Tough Housing Market Causes Harder Struggle for American Renters, According to Recent Report
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A study from Harvard University's Joint Center for Housing Studies, released last week, revealed that both homeowners and renters in recent years have faced growing housing expenses. The study, based on an analysis of existing data, indicated that nearly a quarter of homeowners who own a house are currently straining financially. The burden is even more severe for renters.
The Harvard report stated, "Renters face an even more daunting landscape." Although rents have been surging faster than incomes for decades, the pandemic-induced surge in rent caused an unprecedented affordability crisis for renters.
In 2022, the number of renters spending over half of their household income on housing and utilities reached a new record high of 12.1 million, a 1.5 million increase from pre-Covid-19 levels. Allocating such a significant portion of their income to rent exposes them to potential homelessness if they encounter a financial emergency, such as an unexpected medical bill.
This situation is part of a broader struggle in the US housing market, and recent data shows that it hasn't improved. A lack of homes available for sale is fueling bidding wars. Higher mortgage rates are keeping some sellers and buyers from actively participating in the market.
"Housing costs are a significant source of distress for American households," Lael Brainard, director of the White House's National Economic Council, commented on Thursday at an event in Washington.
"Congress must take action in this area," she said. "The Senate could act immediately, and we would have tax credits for an additional 200,000 affordable units," referring to a bill that recently passed the US House.
At an event hosted by the Urban Institute, Brainard detailed the Biden administration's initiatives to revamp the US housing market, such as a cap on annual rent increases for the 2 million households in "low-income housing tax credit" units and a reduction in Federal Housing Administration mortgage insurance premiums that took effect in the spring.
"Already, nearly 700,000 homeowners have benefited from the Administration's reduction in mortgage interest premiums for FHA-backed loans, saving approximately $900 each year," Brainard stated.
The Harvard report suggested, "State and local government experimentation with regulatory reforms and incentives will slowly add more affordable homes, and there is an urgent need for down payment support and access to low-interest mortgage products to close racial gaps and make homeownership possible for households with modest incomes."
Apple's New Problem in China: ChatGPT is Prohibited There
Apple plans to leverage upcoming AI features to boost iPhone sales, particularly in China, where demand has been waning. However, there's a hurdle: ChatGPT, which is set to be integrated into Siri, is banned in China, as reported by my colleague Samantha Murphy Kelly.
In a recent presentation, Apple (AAPL) showcased its proprietary technology called Apple Intelligence to power cutting-edge AI features and announced a partnership with OpenAI to utilize ChatGPT, albeit in a limited capacity. When Siri needs additional help answering a question, ChatGPT would be able to lend assistance.
This move signals Apple's efforts to rapidly integrate the latest popular technology at a time when tech competitors, like Microsoft, Google, Meta, and Samsung, have already established their AI footing. The partnership with OpenAI might help Apple catch up.
However, China is one of the first countries to regulate generative AI technology that powers these prominent services. In August, the Cyberspace Administration of China, the country's top internet regulator, enacted new guidelines for the industry, requiring companies to obtain approval prior to deployment. As of March, the organization has approved more than 100 AI models, all from Chinese firms.
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Coming Up
Monday: Fed Governor Christopher Waller presents remarks.
Tuesday: FedEx and Carnival Corporation release their earnings. The Chicago Fed releases its May National Activity Index. S&P Global releases its S&P CoreLogic Case-Shiller US National Home Price Index for April. The Conference Board releases its latest Consumer Confidence Survey for June. Fed officials Lisa Cook and Michelle Bowman deliver remarks.
Wednesday: Micron, General Mills, and Levi Strauss & Co. release their earnings. The US Commerce Department reports May figures for new single-family home sales. The Federal Reserve publishes the results of its annual bank stress test.
Thursday: Nike, McCormick & Co., and Walgreens Boots Alliance release their earnings. The US Commerce Department reports new orders for durable goods in May and releases the first-quarter GDP's final estimate. The US Labor Department reports weekly jobless claims for the week ending on June 22. The National Association of Realtors releases May's pending home sales report.
Friday: Richmond Fed President Tom Barkin delivers remarks. The US Commerce Department publishes May figures for household income, consumer spending, and the Fed's preferred inflation measure. The University of Michigan releases its final June Consumer Sentiment Index. Fed Governor Michelle Bowman delivers remarks.
