Vanguard provides a hypothetical example of how executing this strategy can shore up your retirement funding: Let’s say a 30-year-old homeowner bought her primary home in Boston for $170,000 in the early 1990s. The home, which enjoyed appreciation above the national average, would now be valued about $500,000. In her 60s and after a move to Florida, she can own a property outright and unlock about $200,000 of equity from her Boston home and add it to her retirement savings fund.
Vanguard says its research shows that housing wealth should not be considered off-limits when mapping out a retirement plan.
“It’s a big deal,” said Kevin Khang, Ph.D., a coauthor of the Vanguard study. “It plays a very big role — and in some cases the only role — in people’s ability to have a secure retirement.”
Since many people often move to a new home near retirement, either to enjoy a warmer climate, cultural opportunities or a breathtaking water or mountain view, it makes financial sense to at least consider a “retire-and-relocate” financial option.
The biggest beneficiaries of this real-estate-focused retirement funding strategy are what Vanguard dubs “lottery winners.” Those are folks who move from a booming, white-hot housing market to a cheaper, low-growth market. Just like maximizing a stock investment by selling at “the top,” this strategy unlocks the most equity when homeowners in expensive markets sell when sellers hold the upper hand over buyers. “Bargain hunters” can execute this strategy by selling and packing up and heading to a more distressed real market.
Why has the Government opted not to extend its moratorium on evictions? The decision has not so far proven popular, except among the relatively small and wealthy population group who are themselves private landlords. In the context of a housing emergency, in which many of those evicted will face the prospect of immediate and possibly prolonged homelessness, the resumption of evictions will not only be personally catastrophic for those affected: it will trigger an unprecedented escalation of a national crisis. Many people in the State, including many children, will be left with nowhere to live, through no fault of their own, as a direct result of this decision.
The wave of evictions expected to begin from the end of this month is not merely theoretical: we already know that during the period of the ban, tenants in the State sought advice on roughly 1,500 new eviction notices. In a few weeks’ time, if the Government does not reverse course, these evictions will be eligible to proceed. Minister for Housing Darragh O’Brien has even publicly accepted that homelessness will “very possibly” increase when the moratorium comes to an end.
Why would any government approve a decision that is by its own admission likely to force additional people into homelessness? In the Dáil last Tuesday, Taoiseach Leo Varadkar tried to explain that despite the short-term “respite” offered by the eviction moratorium, “it actually would have made things much worse in the medium to long term”. If the moratorium had been extended, he claimed, “it would have discouraged new landlords from coming into the market, who we need. We have lost 40,000 in the past five years and it may have caused, once extended, more and more landlords to leave”.
Not coincidentally, “supply” has also been the watchword of the Irish Property Owners’ Association (IPOA), a lobby group on behalf of landlords. In its statement welcoming the end of the eviction ban, the IPOA exhorts the Government to focus on “protecting the existing private rental supply that we have in place and [that] is housing hundreds of thousands of people”. The Government and its cheerleaders would like us to believe, then, that the eviction ban is forcing landlords out of the market, reducing the number of rental units available, and thereby causing long-term dysfunction in the housing system. If this really is the rationale underlying the decision to resume evictions during a housing crisis, it deserves very serious consideration.
There is some evidence to suggest that a higher than usual proportion of landlords have been exiting the rental market in recent years. A survey by the Real Estate Alliance indicated that 35 per cent of properties for sale in 2021 belonged to landlords; the average figure in previous decades was about 20 per cent. Statistics like these – suggesting an “exodus” of rental properties from the market – are reported to have influenced the Cabinet in its decision to lift the moratorium. But this data is easily explained without any reference to State intervention. Considering that property prices have reached extraordinary highs since the pandemic, and given that rental properties represent financial commodities rather than homes for the people who own them, it should not be at all surprising that landlords are choosing this moment to cash out.
Not only have successive Fianna Fáil and Fine Gael governments done nothing to break this cycle, they have on the contrary lavishly subsidised it, pouring ever greater sums of State money into the coffers of private landlords
It is a basic principle of finance that asset owners should sell when they judge that the price of an asset has reached its peak. Many investors may believe that property prices right now are as high as they’re going to get. Owner-occupiers – the other relevant participants in the housing market – typically have more personal reasons for selling up: they need to move for work, for instance, or they want to downsize, or they’re planning for a bigger family. These concerns are largely unrelated to shifts in the property market. Therefore, in periods of extremely high house prices, especially if there are broader signs of volatility in global commodity markets, we could rationally expect to see a higher proportion of sales from landlords than from owner-occupiers. This makes basic financial sense. There is no need to invoke State regulations to explain why landlords might be eager to realise the cash value of their presently very lucrative assets.
But a prolonged eviction ban with no definite end date may well discourage new private investors from entering the rental market: in which case, we need to figure out how this affects people who are in need of homes. Invoking the sale of 40,000 rental properties in recent years, the IPOA gives what appears to be a stern warning: “This stock is lost to the rental market. Private rented properties that are sold did not return to the rental market and instead are typically sold to owner-occupiers.”
This is a significant point. For all the talk of supply, the fact is that landlords do not and cannot increase the levels of available housing in the State. A given property that goes up for sale on the private market may be purchased by an owner-occupier, or it may end up in the hands of an investor who intends to let the property to tenants. In either case, however, the same edifice continues to exist, and will be used to house a person or group of people in need of a home, be they owners or renters.
