The 2023 New Year celebrations were barely over when experts began sounding the alarm over a miserable 12 months ahead, but the outlook appears less gloomy this time.
Barclays Capital Inc. said 2023 would go down as one of the worst for the world economy while Fidelity Investments labeled a US recession in the coming months ‘likely.’
While economists were wrong about some things – consumer spending and the labor market remained surprisingly resilient – soaring interest rates and hot inflation have battered household budgets this year. So what lies in store for 2024?
As the new year approaches, DailyMail.com spoke to leading experts for their economic predictions – and what they could mean for your budget.
DailyMail.com spoke to leading experts for their economic predictions – and what they could mean for your budget
Interest rates and inflation
The Federal Reserve began aggressively hiking its benchmark funds rate in March 2022 – taking interest rates to their current 22-year high of between 5.25 and 5.5 percent. By comparison, in April 2020, they were as low as 0.5 percent.
Fed hikes are designed to curb consumer spending to bring down inflation. The rate of annual inflation fell to 3.2 percent in October – down from its peak of 9.1 percent in June 2022 – but remains well above the Fed’s 2 percent target.
Cris deRitis, deputy chief economist at Moody’s Analytics, told DailyMail.com that interest rates will likely remain at their current level for the first half of 2024 before dropping slightly.
‘We predict the Fed will hold interest rates steady until around June of next year as inflation gets closer to its 2 percent target.
‘But it will take some time because inflation is largely dependent on rents and property prices which we don’t expect to come down quickly.
‘By the end of 2024, we should see the Fed starting to cut rates at a leisurely pace.’
His comments echo a similar prediction from Bank of America which suggested the funds rate would end the year at 4.75 percent.
The funds rate is the interest banks charge to each other and does not directly dictate what consumers pay. However fluctuations to the rate have a knock-on effect on mortgages, credit cards and savings accounts.
The rate of annual inflation has fallen to a rate of 3.2 percent – down from its peak of 9.1 percent in June 2022 – but remains well above the Fed’s 2 percent target
House prices and mortgage rates
Buyers are currently facing one of the worst housing markets in recent memory thanks to a perfect storm of high house prices and elevated interest rates.
While the average 30-year mortgage has dropped slightly from its late October high of 7.79, it remains 7.22 percent as of November 30 according to lender Freddie Mac. Two years ago this figure was hovering around 3.10 percent.
In real terms it means buyers face paying $1,000 more per month on their mortgage than if they had purchased a property in 2021. As a result, many are thinking twice.
Yet property prices have remained high thanks to a shortage of available housing. Figures from the Federal Housing Finance Agency (FHFA) show the average house price increased by 5.56 percent between the third quarters of 2022 and 2023.
DeRitis told DailyMail.com: ‘Our expectation is that the housing market will move sideways.
‘Month by month there will be some volatility as the two forces of low affordability and low housing stock fight each other. But we are not expecting a big drop.’
He added that mortgage rates would likely end the year on 6.5 percent.
But Meredith Whitney, a former Oppenheimer analyst nicknamed the ‘Oracle of Wall Street’, offers a starker prediction.
She said: ‘House prices could drop by up to 20 percent. Aging boomers are set to start downsizing and that will free up inventory.
‘But homeowners have built up $21 trillion of equity in their properties so any drops to prices will not have a significant effect on the economy.’
The immediate future of the stock market has been the subject of fierce debate among economists.
Last month Wall Street ‘prophet’ Gary Schilling said the S&P 500 could crash by as much as 30 percent to its lowest level since the pandemic.
JPMorgan said it could fall a more moderate 8 percent yet Bank of America and BMO Capital Markets suggested they could rise by as much as 10 to 12 percent.
But deRitis again issues a more moderate prediction.
‘Our forecast is that stocks will remain relatively flat,’ he said.
‘Our prediction is more on the upside than downside and there will likely be some positive growth. Certainly, in the second half of 2024 when the economy reaches a new equilibrium, investors may be more enthusiastic.’
