tv Real Money With Ali Velshi Al Jazeera September 26, 2013 7:00pm-7:31pm EDT
welcome to al jazeera, i'm tony harris. here are tonight's top stories. a government shutdown is looming, but there could be an agreement in the works to avoid it. and house republicans would have raised the debt ceiling even if the senate agreed to defund president obama's health care bill. the new bill would instead delay implementing parts of the law. the full un security council plans to meet tonight to discuss getting rid of syria's chemical
weapons. interpol has issued a search for a woman. they are linking her to a plot to bomb resorts in kenya in 2011, and there are two revelations about detroit's financial crisis, and what could have contributed to their financial problems. workers may have been overpaid for years. those are the headlines. up next, "real money with ali velshi." ♪ the dream of owning your own home is becoming just that and no more for millions of americans. i'll tell you why minnenals are becoming a generation of
renters. and many people will still not have insurance under obama, because of the supreme court. i'm ali velshi. this is "real money." ♪ this is "real money." you are the most important part of the show, so join our live conversation for the next half hour by using that hashtag on twitter. to many people owning a home is the american dream. but for 28% of americans who are in the market to buy a home, that dream may be unattainable, because they are not likely to qualify for a mortgage. according to a new study, 28.4% of people who have applied or looked for a loan have a credit score of 620 or lower. 620 is the cutoff point.
tightening lending standards combined with short sales and foreclosure has brought home ownership down to 65%. that's the lowest rate of homeownership since 1995. but the last few years of turmoil should have taught us something. that owning a home is for most people hundreds of thousands of dollars of debt. for many american's it's their primary tool for building wealth. but tell that to those who are still under water on their home loans. owning a home has turned into an american nightmare for them. sure the housing crisis was fuelled by aggressive real estate agents and greedy lenders, and home buyers eager to borrow more than they can
chew. renting your home is a perfectly honorable thing to do. americans [ technical difficulties ] tell me what you think by tweeting me at alreal money. many of these are millenals, or the under 35 crowd. you would think they would be renters, but the average age of a first time home buyer is 31, and these days they are buying
way less and renting way more than they used to. >> reporter: 32-year-old dreams of one day owning a home. >> we all dream about buys. the friends that i have that haven't purchased just don't have the savings or the salary to take the plunge. >> reporter: she has been warned with the looming threat of sequester, she could be laid off at anytime. >> i just know it wouldn't be smart to buy right now, probably won't be smart to buy in the next day or two. >> reporter: she is one of a growing number of millennials in america choosing to rent than buy. >> this is a economically challenged generation. the economy has not be producing enough high-paying jobs, and
many are either unemployed, under ployed, or have jobs which don't pay sufficient levels of remuneration in order to purchase a home. >> reporter: economies james hughes says one big problem is student loan debt. >> it is like graduating from college and you are immediately subject to mortgage payments. so that makes it very difficult to take on a second debt load in the form of a mortgage. >> reporter: she has combined student dead and credit card loans of around $13,000. but it's not just economic uncertainty that prevents her from buying. >> i don't have enough savings, first of all, to even think about putting a down payment. >> reporter: the share of young people getting their first mortgage was chopped in half
from 10 years ago, falling from 17% to just 9%. >> it's harder to get a mortgage today than it was during the housing bubble. >> reporter: as mortgage lending gets tighter, ben bernanke says it is the ma lennals who are hit hardest. >> during the housing bubble credit was so lose, interest rates were so low, we created these toxic financial products. >> reporter: after the bubble burst stricter lending standards triggered more through thorough checks. >> renters face a lot of obstacles, but the biggest is still saving enough for a down payment. >> reporter: the average down payment in the '90s, was 20%. in 2006 that dropped to 4% or
less. now the average down payment is around 22%. >> the vast majority of young renters say they want to own some day. >> reporter: but for sean renting is a lifestyle choice. >> financially i could buy a home if i wanted to. but right now i choose the rent just mostly for the flexibility, the mobility of getting to live in different places and areas in the city, possibly moving to another city or out of the country. >> reporter: for shawn buying a house seems like a risky financial decision. >> i see buying a house a questionable investment at this point in my life. and right now i'm invested in four businesses. and i chose to put my money into businesses rather than a house. >> right now, i'm saving just for survival and that doesn't include a mortgage. so here is the question, is