Unless property is left vacant – a problem the Government can and should address urgently by means of targeted policies – the overall housing supply therefore cannot be affected by landlords entering or exiting the market. All that can change is the fraction of Ireland’s private housing stock held by owner-occupiers and the fraction owned by investors. Those two percentages will add up by definition to 100 per cent. Since the Government has expressed such “deep concern” around the exit of landlords from the market, perhaps it should provide us with a guideline of what exactly it thinks the ratio ought to be. How much of our housing stock should ideally be concentrated in the hands of private landlords?
Let me put the same question another way. Would you, the person reading this article right now, rather be a tenant or a homeowner in Ireland today? For almost everyone, the answer is simple. In order to access their own homes, tenants of private landlords have to pay a recurring sum of rent every month, in perpetuity; and each rental payment consists of money that the tenant will never see again. Rent is simply the price of continuing to live in a given property, just as groceries and electricity have a price. Many homeowners also have to pay a recurring monthly sum, of course, in the form of a mortgage repayment. But unlike rent, mortgages are eventually paid off; and a homeowner can confidently expect to see some of that money again, if and when they choose to sell or refinance their property.
The differences are obvious. Very few people actually want their money to disappear every month instead of being added to a fund they can draw down at a later date. It stands to reason that the median net worth of a household of renters in Ireland is just €5,300, while the figure for homeowners is almost 60 times higher at €303,900.
[ Una Mullally: Government has lost control of the housing market ]
Even aside from the financial toll of renting, consider the psychological hardship of trying to make a life for yourself and your family in what is ultimately someone else’s spare house. Your home – your place in the world, your refuge, the stage for all the private dramas of your intimate life – can be taken away from you at any time, through no fault of your own, for the financial benefit of someone wealthier than you are. This is obviously not the life most of us would choose for ourselves.
So, if most tenants in Ireland would rather be homeowners, why don’t they just buy houses? Because they can’t afford to. House prices in Ireland are of course extremely high, and mortgages are difficult to secure, but that’s only one part of the picture. Between 2010 and 2021, property prices in Ireland increased roughly in line with the EU average. But during the same period, average rent payments in Ireland increased by almost 70 per cent, compared with an increase of only 16 per cent across the EU. What makes our housing market so dysfunctional is partly that our tenants are paying such excruciatingly high rents to private landlords every month. Average rents in Ireland have in fact become higher than average mortgage repayments – in other words, tenants are forced to pay a premium for the reduced rights and privileges they endure.
This is a self-perpetuating form of exploitation: the higher the rental payment, the harder it becomes to save up for a deposit, and the more time tenants have to spend paying extortionate rents as a result. This in turn feeds the cycle of escalating house prices, as investors with deep pockets are incentivised to buy up lucrative rental properties, pushing would-be homeowners out of the housing market and back into the rental system. Not only have successive Fianna Fáil and Fine Gael governments done nothing to break this cycle, they have, on the contrary, lavishly subsidised it, pouring ever greater sums of State money into the coffers of private landlords. More than half of our renters are now in receipt of State assistance, largely in the form of payments such as HAP (Housing Assistance Payment), which goes directly into the pockets of property owners without improving the living conditions of tenants whatsoever. The nice thing about being a landlord in Ireland today, as the late Margaret Thatcher might observe, is that you never seem to run out of other people’s money.
This patently absurd situation is the outcome of global changes in the property market, but also of our specific national history. Throughout the 20th century, as a result of concerted State policies, overall rates of home ownership in Ireland skyrocketed, passing 80 per cent of households in 2004. The figure among young people aged 25-34 was 60 per cent. Partly because of this emphasis on mass property ownership, and a relatedly small and short-term private rental sector, protections for tenants in the State have historically been weak. Private tenancy was perceived as – and to some extent was – a temporary arrangement for mobile population groups like college students, and legal protections for tenants reflected this dynamic.
[ Ireland’s housing crisis: why doesn’t the State step in and build? ]
But since the 2008 financial crisis, home ownership rates in Ireland have fallen sharply, and are now at their lowest point in 50 years. Today, only 27 per cent of people aged between 25-34 own their own homes. Private investors have in the meantime been empowered to buy up vast swathes of our housing stock and let it back to us at exorbitantly high rents. The light-touch tenancy regulations developed in the era of mass home ownership have proven completely inadequate for our present housing system, in which renting has become a long-term reality for a generation of people and families chronically shut out of the property market. The eviction moratorium was, in this context, a welcome step toward a long-overdue rebalancing of rights between tenants and landlords. But the Government now intends to strip renters of even this temporary protection and leave them once again at the mercy of the propertied class.
Is it merely a coincidence that crisis conditions in our housing system have emerged during the very same period that private investors have come to own an ever higher proportion of our housing stock? Of course not. The entrenchment of property in the hands of a small number of landlords is not a solution to, but in fact a source of, our present housing emergency. Landlords have no incentive to improve conditions in the housing market: their only incentive is to see rents and property prices increase. This is not because they are individually bad people, but because of the economic role they play as investors in the commodity market that is the Irish housing system. The more power landlords accumulate in that system, the worse we can expect conditions to get.
