The American dream of homeownership is becoming increasingly elusive in many parts of the country. As people flee expensive states in search of affordability and quality of life, they’re also unknowingly sowing the seeds for potential housing market instability.

This migration trend, exacerbated by the pandemic and facilitated by the rise of remote work, has pushed home prices in previously affordable cities to unprecedented heights. This article will explores the consequences of these moves on the housing market, focusing on how they could precipitate a housing market crash.

Key Takeaways

Affordability Crisis in New Destinations

States like Texas, Florida and North Carolina have welcomed thousands of families seeking refuge from the high cost of living in their home states. However, this influx of new residents has led to skyrocketing home prices and rents, making it increasingly difficult for locals and newcomers alike to afford housing. In cities that were once considered affordable, bidding wars, cash offers well above asking price and a shortage of inventory have become the norm.

The Impact on First-Time Buyers

The dream of homeownership is slipping away for many first-time buyers, who find themselves priced out of the market. With home prices rising much faster than wages, saving for a down payment and qualifying for a mortgage are becoming insurmountable hurdles for many. This disparity is creating a generation of permanent renters, unable to invest in their futures through property ownership.

Potential for a Housing Market Crash

The current housing boom in states gaining population is not sustainable in the long run. As affordability continues to decline, fewer people will be able to buy homes, leading to a decrease in demand. This, coupled with a potential increase in supply if investors decide to cash out or if overextended homeowners are forced to sell, could lead to a sharp decline in home prices. Such a scenario could trigger a housing market crash, similar to what was experienced in 2008, leaving many homeowners underwater on their mortgages and destabilizing the economy.

Is There a Way To Prevent a Housing Market Crash?

What can be done to prevent a potential crash? Measures that could help stabilize the market include:

Final Take

While the move from more expensive states to more affordable ones seems like a solution to high living costs, consider any of the long-term implications on the housing market. Without intervention, the dream of homeownership will become increasingly out of reach for many, and the risk of a housing market crash will rise. It’s a complex issue that requires thoughtful solutions to ensure a stable and accessible housing market.

Written by: Melanie Grafil @MSN.com

The post “Could Moving Out of Expensive States Lead To a Housing Market Crash?” first appeared on MSN

Consumer prices in China plummeted last month at the fastest pace since the global financial crisis.

The Chinese government is facing growing pressure to support a crumbling economy as experts warn that the consumer price index dropped 0.8 per cent in January from a year ago.

On Thursday, the National Bureau of Statistics said the economy is the weakest since September 2009.

It comes as calls mount for China to support an economic rebound.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management Ltd said: “The CPI data today shows China faces persistent deflationary pressure.

“China needs to take actions quickly and aggressively to avoid the risk of deflationary expectation to be entrenched among consumers.”

The decline was worse than economists’ expectations for a 0.5 per cent drop.

Despite China enforcing measures such as releasing long-term cash for banks and issuing more government bonds to fund construction projects, confidence in the world’s second-largest economy has flagged.

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Last year the nation struggled with falling prices as China attempted to revive domestic demand and consumer confidence.

Core CPI, which removes volatile food and energy costs, rose 0.4 per cent, slower than December and the weakest rise since June last year.

Experts warn that the risk of deflation is a major concern.

If China is unable to turn the trend around, it risks a downward spiral with people holding off on purchases due to expectations prices would continue falling.

Written by: Georgina Cutler @MSN

The post “China’s economic crisis takes huge turn for the worse as inflation drops at fastest pace in 14 years” first appeared on MSN.com

Inflation has been a stressful reality for many Americans recently, having a marked impact on consumer budgets. But with inflation rates finally slowing, and the threat of a recession in the news, deflation is also a phenomenon many should prepare for.

Deflation, or a decline in prices of goods and services across the economy, might seem like good news after dealing with high prices for so long. However, the trend is typically accompanied by job loss, poor investment return and other side effects.

The good news is this: Preparing your finances for deflation involves many of the same good financial habits as preparing for inflation does. Those financial moves include shoring up your emergency savings and carefully choosing investments.

What Is Deflation and Why Is It a Risk to Your Finances? 

“Deflation is when the general prices of goods and services start to fall and typically a sign of an economy that is weakening,” says Andrea Woroch, consumer and money-saving expert and U.S. News contributor.

