its debut asset-backed
security issued a year ago contained loans with annual interest rates
as high as 100%.
The bulk of their growth has been fueled by the
About 45% of online installment borrowers in 2018
reported annual income over $40,000, according to data from Experian Plc unit
Clarity Services, based on a study sample of more than 350 million consumer
loan applications and 25 million loans over the period. Roughly 15% have annual
incomes between $50,000 and $60,000, and around 13% have incomes above $60,000.
For Tiffany Poole, a personal bankruptcy lawyer at
Poole, Mensinger, Cutrona & Ellsworth-Aults in Wilmington, Delaware, middle
America’s growing dependency on credit has fueled a marked shift in the types
of clients who come through her door.
“When I first started, most filings were from the
lower class, but now I have people who are middle class and upper-middle class,
and the debts are getting larger,” said Poole, who’s been practicing law for
two decades. “Generally the debtors have more than one of these loans listed as
If anyone needed further evidence of Hong Kong’s
sky-high real estate prices they found it this week with news that a car
parking spot sold for almost $1 million.
The space went for HK$7.6 million ($970,000), making
it the most expensive place to park an automobile in the city, and perhaps
anywhere in the world.
The car-parking spot is (in)…The Center in Central,
which also happens to be the priciest office tower in the world. For
the cost of the parking space, you could buy a one-bedroom
apartment in Manhattan.
Side note, …the seller was Johnny Cheung Shun-yee, a businessman
with a reputation for flipping property. He made around HK$900
million last year in about nine months by buying and selling floors in
the same office building.
First because I
really enjoyed this mock
interchange by Matt Levine of Bloomberg representing the initial investment
conversation between Adam Neumann (WeWork) and Masayoshi Son (Softbank). Just
to repeat, this is most likely not what was said.
Neumann: We lease office buildings,
spruce up the space and sublet it in small chunks.
Son: Hmm I invest in visionary tech stuff, this
doesn’t really sound like my thing.
Neumann: Did I
mention we are a state of consciousness. A generation of interconnected
emotionally intelligent entrepreneurs.
Son: Okay yeah that’s more like—
Neumann: The world’s
social network. We encompass all aspects of people’s lives, in both physical and digital
Son: You’re crazy! I love it! But could you be,
say, ten times crazier?
Neumann: You’re going to invest $10
billion in my company, which I will use as kindling to light the whole edifice
on fire, and then when we are both standing in the ashes you will pay me
another billion dollars to walk away while I laugh at you.
Son: All my life I have dreamed of meeting someone
as crazy as you, but I never really believed this day would come.
Neumann: I’m gonna use
your money to buy a mansion with a room shaped like a guitar, where I will play the world’s
tiniest violin after all your money is gone.
Son: YES PUNCH ME IN THE FACE.
Neumann: Also I’ll
rename the company “We” and charge it $6 million for the name.
…An unpleasant truth for many Americans, even at a
time of abundant global oil supplies: Regional differences in taxes,
environmental rules and access to energy infrastructure can translate into
large seasonal swings in gasoline prices.
Prices have surged this fall in California and other
West Coast states following outages at several refineries in the region.
Analysts said the coast is generally vulnerable because of its limited
pipelines and refineries that turn oil into fuel products such as
gasoline. Higher gas taxes in some states aiming to fund local
infrastructure projects and varying pricing strategies by energy companies also
The volatility isn’t an isolated event. The standard
deviation of gas prices—a measure of how much each state’s price varies from
the national average—has hit its highest level this year in data going back to
2005, according to price tracker GasBuddy. The figure has risen in each of the
past three years.
People in many of the world’s most advanced nations –
including the euro area, Japan and the U.S. – are holding more of it than ever.
In the U.S., for example, currency in circulation stood at an estimated $1.76
trillion as of late September. That’s about 8.2% of gross domestic product, up
from just 5.6% before the 2008 financial crisis and close to the highest level
in at least 36 years.
Benjamin Franklin’s share of total U.S. currency in
circulation reached 80% in 2018, up from 73% a decade earlier.
The city of Berlin has agreed drastic measures to
curb the surging cost of housing in the German capital, including a five-year
freeze on rents and the right for tenants to have them lowered if they exceed a
The new curbs — presented by Social Democrat
mayor Michael Müller and members of his leftwing government on
Tuesday — will apply to an estimated 1.5m apartments.
Supporters say the measures are needed to preserve
affordable housing for low-income households, and to halt the spiraling
rents of the past decade. But critics warn that the Berlin plan will drive
away investment and exacerbate the severe housing shortage in the fast-growing
Soaring rents in Berlin and other large German cities
have become politically controversial in recent years, and a favorite campaign
theme for left-wing parties.
According to a study by Immowelt, a property website,
rents in Berlin have jumped 104% since 2009. The average rent per
square meter in the city stands at €11.60 ($1.20 per square foot “PSF” per month), a notable jump from €5.70 ($0.59 PSF) in 2009 but still lower than the 2019 prices in
cities such as Munich (€18.60) ($1.92 PSF) and Frankfurt
(€14.20) ($1.47 PSF).
Under the new plan, landlords will be banned from raising rents for the next five years. The city will also give tenants the right to demand lower rents if they exceed official rent caps by 20%. According to the new rental table presented on Tuesday, the maximum rent landlords can demand for recently-built apartments is €9.80 per square meter ($1.01 PSF), with minor top-ups allowed only for properties with high-quality fittings or located in an especially desirable neighborhood.
Berlin has gained almost 400,000 new residents over
the past decade, taking the city’s population to 3.75m. The recent growth
reflects at least in part Berlin’s new-found economic dynamism: long derided as
a business backwater, devoid of important corporate headquarters, the city has
emerged as a location for the technology and start-up scene.