The Affordable Care Act, aka ObamaCare, has certainly been off to a rocky start––from a barely functioning website to premium sticker shock, from data security risks to dropped insurance coverage. Now, new data point to widespread trouble ahead in the housing market as a result of this wildly unpopular legislation, and many are asking where the fallout will stop.
One of the main reasons analysts expect to see negative repercussions of the ACA in the housing market stems from the burdens ObamaCare places on employers. Under the new law, employers with at least 50 employees working 30 hours per week must provide health insurance. At the same time, insurance premiums are rising rapidly. As a result, many employers – especially small businesses – have no choice but to lay off workers or cut workers back to fewer than 30 hours per week.
In a recent episode of “Safe Money Talk Radio,” guest co-host Bruce Avellanet discusses how this will affect the economy as a whole. According to Avellanet, as people lose their jobs or see their income drastically reduced, they will have no choice but to dip into retirement accounts and investments to stay afloat. This sell-off will drive markets quickly downward. As the situation worsens, hundreds of thousands of home owners will have to sell their homes or face foreclosure.
Rising healthcare premium costs are beginning to take their toll on Americans who are now required to purchase coverage independently through the ACA website – that is if they can manage to log on to the site at all. Many people are finding that new coverage is 2x to 3x more expensive than their old health plans. Laying out hundreds more each month for healthcare means people have less money going into savings. As a result, we will see fewer first-time home buyers, which currently account for more than 35% of all home sales.
We can also expect to see unemployment and underemployment numbers rise in the coming months. Thanks to sky-high premiums, more older workers are opting to delay retirement in order to stay on company plans rather than having to pay for coverage on their own. This means less opportunity for younger workers to enter or rise through the job market. To top it all off, many employers report they will eliminate jobs this year to offset the massive expenses associated with the Affordable Care Act.
With all of these factors combined, it seems likely that we will soon see the stock market contract from recent record highs. Not only will many people be forced to sell-off existing investments, we will also see less money moving into the market from new investors. The effects of this contraction will become more intense as the Fed cuts back on its quantitative easing practices many see as artificially inflating our economic performance.
Forcing Americans and American businesses to spend billions on inflated healthcare premiums means lower employment, less consumer spending, and less capital investment in the stock and real estate markets.