Obviously, there are too few homes in Ireland to meet demand, and any comprehensive housing strategy must deal with the lack of habitable dwelling-places available. But landlords have no role in solving this problem either. They merely act as middlemen between existing homes and the people who want to live in them, a process that serves to inflate property prices, shut first-time buyers out of the market and exploit vulnerable tenants at the same time. The public has received no explanation from the Government as to how further expansion of this process can improve rather than worsen the crisis. Absurdly, Varadkar himself professed just last month to be “alarmed” by the continuing drop-off in home ownership rates in Ireland: the same Varadkar who is now emphasising so firmly the need for “new landlords” to enter the housing market. Does the Taoiseach understand that the entrance of new landlords into the market can only mean a further decrease in home ownership rates? Every landlord who purchases a property quite literally leaves one fewer available for owner-occupiers. Are those in power really so confused as to what a housing market actually is?
If we are serious about ending the housing crisis, then we must all be prepared to stand in solidarity with tenants – and of course with our homeless population – in the struggle for justice
Our Government’s rationale for lifting the moratorium on evictions appears in the final analysis to be as follows: in the short term, evictions are necessary, because in the longer term, we need to get more of our housing stock into the hands of private landlords. I am suggesting precisely the opposite. In the short term, evictions must be stopped. Tenants have already been exploited for unreasonable rents, prevented from accumulating any protective savings, and given no alternative accommodation options, all to protect the profit margins of private investors. To resume no-fault evictions during a housing emergency and cost-of-living crisis would be an unforgiveable assault on human dignity. The moratorium must be reinstated until the Government is certain that it can offer tenants reasonable and safe alternative accommodation in the event of eviction. This may admittedly take a while – but if new landlords are discouraged from buying up habitable properties as a result, this is a development to be welcomed.
In the longer term, the State needs to start moving our rental stock out of the hands of private investors, and into the hands of State housing bodies. The Government presently spends half a billion a year on HAP alone, money that flows straight to landlords. That significant sum would be better spent buying, building and maintaining an expanded stock of social housing. Unlike the private rental market, State-owned housing can offer tenants fixity of tenure, fair rents and peace of mind. It also gives us some democratic input into a fundamentally necessary part of our shared national life. The Government’s plan to cede even more of our already scarce housing stock to capricious private investors will escalate the crisis gravely in both the short and long term.
But the flimsiness of the Government’s stated reasoning – its apparent ignorance of basic economic principles and realities – inevitably raises the question of sincerity. The sight of investors fleeing the property market may well be a source of anxiety for Cabinet Ministers, but probably not for the reasons they have provided. If State interventions like a prolonged eviction ban discourage profit-seeking investors from buying up more Irish property, house prices will likely fall as a result. A downturn in property values would have no ill effects on tenants or homeless people, and would improve the lot of aspiring first-time buyers, but it would also damage the net worth of current homeowners and investors.
Curiously, these latter demographics happen to make up the key voter base for the governing parties. Among voters who do not own their own homes, only 9 per cent support Fine Gael, and only 6 per cent Fianna Fáil, according to a recent poll. Perhaps the Coalition has given up hope of attracting this slice of the electorate, and is instead appeasing the ownership class by trying to pump house prices continually higher and higher. This may offer a more convincing explanation for the otherwise perplexing decision to let the eviction ban elapse. But homeowners in the State are not automatons, mechanically voting in favour of higher house prices no matter what. They may soon judge the devastating human cost of our housing crisis to be more important than the on-paper cash value of their homes.
In any case, if those in power are sincerely committed to allowing hundreds or thousands of people to be evicted into homelessness in the coming months, collective community action will be needed. Tenants’ unions such as CATU (Community Action Tenants Union) will no doubt have an important role to play, not only in the fight against unjust and inhumane evictions, but in the longer battle to organise renters and confront the disproportionate power of landlords in the State. If we are serious about ending the housing crisis, then we must all be prepared to stand in solidarity with tenants – and of course with our homeless population – in the struggle for justice. We in Ireland have a proud national history of fighting evictions: our National Land League was founded in 1879 for the very purpose of organising resistance to evictions and forcing reductions in rent. Almost 150 years later, the fight must go on. If the Government won’t stop evictions, we can.
Copyright ©2023 Sally Rooney Sally Rooney is a novelist
A shortage in the supply of new homes has been an issue in Ireland over the past number of years and, according to industry experts, issues with the planning system are one of the main contributing factors.
“In the building industry, there is continued frustration with the severe blockages in the planning system as this adds to the lack of stock currently under construction,” according to Gemma Lanigan, partner at DNG New Homes. “We have a number of clients patiently waiting on planning decisions on their development sites over excessive periods of time, while, in the meantime, rising construction costs eat into the viability of projects,” she says.
As a possible solution to the backlog in planning applications, Ivan Gaine, director of Sherry FitzGerald New Homes, cites the draft Planning and Development Bill, the aim of which is to reform the planning system and reduce the number of judicial reviews. “The devil will be in the detail [regarding the Bill],” he says, adding that proposed reforms include longer 10-year development plans and mandatory timelines for decision-making.
He also hopes to see the National Planning Framework reviewed following the latest census “to reflect our changing demographics”.
The number of new homes built rose to almost 30,000 units nationwide in 2022, according to the Central Statistics Office. However, only a small amount of those units were available to individual homebuyers. “This [figure] is well short of the estimated annual need according to the Housing Commission, which believes there is a baseline housing requirement ranging between 42,000 to 62,000 new homes per year between now and 2050,” says Ray Palmer-Smith, director of new homes at Knight Frank.
