Struggling Americans Once Sought Greener Pastures — Now They’re Stuck

For small towns, mobility has always been something of a problem: When the brightest youngsters leave and don’t return, “brain drain” can be a drag on the community, even if it is a boon for the other cities they settle in. Now, the lack of mobility has become a drag on the entire U.S. economy.

“We’re locking people out from the most productive cities,” says Peter Ganong, an assistant professor of public policy at the University of Chicago who studies migration. “This is a force that widens the urban-rural divide.”

.. Today, manufacturers employ only a third the number of workers that they did 10 years ago, according to census data. Their payrolls have plummeted by 74% adjusted for inflation, or by $30 million. Unemployment has averaged 7.7% over the past year, compared with 4.7% nationally. In one of many ominous signs, census figures show that more residents are using wood to heat their homes.

.. Nevertheless, the inflow and outflow of people in Ogemaw County is so small that among its 21,000 residents, it only loses a net of one person a year for every 1,000 residents. Even some young people, who yearn to move to thriving nearby cities like Grand Rapids, find they can’t.

.. A lawyer who leaves Alabama, Mississippi or South Carolina for a job in New York, New Jersey or Connecticut would spend just 21% of his income on housing after moving, Prof. Ganong has found. But a janitor making such a move would have his higher salary gobbled up by housing costs equal to 52% of income.

.. She is a college grad but finds that employers are bypassing her in favor of younger graduates, which are cheap and abundant in the state’s second-largest city.

.. For many rural residents across the country with low incomes, government aid programs such as Medicaid, which has benefits that vary by state, can provide a disincentive to leave. One in 10 West Branch residents lives in low-income housing, which was virtually nonexistent a generation ago. Civic leaders here say extended networks of friends and family and a tradition of church groups that will cover heating bills, car repairs and septic services—often with no questions asked—also dissuade the jobless and underemployed from leaving.

.. the rationale boils down to: “I’ve got good social services. I’m stuck in one big rut. If you ask me to go to Indianapolis, I can’t—even if there’s a job there.”

.. Another obstacle to mobility is the growth of state-level job-licensing requirements, which now cover a range of professions from bartenders and florists to turtle farmers and scrap-metal recyclers. A 2015 White House report found that more than one-quarter of U.S. workers now require a license to do their jobs, with the share licensed at the state level rising fivefold since the 1950s.

.. cities’ welcoming attitudes toward immigrants from abroad, same-sex marriage and secularism heighten distrust among small-town residents with different values. That widens the cultural gulf.

.. Economists have tried to measure whether Americans’ eroding trust in one another is damping mobility—such confidence helps ease the transition to a new town—and found signs that this sliding trust may be keeping people from uprooting.

.. states with large declines in overall trust were also places where job-switching had decreased markedly.

.. Bad experiences in cities also turned him off. In one job, he traveled the country cleaning Home Depot locations and recalls feeling uneasy when a black worker at a Kansas City McDonald’s told him to leave because white boys didn’t belong in that part of town, he says. He took his children to Detroit for a motocross event at Ford Field and panhandlers hit him up for money.

.. “One of the big cultural divides when people move from small towns to cities is this feeling that you can’t be involved in your community,” says David J. Peters, associate professor of sociology at Iowa State University. “You feel powerless to change large cities.”

.. she started at Olivet College in south central Michigan in 2016. But she struggled to fit in there, too. She felt uncomfortable when a professor asked students to write about why Donald Trump would make a bad president.

Canada’s Housing Boom Expected to Spark Rate Rise

In Canada, which was hit with an income shock after the downturn in prices of oil and other commodities, low rates have resulted in an extended period of loose money that has fueled a housing boom in pockets of the country.

..  even though inflation—at an annualized 1.3% rate in May—remains well below the central bank’s 2% target, and wage growth remains stubbornly low.

.. TD Securities, said it believed the central bank would hold off until October, arguing a rate rise now could hurt the Bank of Canada’s reputation as an inflation-targeting bank.

.. Six of the dealers surveyed added they expect Canada’s benchmark interest rate to hit 1% by the fall.

“Inflation isn’t pressing, but the economy is showing that it can easily live with interest rates a bit higher than they are at present and still generate solid growth,” said Avery Shenfeld, chief economist at CIBC World Markets.

.. Mr. Poloz said rate cuts delivered in 2015 have worked in helping the economy adjust to the income shock from lower energy prices, and that spare labor and production capacity in the economy was being “steadily” absorbed.

.. Mr. Shenfeld said one factor that may be driving the Bank of Canada is more concern about financial stability than it is letting on, highlighted by record levels of household debt and worries about a housing crash in Toronto and Vancouver.

“Why encourage excesses of debt?” he said. “We’ll trade off a bit of a delay in getting to 2% inflation if that gives sufficient benefits in financial stability.”

Trump Family Wedding Planner to Head New York’s Federal Housing Office

A longtime associate of President Trump’s family, who organized golf tournaments on the president’s courses and planned his son Eric’s wedding, will soon oversee billions of federal dollars as the head of the Department of Housing and Urban Development’s New York and New Jersey office.

Lynne Patton had been working as a senior adviser and director of public engagement at HUD for several months before Ben Carson, the department secretary, recommended her for the new role

.. The appointment of a Trump family loyalist to a key government post fits a pattern. His daughter Ivanka and son-in-law, Jared Kushner, work in White House offices. Dan Scavino Jr., who was the president’s caddie, is the director of social media. His longtime bodyguard, Keith Schiller, has become such an important White House figure that he hand-delivered the dismissal papers to James Comey, the former F.B.I. director.

.. Ms. Patton had earned the trust of Mr. Carson after organizing his listening tour in several cities.

