In the midst of the epidemic, the U.S. housing market has had its hottest year, with houses rising in price almost everywhere, and many American people beginning to move away from cities with high prices. While Americans were busy moving, President Joe Biden was not idle. After throwing down a $1.9 trillion stimulus package, he pushed through a $2.3 trillion infrastructure plan. However, this plan has received a lot of criticism, but some analysts believe that Biden is “stealing the path of the Chinese Communist Party and leaving it with no way out.
Property prices rise in the epidemic and houses sell fast
Although the epidemic that began early last year hit the global economy, the U.S. housing market has seen its hottest scenario in 14 years, and data shows that home prices are rising in almost every corner of the United States, and even dozens of major cities have seen double-digit increases in median sales prices year-over-year.
Let’s look at an example. A few days ago, the Wall Street Journal reported on an incident in which White, a broker with Redfin Real Estate, listed a 3-bedroom home in California in March of this year that wasn’t cheap, asking around $500,000. Less than a day later, he received an all-cash offer.
White said the buyer, who hadn’t even seen the home, wanted to pay $520,000 for the home and made an offer of $21,000 more than the asking price, which was 37 percent higher than the seller’s purchase price two years earlier. The house quickly settled on a buyer, and White had to quickly call 17 other agents waiting to see the house to tell them it was sold.
Data from the National Association of Realtors (NAR) showed that more than 70 percent of the homes sold in February were sold in less than a month on the market, and the median price of existing homes rose to $313,000, up 15.8 percent from a year earlier.
The Federal Housing Finance Agency (FHFA) also said that in January, prices of detached homes across the U.S. rose 12 percent from a year earlier, the largest annual increase since 1991.
What makes the U.S. housing market so hot?
So why is the U.S. housing market so hot in the midst of the epidemic and the anti-epidemic embargo?
The market believes there are three main reasons for the rise in U.S. home prices: first, mortgage rates are near historic lows; second, the epidemic has triggered new demand, with some buyers wanting more space to work from home and others willing to move farther away from their offices; and third, the supply and demand for housing is tight.
On the demand side, millions of millennials in the U.S. are currently entering their early 30s, the typical age group for first-time home buyers. In addition, thanks to stimulus checks, delayed student loan repayments and reduced travel and entertainment spending, many of those keeping their jobs in 2020 have been able to save for a down payment on a home as a result. All of this adds to the pressure from the demand side.
At the same time, there has been a significant decline in the availability of homes on the market. According to Realtor.com, the number of homes for sale in March was half of what it was a year ago. Some popular cities to live in, like Austin, Texas, Jacksonville, Florida and North Carolina, all saw their inventory of listings drop by more than 70 percent year-over-year.
But the factors behind the rise in home prices may not be so simple. In addition to these market factors, institutional investors in the U.S. have joined the wave of residential bidding. The Wall Street Journal reports that large investment firms with billions and billions of dollars of capital are bidding for profit against ordinary people who are taking advantage of the low mortgage rates, and the advantage is obvious, which also raises prices.
People moving out of high-priced cities
While the boom is certainly good for home sellers, investors and agents, it is no fun for first-time homebuyers or those on a budget to see prices rise. So, some Americans in high-priced areas are already moving.
In March, Redfin, a real estate agency, released a report showing that 31.2 percent of Americans searching for property on Redfin’s website in January and February were searching for property in cities other than where they live, up 5 percentage points from the same period last year. The number of people seeking to move out of high-priced cities such as New York, San Francisco, and Los Angeles was another record, with most people looking for more affordable properties in neighboring cities.
For example, Philadelphia, Pennsylvania, is the most popular destination for New Yorkers to move to, with the average home in Philadelphia selling for about $238,000 in February, compared to $590,000 in New York.
Redfin said the increase in the number of people changing cities may be due to the popularity of remote work patterns, the primary consideration for most people buying a home is no longer the distance from their workplace, but the affordability of the home and its proximity to friends and family.
Biden’s big money spill stole the show from the Chinese Communist Party
After talking about the U.S. real estate market, let’s see what Biden is up to. Just before the Easter holiday, on March 31, the Biden administration began pushing a $2.3 trillion infrastructure plan that has been widely criticized, with former President Trump criticizing it as a gift to the Chinese Communist Party, and some commentators sarcastically saying that Biden is “stealing the Chinese Communist Party’s path and leaving it with no way out.
The infrastructure plan includes $621 billion for transportation infrastructure such as bridges, roads, public transportation, ports, airports and electric vehicle development; $400 billion in care funding for older Americans and people with disabilities; more than $300 billion to improve drinking water infrastructure, expand broadband access and upgrade the electric grid; and more than $3, more than $300 billion to build and renovate affordable housing while building and renovating schools; and $580 billion in investments in U.S. manufacturing, research and development and job training.