“Worryingly, instead of moving closer to this range in 2023, completions are likely to contract,” he says, due to planning delays as well as a shortage of zoned and serviced development land, expensive finance and rapid build-cost inflation.
[ Number of planning permissions for new homes drops sharply ]
[ Development plans doomed to fail due to flawed data ]
[ Cliff Taylor: Interest rates are likely to go a lot higher than we had expected ]
Despite high inflation and rising mortgage rates, Palmer-Smith cites the observation of banking lobby group the Banking & Payments Federation Ireland (BPFI), which said mortgage approvals – “a crucial barometer of future demand,” he says – continued to demonstrate resilience in the market.
“Notwithstanding the continuing challenges posed by higher inflation and interest rates, we believe that a combination of resilient demand, contracting supply and continued desire to live in more energy-efficient homes will prevent any significant fall-off in price growth this year,” he says.
Lower-rate green mortgages are also supporting the high demand for new energy-efficient homes, says Judy Sorohan, associate director at Hooke & MacDonald, as well as the energy savings they offer a buyer against the backdrop of rising energy costs.
“Another component enticing people to buy new is the cost-of-living crisis,” says Will Coonan, director of Coonan Property. “This, coupled with rising building costs, have made people stop and think.
“Plenty of purchasers who would have chosen a renovation project or a second-hand home that needed extending have opted to go with a new-build. Some purchasers want the hard work done for them instead of putting money into an older home,” he says.
Experts note that Government schemes such as the Help-to-Buy (HTB) scheme, the tax-refund incentive to help first-time buyers reach the 10 per cent deposit required to buy a new build, and the shared-equity First Home Scheme (FHS), where the Government takes a stake in your home in return for a percentage of the price of the property, are contributing to the demand in new developments.
“[Purchasers] now have the opportunity to bridge the gap between deposit saved, mortgage, and purchase price with these schemes, both of which are available on new homes only,” says Coonan. “With house prices on the rise, these are much-needed initiatives.”
“As rents continue to hit record highs, the Help-to-Buy scheme coupled with the First Home Scheme, will provide much-needed affordability to both single purchasers, and couples on lower incomes,” according to David Browne, head of new homes at Savills.
“We are seeing an increase in enquiries for apartments, for example, as in the majority of cases, most people will be better off financially by purchasing their home rather than renting it. This should have a positive impact on the viability of higher density apartment and duplex schemes,” he says.
The change in Central Bank lending rules to allow first-time buyers to borrow four times their income and second-time/subsequent buyers to borrow up to 90 per cent of the property value is already having an impact on the new-homes market, says Browne. “[There is] a high volume of brand new entrants to the market, and those trading up can now borrow more to move on, freeing up second-hand stock,” he says.
Estate agents note the effect rising mortgage interest rates are having on the market. According to Lanigan, rising rates have had “a welcome steadying effect on all levels of the market”.
“In the main, buyers of new homes are opting to fix their mortgage interest rate and buyers are shopping around to ensure that they are securing the best fixed rate available to them in the mortgage market at the time of closing,” she says. “Due to our very strong economy, keen fixed rates are available to buyers.”
Palmer-Smith also has an optimistic view: “According to the Banking & Payments Federation Ireland, mortgage approvals, a crucial barometer of future demand, continue to demonstrate resilience despite the spectre of higher inflation and interest rates.”
“We anticipate that continued strong employment growth, high levels of household savings, Government incentives as well as changes to the Central Bank’s mortgage rules, whereby buyers can now borrow up to four times their gross income, will continue to support demand this year in the face of challenges,” he says.
Browne expects rising interest rates “to have a dampening effect on demand, while soaring build costs will unfortunately continue to push affordability further out of reach for some.”
“However,” he says, “the critical imbalance between supply and demand will inevitability ensure prices remain strong.”
All the industry experts who spoke to The Irish Times provided a positive outlook for the new homes market for the year ahead.
Lanigan anticipates strong demand and sales “as supply continues to lag demand”.
Browne predicts a positive year for the market. “However,” he says, “much more progress could be made if the thorny issue of supply is finally grasped.”
“We estimate there is currently a shortfall of 72,000 residential units in Dublin, so despite a reduction in demand, supply issues look likely to continue for the foreseeable future,” he says.
Coonan also fears a stock deficit. “Indicators are showing that the influx of new developments may be starting to dry up,” he says, “and housing starts have already slowed.”
Regarding the housing system as a whole, Gaine concludes: “Industry, society and Government need to continue to collaborate and show ambition and bravery to improve the system and not let ‘perfect’ get in the way of ‘better’.”
Valentine’s Day has been celebrated around the world this week and with it endless stories of love – saccharine sweet, emetic, wretched love.
Valentine’s Day is, of course, a holiday pushed by card companies, lingerie firms and chocolate makers desperate to find a way to sell more products when holidays and romance are in short order.
And romance is in short supply this time of year. After the potentially stressful Christmas holiday period where families spend more time together, divorce inquiries spike in January.
Love ends. For those who can’t gallop off into the sunset of their years hand in hand with a partner, divorce is there to help separate even those bound by marriage. But the cost-of-living crisis has changed how feasible getting divorced is.
While not all divorces have the eye-watering figures of the near €65 billion settlement of Jeff Bezos’ split from his wife MacKenzie, the job of dividing finances can still put a strain on families that may be struggling to pay bills in the current climate.