The US added 150,000 in October, a significant reduction on the month prior and an indication that the economy may finally be starting to cool
America’s red-hot labor market and consistent wage growth has been repeatedly blamed for keeping inflation high.
The unemployment rate is hovering at 3.9 percent, according to the latest data from the U.S. Bureau of Labor Statistics.
However a cooldown has started to emerge already. The US added 150,000 in October, a significant reduction on September when it saw the largest jump in employment in eight months.
But Moody’s Analytics predicts next year unemployment will rise ‘modestly’ to 4.1 percent.
deRitis said: ‘Our baseline forecast is that there will be a slowing to the US economy, with GDP reaching between 1.5 and 1.7 percent compared to around 2.5 percent this year.
‘We see both wage growth and new jobs slow.’
JOHN KRINJAK: So we know housing is expensive here in Austin. It costs a lot to buy a house. The market has changed so much in recent years. But what does this report reveal about the scope of this problem?
CLARE LOSEY: So the report really takes a more nuanced look at the shortage of housing. So, for example, we know that in Travis County, there’s a shortage of affordable homes to the tune of about 250,000 versus about 211,000 homes in the city of Austin. However, we also boil that down to five different income cohorts. And then we also look at the extent of the shortage of homes across all ten council districts in Austin, as well as five different racial and ethnic groups.
JOHN KRINJAK: And when you looked at those different districts, first of all, what did you find?
CLARE LOSEY: Well, essentially, there is a shortage of affordable homes in all ten council districts in Austin. The disparity ranges somewhat. We found that there’s the greatest proportional need for affordable housing in District four. But the largest number of housing and new homes needed is in Council District five. And then with respect to the other nine council districts, District ten was essentially the best position with respect to the shortage of affordable homes. But again, stressing there that there is a shortage of affordable homes across all ten districts.
JOHN KRINJAK: And looking at it through the prism of different racial and ethnic groups. How much of a disparity do you find there?
CLARE LOSEY: Certainly a large one. So the Black or African-American population within Austin is about 4% of the total population, but they have a shortage of about 26,000 affordable homes across the region versus the Hispanic or Latino population, which has a shortage of about 78,000 homes and then households of other races. They have a shortage of about 61,000 homes.
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JOHN KRINJAK: What would you say is to blame for this? Does it have a lot to do with just the rapid growth, just the influx of population we’re seeing from outside of the city into Austin?
CLARE LOSEY: So there are very strong demand side fundamentals in our housing market right now. So strong population growth, job growth. This is especially good for existing homeowners, right, as they’ve been able to capture that very strong home price appreciation, especially that during the COVID-19 pandemic. However, for would-be buyers, for potential home buyers, it can become a particularly large issue, right? If they’re not able to find homes that are affordable to their price point. Fewer than 10% of homes sold are transacting for that under $300,000 price level. And that’s really so households essentially need to be earning about 90 to $100,000 to be able to enter the housing market in Austin. So obviously that’s quite prohibitive to a large number of households in Austin.
JOHN KRINJAK: Do you feel the city is doing enough to address this issue? And if not, what more should the city government be doing?
CLARE LOSEY: At the Austin Board of Realtors, we’ve been particularly encouraged by recent initiatives undertaken by our mayor and just his staff at large. In essence, what we’re calling for in our recommendations with this report is a focus on reducing those minimum lot size requirements and facilitating the supply of new housing. We know that all else equal, if the supply of homes increases, that should mitigate some of the upward effects on home prices. Right. That we’re seeing as a result of those very strong demand side fundamentals.
JOHN KRINJAK: All right. Clare Losey from the Austin Board of Realtors. Clare, thanks for being here. We appreciate it.
CLARE LOSEY: Thanks so much for having me.
When Amazon announced in 2018 that it would build a second headquarters in Arlington, Virginia, to host 25,000 white-collar tech workers, fears erupted that local house prices would skyrocket, displacing lower-income residents.
It found that in 2018 after it was announced that HQ2 would be located in Arlington, house prices soared faster in that county than in neighboring areas, such as Washington, DC, Maryland and the rest of Northern Virginia.