it really so bad to rent instead of buy? does it mean you are not living the american dream? i'm not sure it is a bad thing to be a renter nation, but joining me now is an economist who is concerned about america's shift to being a renter nation. he is with welling far go who is the largest lender in the united states. mark, you make a really compelling argument as to why owning is good over renting. it has got to do with wealth creation. >> yes, it really does have to do with wealth creation. one of the best ways that america has built well is through owning a home, and unfortunately we really got away from that, we allowed folks to pull all of the equity out. a lot of people rushed into buying homes without really giving it a lot of thought, and it turned out to be an awful investment for them. it doesn't mean that everybody
is -- and we don't think that everybody should -- should buy a home. certainly there is a place for renters, particularly in some of the more expensive markets, and young people in general are going to rent until they settle down. it doesn't make as much sense to own a home when you are single and may relocate to some other part of the country. but as millennials age up and build savings, i think we'll see the homeownership move back up again. >> so as millennials built up some savings, that was the key to buying a house. you didn't just grab all of the equity that you made in it as home prices appreciated, took that out, and risked your capital? >> absolutely, people used to have to save for a down payment, and so when they shop for a home, they spent a lot of time. that's what we call selection bias. they were very careful. they looked at the best
neighborhoods, and because they spent so much time looking for that home, they tended to make very good choices. in the last cycle, everybody was rushing to buy homes, simply because they felt the prices were going to go up so fast that if they waited they would miss the opportunity. it was nonsense. and many people who bought at the top are probably going to wait another decade or more before they get whole on their mortgage. >> right now it will take you 620 on your credit score at a minimum generally speaking to get a mortgage these days. the fact that mortgage standards have tightened, there are a lot of people that are very frustrated by that, is that a bad thing, not the philosophical concept of being a renter, but the idea that it's hard to get a mortgage? >> it's not a bad thing that mortgage standards had tightened
up. they had gotten way to easy. i was queasy when we got to 4 or 2% down. because when you are only putting 2% down, you know, you get a lot of -- a lot of tricky that was going on in some markets. but most mortgages today that are -- that people are getting, are -- are sold in the secondary market. the mortgages are sold to fannie mae and freddie mac, and because they are still trying to dig themselves out of the hole they got into during the crisis, they are very stringent in terms of the criteria -- of the mortgages that they are going to buy. so really that's what is dictating the terms is fannie mae and freddie mac. and they have loosened up a little bit. appraisals have normalized, a little bit of house appreciation as the markets are improving,
but if you look at the raw numbers, home prices are up 10%, yet the number of people who own a home has dropped to 133,000, and that concerns me because we can't have a recovery in the housing market without more homeowners. >> good to talk to you mark. here is an image that says lot about a story that we have been following that is clearly heating up. jpmorgan jamie diamond showing his diver's license to a security officer. he was there to talk to eric holer about settling various charges that may be filed against the bank. the settlement number appears to be $11 billion. but both sides are reportedly far apart so stay tuned. five days until the initial enrollment process for o&m
begins. >> i'm 53 years old, my last time for a full medical checkup was probably five years ago. i was doing pretty good at that time. i don't know what has hand over the last five years. >> that cab driver is going to have to wait a little for that checkup, because he won't be covered under obamacare.
obamacare is now being delayed by a month. this is not entirely unexpected. >> like any law, like any big product launch, there is going to be some glitches, as this thing unfolds, folks in different parts in the country will have different experiences. >> as obamacare rolls out, "real money" will report continuously on our nation's new approach to health care. david is here to have a look at medicaid, and how it is falling short for millions of people. >> that's right. the supreme court made a key part of obamacare optional,
expanding medicaid. half of the country has opted out. >> reporter: not everything is bigger in texas. lawmakers in the loan star state are steering clear of obamacare's medicaid expansion. that decision will leave like this cab driver right where they were before. >> life of a cab driver, man. >> reporter: tell me how things have been for you without insurance? >> it has been pretty difficult. like i said i don't have any preexisting conditions right now. i'm 53 years old. my last time for a full checkup was probably -- a full medical checkup was probably five years ago. >> reporter: the medicaid expansion that texas is rejecting is designed to help people like dave who has a wife and three kids and has an annual income of about $23,000 a year.