“We’re seeing soaring bills, spiralling energy costs, the cost of fuel, food and fuel having risen. Ultimately, this is a diminishing matrimonial pot to be divided upon divorce,” says Georgina Chase, a family solicitor at Slater & Gordon in the United Kingdom. She advises and guides people through divorce proceedings, and can be involved in helping courts split income and assets to fairly accommodate both sides of a split.
Inflation in Britain peaked at 11.1% in October last year, pushing the average cost of goods and bills for many people out of step with their salaries.
House prices across the country have shot up in the past few decades and are wildly out of step with the average incomes of British people. “One party who may have previously wanted to remain in what’s called the matrimonial home for the benefit of the children may find that now because of the mortgage and bills having increased that’s unaffordable as an option upon divorce,” Chase explains.
If you thought it was hard moving house in 2023 already, now imagine having to find a way to split the house you already have and find two with the proceeds.
Chase’s firm has received a similar number of people requesting advice for divorce proceedings through her firm, but more couples than ever are expressing concerns about legal fees, and the affordability of their lives post splitting finances. “We’ve seen more people reluctant to formally start the process due to the cost-of-living crisis. And indeed, the research undertaken by Slater & Gordon shows that 40% of spouses say that the cost-of-living crisis has put additional pressure on their marriage.”
And the crisis isn’t just heaping extra pressure on couples already set on divorce, the stresses associated with questioning finances could put once-happy pairings on the road for a split. For those couples, the worry that divorce can be a costly affair won’t exactly engender hope in their marital prospects.
“My advice is always not to necessarily put off going through the divorce just because of the cost-of-living crisis,” Chase says. “We’re uncertain as to how long the crisis will last. To put off, being in an unhappy marriage indefinitely is unlikely to be of benefit to anyone, especially children.”
Chase’s advice to any couple currently questioning whether divorce is the right decision should try and find an amicable way through it sooner rather than later. No fault divorces were introduced into the UK last year, giving couples a less combative means without finding a contentious issue on one side that’s caused the rift.
Across the EU, marriage rates have been decreasing since the 60s. In 1964, eight marriages for every 1,000 people across the EU. That figure dropped by over 50% to just 3.2 marriages per 1,000 people in 2020.
Across the same time period, divorce rates have doubled, going from 0.8 divorces per 1,000 people in 1964 to 1.6 in 2020. In this time period EU member states like Italy, Spain, Ireland and Malta all legalised divorce, contributing to the increase.
Data is only available up to 2020, but interestingly the 2020 figures are actually a slight decrease already on the EU high of 1.9 divorces per 1,000 people in 2010. Divorces are most popular in Latvia, Lithuania and Denmark with the individual country rates at 2.7 divorces per 1,000.
Once in a while, while out shopping for the holidays, a few lucky people might realize they have a bit more money than they thought. Do they put the extra aside to help pay the bills that are sure to becoming due soon? Or do they sneak a little something for themselves into the shopping cart?
Mark members of the Illinois Legislature — most of the Democrats, at least — in the latter category.
In the waning hours of the lame-duck session conducted earlier this month, Illinois lawmakers voted themselves and several other elected officials and department heads some significant pay raises that begin this year.
The votes in the House and Senate came in the evening of Jan. 6 and Jan. 8, respectively.
Members of the Legislature, who received a 2.4 percent cost of living increase in July, will see their paychecks jump from $72,096 to $85,000 a year. The total will be even higher for committee chairman and other official positions within the Legislature.
Not bad for what is technically supposed to be a part-time job.
The pay hike amounts to about 16 percent, a number few of the lawmakers’ constituents see in a single year — or during a couple of years.
Department heads and elected officials, such as the governor, also will see increases. And there’s a case to be made that higher salaries are necessary at that level to attract the best candidates. Gov. JB Pritzker, already a billionaire, does not accept his salary that now will total $205,700. But the job comes with perks such as housing and transportation that are not included in the total. As a comparison, the superintendent at Danville’s District 118 schools receives a base pay of $218,000 a year, according to a Sept. 1, 2022, wage chart on the district’s website.
No Republicans voted for the pay increases, and a few Democrats stood against it as well. It will be interesting to see whether those who opposed the raises will act on their principles and return the extra pay to the state treasurer, or whether they will just cash their checks and move on.
No one doubts lawmakers work long hours, especially when the Legislature is in session. Even though the job is part time, working with constituents is a year-around task.
But each of the lawmakers taking his or her seat in the new session knew how much the job paid when they announced their candidacies. The increases might be easier to take if the Legislature had made them effective in four years. Handing them out right away seems a bit wrong when many state residents struggle to pay their bills.
Members of the Illinois Legislature already receive automatic cost of living raises each July, a nice way for them to receive pay increases without voting for them. That, however, did not seem to slow down the momentum for the latest increase.
No one expects an elected official to serve for free. Demand for talent from the private sector also can siphon away talented people unless the pay for public officials can keep pace with the job market. It’s understandable to offer a pay scale that is competitive.
Lawmakers, however, should not vote on raises and then benefit from that vote within a short period of time. Even if the raises are voted on in a lame duck session as these were, then distributed when the new Legislature convenes, there are enough of the same people holding the same seats to make the whole situation look self-serving.
Inflationary pressures in Northern Ireland moderated last month but business activity levels plunged at their fastest rate since February 2021, pointing to a “difficult end” to the year for company, an Ulster Bank report indicates.
