Marketplace Episode Summary: "How Fresh Is That Home Listing?"

Release Date: December 30, 2024
Host: Kimberly Adams (in lieu of Kai Ryssdal)
Podcast: Marketplace
Description: Every weekday, host Kai Ryssdal helps you make sense of the day’s business and economic news — no econ degree or finance background required. “Marketplace” takes you beyond the numbers, bringing you context. Our team of reporters all over the world speak with CEOs, policymakers and regular people just trying to get by.

1. Housing Market Dynamics

The episode opens with an in-depth analysis of the U.S. housing market's tightness and affordability issues, marking it as one of the major economic stories of 2024.

• Pending Home Sales Growth:
  [00:02] Kimberly Adams introduces the latest data from the National Association of Realtors, highlighting that pending home sales grew for the fourth consecutive month, increasing by 2.2% in November despite persistently high mortgage rates.

• Increase in Housing Inventory:
  [01:23] Despite the ongoing affordability challenges, there has been a modest gain in housing inventory.
  Elizabeth Troval reports that active listings have reached their highest level since 2020, according to Redfin's analysis. However, this increase is partly due to stagnant listings.

• Regional Market Insights:

  • Orlando, Florida:
    Rose Kemp notes that the housing market is beginning to balance, offering buyers more options.
    "For buyers, for the first time... you can probably go out and see five homes that have the potential for you." [00:59-01:23]

  • Austin, Texas:
    Kent Redding observes an uptick in inventory and expresses optimism for 2025 as a favorable time to buy.
    "We're still short by about 30% fewer homes on the market compared to pre-COVID levels, but inventories are trending in the right direction." [02:10-02:32]

• Challenges of Stale Inventory:
  Shahriar Bahari explains that many homes remain unsold because they are overpriced, with buyers considering additional costs like interest rates and insurance.
  "Houses are just sitting there largely because they're priced too high." [01:54-02:10]

• Economic Implications:
  Lawrence Yoon emphasizes that although there are more choices now than before 2020, the market is still significantly constrained compared to pre-pandemic times.
  "We are still short by about 30% fewer homes on the market compared to pre-COVID levels." [02:10-02:32]

2. Medicare Prescription Drug Cap

The discussion shifts to healthcare, specifically the new policy capping out-of-pocket prescription drug costs for Medicare recipients.

• Policy Changes:
  Starting January 1st, seniors on Medicare will pay no more than $2,000 annually for prescription drugs, a reduction from the previous cap of $3,250.

• Expert Insights:
  Benedict Ippolito from the American Enterprise Institute comments on the necessity of capping out-of-pocket expenses for insurance products.
  "If a health plan doesn't cap the amount you can be required to pay, that's not a particularly good insurance product." [04:00-04:06]

• Impact on Seniors:
  Matthew Fiedler from the Brookings Institution notes that while most seniors do not exceed $2,000 annually, around 1.5 million faced higher costs in 2021 due to expensive medications.
  "Most seniors aren't spending more than $2,000 a year on prescriptions, but at least one and a half million did in 2021." [04:15-04:28]

• Economic Considerations:
  While the cap benefits individuals, it introduces new costs for the federal government and taxpayers. However, Dusetzina points out that Medicare's ability to negotiate drug prices may help offset these expenses.
  "The new price cap will cost the federal government and taxpayers, but Medicare can now negotiate drug prices to offset some of the increased costs." [05:24-05:35]

• Premium Adjustments:
  Kent Redding and Samantha Fields discuss potential premium increases for Medicare Part D plans, although safeguards are in place to limit these hikes in the coming years.
  "If you are purchasing a Medicare Part D plan, your premium could potentially go up. But there are guardrails to prevent them from going up too much, at least for the next few years." [05:35-05:45]

3. Declining Adult Literacy in the United States

The episode delves into the concerning trend of declining adult literacy rates in the U.S., based on recent OECD research.

• Current State of Literacy:
  Daphne Greenberg, director of GSU's Adult Literacy Research Center, explains that about 28% of U.S. adults have literacy skills at level one or below, comparable to elementary school levels.
  "We really do rank very lowly compared to other countries. But this isn't a brand new problem." [07:53-08:33]

• Causes of Low Literacy:
  The reasons for adult illiteracy are multifaceted, including inadequate education, learning disabilities, language barriers for immigrants, and inconsistent curricula across states and schools.
  Kent Redding elaborates:
  "It's a very complicated issue in terms of the reasons why. Some received poor instruction, some moved frequently, others have learning disabilities or are immigrants learning a new language." [08:47-09:36]

• Impact on Individuals and Economy:
  Low literacy rates contribute to significant economic losses, estimated at $1.4 trillion in GDP and $100-$200 billion in healthcare costs annually. Additionally, poor literacy affects health outcomes and intergenerational educational attainment.
  Kent Redding:
  "Low rates of adult literacy can lead to a $1.4 trillion loss in GDP and $100 to $200 billion in healthcare costs." [11:06-12:05]

• Effective Solutions:
  Adult education programs that boost self-esteem and provide supportive environments can be effective, but currently, only about 10% of adults in need access these resources.
  Kent Redding:
  "These programs really help their self-esteem and increase their skills, but only about 10% of adults who need these programs are accessing them." [12:10-12:48]

4. Cash Stuffing: A Modern Budgeting Trend

The segment explores the rising trend of "cash stuffing" as a creative budgeting method popularized on social media platforms.