In early March, the U.S. Congress just passed a $1.9 trillion stimulus package, and now, there is this $2.3 trillion infrastructure plan, and Reuters has news that this April, Biden may have to launch another economic proposal of about $2 trillion.
So, the total amount of economic stimulus plan that Biden will launch after taking office will be more than $6 trillion, and it’s $6 trillion! This kind of economic stimulus by “throwing money around” has led many commentators to say that it is a replica of the Chinese Communist Party!
According to He Qinglian, a US-based economist, this kind of rhapsodic energy is comparable to Mao Zedong’s “Great Leap Forward” into communism, and makes Beijing, which spread 5 trillion yuan in 2009, feel ashamed of itself.
So the question is, where is the money for this 2.3 trillion infrastructure plan coming from?
The previous 1.9 trillion relied on debt financing. What about this time? The Biden administration says the new $2.3 trillion infrastructure plan will rely on tax increases. Biden plans to raise the corporate tax from 21 percent to 28 percent, and also plans to raise the minimum tax on multinational corporations.
Keep in mind that before Trump became president, the U.S. corporate tax was 35 percent, and Trump worked to lower that rate to 21 percent. Now it has been added back by Biden. No wonder Trump commented that this would lead to “one of the greatest self-inflicted economic wounds in history” and said that the U.S. would go back to where it was before he became president four years ago, with more Americans out of work, more factories abandoned, more industries destroyed and more stores forced to close.
Of course, American businesses are not happy either, and the U.S. Chamber of Commerce commented on the Biden administration’s proposal by saying that the tax increase is too big!
For the U.S. economy, Biden’s plan is certainly fuel for the fire. In early March, Harry Dent, a leading U.S. economist and founder of HS Dent, issued a dire warning.
Dent said that a huge collapse is coming, at the latest at the end of June this year, the U.S. stock market will stage the most tragic crash in history, and this will be the beginning of a new large-scale economic recession. He said the capital market bubble is expanding, while the Federal Reserve is still printing money to avoid the outbreak of the next huge crisis.
He Qinglian said that when the epidemic hit in 2020, countries around the world without exception printed money and raised debt to tide over the difficulties, and the Fed went crazy printing $3 trillion, accounting for 34 percent of the total dollar in 2020. Now, Biden wants to launch a total of 6.2 trillion large-scale economic stimulus plan never seen in the history of the United States, and finally can only rely on money printing, debt solution, the dollar want not to devalue is difficult.
And there are data to illustrate the decline in the attractiveness of U.S. debt to foreign buyers. Currently, the total assets on the Fed’s balance sheet have reached $7.34 trillion, and the momentum of this expansion (balance sheet expansion) is far from stopping. As early as December last year, the Federal Reserve held $4.66 trillion in U.S. debt, becoming the largest holder of U.S. debt, has exceeded the sum of 4.17 trillion overseas major official holders, this data shows that the U.S. debt has entered the “internal cycle and internal debt”.
So what is the backing of the dollar and the U.S. debt? It is the credibility of the United States. So, as some economic people say, the Biden administration’s mega economic stimulus plan is a big gamble on the country’s fortunes.
However, there are also analyses that the Biden administration’s infrastructure plan, the idea like a copy of the Chinese Communist Party, and optimistic that this plan may lay the foundation for the U.S. economy, expand U.S. domestic demand and drive industrial upgrading, when the U.S. becomes opportunities everywhere, the economy is booming, there will be an effect, the global market to attract capital, talent, technology, etc., really at that time, may be The Chinese Communist Party is facing a situation where there is no way out, because the road is taken away by Biden.
A few days ago, the Chinese Communist Party’s CCTV also issued an article expressing this concern, saying that Biden can not stop, the world has to prevent ah. If that’s true, Biden’s plan might even be crooked.
For those who have been to New York, or live in the United States, you may have some idea of the infrastructure of the United States, many facilities were built in the 1950s and 1960s, and even in the 1930s. In addition, the Texas snowstorm power outages, also exposed the United States in the construction of infrastructure is also a problem. Therefore, it must also be said that the infrastructure of the United States really needs to be updated, and this may also be the inevitable choice faced by the U.S. government. Before this, President Trump is also hoping to do some upgrades and updates to the U.S. infrastructure.
So, why has the United States not done it before? Those who have been to China know that some of China’s first and second-tier cities, infrastructure can be said to be quite advanced, and some urban infrastructure climbing into the wind, the reason why the Chinese Communist Party has the ability to do this is to rely on the totalitarian system of the Chinese Communist Party. And in the United States, the money comes from the taxpayers, not from any president. So infrastructure investment itself is not the problem, the question is still “where does the money” come from? Will the US be capitalist or socialist in the future?
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