At the moment, however, the U.S. is still experiencing inflation, albeit at a rate that has shrunk from recent highs.

Historically, deflation is triggered by a recession and low consumer spending, says Tom Graff, head of investments at Facet. So despite the fact that Americans may be a ways off from deflation, the threat of an impending recession has many worried about the phenomenon.

Deflation is a sign of a poor economy, but it has both negative and positive effects on the average individual.

“It can be good because it gives people more purchasing power, which can stimulate the economy. However, companies and businesses will have to reduce production to offset loss in profits which can be followed by layoffs and liquidations,” Woroch says.

Graff adds that the value of your assets is likely to decline and your income could go down.

How to Prepare for Deflation

Americans can take several steps to prepare for deflation, even if it isn’t currently an economic reality. Consider these steps:

Here’s more information on each step.

Build Emergency Savings

An emergency fund is a critical tool for getting through many financial storms. With a healthy amount of emergency savings, you’ll have a safety net if your income stops growing or you lose your job.

“Deflation usually results in households having less income, or at least that people stop getting raises. That could be exactly the time you want to have a little extra money socked away to handle expenses,” Graff says.

Consolidate Debt

It’s worth consolidating and repaying debt before deflation hits.

Deflation “can harm borrowers who end up paying their debts in money that is worth more than when they borrowed it. It’s like borrowing a cup of sugar from your neighbor, but when you return it, you have to give back a cup and a half,” says James Allen, founder of Billpin.com.

Plus, interest rates tend to rise during a recession.

Consolidating debt now may take away this stress in the future. Woroch recommends looking into balance transfer credit cards while there are still good offers on the market.

“Transfer your credit card debt to a 0% balance transfer card, which will waive interest fees on the balance for anywhere from 12 to 21 months, depending on the card offer, helping you save a lot in interest. This way you get out of debt faster and can put more of your money toward savings and retirement,” she says.

Be Careful About Investments

Deflation and recession can limit the growth of your investments. If you’re worried about deflation, take the time to discuss your investment portfolio with a financial advisor and make adjustments according to the different risk levels.

For instance, Graff recommends being cautious about real estate investments.

“Don’t buy a house assuming the price will go up. It is often said that your home is your biggest investment, but we don’t think you should think of it in those terms,” he says. “If you finance your home in such a way that it needs to appreciate for the purchase to make sense financially, you are leaving yourself vulnerable. This is true whether the whole economy suffers a bout of deflation or merely your local housing market turns weaker.”

Written by: Emily Sherman @MSN

The post “How to Prepare for Deflation” first appeared on MSN.com

Electric vehicles (EVs) are about to get cheaper and more accessible around the world, as Chinese automotive company BYD has now created the most inexpensive EV in existence.

Dubbed the “Seagull,” the car was recently unveiled at the Shanghai auto show, and according to experts, it is expected to become China’s best-selling car within six months of its launch. And with good reason: the Seagull will cost a mere 78,000 yuan (about $11,200, as of early May) and, with two available versions, travel 305 to 405 kilometers (about 190 to 252 miles) per charge, according to Reuters.

Making EVs an option that the average consumer can afford — as opposed to the super-luxury item they were when they first arrived on the scene — is crucial to breaking our reliance on gas-powered cars. BYD’s Seagull definitely does that, with a price tag that is less than half of what any other EV on the market costs.

Unfortunately, the Seagull is not going to be available to U.S. customers any time soon, as BYD is currently taking a cautious approach when it comes to expanding into the U.S. market, largely due to the political tensions between China and the U.S.

That means that, for the time being, American customers will have to console themselves with the fact that EV prices in the U.S. have also been dropping recently, although not nearly to the $11,200 level. The lowest-priced EV currently available to U.S. customers is the Chevy Bolt, which starts at $26,500 and also qualifies for the $7,500 tax credit that was part of the Inflation Reduction Act.

Whenever the Seagull does make it to the U.S., it is sure to be a big seller as long as it maintains that low price tag. And in the meantime, it’s a great thing for the planet that so many people who may not have previously been able to afford an EV will now be able to make the switch.

Written by: Jeremiah Budin

The post “A Chinese company is releasing an ultra-cheap EV that costs less than almost any new car in America — here’s how that’s possible“ first appeared on The Cool Down