Housing Market Woes & The U.K.’s New Prime Minister | 10.27.22

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Georgia Howe: Good morning, I'm Georgia Howe, and this is Morning Wire.

John Bickley: [in the background] I'm John Bickley, the editor-in-chief of Daily Wire.

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John Bickley: The housing market is slowing at the fastest rate on record. But does that mean it will be easier to buy? Not necessarily. We break down what's driving the drop in home prices.

Georgia Howe: I'm Georgia Howe with Daily Wire editor-in-chief John Bickley. It's Thursday, October 27th, and this is Morning Wire. The UK has named their third prime minister in three months. I know the high office I have accepted, and I hope to live up to its demands. Who is Rishi Sunak? What are his policy plans? And what do we know about his connections to the World Economic Forum?

John Bickley: And a new report shows that residents of blue states are much more politically active than their red state counterparts. What's behind the divide and what are the national implications?

Georgia Howe: Thanks for waking up with Morning Wire. Stay tuned. We have the news you need to know.

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Georgia Howe: As homebuyers continue to struggle against record inflation and rising interest rates, new data shows that the once red-hot housing market is now slowing down faster than at any point on record. And it's about to get worse. Here with more on what's driving prices down and what it means for homeowners and renters is Daily Wire senior editor Cabot Phillips.

Cabot Phillips: We've talked about the market cooling off, but things are really hitting a new level now. They absolutely are. Last month, existing home sales fell by 24%, marking the eighth straight month of decline. We haven't seen a slide last that long since 2007. The number of listings also fell last month by 22%, and mortgage applications are down 38% this year compared to last. They now sit at their lowest point in a quarter century. And also 22% of homes for sale had a price drop last month. That's another record. But perhaps most concerning of all, in the month of August, that's the last month we have data for, home prices fell nearly 3% compared to the month before. Now, that might not sound like much, but we have not seen a 30-day drop that drastic since we started tracking this stat all the way back in 1987. And it's worth pointing out that record was also broken again last month as well.

Georgia Howe: How much of this housing slowdown is a result of the Fed raising rates?

Cabot Phillips: That is certainly the main reason. So in an effort to curb inflation and slow down the economy, the Fed is continuing to raise interest rates. They're now up around 7%. That's a 20-year high. And that means that if you had your eye on a house since the summer and you saw a price cut it actually probably more expensive for you to buy that house now than it was then because your monthly mortgage payment is going to be so much higher with these new rate hikes. And that reality is causing the pool of homebuyers to shrink, which is terrible timing because there's about to be a huge spike in new homes coming onto the market.

Georgia Howe: Yeah. Tell us about the timing factor here with all the building. So during the pandemic, we saw construction on new homes crater. But then after lockdowns ended, builders had to deal with massive supply chain backups, which prevented them from capitalizing on the increased demand post-COVID. So as the market continued to heat up last year, those builders really raced to fill the demand and started construction on a record number of new homes. So last month, there were 800,000 new homes under construction. But the problem is that the market itself is completely different now than it was when construction started, meaning the price of those new homes is going to be way less than builders had anticipated.

Cabot Phillips: To that point, here's Jeremy Siegel. professor of finance at UPenn's Wharton School, talking about the price drops that we're expecting to see on houses moving forward. I think we're going to have the second biggest housing price decline of post-World War II period over the next 12 months. And I mean, that's a very, very significant factor for wealth, for equity and the housing market.

Georgia Howe: But it's not just the housing market that's seen major changes lately, right?

Cabot Phillips: Yeah, while the average price of a new home has plummeted this year, the price of rent has skyrocketed. Over the last two years, rent has gone up 25% nationally. And that spike has now driven a lot of renters just completely out of the market. Last quarter, for example, apartment demand hit its lowest point since 2009. And as a result, many young Americans are either moving back in with their parents or even moving in with friends because they can't afford anywhere else. The latest figures show that 18% of American adults said that they'd lived rent-free with friends or family in the last six months. 18%. 18%. That is the highest number since that data was first collected back in 2015. And just from a social standpoint, it's also worth noting, we've talked on the show about America's declining birth rate and population decline. Well, study after study shows that people are less likely to get married and have kids when they're living with their parents or feel like they can't afford a home.

Georgia Howe: Yeah, there's another factor that could impact society as the economy continues to worsen.

Cabot Phillips: Cabot, thanks for reporting.

Georgia Howe: That's Daily Wire senior editor, Cabot Phillips.

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Georgia Howe: Britain's new prime minister delivered his first speech this week, vowing to steady the economy at a time of political chaos in the country. Prime Minister Rishi Sunak acknowledged the mistakes of his predecessor, Liz Truss, but said he'll make economic stability and confidence the cornerstone of his administration, noting that that would mean, quote, difficult decisions to come. Here to discuss the situation is Daily Wire senior editor Ash Short.

Ash Short: So Ash, this is the third prime minister since July. What's going on in the UK?

Georgia Howe: Right. It's been a pretty hectic few months in the United Kingdom. Boris Johnson resigned in July amid multiple scandals And his foreign secretary Liz Truss then took over But she lasted just 44 days and now we have Sunna Now what happened with Liz Truss Truss was appointed just weeks before the gas prices in Europe went haywire, which can't really be blamed on her since they had more to do with COVID supply chain issues, Ukraine, and pre-existing issues with the European energy market. But Truss's attempt to deal with them caused a lot of fallout. In September, she designed a mini budget, which included a cap on energy prices, with the difference to be paid by the government through borrowing. At the same time, though, Trust's administration cut a bunch of taxes. For example, they suspended the UK's carbon tax, scrapped a planned rise in corporation taxes, and lowered income taxes. So essentially, Trust ballooned the country's debt at a terrible time, which sent the markets into a nosedive and tanked the British pound. Also around this time, the Bank of England announced there's a liquidity crisis in pension funds that was just hours away from blowing up. So they had to raise interest rates dramatically and begin buying back their own bonds. So it was a huge mess.