But despite the broadly gloomy data, the bank’s latest purchasing mangers’ index (PMI) for Northern Ireland indicates that negative sentiment is receding, suggesting that the private sector may have passed “peak pessimism”.
The headline index, which is based on a survey of about 200 companies, fell sharply last month from 46 in November to 41.6 with any reading below the PMI’s benchmark of 50 indicating a slowdown.
The decline in overall activity levels was the steepest since February 2021, Ulster Bank said. Activity declined in all four sectors covered by the survey — retail, manufacturing, construction and services — amid declining output and new orders.
The overall decline in output was the steepest in a decade outside of periods of lockdown during the emergency phase of the Covid-19 pandemic, said Ulster Bank.
Of the four main sectors, construction regressed at the fastest pace although builders did take on more employees in December.
Overall, however, employment growth, which was unchanged from November, stagnated in December, ending 21 consecutive months of job growth. But “the picture in Northern Ireland was more positive than across the UK”, said Ulster Bank, where employment growth fell last month.
“While some firms were able to expand workforce numbers, others reported voluntary resignations and ongoing difficulties recruiting,” the report notes.
Meanwhile, suppliers’ delivery times lengthened for the 22nd month in a row, according to the survey, with respondents citing Brexit and postal strikes across the UK last month as the main factors behind the longer wait times for orders.
On a more positive note, inflationary pressures moderated again in December with both input and output costs rising at their slowest pace since early 2021.
Where input costs were up, respondents cited higher energy prices and transportation costs as the driving factors.
In December, companies also reported feeling more positive about the outlook for the immediate future. Sentiment improved to an eight-month high but remained subdued due to the cost of living crisis and worsening economic uncertainty.
“This time last year, firms were braced for a challenging year, but it turned out much worse than anticipated,” said Richard Ramsey, chief economist at Ulster Bank Northern Ireland.
Having started 2022 in expansion mode as the pandemic recovery gathered pace, Mr Ramsey said, last year was coloured by the Russian invasion of Ukraine, which added “fuel to the cost of living crisis”, forcing down growth and confidence.
“December’s report suggests that negative sentiment is receding and that we may have passed peak pessimism,” he said. “This year, expectations for the 12 months ahead are low but we could see the converse of last year with expectations being exceeded this time around.”
surprise drop in London rents shows the extent to which people have been put off moving to the capital during the cost-of-living crisis, experts have warned.
Data from insurer HomeLet this week showed that the average cost of renting a home in Greater London fell by 0.2 per cent in December.
Although this represented just a £4 reduction from the typical £2,011 bill faced by tenants in November, it was the first price cut in 10 months and comes at a time of high inflation and rising interest rates.
Separate figures from estate agents Chestertons showed that the volume of landlords cutting their asking rent was up 50 per cent in November.
James Forrester, managing director of estate agents Barrows and Forrester, said demand for property in the capital had been dampened by economic realities.
“Many tenants are struggling with the increased cost of living and this has temporarily deterred them from moving to major cities where rental prices are often far higher – nowhere more so than London,” he said.
“At the same time, those already renting have largely decided to sit tight on existing tenancy agreements with fixed rents, rather than risk a move and incur an increase in monthly rental costs.
“The resulting dip in demand has naturally led to a reduction in top line asking rents as landlords look to entice tenants.”
Chestertons reported increasing supply of rental properties, another factor that could ease the cost of tenancy. The agency said there were 50 per cent more homes available to let in the capital in November 2022 than a year earlier.
Richard Davies, chief operating officer at Chestertons, said the Covid-19 pandemic had “artificially” slashed supply.
“The aftershocks of this unusual period are finally coming to an end and we believe that London’s rental market is now showing signs of stabilising, with more rental properties coming onto the market and an increasing number of landlords being realistic on the rent they are prepared to accept to minimise any void period,” he said.
Andy Halstead, chief executive at HomeLet, said December had marked the first nationwide drop in average rent prices in 2022.
But he added: “Even in the face of a minor dip, rental prices remain historically high, including December 2022 being only the second month on record in which the average Greater London rental property has been priced higher than £2,000 per month.
“Our prediction for 2023 is that rental prices will likely continue to rise, despite spiralling costs for tenants in other areas of their lives. Tenants struggling to pay their rent is sadly likely to become a recurring theme across the country and, in turn, this could lead to some landlords vacating an already struggling market. This will likely result in a continued shortage of rental properties to meet demand.”
Matt Hutchinson, director of SpareRoom, said the flatshare portal’s own data suggested rents had flattened out in the capital in the last two months of last year.
“There is an imbalance at the moment between an all-time high in demand and a 10-year low in supply,” he said.
“There is potential for prices to come down because they’ve shot up so much. But if they fall by a pound or two that won’t feel like a fall to people who’ve seen them go up 22 per cent in a year.”
He added that January’s data would be closely watched to see how much the traditionally busy moving month is impacted by post-Covid demand.
“There are two potential scenarios – one that the spike in demand has calmed, the other that it was a pause for Christmas and will bounce back. But there is only so far rents can go up and remain affordable.
“Rents in London were unaffordable for many tenants even before last year’s spike in demand. Unless demand falls and we see a significant increase in supply, it’s hard to see rents coming down much, even if they do fall.”
Marc von Grundherr, managing director of estate agents Benham and Reeves, said economic gloom was weighing against post-lockdown boom.