But that initial uptick was not a direct consequence of those employees buying up and renting homes, the report found. Instead, it was driven by speculation and moves by real estate agents who used the forthcoming Amazon development to boost demand.
Amazon’s HQ2 is in Arlington, by the Potomac River and across from DC. The location was first announced in November 2018, causing house prices to temporarily rise in response, studies have found
A rendering of Amazon’s proposed design for its second headquarters campus in Arlington. Pictured is ‘The Helix’, which is part of the company’s Phase 2, and currently on hold
The report also noted that while the original uptick was linked to Amazon, the company’s effects may have only been short-lived. The Covid-19 pandemic in 2020 then muddied the waters, making it harder to identify clear trends.
Over the last decade, home prices rose at a rate of about 4.5 percent annually in the DC area, according to the report. And since 2019, the pace of home price appreciation escalated, rising at around 7.0 percent annually between 2019 and 2023.
AMAZON HQ2 TIMELINE
September 2017 – Amazon begins appeal to communities around the country for tax breaks in exchange for its new headquarters
November 2018 – Locations are whittled down to NYC and Arlington
February 2019 – NYC offer is withdrawn
June 2019 – Handful of employees move into rented space in Arlington
January 2020 – Construction begins on ‘Phase One’ buildings (Met Park)
June 2023 – Over several weeks, approximately 8,000 employees move into the Met Park site
A separate analysis by Realtor.com shortly after the announcement in 2018, found that the median home price in Arlington rose 17 percent to $750,000 in April 2019, up from $640,000 in November 2018.
That was significantly higher than the national average.
‘It’s a little bit like a chicken and an egg,’ said Lisa Sturtevant, the author of the paper.
‘Amazon came to Arlington because Arlington was attractive, Arlington was attractive so people wanted to be there and home prices and rents were rising. And then Amazon came in and home prices and rents continue to rise.’
She noted in the report that the immediate impact was not caused directly by Amazon employees buying homes – since they were not to move in for several years – but by speculation around how HQ2 might eventually have an impact.
‘I think it was sparked by the announcement and not by any new Amazon workers moving to the area,’ she said.
‘There was an expectation that this new economic development that was going to bring 25,000, very high wage workers to the region and that would draw increased demand for housing,’ she added.
The new campus in Virginia is intended to eventually accommodate around 25,000 staff members who will have a median salary of $150,000, according to Amazon.
So far, Amazon has hired 8,000 employees at HQ2. They mostly arrived over the course of several weeks in June.
Immediate increases in house prices after Amazon announced it would locate HQ2 in Arlington were most pronounced among more expensive and older detached housing
Another phenomenon Sturtevant noted was that after the announcement in 2018, local real estate agents started using Amazon to drive up hype and interest in the area.
‘Real estate agents began using Amazon HQ2 as a marketing tool. Two out of five single-family detached homes listed in 2019 in the 22202 zip code – the area that includes the Amazon HQ2 headquarters – explicitly mentioned HQ2 in the property description,’ read the report.
‘It was definitely a marketing tool for real estate agents and brokers, as they would use proximity to the subway, or your proximity to a business district,’ she said.
HQ2 was broken up into what Amazon has called Phase One and Two – with 14,000 and 11,000 new jobs respectively.
Since the pandemic, Amazon has temporarily scaled back its development of the second headquarters, pausing Phase Two indefinitely.
Its first influx of employees came earlier in June. And for the time being, Sturtevant predicted that the new employees were still unlikely to directly impact the market.
She referred to a 2018 study from George Mason University which estimated that just 10 percent of the new employees were likely to actually buy home in Arlington.
The most recent batch of employees moved into a site referred to by Amazon as Met Park – a 67,000-square-foot development by the Potomac River and across from DC.
Pictured is a traditional wooden house in Arlington. Detached houses appreciated the most after Amazon announced HQ2 would be located in Northern Virginia
Since the pandemic, Amazon has temporarily scaled back its development of the second headquarters, pausing Phase Two indefinitely
‘In June, we began welcoming the 8,000 employees hired at HQ2 to Met Park, the first phase of our second headquarters,’ Amazon spokesperson, Zach Goldsztejn told DailyMail.com.