if texas had expanded the program, a family earning about $30,000 a year could get coverage. but because texas has not expanded medicaid, dave and his family are basically out of luck. about 1.7 million texas are stuck in the middle. >> i know things such as probably prostate screening and all of that stuff at my age is recommended. i don't have the money to do that. >> reporter: medicaid provides health care coverage to low-income people, but eligibility is largely determined by the states. >> in texas we only cover children, pregnant women and the disabled for the most part. >> reporter: as for opting out, texas is not alone. about half of the country has
followed suit. the result, about 11.5 million people are left without coverage. >> completely unexpected. changed the political dynamic, the economic dynamic, the marketplace dynamic. >> reporter: opponents say medicaid is a mismanaged program. >> we think there's plenty of money in the system already, it's just so poorly spent. >> reporter: texas spends about a quarter of its budget under medicaid. under the new law, the feds will foot the entire bill scaling down to 90% in subsequent years. >> there are many states in this country that are struggling with budget deficits, and are saying to themselves even if this expansion only cost us 10% of the cost, we can't afford it. >> reporter: but at the local
level that has some count think administrators fuming. >> the impact to our hospital district is $52 million a year. had we expanded medicaid, we would have got that $52 million from the federal government. instead we're getting it from local taxpayers. >> reporter: if every state expanded, america's uninsured population would drop by as much as 23 million people. after the dust settles in the obamacare debate, some analysts expect that states like texas will ultimately end up expanding medicaid. in the meantime, dave and others will have to wait to see any help. when medicaid was first enacted in 1965, it wasn't until 1982 that arizona became the last state to join the program. >> for a lot of people out there
not on medicaid this has a potential impact on them as well. >> that's right. basically the whole argument behind obamacare is that it lowers costs in the long term. overall health care premiums have been skyrocketing, to obamacare lowers cost. the way it lowers costs is having fewer uninsured. when you are in a hospital, hospitals have to take care of the uninsured. so they ate that cost. the hospitals have to pass on that cost in the form of higher prices when you in the hospital, that's why those bills are so high -- >> that's when you get medication in the hospital it is a lot more than what you would pay at a drugstore. >> exactly. >> and generally hospitals signed on to the idea of obamacare thinking we'll have fewer people walking through our doors uninsured and our price
will go down. >> that's exactly. the supreme court allowed that -- that medicaid expansion to be optional, so there's potential for fewer people with insurance. >> thanks very much, dave. coca-cola is launching a way to get safe drinking water to the most difficult places to reach. that store and more right here. that's all i have an real money.
it's a liter, obviously there is at least a liter of water in there, but it takes a lot more than the liquid you drink to manufacture the coke. as you know, water is something we care a lot about on this show. coke knows in a world where water is scarce, heavy water can be a problem. i sat down with the ceo to discuss what coke is doing to bring clean water to the most remote parts of the world. >> for every liter of beverage that we actually use for making our beverages, filling our beverages, sanitizing our 1,000-plus factories around the world, we will give back -- for every liter we'll give that liter back to the planet earth
through technology, through recycling the water, before we give it back to the municipalities where we operate our plants, and the third is replenishment projects -- capturing rain water and water-harvesting projects around the world. >> this is interesting, because if my viewers are wondering where this fits into a money show, you have connected it to this whole commercial enterprise. tell me about this echo center. >> it's a kiosk that house the slingshot unit that can produce up to 850 liters of clean water using solar power or power from bye biomass.
it is is in connection with other companies. >> you have a company mccann health -- >> mccann health is providing health care solutions to communities. so it's all about creating these healthy communities, and a woman entrepreneur who will run this, and she will become the beacon of this community, hire more women, and that community then, with clean drink water, with women entrepreneurs, becomes a successful vibrant community. >> somebody described it as downtown in a box. you go into a remote village that does not have access to clean water, and you plant this thing that looked to me like a shipping container. >> it actually is. it's a 20-foot shipping container. >> all right. you plunk it somewhere, and people will come to use the
electricity to charge their cell phones. >> and it will bring wi-fi to the area. imagine the possibilities that it opens up to all of these communities around the world in places like india, indonesia, latin america, africa. so we have deployed in mexico, paragua paraguay, and south africa. >> coca-cola hopes to deploy between 1500 and 2,000 units of water puration systems, as well as those complete echo center containers in at least 20 countries by the end of 2015. they are hoping it will give access to clean water to about half a million of people. okay. your question for the day . . .
and if you want to know more about tonight's stories, log to our website, aljazeera.com/reelmoney. that's our show for today. thank you for joining us. friday we'll take a look at the financial implications on hospitals under obamacare, and what it means for you. i'm ali velshi. this is "real money." ♪
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