Your August Letter From My Heart

Good Morning to Summer Fun,

Last month, we focused on lending programs designed especially for our Veterans. This month, let’s offer some perspective on Reverse Mortgages – a HECM lending program. The good news for our mature clientele: The Reverse Mortgage is but one of 8 available options. This means more choices to best fit you and your needs.

And where does it all begin? It begins with our first conversation. It is here we develop an understanding of your specific needs, before carefully choosing, with you, the path optimized for you, your family, and your future.

Give a call. We try to make our conversations fun, informative, and constructive.

Before this month’s “Good, the Bad, and the Ugly,” let’s bring a few helpful stats and marketplace events, to the table. We will then end this letter by challenging the conversation called, “wage inflation”.

Of Interest:

  • Of the 76 million homes, 40 % are Free and Clear and 4 % are still underwater.
  • Nationwide 60.3 % of homes are available to the national median household income.
  • Building Stats: Between 1991 and 2007, 1 +Million new homes were constructed each year. Today, we are still under 800 K per year. And, with a larger population, demand will not be satiated any time soon.
  • Total bank deposits rose 6.6 % last year. We are saving more.
  • Nationwide sales of SFR: Interest Rate 0.625 % higher with 7 % more purchases, year-over-year, despite inventory challenges. Signs of a better economy.

    THE GOOD, THE BAD, AND THE UGLY

The Good: The word is the number of available H1B Visa’s, in May, increased 15,000. The first such increase in many years.

The Bad: A government expectation of big business “paying” by taxation and fees, while at the same time, trying to limit their voices of concern. For example, Google is planning to spend $30 Million to provide 300 temporary housing unit. Why? To help overcome a dire lack of transportation solutions. Let’s thank them, seek their input, and understand why they put money into elections.

The Ugly: Local cities attempting to legislate minimum wages. I applaud paying people who are economically challenged, yet the outcome of such good intentions, such as minimum wage, needs asking. Seattle tried this a few years ago, with results not to be ignored: 1). loss of jobs, 2) hours cut, 3) reduction of services due to less working hours. City of Santa Clara recently voted in a 27 % increase.

Consider your local grocery store where you have delivery people, stocking clerks and checkout clerks. This is not a 27 % wage increase on one level, but on 3 levels. Results: Higher costs negatively effecting those on fixed income. Ouch.

It is important to see all sides, to keep an open mind and grasp the unintended consequences, while attempting to keep things in balance. And to this, thank you for our many conversations and your insights into a complex world, too big for just one.

Closing Thought: Wage Inflation – Myth or Fact

Economic realities, on a global scale, speak against such increases. In particular, the yet weak economies of the EU and the Pacific Rim continue to restrict the upside movement of wages. Add to this, the demographic reality of high earning ‘Baby Boomers’ retiring, in favor of younger people having lower initial salaries. As a result, most prevalent headline data shows a marked down trend in wages.

Yet at the same time, such numbers maybe hiding the actual increases we do have.

There are “less” read reports indicating the small increase in wages, instead, may be much higher. It suggests wage growth has been far more positive the past 17 years. If so, this challenges the popular belief ‘real wages’ have remained flat since 2000 and questions how meaningful is our headline data. Chris Thornberg, chief economist, with Beacon Economics, adds to this: “The data does not include income or consumption received by households in non-cash forms. This includes private and public healthcare benefits, private and public pension contributions, and other government support services such as food stamps or housing supports.” 

One last point, when adjusting monthly data for non-cash benefits and inflation, we prefer the more complete data from the Bureau of Economic Analysis – BEA – than the Census data alone. This viewpoint provides further confirmation American income is far stronger than “stagnant”, potential up by a whopping 40% since 2000.

How one sees their world, effects the choices made. I invite you to call us, as we seek to discuss and facilitate your desired outcome in ways best fit for you and your view of tomorrow. It is why our opening conversation is so important in developing the details and strategies needed for your success. It is who we are and what we do. So please call, email, text, or schedule an appointment from our website.

www.michael-ryan.com

Be well, be blessed. We remain gratefully yours.

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