‘Our long-term intention and commitment remains unchanged, including our plans to bring 25,000 corporate and tech jobs to HQ2.’
And that temporary slowing down of Phase 2 has also caused concern among real estate agents.
‘On the flip side, we’ve heard from some real estate agents that are worried, “Oh, my goodness, Amazon’s pausing Phase Two, is that going to dampen the housing market?”‘ said
And Amazon has largely chalked up home price increases to a lack of supply and not its new national headquarters.
‘It is clear that relatively high home prices in Arlington and in the greater Washington, DC, region are being driven by strong demand and low supply, and not the movement of high-wage employment to the area,’ said Goldsztejn.
U.S. home prices across the country are surging even with the astronomical rise in mortgage rates, putting ownership out of reach for millions of Americans.
The spike in interest rates – which topped 7% last year for the first time in two decades – has created a “golden handcuff” effect in the housing market: Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell and take on a more expensive option, leaving few options for eager would-be buyers.
The number of available homes on the market at the end of August was down by more than 9% from the same time last year and down a stunning 45% from the typical amount before the pandemic began in early 2020, according to a recent report from Realtor.com.
But there’s another factor driving home prices higher, according to Barclays economists; baby boomers. In a recent analyst note, titled “Blame the Boomers,” the strategists argued the aging of America is spurring more household formation.
Homes in Hercules, California, US, on Wednesday, Aug. 16, 2023. (David Paul Morris/Bloomberg via Getty Images)
“The US housing sector is on the upswing again, even with mortgage rates at multi-decade highs,” the strategists, led by Jonathan Millar, wrote. “Although much has been attributed to shortages of existing properties and mortgage lock-in effects, we think strong demand is a symptom of the aging population.”
It may seem “paradoxical,” because an aging population tends to require fewer homes. But that’s not the case with the baby boomers, who are currently between the ages of 57 and 75. Boomers are reaching retirement age and forming new households, either due to divorce or death, but they aren’t freeing up existing supply.
The formation of households drives demand for both homeownership and rentals. Formation refers to the change in the number of households – of persons living under one roof – from one year to the next. It often happens when young people move out of their parents’ homes, or when a couple divorces.
“While it is likely true that older people tend to prefer smaller housing units, it is not true that an older population requires fewer housing units,” Millar said.
Although there have been “notable” increases in demand from the younger population, nearly all additional demand is explained by the aging population and significant increases in households, according to the analysis.
Barclays anticipates the imbalance between excessive demand among boomers and limited supply to last for several years.
“Data suggest that demographics are likely to support demand for the foreseeable future, consistent with annual household formation of around 1.3mn units through the end of the decade,” the Barclays analysts said. “Meanwhile, the accumulated shortage of new housing units remains considerable, putting upward pressure on house prices and rents, thereby encouraging additional construction.”
The chance to run a restaurant at a unique and historic clifftop property with “one of the most dramatic views in the country” is up for grabs.
Efforts to shift the building for £950,000 earlier this year proved fruitless, while a listing in 2016 at £3.5 million also saw nobody step up to the plate.
Perry Mercer of Marshall & Clarke, the firm marketing the business, told KentOnline it has been a struggle to move the property on but confessed hopes of seeing it utilised as an eatery.
He said: “We’ve struggled to find somebody to buy it as a whole because of its restrictions around not being able to live there as a main residence.
“We’re hoping to find somebody to take it on and run it as a successful cafe or restaurant, the locals would love it and the idea has been really popular before.
“The owners have retired now and what with Covid and everything else it’s not reopened for a few years but it’s a great opportunity for someone else to take over.
“There’s the potential to open it as a restaurant in the evenings and with the location it’s second-to-none, the 180-degree views are some of the best around – it’s a fantastic location.”
Described as “absolutely immaculate”, the property is a former coastguard station which has been sympathetically extended and converted into a tea room with a luxury holiday apartment above.