• What is Cash Stuffing?
  Cash stuffing involves physically dividing cash into different budget categories using envelopes or binders, with an emphasis on aesthetics and ritualistic organization.
  Lillian Carebake describes:
  "Cash stuffing is a modern twist on the Envelope System. Stuffers post videos of neatly organizing their bills, almost like an unboxing video for their paycheck." [16:17-16:32]

• Personal Implementation:
  Lillian Kaerbake demonstrates the process by categorizing her paycheck into a pink wallet binder with exact denominations for each category, enhancing the experience with visually appealing bills.
  "It's nice to look at clean, crisp new bills versus the dirty old ones." [17:04-17:41]

• Psychological and Economic Benefits:
  Studies cited by Ted Rossman from Bankrate indicate that using cash can reduce spending compared to credit cards due to the tangible nature of money. Additionally, John Roark explains the "endowment effect," where people value items they own more highly, potentially aiding in saving.
  "Consumers spend less with cash than plastic because it's more painful to part with cash." [18:00-19:12]

• Challenges and Criticisms:
  While aesthetically pleasing, cash stuffing requires significant effort, such as multiple trips to the bank, and lacks protections against loss or theft.
  John Roark:
  "If you lose your pretty envelope, there's no recourse." [19:15-19:30]

• Practical Application:
  Despite the drawbacks, Lillian Kaerbake finds value in the process, transferring funds to her Roth IRA and brokerage account after cash stuffing, indicating a blend of traditional and modern financial management techniques.
  "I love the process of opening it up, stuffing the money in, and having those pretty things makes it a more enjoyable experience." [19:30-19:40]

5. Sustainable Building with Cross-Laminated Timber (CLT)

Addressing the housing shortage and environmental concerns, the episode highlights innovative construction using Cross-Laminated Timber.

• The Ascent Tower in Milwaukee:
  Kate Grumpke introduces the Ascent, a 19-story high-rise in Milwaukee made primarily of CLT, marking it as the world's tallest hybrid timber-concrete building.
  "The Ascent is currently the world's tallest building that's a hybrid of timber and concrete." [20:44-21:04]

• Advantages of CLT:
  CLT offers significant environmental benefits by sequestering carbon dioxide, reducing reliance on high-carbon materials like steel and concrete, and promoting sustainable forestry practices.
  John E. Fernandez states:
  "Trees take carbon out of the atmosphere. When you cut down a tree to turn it into CLT, you're storing a lot of carbon into a building for a long time." [22:05-22:24]

• Industry Adoption and Future Prospects:
  Despite its benefits, CLT remains relatively rare in the U.S. construction industry. However, recent changes in international building codes and interest from major corporations like Walmart and Microsoft suggest growing momentum.
  Bill Parsons:
  "Changes in the international building code opened the door for high rises made of CLT, and there's some momentum around it." [22:27-23:48]

• Upcoming Projects:
  Kyle Howerton of AHM Group discusses upcoming CLT projects in St. Louis, aiming to inspire similar sustainable constructions nationwide.
  "We hope this building serves as a catalyst for more structures using the same technologies." [23:30-24:39]

6. Economic Indicators and Legacy of President Jimmy Carter

The episode concludes with a brief overview of current economic indicators and reflections on President Jimmy Carter's economic legacy.

• Market Overview:
  Kimberly Adams reviews the stock market's year-end retreat, citing declines in the Dow Jones, NASDAQ, and S&P 500.
  "The Dow Jones industrial average fell 418 points, 1%, to finish at 42,573." [13:16-14:46]

• Energy Imports and Natural Gas Futures:
  Historical comparisons regarding crude oil imports during Carter's presidency are made, linking them to current trends in natural gas futures and energy policies.
  "U.S. imports of crude oil reached a peak of just over 2.14 billion barrels in 1977, falling to just over 1.6 billion barrels by 1981." [14:46-21:04]

• President Jimmy Carter's Economic Philosophy:
  Reflecting on Carter's decision to appoint Paul Volcker as Fed Chair to combat inflation, the episode includes an archival interview where Carter discusses the political ramifications of his economic policies.
  Kimberly Adams:
  "Your presidency coincided with the last period of really high inflation... you were the one that suffered politically." [25:03-25:19]
  President Carter:
  "I don't begrudge the fact that it happened during the next term. I thought the next term was going to be mine." [25:19-25:31]

• National Day of Mourning:
  Following President Carter's passing, the New York Stock Exchange and NASDAQ announce closures for a national day of mourning.
  Kimberly Adams:
  "President Jimmy Carter passed away yesterday... The NYSE and NASDAQ will be closed for trading on January 9th for the national day of mourning." [25:24-25:31]

Conclusion

This episode of Marketplace provides a comprehensive overview of critical economic issues ranging from the housing market's current state and healthcare policy changes to the declining literacy rates among adults and innovative budgeting trends like cash stuffing. Additionally, it highlights sustainable construction practices using CLT and reflects on the economic legacy of President Jimmy Carter. Through expert interviews and detailed reporting, the episode delivers valuable insights for listeners seeking to understand complex economic landscapes without the need for specialized knowledge.

Notable Quotes:

• Rose Kemp:
  "For buyers, for the first time... you can probably go out and see five homes that have the potential for you." [00:59-01:23]

• Shahriar Bahari:
  "Houses are just sitting there largely because they're priced too high." [01:54-02:10]

• Kent Redding:
  "Low rates of adult literacy can lead to a $1.4 trillion loss in GDP and $100 to $200 billion in healthcare costs." [11:06-12:05]

• Lillian Kaerbake:
  "It's nice to look at clean, crisp new bills versus the dirty old ones." [17:04-17:41]

• John E. Fernandez:
  "Trees take carbon out of the atmosphere. When you cut down a tree to turn it into CLT, you're storing a lot of carbon into a building for a long time." [22:05-22:24]

• President Jimmy Carter:
  "I thought the next term was going to be mine." [25:19-25:31]

This summary encapsulates the key discussions and insights from the "How fresh is that home listing?" episode of Marketplace, providing a structured and detailed overview for those who have not listened to the episode.