Remote Work Has Pushed Up House Prices

Slack, Citizens Bank, Penguin Random House, Verizon, 3M, Twitter – the list is long and growing of companies that have allowed employees to continue working remotely even though the pandemic seems to be easing.

The COVID-19 upheaval in lifestyles – the moving around to larger homes, to the countryside or to an affordable city – is pushing up house prices.

John Mondragon at the Federal Reserve Bank of San Francisco and Johannes Wieland at the University of California, San Diego, estimate that remote work fueled a 15 percent rise in house prices over the two-year period that ended in November 2021. That’s more than half of the total price increase for that period, which was a record, the researchers said.

A few different types of lifestyle changes drove the price hikes. But the bottom line is that remote work caused a frenzy of buying activity that wouldn’t have happened otherwise. The increase in demand sparked competitive bidding for properties – and prices shot up. And the parts of the country where remote work was more common had significantly larger price increases.

The price increases “reflected a change in fundamentals rather than a speculative bubble,” the researchers concluded.

Soon after the pandemic began, workers who were changing their living arrangements made the news. Renters left behind expensive apartments in New York or San Francisco to escape COVID’s dangers. Now working remotely, they used their newfound freedom to become first-time homeowners in an appealing suburb nearby or a rural area halfway across the country where they could afford to buy a house.

The need for larger homes also heated up market activity. Having more space was suddenly more valued by workers who required an additional bedroom to set up a home office or now had to accommodate both spouses working from home – and, early in the pandemic, children attending classes on Zoom.

The researchers stress that they measured only the price increases resulting from an increase in aggregate housing demand nationwide. In other words, people didn’t add to total demand if they simply moved from Chicago, where they sold a condominium, to Des Moines, Iowa, where they purchased a house of similar value. …Learn More

Too Much Debt Taxes Baby Boomers’ Health

work related stress

Staying healthy is becoming a preoccupation for baby boomers as each new medical problem arises and the existing ones worsen.

The stress of having too much debt isn’t helping.

The older workers and retirees who carry debt are less healthy than the people who are debt free, and higher levels of debt have worse health effects, according to Urban Institute research. The type of debt matters too. Unsecured credit cards have more of an impact than secured debt – namely a mortgage backed by property.

Debt can erode an individual’s health in various ways. The stress of carrying a lot of debt has been shown to cause hypertension, depression, and overeating. And it can be a challenge for people to take proper care of themselves if they have onerous debt payments and can’t afford to buy health insurance or, if they are insured, pay the physician and drug copayments.

This is an issue, say researchers Stipica Mudrazija and Barbara Butrica, because the share of people over age 55 with debt and the dollar amount of their debts, adjusted for inflation, have been rising for years. In this population, increasing bankruptcies – a high-stress event – have been the fallout.

In an analysis of two decades of data comparing older workers and retirees with and without debt, the researchers found that having debt is tied to the borrowers’ declining self-evaluations of their mental and physical health. Older people who are in debt are also more likely to be obese, to have at least two diagnosed health conditions, or to suffer from dementia or various ailments that limit their ability to work.

The bulk of their debt is in the form of mortgages, which increasingly have strained household budgets in recent decades as home prices have outpaced incomes. Piled on top of the larger mortgage obligations can be payments for credit card debt, medical debt, car loans, and college loans – often for the boomers’ children. …Learn More

Woman in a dark place

Opioids Make it Harder, Not Easier to Work

The twin goals of prescribing opioids to workers with a bad back or arthritis are to alleviate their pain and keep them employed.

But the use and abuse of opioids can cause poor memory, extreme drowsiness, and an inability to engage in normal social interactions – all of which limit workers’ ability to function. Opioids also have serious physical effects outside of the dependence itself.

The resulting detachment from the labor market, revealed in a new research study, calls into question any benefits the medications have.

Between 2012 and 2018, average employment declined by nearly 2 percent for every 10 additional opioid prescriptions per 100 adults in a county-sized area, the researchers found. Wages also dropped by 6 percent, indicating that the opioid users who do remain employed are less productive.

The painkillers had more permanent consequences, too, when workers, unable to cope, left the labor market for good. The rate of applications for federal disability benefits increased sharply in the areas with higher prescribing rates, according to the study funded by the U. S. Social Security Administration, which runs the disability program. …Learn More

retired couple on a boat

Health and Wealth Drive Retirees’ Spending

Previous research has shown that spending drops immediately at the moment the paychecks stop, and a few studies have found that households, once retired, reduce their consumption over time.

But a new study that also takes the long view suggests that the spending decline is not what retirees want to do but what is necessitated by their financial and health constraints.

The analysis, which used data from two national consumption surveys, divided retired households into groups to get a sense of what goes into their spending decisions. The researchers compared the consumption patterns of retirees at three different wealth levels over a 20-year period and then compared consumption for three states of health.

The evidence that financial resources drive behavior is that the wealthier households’ consumption was relatively constant, declining just one-third of 1 percent a year.