As a result of previous planning disputes, possible owners would be unable to permanently reside in the property – though plans to convert the cafe into a holiday let were approved last year.
In any case, the 999-year lease would cost any suitors £395,000 and would only see the bottom half of the property available – with the upstairs holiday home to be used by the current owners.
The building occupies a truly spectacular location overlooking the English Channel and once played a vital military role during the Battle of Britain where a top secret revolutionary radar system, called Magnetron, was installed to detect incoming enemy aircraft.
So important was the building to the defence of the realm, it was protected by two anti-aircraft guns and retains an underground bunker. It even warranted two visits by Sir Winston Churchill during the war.
The land where it now sits was acquired by the Ministry of War in 1914 and two huts were erected and used as a signal station during and after The Great War.
In the late 1920s, they were replaced by a purpose-built brick coastguard lookout.
With war again looming, however, the significance of the site prompted the building of an underground operations room (35ft below the building) with two anti-aircraft guns sited to the rear.
Throughout the Second World War, the lookout played a significant part in the defence of the country, its position near ‘Hellfire Corner’ being central to the Battle of Britain.
It was also pivotal in the monitoring and co-ordination of shipping in the Channel which saw its importance acknowledged by Churchill who made visits during the war to the underground bunker.
After the war, the lookout – now a fully equipped coastguard station complete with a radar scanner – continued its important role as the principal centre for the monitoring of what had become the busiest shipping lane in the world.
With this increase in traffic and the development in new technology the decision was made to build a new multi-million pound coastguard station nearer to Dover at Langdon Cliff.
The old station was then decommissioned and in 1994 offered for sale by public tenure.
Chinese stocks were sliding on Wednesday as a fresh batch of bad news weighed on sentiment.
Official data showed new home prices in China’s major 70 cities fell in July, and the yuan held around a nine-month low against the dollar.
That followed a disappointing set of interest-rate cuts from the central bank on Tuesday, as well as fresh signs of a weak economy. There was also news that authorities would stop reporting youth unemployment figures, which had become embarrassingly high.
On top of that,
said that hedge funds are aggressively selling Chinese stocks, and Bloomberg reported that an important financial group, Zhongrong International Trust, had missed interest payments on dozens of products. Property developer Country Garden suspended payments on some of its bonds over the weekend, heightening concerns that China’s financial system is under stress.
“We still expect more policy support to materialize soon, and we retain our constructive view on Chinese equities,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “At the same time, we acknowledge the risk of further disappointment in the near term, delaying the recovery and warranting a more defensive stance.”
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The Shanghai Composite Index finished 0.8% lower on Wednesday. Hong Kong’s Hang Seng Index dropped 1.4%.
Some big Chinese stocks with U.S.-listed American depositary receipts fell on Wednesday.
(ticker: BABA) fell 1% in U.S. premarket trading.
(JD), which reports earnings later in the day, was 0.4% lower.
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SAN ANTONIO – With interest rates the highest we’ve seen since 2000, is it better to rent or buy a home these days?
According to Nerd Wallet, the average 30-year fixed rate in San Antonio is 7.24%.
With high interest rates coupled with still-elevated home prices, consumers are asking what makes better sense for their budget.
“Mine was close to 6%, and I went from an $1,800 a month (rental) payment to a $3,300 a month (mortgage) payment. But I knew back then that it was important for me to start investing in my future and that 10 years later has paid off tremendously,” said Ronnie Trevino, a real estate agent with Keller Williams Heritage.
Trevino knows first hand all of the expenses that come with owning a home and how a mortgage payment can cost more than rent.
“We have to educate buyers on why it is that they’re buying and the strategy of buying versus renting,” Trevino said.
He has seen the highest of the highs.
“Back during the pandemic, we were basically taking orders. There were so many people that just wanted to buy housing,” Trevino said.
And he has seen the lowest of the lows.
“I don’t have any fears, locally. I started the business in 2008, when we had the biggest real estate crash of the nation. And I’m not seeing that same pattern today,” Trevino said.
What we are seeing now are the effect of interest rates on people buying and selling.
