Marketplace - How fresh is that home listing?

Episode Date: December 30, 2024

Pending home sales grew for a fourth-straight month in November and housing supply just hit a four-year high. But that’s partly because many listings are “stale inventory,” sitting on the market for at least 60 days. Also in this episode: An old material used in a new way for climate-friendly high rises, social media budgeters breathe new life into the cash-in-envelopes strategy, and seniors on Medicare will pay less out of pocket for prescriptions starting Jan. 1.

Hey everybody, it's Kai. Time is running out to give a tax deductible donation to Marketplace before the end of the year. Donate today to support the public service journalism that you rely on. Every donation and every dollar helps us plan for the new year ahead. Go to Marketplace.org slash donate and invest in news you value and trust. That's Marketplace.org slash donate or you can follow the link in the show notes. What the year ahead will look like if you're trying to buy a house or fill a prescription. From American Public Media, this is Marketplace. In Washington, D.C., I'm Kimberly Adams in for Kai Rizdal.

It's Monday, December 30th. Good to have you along. The tightness and lack of affordability in the housing market has been one of the major economic stories of 2024. And to end the year in housing data, tomorrow we'll get an update on home prices. Today we got the latest numbers on home purchases in progress from the National Association of Realtors. Pending home sales grew for a fourth straight month up 2.2% in November and even though mortgage rates remain stubbornly high we have seen some gains in housing inventory.

Marketplace's Elizabeth Troval has more. In Orlando, Florida, realtor Rose Kemp says the housing market is finally balancing out. And for buyers. For the first time in several years, there are options. She says while before you might have had to pick between one or two homes and a zip code, now? You actually can probably go out and see, you know, five homes, let's say, that have the potential for you. And in Austin, Texas, realtor Kent Redding says there's also been an uptick in inventory. And he thinks 2025 will be a good time to buy.

Houses are selling, new houses are going on the market and we're not seeing wild swings. That's a healthy market to be in. Though active listings are at the highest level since 2020, according to new analysis by Redfin, it's not all good news. Redfin economist Shaharyar Bihari says that's because many listings are stale inventory, or, A home has sat on the market for at least 60 days. He thinks houses are just sitting there, largely because they're priced too high, while buyers

also factor in other costs like interest rates and insurance. People are just looking for affordability. And economist Lawrence Yoon with the National Association of Realtors says if you look at the market before 2020. We are beginning to see more choices, but compared to pre-COVID, right before COVID arrived, say 2019 or 2018, we are still short by about 30% fewer homes on the market. He says while inventories are trending the right direction, some homeowners locked into 3 or 4% interest rates are still staying put.

I'm Elizabeth Troval, our Marketplace. Wall Street Today, stocks continue their year-end retreat. We'll have the details when we do the numbers. With the new year comes a raft of new policies kicking in. Starting January 1st, seniors on Medicare will pay no more than $2,000 a year out of pocket for prescription drugs. That's down from this year's cap of $3,250. Now, limiting how much Medicare recipients pay for prescription drugs is a relatively new federal policy. It came out of the 2022 Inflation Reduction Act. Before the cap started phasing in this year,

some seniors were paying tens of thousands of dollars a year out of pocket to cover their meds. Marketplace's Samantha Fields has more. The whole point of health insurance is to make medical care affordable, at least in theory. Insurance is supposed to be limiting big financial shocks. Benedict Ippolito at the American Enterprise Institute says if a health plan doesn't cap the amount

you can be required to pay, It's not a particularly good insurance product. Private health plans have long had some kind of out-of-pocket maximum, but not Medicare. It was unusual in that it did not cap how much you could spend on, in this case, prescription drugs. There was no cap at all.

Matthew Fiedler at the Brookings Institution says until this year, If you were taking a really expensive drug and that drug was tens of thousands of dollars, that could translate into, you know, potentially thousands of dollars of out-of-pocket costs. Most seniors aren't spending more than $2,000 a year on prescriptions, Fiedler says. But at least $1.5 million did in 2021, according to the health policy nonprofit KFF. One common reason people can end up with particularly high drug costs is they're taking an expensive cancer drug. Other scenarios include people with certain immune system disorders or people who have had

an organ transplant and take immunosuppressive drugs. And you never know when that might be you. That's why Stacey Dusetzina at Vanderbilt University Medical Center says capping how much seniors have to pay for prescriptions is a big deal. This puts financial security there for people who end up developing a condition that needs a high-cost drug so that you know that the drug costs that they will face are not going to bankrupt them. This new price cap will cost the federal government and taxpayers but Dusatzena says Medicare can now negotiate drug prices and that should offset some of the increased costs. The other way that this comes out is through premiums. So if you are purchasing a Medicare Part D plan,