While these retirees have the financial wherewithal to largely maintain their spending, retirees in the bottom wealth tier saw bigger drops of 1 percent a year. When accumulated over 20 years, the declines produced much lower spending levels than when they first retired.

Health is a second factor in retirees’ decisions. Again, the extremes tell the story. Spending in the top tier – very good or excellent health – held fairly flat, while the retirees in fair or poor health saw relatively large declines. Even if they can afford to travel or eat out frequently, health problems may be preventing them from enjoying their money. …Learn More

How Scammers Use Emotions to Persuade

It’s an implausible ruse. Yet we are all human, and many people are taken in by it.

In the Social Security imposter scam, someone claiming to be from the agency tells the intended victim that he has been accused of a crime and that his bank account will be frozen. To prevent arrest and preserve the money, the individual is instructed to withdraw the funds and buy gift cards or exchange the cash for virtual currency such as Bitcoin. A government official, the caller claims, will return the funds tomorrow.

More than 300,000 people lost millions of dollars in this scam between 2018 and 2021. At a broader level, imposters purporting to be from various government agencies were the most common fraud reported in 2019 to the Federal Trade Commission (FTC), which tracks and investigates cases of consumer fraud.

A new study found that young adults in their 30s, and also minorities, were more likely than other groups to report being victimized by the Social Security imposter scam. But the victims who are over 70 lost significantly more money, on average. The typical loss among victims of all kinds was $1,500.

More interesting is what the researchers uncovered about how someone becomes ensnared in such an outlandish scheme. The insights came from victims’ first-hand accounts in 600 FTC complaints, as well as an involved process of coding the narratives in some 200,000 complaints to find the emotional words the victims used that would identify larger themes about the Social Security imposters’ methods of persuasion.

High emotional arousal “is an extremely effective tool” that overwhelms victims’ ability to process information rationally, the researchers concluded.

The victims’ accounts reveal a trove of psychological manipulation by the Social Security imposters to elicit anxiety and other negative emotions. Some imposters threatened to harm the victims or their families. In half of the complaints the researchers scrutinized, victims were threatened with arrest. …Learn More

The Pandemic Was a Gift to this Grandpa

Marc Joseph reads to Grace and JacksonMarc Joseph reads to Grace and Jackson

In the early days of the pandemic, four of Marc Joseph’s grandchildren, along with their parents, came from Austin and Orlando to live with him and his wife, Cathy, in Scottsdale, Arizona. Two other grandchildren living nearby were frequent visitors to the house for meals and sleepovers with their cousins.

Many families coalesced to ride out the pandemic together and counteract the stillness that fell over the world. Joseph’s six joyful weeks with his grandkids, ranging in age from 1 to 8, changed how he looks at his personal relationships and the responsibilities of being a grandparent.

“As you grow older, you grow wiser,” he said. “I wish I was there more often for my kids – every concert they were in, every ballgame they played. I was traveling around the world. I wasn’t always home,” said the former entrepreneur. “If I can spend more time with my grandkids, then maybe it’s making up for what I didn’t give my kids.”

The time with his grandchildren is so precious that Gramps, as the children call him, found a way to keep the connection alive when the children went back home. Every evening, he and Cathy made up stories about dinosaurs roaming their house in order to share them with the grandkids on Facetime. One night, the dinosaurs camped out at the refrigerator eating blueberries. Another night they were playing the piano.

“We became part of the routine,” Joseph said. “The kids took baths and read books and then they’d say, ‘What are the dinosaurs doing tonight?’ That gave us a chance to keep in communication with them.”

Joseph’s focus on family isn’t at all unusual. One research study found that women don’t make major changes in their more developed personal lives after retiring. But men do. After years of focusing on their careers, older men become more dependent on family and greatly expand their social networks.

All that love from grandchildren – without having to worry about managing their day-to-day activities – takes the edge off of getting older. This may be especially true during COVID, which has isolated retirees from the social interaction crucial to maintaining their mental and physical health. …Learn More

Disability Applicants’ Opioid Use in Decline

A big drop in opioid use among people applying for federal disability benefits seems like encouraging news, even if they do still use the drugs at considerably higher rates than the general population.

A Big Drop in Use in Just 5 YearsNew research finds that opioid use fell from one in three disability applicants in 2013 to one in four 2018 applicants. And the improvements were across the board: opioid use declined regardless of age, education level, sex, or region, according to the study funded by the U.S. Social Security Administration, which administers the program.

The researchers wanted to get as accurate a picture as possible of use and abuse in the disability community, a source of one in four hospitalizations for opioid overdoses. To tease out opioid use in Social Security’s records, they combed through applicants’ own free text descriptions of their medications for every conceivable name they might’ve used, including generic and brand names. The researchers even included misspellings – for example, oxycotin for oxycontin – and excluded cough suppressants with an opioid as an ingredient. …Learn More