“People don’t want to give up 3% mortgages to get a 7% mortgage. And so, that’s helping keeping the housing prices up,” said David Macpherson, a Trinity University economics professor.
Macpherson said housing prices could continue going down.
“There’s already been a slow decline in housing prices. It’s just not as rapid as one would think would happen given the hike in interest rates,” he said.
It seems like the San Antonio market is insulated from real estate chaos – but there are cities across the country not so protected — the thought is that housing prices are too still high – and there is a lot of room for them to come back down.
“ I’d be more inclined to rent and save at a higher savings rate because rents have come down too. Just not as much as housing. I mean, like single-family homes have,” Macpherson said.
But like most matters – it’s not always best to try and time the market.
If you are looking short term – renting could actually be more cost-effective, especially when you factor in closing costs and any home repairs. But long term – a house could be a safe investment.
“You’re saving for the future and you’re putting your money into an investment just like you would a 401k,” Trevino said.
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Ally Liu, 27, graduated from Beijing’s prestigious Peking University with bachelor’s and master’s degrees in finance, and now works at an investment firm. She said she’s exhausted from long hours at work.
“It’s embarrassing, but I’ll just say it,” she said in an interview from China’s capital. “I want to find a guy.” After a long pause, she added, “But it’s hard.”
China’s marriage rate steadily increased until hitting a peak in 2013, when 13.5 million marriages were recorded. By the end of that year, a precipitous decline began—one that continues. Last year the marriage rate hit half its 2013 level, at 6.8 million, according to China’s Ministry of Civil Affairs.
The factors complicating Liu’s romantic pursuits are manifold. Either she is drained of energy and pressed for time, or the potential suitor is. Her close relationship with her parents compels her to abide by one of their marriage demands: a spouse must own a home and ideally a car or other investments, or come from a rich family.
Both the causes and effects of the marriage falloff are being widely discussed in China. For one, the rising unemployment rate for the youth cohort has broken record after record each of the past few years.
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Joblessness for this group, aged 16 to 24, hit a record high of 21.3% in June. By comparison, the rate for the same age group in the U.S. was 7.5% in June, according to the U.S. Bureau of Labor Statistics.
But while China’s number frightens many who are on the cusp of graduation, it may in fact be much higher.
Last week, a professor at Peking University, wrote in a leading financial magazine that her calculations show the rate could be as high as 46.5%. The online article by Professor Zhang Dandan, which has since been deleted, argued that some 16 million non-students in this range are likely “lying flat”—a popular Chinese expression meaning to have given up efforts to work.
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This sky-high jobless rate has given companies that employ younger workers—most notoriously tech firms—extreme leverage over their employees. If one wants a job at all, he or she may be forced to work the “996” schedule—9 a.m. to 9 p.m., six days a week.
This leaves those who do choose the corporate life little time or energy for romantic pursuits. “No gym, no dates, no time for my own stuff,” said Lee Wang, a 30-year-old project manager at one of China’s leading gaming companies, which he asked not be named.
Amid these work conditions lies a vast property market that is both unstable and out of reach for an increasing number of Chinese. Many young men were caught up in the recent spate of defaults among China’s large developers, which left millions of already-purchased units unfinished, leaving the owners in limbo.
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A survey by university researchers taken just before the pandemic found that two-thirds of Chinese born after 1990 felt that owning a house was necessary for marriage.
The pressure for male suitors to own a property even has a phrase, the “mother-in-law economy”—meaning the requirement of the would-be bride’s mother that the future husband own a home.
A team of scholars from multiple Chinese business schools found that “the increasing price of houses, an important measure of marriage cost, has significantly reduced the marriage rate in China.”
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Using 20 years of data, they found that for every 1,000 yuan ($140) increase in property prices per square meter, the marriage rate falls by 0.3%. With housing prices in large Chinese cities rivaling those in the west, such price increases put significant dents in the marriage rate, according to the study.
“As housing prices continue to rise, many young people opt out of marriage because they cannot afford to buy a house,” said study author Zhou Hongyong.