“There remains a strong appetite for good quality rental properties within the capital and this is being largely driven by overseas students, as well as Hong Kong British National Overseas visa holders, who are adopting a try-before-they-buy approach when settling in the UK,” he said.
“As a result, we’re yet to see any significant downward trends impacting London rental values at ground level and we expect this to remain the case over the course of the year.”
Siobhan Donnachie of the London Renters Union insisted landlords were “still pushing rents through the roof”.
“Our members are facing unfair rent rises as high as 40 per cent,” she said. “Last year, the wild west of London’s private rental market hit record levels of unaffordability, but rents have been out of control for decades.
“Left unchecked, many landlords will take the first opportunity they can to artificially inflate rents even further. If the government does not introduce a rent freeze now, more renters will be forced to cut back on food and heating, or forced out of their homes.”
Dan Wilson Craw, deputy director at Generation Rent, said soaring rents had caused “misery” for prospective movers.
“But that post-pandemic shift has come to an end, fewer people are moving into the capital and rents are now at the limit of what’s affordable, especially with inflation running so high,” he added.
“We wouldn’t expect rents to get much higher, but it’s still a horrific situation if you’re looking for a new tenancy. That’s why we need to be building many more homes to relieve demand and bring rents down in the long term.”
A spokesperson from the National Residential Landlords Association described pressure on the London rental market as “intense”.
“Landlords are still facing significantly higher costs than in previous years and many are having to decide if they are able to remain in the market. If, as many expect, landlords begin to sell in significant numbers the imbalance between demand and supply will only worsen,” they said.
“Now is the time for the government to make it easier to invest, which will help address this acute problem and promote growth. If this crucial step isn’t taken, tenants will continue to see costs increase and yet more obstacles blocking their efforts to become homeowners in future.”
The list of permits issued to build new single-family homes in Waco used to run longer than the proverbial letter to grandma. Now it is more like a blurb, thanks to rising interest rates, recession fears and less confidence speculative homes will find a buyer in a timely fashion.
Homebuilders typically hibernate during cold weather, the chill and moisture of November and December not conducive to pouring slabs or installing roofs. But numbers during 2022’s last half seemingly dropped prematurely, possibly reflecting national and regional housing trends.
Waco issued 18 permits in October to people wanting to build single-family homes, a decline from 38 issued in October last year. During the calendar year through October, the city issued 563 permits compared with 571 during the first 10 months of 2021, according to Karr Ingham, a West Texas economist who compiles a monthly snapshot of trends in Waco.
Ingham said Waco’s permit output in October “tanked,” producing the lowest monthly total since the 14 issued in January 2016.
In November, Waco issued 12 permits to build new homes, one more than the 11 in the same month last year, according to the list compiled by the local office of the Associated General Contractors of America. Hewitt took up the slack, issuing permits for 24 new homes, up from three the previous November.
Ingham’s monthly report includes only permits issued in Waco, not in surrounding areas.
“From the builders I’ve heard from, they are not comfortable starting work on a home right now, not for any particular reason but due to the climate in general,” said Bobby Horner, spokesperson for Waco’s inspection services department.
“Not as many contractors are starting new houses at the moment,” said Craig Vrbas, a longtime employee at the Gross-Yowell lumberyard on Franklin Avenue. “Will it pick up? We’ll see. They’re waiting to see what happens now. Our volume is down maybe 10% to 15%, not on a particular item but in general.”
Workers frame up a roof for a house in the 700 block of South Ninth Street.
Laura Sterr, a regional sales manager for Stylecraft Builders, said the company started building fewer speculative homes when the fourth quarter of the year arrived. But she said demand remains strong. Stylecraft sold more than 50 homes last month and has sold 65 so far this month in the area stretching from Bryan-College Station to Fort Hood to Waco. Sterr said at least 20 of the more than 50 homes sold last month were in Greater Waco.
“It’s said that people don’t buy homes during the holidays, but December has been pretty good for us,” Sterr said.
She said other commonly accepted beliefs about building and marketing homes have been turned on their head, thanks in part to the COVID-19 pandemic and economic shifts.
“At the height of the housing craze, we were limiting sales because we couldn’t service everyone wanting to buy a home,” Sterr said. “Now we’re not limiting sales, though we have adjusted the number of houses we release into inventory.”
She said Stylecraft also began rationing sales when interest rates were at their lowest “because we were getting a lot of investors scooping up everything they could before homeowners could act.”
That dilemma has corrected itself as the Federal Reserve raises interest rates.
“I don’t know if we’ll ever get back to how fast things were 12 to 18 months ago,” customer homebuilder Keith Gunn said of the breathtaking sales pace builders saw. “But my part of the market has not slowed much.”
He rattled off new homes under construction or just completed in Badger Ranch, Hidden Valley, Tanglewood and Creekside. He has a “blend” of jobs continuing in Lorena, Robinson and West. His custom-built homes start at $450,000, “but most are quite a bit taller than that.”
“I have lots in different places, but I haven’t decided if I want to start spec houses. I’m not in a hurry to build them,” Gunn said. “I haven’t had many subcontractors contacting me, saying, ‘Hey, we’re out of work.’”
Buyers run the gamut from business owners and empty-nesters to college professors and coaches, said Gunn, who remains optimistic.