your premium could potentially go up. But she says there are guardrails in place to prevent them from going up too much, at least for the next few years. I'm Samantha Fields for Marketplace. All over the world, according to new research, we're getting worse at reading. The Organization of Economic Cooperation and Development, OECD, surveyed 31 different countries and found that while a handful have managed to improve literacy over the last decade, most have been stuck at a standstill or

are even in decline. Among those countries in decline is the United States. Here to discuss how that shift can affect people's personal economies and our national economy is Daphne Greenberg, a professor at Georgia State University and the director of GSU's Adult Literacy Research Center. Thanks for joining us. Thank you for having me on. So a report came out recently that showed adult literacy in the US is decreasing, But first of all, what actually counts as literacy? That's a very, very good question. Because most people think of literacy as reading, and sometimes they include writing. But we think of it as including a lot more. It includes

numeracy, such as math. It includes adaptive problem solving so that's being able to use a computer and the internet and so forth to access information. But you know, there's even a more general definition of literacy and that is basically whatever an adult wants or needs in order to function to their full potential at at the workplace and society and in their family. So how are we doing when it comes to literacy here in the United States compared with other countries as well as how we did in the past? Yeah so unfortunately we're not doing as well as many people would think we are. About 28% of adults in the United States are reading at what's considered level one and below which is really elementary skills and we really do rank very lowly compared to other

countries. But this isn't a brand new problem. We really have not focused enough on the skills of our adults in this country. And as a result, there are a lot of, you know, consequences both for the individual and for society. Most American kids, the vast majority, go to school and learn how to read. So how do we end up with adults who really struggle with literacy to the level that you're talking about?

That's a really good question. The adult education student is very diverse in the reason why they are at the point they are. So for some of them, it's because they received very poor instruction. They just got passed along grade after grade after grade when they shouldn't have been. For some of them they were sick as children and missed a lot of school. For some of them they moved around a lot. And as we know that different schools in different states and different neighborhoods are following different curricula. Some individuals have learning

disabilities. Some individuals are immigrants to our country, and so they're learning to read and write in a new language. It really is a very complicated issue in terms of the reasons why. LESLIE KENDRICK There can obviously be a lot of shame attached to this and people who struggle with reading or literacy may have developed some skills. To hide it, what does it look like when somebody has low literacy, particularly in the workplace? So for instance, many, many, many, many years ago, I tutored a woman who was struggling with reading and she always came to my tutorial

session on time. And I asked her how did she do that? And she said, well, she used to watch the Cosby show in those years and she told me, well, I know that during the second commercial of the Cosby show, I have to get out of my house and take the bus and walk to the bus stop to get to you on time. And so they develop unbelievable compensatory skills. As another example, you mentioned the workplace. I used to know a person at a dry cleaners who had difficulty with people's names and

so forth, and he just literally memorized faces that went along with clothes. So they definitely, definitely do develop a lot of compensatory skills. And you're right. There is a lot of shame associated with low literacy in our country because there's an assumption which is incorrect that every adult can read very well and is proficient. What's the broader economic impact of the fact that there are so many folks in this country who struggle to read? It has a lot of impact on both society and for the individual. So in terms of our economy, the Coalition on Adult Basic Education, for example, cited that low rates of adult literacy actually can lead leads to a $1.4 trillion loss in gross domestic product. Pro literacy cites

that there's a $100 to $200 billion loss in terms of healthcare costs because you can imagine that if you have difficulty reading and using the internet. And so much of healthcare now is on the portals that you have difficulties accessing healthcare, you have difficulties reading medical instructions, and that leads to poor health outcomes. You know, there's also the intergenerational transfer of the literacy that can happen, because if parents have difficulty reading,

then many of them are ashamed to read to their children and they can't help them with homework. And what sorts of strategies actually work to fix this issue? Yeah, so there are adult education programs and it really helps their self-esteem first of all because they realize, wow, I'm not the only one and if I come and I attend, I will be able to really increase my skills and I'm with a whole bunch of people who really care about me. One of the problems though is that these programs now only access about 10% of adults who really

need these programs. And part of the problem is that there aren't enough programs. Some people don't know how to access them. A lot of people don't even know that they exist. Daphne Greenberg is director of the Adult Literacy Research Center at Georgia State University. Thank you so much. Thank you. Bye-bye. There's very little wood utilized into commercial and institutional buildings. At least for now.