Georgia Howe: There's a worthy debate to be had about whether Truss's policies could have possibly been beneficial in the longer term, but the media was pretty brutal to her and she clearly wasn't prepared to stand by her plan. So she resigned. Within a few days, Britain's Conservative Party selected Sunak to replace her.

Ash Short: Okay, so now they have Sunak. He's obviously walking into a really difficult situation. What is he saying he's going to do?

Georgia Howe: Well, it's not entirely clear right now how his policy approach will differ from Liz Truss's because he appears to be putting together the same cabinet as both Boris Johnson and Truss. But it looks like his first priority is reassuring the British people that they're in good hands. Here's a clip from his first speech as prime minister. I will unite our country, not with words, but with action. I will work day in and day out to deliver for you. This government will have integrity, professionalism, and accountability at every level. Trust is earned, and I will earn yours.

Ash Short: Part of building that trust will involve having the UK's Office of Budget Responsibility review his economic package, which Trust's administration did not do, as well as allowing the Bank of England to raise interest rates if they find it necessary. Sunak is also expected to slash spending, something that will likely be met with pushback in a country with a longstanding tradition of big government, which some people argue contributed to the mess they're in now.

Georgia Howe: Now, Truss was famously pro-Brexit. Where does Sunak fall on that?

Ash Short: Well, he has publicly supported Brexit in the past, but he isn't necessarily a nationalist. Some critics are raising flags about his association with the World Economic Forum. His father-in-law is tech billionaire Narayana Murphy, who owns the Indian tech company Infosys. Infosys is an official partner of the WEF and has been linked to the social credit score movement. So for people who are concerned about the social credit system being furthered on a global scale, this is potentially a concerning conflict of interest.

Georgia Howe: Absolutely. That's something we're going to keep an eye on.

Ash Short: Ash, thanks so much for reporting.

Georgia Howe: That's Daily Wire senior editor, Ash Short.

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Announcer: A new study shows that some states far outpace others in voter and civic engagement. Here to give us the details on the study is Daily Wire's Charlotte Pence Bond.

Charlotte Pence Bond: So Charlotte, let's start with the basics. Who did this study and what did they find?

Georgia Howe: The study was published by a personal finance group called WalletHub. It looked at all 50 states with a focus on 10 main points of evidence having to do with political participation For example the portion of people who were registered to vote in 2020 presidential race as well as the amount of political donations Now, which state or states came in first in participation? The top state was Maryland, followed by New Jersey, Virginia, Washington, Oregon, Minnesota, California, Arizona, New York, and Iowa. The lowest participation state was Arkansas, followed by West Virginia, Alabama, South Dakota, Nebraska, South Carolina, Oklahoma, Indiana, Louisiana, and Idaho coming in right above it. Interesting pattern there. So there's a political lean to it.

Charlotte Pence Bond: Right. And as you mentioned at the top, blue states are much more politically engaged than red states on balance, which is a little unexpected. You'd think purple states would have the most motivation to vote. But that's just not really the case. And it doesn't seem to correlate with median income either. For example, during the 2018 midterms, the lowest voter turnout was Arkansas, followed by Hawaii and West Virginia. Now, keep in mind, by some measures, Hawaii is the most affluent state, whereas Arkansas and West Virginia are much lower. That same year, the voter turnout was highest in Maine.

Georgia Howe: So do rates of civic engagement give either party an advantage?

Charlotte Pence Bond: Well, the study didn't parse out the data by party affiliation, so it's not clear that blue voters are engaging at higher rates than red voters. All we know is that voters in blue states are more engaged, but it does have implications for things like the national popular vote if blue states are more engaged overall.

Georgia Howe: Now, do we have any information about voter enthusiasm along partisan lines for this upcoming election?

Charlotte Pence Bond: Our recent morning consult Politico survey showed that excitement among Democratic voters is about even with Republicans. 59% of Democrat voters said they were extremely or very enthusiastic about voting in the midterms. And 58% of Republicans said the same. But Democratic Party insiders have been voicing concern about the perception that Democrat enthusiasm is low. Here's former mayor of Atlanta, Keisha Lance Bottoms, discussing just that. Just as a voter, I can tell you I am very concerned at the lack of enthusiasm in our state right now. And I know that oftentimes in midterm elections, people don't turn out to vote. I hope that won't be the case this year in Georgia.

Georgia Howe: Analysts at WalletHub named Jill Gonzalez told me they're hoping to see more people vote this cycle due to the current economic situation. But we just won't know until November.

Charlotte Pence Bond: Now, did this study offer any insights about why blue states have higher rates of participation than red states?

Georgia Howe: Well, Jill Gonzalez says blue states have more voter accessibility policies and more volunteer political campaign opportunities per capita. But that doesn't really answer the fundamental question of why people seem to show more interest in politics in blue states in the first place.

Charlotte Pence Bond: It's possible that these policies and organizations successfully reach disengaged voters who might otherwise not vote. So basically, the policies turn disengaged voters into engaged voters.

Georgia Howe: All right. Well, Charlotte, thanks so much for reporting.

Charlotte Pence Bond: Thanks for having me.

Georgia Howe: That was Daily Wire's Charlotte Pence Bond.

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Georgia Howe: Another story we're tracking this week. The Biden administration is awarding $1 billion to schools in all 50 states, D.C., and tribal areas for the purchase of 2,500 clean, zero-emission school buses. Vice President Kamala Harris announced the grants on Wednesday in Seattle.

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