So many Chinese have decided not to buy a home and remain unmarried that even if housing prices fall, the generational shift may have already cemented, a Chinese economist told local media in September.
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The government is in a difficult spot. It wants to boost the property market because rising prices means rising wealth for the hordes of Chinese who put their life savings in housing. But this would exacerbate the unattainability of purchasing property.
Ripples have also been felt in areas effected by the marriage rate, such as fertility. After a two-year lag, birthrates began to fall at roughly the same rate. China now faces a demographic crisis, with a shrinking population that will have too few workers to support a vast number of elderly citizens.
In 2001, China implemented legislation prohibiting unmarried women from any form of assisted reproductive technology (ART), including freezing one’s eggs. Women have pushed back against the law, by going overseas in droves to freeze their eggs and by challenging the legality of the legislation.
Last year, a Beijing court threw out a lawsuit from a women who said a hospital had refused to freeze her eggs because she was single. But officials may have taken notice. Other women have since filed suit.
In March, the National Health Commission began formally seeking expert opinion on allowing egg-freezing and other ART procedures, a step usually taken before legislation is introduced.
While foreign—particularly American ART companies—have benefited from this Chinese influx, a relaxation in the policy in China would mean a boon for the nascent fertility industry.
Experts that Barron’s spoke to were skeptical that the government, or the private sector, could easily intervene, or had the willingness to do so, to reduce work hours and pressure in hopes of improving marriage and fertility rates.
Not only are private companies reluctant to shrink working hours or take other employee-friendly measures because of cutthroat industry competitiveness, but firms could impede government from doing so, said Eli Friedman, chair of International and Comparative Labor at Cornell University who specializes in China.
“If the government were to require fewer working hours without a reduction in wages—which would be necessary for people to still afford living expenses in large cities—you would see tremendous pushback from companies, as it would undermine a key tenet of their business model,” he told Barron’s.
Zhenchao Qian, professor of sociology at Brown University, said that long hours in the private sector aren’t the primary reason for low fertility rates. Those who work in government or state sectors don’t necessarily work long hours but still marry late and have fewer children, he pointed out.
“It probably has more to do with the cost of raising children and poor job prospects even when children go to top tiered universities, that discourage marriage and fertility,” he said.
The government right now views economic development as more urgent than addressing the marriage and fertility problem, experts said. But policy makers still need to engage but tread lightly. “As a more effective approach, the government can contribute by addressing cultural attitudes toward marriage and family, modifying laws and regulations to influence the costs and benefits of having children,” said Haizheng Li, professor of economics at the Georgia Institute of Technology.
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Waterloo Region real estate prices are down on a year-over-year basis but up on a quarterly basis, according to the Royal LePage House Price Survey.
The average cost of buying a home in the area was around $799,000, the report noted.
On Wednesday, the Bank of Canada announced it was raising interest rates by 25 basis points, which is lifting the cost of borrowing to heights not seen in two decades.
It is unclear whether this will be the last rate hike as some experts predict there may be more to come in the fall.
Mike Milovick, a local broker, predicts that if interest rates do continue to climb, it will likely slow the market for first-time buyers but may not slow those who are looking for an upgrade.
In a release, he also noted that rising rates could slow sales but the realtor does not believe it will cause prices to drop drastically.
“Kitchener-Waterloo’s housing market has become more balanced over the last several months, with a much-needed increase in inventory levels and a slight slowdown in sales,” he stated.
Across Canada over the second quarter, the aggregate sales price dropped by .7 per cent year over year to $809,200 but much like Waterloo Region, prices were up in comparison with the first quarter.
Royal Lepage says it has revised its forecast for the aggregate price of a home to increase 8.5 per cent nationally in the fourth quarter of 2023.
It made the move after a stronger-than-expected amount of activity and price appreciation over the first six months of 2023.
The agency notes that some people have been forced to alter their expectations because of rising interest rates — meaning they may have had to choose a smaller house or a different location for their home — but they are still looking to buy.
Long-term, the company does not see prices dropping as there are fewer housing starts and as immigration to Canada is at a record pace.
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