But first, let's do the numbers. The Dow Jones Industrial Average fell 418 points, 1 percent, to finish at 42,573. The Nasdaq subtracted 235 points, 1 and two-tenths percent, to close at 19,486. And the S&P 500 lost 63 points, 1 and 1 tenth percent, to end at 5906. As we recall the memory of the late former president Jimmy Carter, Carter pushed for the creation of the Department of Energy. When he took office in 1977, U.S. imports of crude oil reached what was, at the time, a peak, a little over 2.4 billion barrels, according to the Energy Information Administration,

just a bit more than we imported in 2023. But by 1981, the year Carter left office, that number had fallen by about a third, to just over 1.6 billion barrels. Imports didn't climb back to that 1977 level until 1993. Increased demand in today's world for LNG for export is one reason why natural gas futures heated up 15% today. The other reason? Forecasts of a cold January. Bonds rose, the yield on the 10-year T-note fell to 4.53% and you're listening to Marketplace. This is Marketplace, I'm Kimberly Adams. Many of us have to get creative

to make our finances work in this economy. And one budgeting method is taking off on social media right now that combines nostalgia, Instagram-worthy aesthetics, and a desire to get better at managing your money. Oregon Public Broadcasting's Lillian Carebake explores the trend of cash stuffing. Cash stuffing is a modern twist on how your grandmother might have balanced her books. The envelope system. Cash stuffers post videos of perfectly manicured nails delicately organizing

their bills, almost like an unboxing video for their paycheck. Today we are going to be doing a cash stuffing of my December paycheck. I'm going to do an ASMR cash stuffing. One two hundred fifty three fifty four hundred. That last clip is Lily Cohen, a 25 yearold who does administrative work in Bangor, Maine. She started making cash-stuffing videos in 2021 on her YouTube channel, Lily Budgets. Now Cohen has over a million views from strangers watching her separate her paycheck into a

pink wallet binder. She is thick this month. We have a lot of ones in here, I'm sure. Her viewers are often people her own age who are also trying to build good financial habits. She finds the public accountability helpful, but the actual cash is cumbersome. Oh yeah, I drive to the bank multiple times a week and I've made very good friends with the tellers. Cohen's paycheck comes via direct deposit, but then she drives to the bank and pulls

it out in cash. She asks the teller for exact denominations for each budget category, like housing, gas, and fun. And like a pro content creator, she asked for the most fetching Franklins the bank has. The prettier bills kind of draw the attention of the viewers. It's nice to look at clean, crisp, new bills versus the dirty old ones. The videos have sort of a spa-like vibe, even when Cohen is just counting coins. If the money is in cash, locked up in a safe at my house, I cannot spend it. And it's true consumers spend less with cash than plastic. Studies show it's actually more painful to part with cash than it is to pay with a card,

because you actually fork over your hard earned money. That's Ted Rossman, senior industry analyst at Bankrate, and he says this might be a way to get a handle on rising debt. Credit card balances are up 51% from the beginning of 2021. That's part inflation and high interest rates. But consumers are just swiping more often, especially Gen Z. Gen Zers have substantially more credit card debt than millennials did at the same age. They're also more likely to be using credit.

But cash stuffers think the tangible nature helps them save. When you hold onto something, you cherish it more, and so you're less likely to kind of let it go. That's called the endowment effect, says John Rourke, a professor of economics at Reed College. He says there's a downside, though. I know that's going to sound silly, but if you lose your pretty envelope, there's no recourse. Rourke says he doesn't think there are any academic papers about whether making budgeting pretty makes a difference to financial outcomes. But that might be due to lack of study. After all,

the people who'd be doing the research are economists, right? And we are not the people who are into aesthetics. Cohen isn't just into it for the aesthetics though. She invests her money after she stuffs it in her Roth IRA envelope on her YouTube channel. Then she drives back to the bank, deposits the cash and transfers it to her brokerage account. But she doesn't mind the legwork.

