Renters are struggling more than homeowners in America’s tough housing market, report says
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Homeowners in America aren’t the only ones struggling with an unaffordable housing market. Renters are also bearing the brunt.
A report from Harvard University’s Joint Center for Housing Studies released last week showed that both homeowners and renters in recent years have become increasingly burdened by climbing housing costs. The report, based on an analysis of existing data, said that nearly one in four households that own a home “are now stretched worryingly thin.” The cost burdens are even worse for renters.
“For renters, the landscape is even more challenging,” the Harvard report said. “While rents have been rising faster than incomes for decades, the pandemic-era rent surge produced an unprecedented affordability crisis.”
Renters who spend more than half of their household income on housing and utilities rose in 2022 to a new record high of 12.1 million, up 1.5 million from levels seen before the Covid-19 pandemic. Allocating such a high proportion of household income to rent makes them vulnerable to becoming unhoused if they face an unexpected financial issue, such as an unexpected medical bill.
That’s all part of a broader struggle in the US housing market, and recent data shows that it hasn’t gotten any better. A persistent lack of homes available for sale is spurring bidding wars. Elevated mortgage rates are keeping sellers and some buyers on the sidelines.
“Housing costs are a particular pain point for American households,” Lael Brainard, director of the White House’s National Economic Council, said Thursday at an event in Washington.
“Congress really does need to act here,” she said. “The Senate could act tomorrow and we would have tax credits for 200,000 additional affordable units,” referring to a bill that recently passed the US House.
Speaking at an event hosted by the Urban Institute, Brainard outlined the Biden administration’s attempts to fix America’s 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 are saving roughly $900 annually as a result of the Administration’s reduction in mortgage interest premiums for FHA-backed loans,” Brainard said.
The Harvard report said that “state and local experimentation with regulatory reforms and incentives will incrementally add affordable homes” and that there’s a pressing “need for down payment support and access to low-interest mortgage products to close racial gaps and put homeownership within reach for households with modest incomes.”
Apple’s new China problem: ChatGPT is banned there
Apple is banking on its upcoming AI features to boost iPhone sales especially in China, where demand has been lagging. But there’s a problem: ChatGPT — soon to be integrated into Siri — is banned in China, reports my colleague Samantha Murphy Kelly.
In a presentation earlier this month, Apple (AAPL) showed off its proprietary technology called Apple Intelligence to power compelling new AI features and announced a partnership with OpenAI to also use its viral ChatGPT tool in a limited capacity. (When Siri is activated and needs more assistance answering an inquiry, ChatGPT can step in.)
The move signaled how Apple is trying to expedite the latest buzzy technology at a time when tech rivals, such as Microsoft, Google, Meta and Samsung, have already found their AI footing. A deal with OpenAI could help Apple close the gap.
But China is one of the first countries in the world to regulate the generative AI technology that powers these popular services. In August, the Cyberspace Administration of China, the country’s top internet watchdog, rolled out new guidelines for the industry, requiring companies to seek approval before deployment. The organization has approved more than 100 AI models as of March, all from Chinese companies.
Up Next
Monday: Fed Governor Christopher Waller delivers remarks.
Tuesday: Earnings from FedEx and Carnival. The Chicago Fed releases its National Activity Index for May. S&P Global releases its S&P CoreLogic Case-Shiller US National Home Price Index for April. The Conference Board releases its latest consumer survey for June. Fed officials Lisa Cook and Michelle Bowman deliver remarks.
Wednesday: Earnings from Micron, General Mills and Levi Strauss. The US Commerce Department reports May sales of new single-family homes. The Federal Reserve releases results of its annual bank stress test.
Thursday: Earnings from Nike, McCormick and Walgreens. The US Commerce Department reports new orders of durable goods in May and releases its final estimate of first-quarter gross domestic product. The US Labor Department reports the number of new worker filings for jobless benefits in the week ended on June 22. The National Association of Realtors reports home sales based on contract signings in May.
Friday: Richmond Fed President Tom Barkin delivers remarks. The US Commerce Department releases May figures on household income, spending and the Fed’s preferred inflation gauge. The University of Michigan releases its final reading of consumer sentiment in June. Fed Governor Michelle Bowman delivers remarks.
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