For US renters, the chances of home ownership are getting worse

For US renters, the chances of home ownership are getting worse

The American dream of owning a home looks more like a nightmare.

With inflation heating up again, the Federal Reserve is in no position to consider lowering interest rates at its next meeting. That helped push the average fixed rate on a 30-year mortgage above 7.2% after five consecutive weeks of increases.

Consumers do not expect mortgage rates to drop anytime soon. Over the next year, they expect that mortgage rates will rise to nearly 9%. In the next three years, they expect a rate of almost 10%. That’s according to a New York Fed survey that gauged consumer expectations for the housing market, released on Monday.

Additionally, households are bracing for a rebound in house prices next year after they started to decline last year.

But here’s the catch: Renting is also far from a bargain these days. Consumers are bracing for bigger-than-expected hikes in mortgage rates over the course of next year, a New York Fed survey found.

The issue of rental affordability is especially acute in New York City, where housing costs have been notoriously high compared to other parts of the country, with no brief respite during the pandemic.

But what makes the burden heavier is that rents in the city rose seven times faster than wages last year, according to a Zillow analysis published Tuesday. That’s the largest gap in the nation’s 50 largest metro areas. However, nationally, Americans’ wages rose at a faster rate than their rents last year.

The Fed’s role: The strong job market the Fed has sought to maintain while curbing inflation is working against New York City renters, Kenny Lee, senior economist at Zillow-owned StreetEasy, said in a statement Tuesday. This is because the construction of new homes in the city is mainly struggling to meet the demand that comes from the availability of jobs.

Would things have been different if the Fed had raised interest rates sooner to fend off a rise in inflation in 2022 when it hits multi-decade highs?

“It’s possible that inflation will return to target sooner if the Fed hikes earlier,” Aditya Bhave, senior US economist at Bank of America, told CNN. If that happens, the central bank may not need to keep rates at their current high levels for long.

That could help prevent mortgage rates from rising as high as they are now because, as Minneapolis Fed President Neel Kashkari said in a Bloomberg TV interview Tuesday, housing is “traditionally the most interest-rate-sensitive sector of the economy.”

However, Bhave said “hindsight is 20/20 and a lot of inflation is due to supply disruptions that the Fed can’t stop.”

The other side of the equation is that if the Fed had not kept interest rates near zero for two years, many of the current low-rate homeowners would not have been able to afford to own a home.

One of the dangers now is that many Americans who put off plans to buy a home may not “be able to participate in the increase in home values, which could affect the distribution of wealth in the long run,” Bhave said.

Slaughterhouse cleaning company fined $649,000 for employing child workers
A janitorial company has been fined $649,000 after an investigation found it hired minors for dangerous jobs cleaning slaughterhouses, the US Department of Labor said Monday.

Fayette Janitorial Services has employed at least 24 children, including those as young as 13, according to a DOL investigation. The minors worked overnight shifts at two separate slaughter facilities, according to the DOL.

Federal labor laws prohibit children from certain jobs in slaughterhouses and meatpacking plants, including operating or cleaning machines, because of the hazardous conditions.

This is not the first recent instance of child labor violations in the meat packing industry.

Children were found working at the Seaboard Triumph Foods Plant in Sioux City, Iowa, and at the Perdue Farms chicken processing facility in Accomac, Virginia, according to the DOL. “Minors are used to clean dangerous killing floor equipment such as head splitters, jaw pullers, meat saws, and neck shears,” the Department of Labor said in a February news release describing its investigation findings.

Perdue “terminated our contract with Fayette Janitorial Services prior to this court filing,” a company spokesperson told CNN in a February statement, adding, “labor age has no place in our business or our industry,” the statement continued.

Seaboard, the pork processor, told CNN in a statement that it “immediately terminated all contracts with Fayette,” upon learning of the Labor Department’s allegations. “Such actions, if true, are in violation of our company’s policies and procedures and violate the strict commitments made by Fayette in their contract,” according to that statement.

“Our company will continue to take all appropriate follow-up measures to protect workers and ensure accountability for its contractors’ compliance with labor and employment laws,” Seaboard said.

Incidents of illegal child labor have increased in recent years, and other contractors have been fined for employing underage workers. Last year, Packers Sanitation Services paid $1.5 million in civil penalties for employing minors in hazardous jobs and making them work overnight shifts, according to a DOL investigation.

TikTok is suing to block a potential US ban on the app
TikTok sued Tuesday to block a US law that could force a nationwide ban on the popular app, following legal threats the company issued after President Joe Biden signed the law into law last month, CNN’s Brian Fung reported.

The court challenge sets up a historic legal battle, which will determine whether US security concerns over TikTok’s links to China can override the First Amendment rights of TikTok’s 170 million US users.

The case bet is existential for TikTok. If it loses, TikTok could be banned from US app stores unless its Chinese parent company, ByteDance, sells the app to a non-Chinese entity by mid-January 2025.

In its petition filed Tuesday in the US Court of Appeals for the District of Columbia Circuit, TikTok and Bytedance claim the law is unconstitutional because it restricts Americans’ speech and prevents them from accessing legitimate information.

The lawsuit follows years of US allegations that TikTok’s relationship with China could potentially expose Americans’ personal information to the Chinese government.