I love the process of opening it up, of stuffing the money in, of counting it. And having those pretty things can just make it a more enjoyable experience. And Cohen says she would keep doing it, even if she didn't post online. In Portland, Oregon, I'm Lillian Kerr-Bake for Marketplace. We started the show talking about housing and how there just isn't enough of it in this country. Well, one solution is building more multi-family structures, and some builders are trying to be a bit more climate friendly while doing it. Now typically, when you want to build, say, a high-rise, you need really durable materials

like iron, steel, cement, and concrete that also come with a high carbon footprint. But thanks to some new technology and new rules, builders are finding modern uses for a traditional and more climate-friendly material, wood. Harvest Public Media's Kate Grumke has more. On the northern edge of downtown Milwaukee, one high-rise is not like the others. The building is called The Ascent, and it's made of wood, cross-laminated timber, to be exact, also called CLT. It is 19 stories of mass timber

over a six-story concrete parking structure. That's architect Jason Korb. The Ascent is currently the world's tallest building that's a hybrid of timber and concrete. 15 years ago, it would have been hard to find a wood building that was more than four or five stories tall. But this building stretches up 25 floors, thanks to extra strong CLT.

It's made by layering and gluing lumber in a crossing pattern to form massive strong beams. Corp takes the elevator up to show off a model apartment. 14th floor. These are carrying less weight the higher up you go. Inside the ceiling is made of warm, exposed timber that connects to thick wooden support beams, framing a stunning view of Lake Michigan. Originally, Corp says the building's developers considered cross-laminated timber as an aesthetic

choice. But the more you dive into it, the more you learn about its other benefits. The largest one is the level of carbon sequestration in the timber. Trees take carbon out of the atmosphere. When you cut down a tree to turn it into cross-laminated timber, you're storing a lot of carbon into a building for a long time, says John E. Fernandez, a professor of architecture at MIT. JOHN E. FERNANDEZ When you look at a tree, the fact is that about half of the dry weight of that tree is carbon.

LESLIE KENDRICK-K. The Ascent's designers estimate the building offsets 7,200 metric tons of carbon dioxide. They say that's the equivalent of taking 2,400 cars off the road for a year. CLT doesn't just lock carbon into a building. It also avoids emissions from steel and cement. Together, those two materials produce almost 15% of planetwarming greenhouse gas emissions worldwide. But Fernandez says there's a caveat. The forest the wood comes from needs to be sustainably managed for all of this to work out. Right now, CLT is still a relatively rare building material in the US. It's really early days. Bill Parsons is the chief operating officer at Woodworks Wood Products Council, which

is a nonprofit funded by the forestry industry. Parsons says changes in the international building code in the last few years open the door for high rises made of CLT. And there's some momentum around it. Walmart's new home office in Arkansas includes mass timber. And Microsoft announced it's building two new data centers with CLT. But even though there's this long history of using wood in single-family homes, it hasn't caught on for bigger buildings. There's very little wood utilized into commercial and institutional buildings.

Parsons says there are 15 tall CLT projects either built or under construction around the U.S. and more are in the works. A lot in St. Louis' downtown West neighborhood doesn't look like much right now. It's gated off and covered in gravel. But it will soon have a mass timber high-rise that's a bit taller than the one in Milwaukee. Kyle Howerton is a principal at AHM Group, the developer behind this project. He says city officials were shocked when they first heard about it. They didn't realize that you could build something over 300 feet tall using wood. Now Howerton wants this building to inspire similar projects in St. Louis and beyond. I hope that this is a catalyst for more structures being built using the same technologies.

Howerton plans to break ground on the climate-friendly high-rise next year. In St. Louis, I'm Kate Grumke for Marketplace. This final note on the way out today. As you've heard by now, President Jimmy Carter passed away yesterday. And among his many legacies is an economic one. His presidency coincided with the last period of really high inflation in this country, leading him to what was, at the time, a controversial pick to lead the Fed, Paul Volcker. This came up in an interview President Carter did with Kai Rizdal back in 2010.

Here's a bit of that. On the topic of Paul Volcker, if I could just back up for a second, you put him in the job. You, in essence, made this deal with him where he would do what he had to do and you would suffer the political consequences according to your telling of it. And yet it seems to me that he is most remembered and the president he is most associated with is Ronald Reagan for breaking the back of inflation. Does that gall you at all? Not gall me, but I recognize the fact.

Well, I was the one that suffered politically and Ronald Reagan was the one that benefited from the Paul Volcker economic philosophy. But I don't begrudge the fact that it happened during the next term. I thought the next term was going to be mine. President Carter was 100 years old. The New York Stock Exchange and the NASDAQ will be closed for trading on January 9th for the National Day of Mourning for the nation's 39th president. Our daily production team includes Andy Corbin, Nicholas Guillaume, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sofia

Terenzio. I'm Kimberly Adams. We'll be back tomorrow. This is APM.