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Unintended Consequences - Could Obamacare Lead To A Shift Away From Home Ownership?

By Donna S. Robinson | November 6, 2012

I was at a local big-name grocery store just the other day. As I was checking out, the cashier and I were trading the usual small talk, when she suddenly volunteered the news that every single store employee had been told that their working hours would be cut back from full-time to part-time. I was a bit taken aback, as this was a sudden change from our light conversation to something much more serious, but I got the impression that the cashier was so frustrated that she simply needed to tell someone, anyone who would listen.

Image by David Blackwell via

I responded by asking if this cutback was because of the Obamacare rules governing employers with 50 or more employees, and she said "yes". The management had implicitly stated that they could not afford to comply with the new insurance requirements and penalties, so the company had decided to cut the hours of all store employees back so that everyone was now part-time.

As a grocery store, caught between rising food prices and rising costs of doing business, the only viable solution was one that held costs down as much as possible. Many other companies are following suit, and reducing employee hours so that they are within the definition of "part-time". In so doing, they are avoiding increased costs for healthcare that are threatening to erase already thin profit margins.

I can understand where the employers are coming from. As a business owner, I've experienced government regulations on everything from licensing requirements to insurance to taxes. In the present economic climate, many businesses can't afford to raise prices to help cover these costs, without risking losing more customers. It's a catch-22 for these companies. And there are a lot of companies who are announcing that they are going to reduce employee hours to avoid the new healthcare regulations and the associated costs.

If you are really into boring details you can view an impartial, detailed analysis of the business impact here.

In fact, the above cited analysis points out that this shift in employee status is going to lead to a boom in staffing services, since more and more employees will be treated as contract or temporary workers in response to Obamacare. I can't help but wonder how all of this is going to impact housing and home sales in the long run. With more and more workers seeing their hours cut back, it could mean fewer and fewer folks being able to qualify for a mortgage.

In a housing market where credit is already tight, and mortgage qualifying is already difficult, seeing tens of thousands of workers having their working hours and their income reduced could add more momentum to the shift towards rental and low income housing, and away from home ownership. And this would ripple through the economy, upending a number of other sectors that are heavily dependent on home sales to generate business.

A company has to stay in business and make a profit or NO ONE will have a job, so cutting hours is not the worst thing that could happen. But when incomes are reduced, fewer people can qualify for a traditional home mortgage. And of course, this would mean fewer home sales, thereby prolonging the agony of a housing market that is already almost totally dependent on taxpayer insured mortgages for it's survival. Without more jobs and more employees making more money, the housing market could continue to languish for years to come.

It's going to take good paying full-time jobs that can keep up with the cost of living, if we are ever to see a return to some sense of normalcy for the housing market. But as it stands right now, the fundamentals are shifting decisively in the direction of more renters and fewer home owners in the years ahead.
Donna S. Robinson is a real estate industry veteran, real estate investor, author and residential market analyst, located in Atlanta, GA. Follow her on twitter at donnaconsults.

Donna S. Robinson has been involved in the real estate industry since 1996. A licensed agent and real estate investor, she is a recognized expert on residential real estate investing. Her course, "Fundamentals & Strategies For Real Estate Investing" is approved for CE credit by the GA Real Estate Commission. She has authored several books on real estate investing, and consults with residential investment companies. She also offers coaching services to real estate investors.

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