.. “Dr. Carson calls her, ‘the general’ because she can lead an army. She’s that tough,” Mr. Williams said.

.. “If Donald Trump is intent on showing the contempt he has for the social safety net, then the appointment makes sense.”

.. Mr. Torres, who grew up in public housing, said Ms. Leicht had been a “strong advocate for affordable housing in New York City,” and acted as a liaison between local officials and the federal housing department.

.. Morale among some career officials at the city’s local office of the federal housing department has been low because of proposed cuts to the agency’s budget.

Why Millennials Are (Partly) to Blame for the Housing Shortage

As young people and builders have shifted their focus toward trendier urban markets, overall housing construction has declined

 For decades during the late-20th century, suburbs were the place to build, as urban cores suffered from high crime, poor schools and stagnant or shrinking populations.But preferences have changed among young people, many of whom want to live closer to transit, restaurants and their workplaces.

.. As builders have shifted focus toward trendier urban markets and away from cheaper suburbs, they have produced less housing overall than they otherwise might have. While starter-home construction has bounced back in recent months, it remains far from reversing this long-term trend.

.. The takeaway, Mr. Romem says, is that pricey cities need to loosen land-use restrictions in core areas where there is more demand. Allowing for more high-rise condo buildings would make it economical to produce starter homes in these areas as well.

“Do you care about preserving things the way they are, so that only wealthy people can continue buying in, or do you want to [encourage more density], so that housing is more affordable for everyone?” he asked.

A ‘Forgotten History’ Of How The U.S. Government Segregated America

Rothstein’s new book, The Color of Law, examines the local, state and federal housing policies that mandated segregation. He notes that the Federal Housing Administration, which was established in 1934, furthered the segregation efforts by refusing to insure mortgages in and near African-American neighborhoods — a policy known as “redlining.” At the same time, the FHA was subsidizing builders who were mass-producing entire subdivisions for whites — with the requirement that none of the homes be sold to African-Americans.

The Nightmare Scenario for Florida’s Coastal Homeowners

Demand and financing could collapse before the sea consumes a single house.

.. “These boats are going to be the canary in the mine,” said Cason, who became mayor in 2011 after retiring from the U.S. foreign service. “When the boats can’t go out, the property values go down.”

.. Relative sea levels in South Florida are roughly four inches higher now than in 1992. The National Oceanic and Atmospheric Administration predicts sea levels will rise as much as three feet in Miami by 2060. By the end of the century, according to projections by Zillow, some 934,000 existing Florida properties, worth more than $400 billion, are at risk of being submerged.

.. Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean.

.. Sean Becketti, the chief economist at Freddie Mac, warned in a report last year of a housing crisis for coastal areas more severe than the Great Recession, one that could spread through banks, insurers and other industries.

.. Citing Florida as a chief example, he wondered if values would decline gradually or precipitously. Will the catalyst be a bank refusing to issue a mortgage? Will it be an insurer refusing to issue a policy? Or, he asked, “Will the trigger be one or two homeowners who decide to sell defensively?”

.. He described South Florida’s real estate market as “pessimists selling to optimists,” and said he wanted to cash out while the latter still outnumbered the former.

.. Since the end of 2010, median home prices in and around Miami rose 120 percent, almost twice the statewide average and three times the national rate. In January, a building in Palm Beach County called The Bristol topped $300 million in units sold, achieving the distinction of the most-expensive condominium in that county’s history

.. Realtors in Florida face no legal requirement to warn potential buyers about those flood risks. Albert Slap, president of Coastal Risk Consulting, which helps homeowners and governments measure their exposure to flooding, said he thinks that will soon change: Just as the public demanded mandatory disclosure of asbestos and lead paint, people will insist on the same disclosure if a house suffers regular floods.

And when that happens, Slap said, many Florida home prices will tumble.

.. “Anybody in these floody areas, if they disclose to a buyer, the buyer probably won’t buy that property,” said Slap, whose company is doing work for the city of Miami Beach. “That’s going to drive the value down to zero, well before water is up to their front door.”

.. “The next black swan is the failure of housing finance to take climate change into account,” he said. “There will be a large number of homes that will lose substantial value, and will default on mortgages, if nothing is done to help them.”

.. : The government simply won’t be able rescue homeowners who wait too long to sell. “There isn’t enough money,” he said.

.. The National Flood Insurance Program is up for reauthorization this year; fiscal conservatives have said they want to use that opportunity to reduce the program’s subsidies, so that people are paying something closer to the full cost of their risk.
A cut in federal subsidies would particularly hurt Florida, which despite its exposure pays the lowest average flood-insurance premiums in the country, according to FEMA data.

It’s official. It’s a bubble!

What scares the heck of me, beyond the 22% Y/Y appreciation, is the nature of sales these days. In speaking with agents I see a few clear and worrisome trends.

First, “bully offers” have become the norm these days when they used to be the exception. Bully offers are aggressively high offers that bidders submit before the official offer date. For example, a seller and their agent will market the home as accepting offers on a set date (usually Tuesday), but bidders will come in with preemptive offers shortly after the listing goes to market, canceling out the stated Tuesday offer night. Basically if you’re trying to purchase a home in Toronto you can’t react quickly enough since the bully offers come in so fast, leaving many interested parties no time to react.

.. Since 1999, the Teranet-National Bank Toronto Home Price Index has risen an incredible 200%. In contrast Japan’s home price index rose 193% in the 17 years prior to its peak, and the US S&P/Case-Shiller National Home Price Index rose 152%

.. I have to run now. I’m interviewing some real estate agents to give me a quote on what my home is worth. Who knows, maybe Garth has rubbed off on me and I can convince my wife to sell our home and lock in a massive profit. These type of gains don’t come along too often in life!