“Waco has always been insulated from larger markets,” Gunn said. “Dirt is still affordable. Jobs are still available. Lumber prices have come down, though lumberyards are not taking as many orders. It always slows down around the holidays, but the volume of what we have has not slowed.”
He said supply chain issues and lumber prices have eased, but high-end appliances seemingly have a mind of their own. He said some who moved into their homes three or four months ago still await delivery.
A home is under construction on North Fourth Street near Herring Avenue, across Fourth from Cameron Park.
Homebuilder Scott Bland said Greater Waco still suffers from “an incredibly low supply” of homes, a condition exacerbated by rising interest rates and inflation. He said someone pondering launching a new subdivision must consider the start-up costs related to installing streets and infrastructure.
“But people aren’t being laid off or anything like that,” Bland said. “It’s an odd situation for us. This rate thing is causing us to have bigger supply issues. When they do go down, there is not going to be much out there for people to buy. We won’t be able to build fast enough to fill the void nine months from now, when summertime arrives and people are sitting on a ton of equity, and the Fed eases back on what it’s doing. We’ll see a rush on houses again.”
Bland said maybe the housing market needed a break from something of a frenzy.
“This allowed pricing to stabilize,” he said. “We’re in a much better position going out than coming in, unless we have another pandemic.”
Homes sold for an average $361,430 in October, 29% more than the $280,212 norm in the same month last year.
Pent-Up Demand to Spur Housing Recovery in ’24: National Association of Homebuilders CEO Gerald Howard discusses the outlook for the U.S. housing market.
Purplebricks is marketing itself as a way for homeowners to save money while selling their home amid the cost of living crisis.
In a release likely to frustrate high street agents, the brand claims it is a more “affordable option” as it could cost an average of £6,592 to sell a property through a conventional estate agency.
A spokesperson said the figure is based on an average taken from a “guesstimate” by the 2,000 people surveyed.
However, the brand’s own online calculator shows sellers using its fixed fee service of £1,199 would only get that saving on the sale of a £550,000 property, based on an agency fee of 1.2%.
The average UK house price is currently £294,559, according to the Land Registry.
Sellers in the same scenario would actually be offered a lower £3,540 saving, which drops to £2,950 on a 1% agency fee.
That is still a saving but there is also the additional risk that Purplebricks sellers have to pay upfront even if the property doesn’t sell.
It comes as research by the online agent claims the cost of living crisis is having an impact on the property market, with 79% of homeowners saying that their priorities have changed when it comes to selling their home and buying another.
A quarter said they were more likely to list their home and buy another in 2023, with 55% preferring to list their home for sale in the Spring.
Changing priorities for homeowners included 18% spending less on a new property than planned and 6% selecting a new property which is more of a project than they’d normally choose.
Another half said that they were planning to stay put because of the cost of moving.
The analysis then claims that sellers believe it would cost an average of £6,592 to sell their home with a conventional high-street estate agent, at which point Purplebricks highlights its fixed fees.
Tom Greenacre, managing director of Purplebricks, said: “It’s understandable that people are nervous about the cost of selling their home and moving house given the cost of living crisis – but they don’t have to be.
“Buying a new home in a cheaper area or downsizing where children may have left home, for example, might leave you better off. And listing now, or very early in the New Year, could mean that you beat the crowd.”
When Melissa Allsop felt burnt out as a disability worker during the pandemic, she decided to make a career change.
It meant the Adelaide single mother had to find someone to help pay the rent, but having a housemate “didn’t go too well”.
“We ended up with some issues in the house and my family got disrupted because of it,” she said.
“And we had nowhere to go, there was no option for us to move.
“So our wellbeing declined I guess, during that time.”
The experience left Ms Allsop wary of finding another housemate and she spent months juggling rent and bills on her own.
“In that time when I didn’t have a housemate and I was too scared to get [another] one, I spent all of my savings that I had for a house deposit on rent and trying to get by,” she said.
“So I am further away from home ownership than I’ve ever been before.”
That gap has been exacerbated by rising house prices.
“Three years ago, I could go to the bank with the deposit that I had and go, ‘yeah I am going to have a nice family home’,” Ms Allsop said.
“But … that’s not a reality anymore because I have been priced out of the market.
Adelaide rents rose 12 per cent in the year to September — the city’s biggest rent hike on record — according to the latest PropTrack report, published by the company behind realestate.com.au.
SA’s Housing Minister Nick Champion said the state has an “extraordinarily tight rental market” and asked landlords to have “consideration for their tenants at this time”.
“If you’ve got a good tenant, a stable tenant, then cut them a break on the rental rise, maybe moderate it, even though we know costs are going up for everyone,” he said.
Mr Champion said the state government were looking at a “range of things” to help housing affordability and supply, such as a new development in Adelaide’s north-east putting 1,500 new homes on the market.
A quarter of the Oakden Rise development will be dedicated to affordable housing.
“Every time we move someone out of a rental property into their own home that frees up that rental property,” Mr Champion said.
PropTrack’s latest report showed Adelaide had one of the lowest vacancy rates among capital cities, and rental properties were being snapped up faster, in the year to September.
The demand for rental properties has been evident in the long queues of people lining up at inspections, something Ms Allsop hopes to avoid if her lease is renewed.
“It’s not very dignifying standing in a line on a road with 60 other people with cars going past,” she said.
“And you’re waiting for a chance to go and see a house that you are probably not going to get because everyone else is offering $100 over asking price.
“It’s just not realistic.”
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