Economic Update (Monday, October 18, 2021)
Economic Update
(Monday, October 18, 2021)
A tight labor market, strong consumer demand for goods, rising energy prices, and supply chain disruptions are some of the main factors that have caused inflation to surge in recent months to the highest levels since 1991. The Consumer Price Index (“CPI”) is a closely watched inflation indicator that looks at price changes for a broad range of goods and services. In September, “Core CPI” (which excludes the volatile food and energy components) was 4.0% higher than a year ago.?That was the same annual rate of increase as last month, but well above levels below 2.0% seen earlier in the year. ?As a result, Fed officials and economists are divided about whether the recent spike in the annual inflation rate is mostly due to temporary factors caused by the pandemic (“transitory”) or will last for a long time.?What do you think…
Retail Sales Rose in September.?Retail sales continued to show strength in September, surprising the consensus and rising 0.7% for the month.?The sales gains were broad, with eleven of thirteen major categories up in September, led by general merchandise stores (back-to-school shopping!) and at gas stations (more miles driven and consumers paying more at the pump).?Overall sales are up a robust 13.9% from a year ago.?Another way to look at it is that sales are up 18.9% versus February 2020, which was pre-COVID.?In other words, due to temporary government support, retail sales are running much hotter than they would have in the absence of COVID, even as the level of output (real GDP) is still running lower than it would have been in the absence of COVID.?It has NOT been an even recovery for all major categories, though. For instance, non-store retailers ( 36.1%) and sporting goods stores ( 37.1%) have grown significantly faster than overall retail sales since February 2020.?In contrast, the last category of sales to get above February 2020 levels was restaurants & bars, which finally moved into the green in April and are now up 9.3% from 19 months ago. ?In the months ahead, the path of retail sales will be a battle between a number of opposing factors.?Rising wages, jobs, and inflation will all be tailwinds for retail sales, while the waning of the temporary and artificial boost from those "stimulus" checks, along with the end to overly excessive jobless benefits will be headwinds.
Third Quarter 2021 Foreclosure Activity Increases. ?ATTOM just released its third quarter “U.S. Foreclosure Market Report,” which shows there were a total of 45,517 properties with foreclosure filings?(i.e. default notices, scheduled auctions or bank repossessions), up 34 percent from the previous quarter and up 68 percent from a year ago.?The report also shows there were a total of 19,609 properties with foreclosure filings in September 2021, up 102 percent from September 2020!?That may sound extraordinarily high until you realize that September’s foreclosures were almost 70 percent lower than they were prior to the COVID-19 pandemic in September of 2019, and Q3 foreclosure activity was 60 percent lower than the same quarter that year.?In other words, we’ll end the year significantly below what we’d see in a normal housing market.?States that posted the greatest number of foreclosure starts in Q3 2021, include the usual culprits, California (3,434 foreclosure starts); Texas (2,827 foreclosure starts); Florida (2,546 foreclosure starts); New York (1,363 foreclosure starts); and Illinois (1,362 foreclosure starts).?Among the 220 largest metropolitan markets analyzed in the report, those that posted the greatest number of foreclosure starts in Q3 2021, include New York City (1,456 foreclosure starts); Chicago (1,122 foreclosure starts); Los Angeles (1,102 foreclosure starts); Miami (992 foreclosure starts); and Houston (866 foreclosure starts).?Why are the foreclosure numbers still so low??Because according to Rick Sharga (Realtytrac.com), the government and the mortgage industry have worked together to prevent millions of unnecessary foreclosures using: (a) the foreclosure moratorium, and (b) mortgage forbearance programs. Nevertheless, with thousands of borrowers exiting forbearance in the coming months, we still might see a higher percentage of those borrowers default on their loans.?Nationwide in September 2021 one in every 7,008 properties had a foreclosure filing.
Florida Landlord is Requiring Vaccines for Tenants. ?A Florida landlord who controls approximately 1,200 rental units across two counties is requiring both new and existing tenants to have COVID-19?vaccines — thus opening a new chapter in the increasingly tense debate about safety during the Pandemic.?The landlord, Santiago A. Alvarez, operates several large apartment complexes in Florida’s?Broward and Miami-Dade counties, according to the?South Florida Sun Sentinel, which first reported the story. Beginning October 1, all new tenants at the complexes are required to show proof of?vaccination?before moving in. Additionally, existing tenants will now need vaccines in order to renew their leases.?The new policy was announced to tenants via letters taped up at the complexes. The letters are topped by the words “zero tolerance” in bold, underlined type.?Speaking to the?Sun Sentinel, Alvarez explained the policy by saying “we have to be concerned about our tenants and our employees.” He also said that between 12 and 15 of his tenants have died from COVID-19.?“We’re just trying to keep people safe and healthy. It’s going to cost us money, but we’re very firm on that.”?Despite the concerns, the policy has apparently not gone over well with all the tenants of Alvarez’s complexes. One man, who did not provide his name, told the?Sun Sentinel?that requiring tenants to get vaccines “should be illegal.”?Similarly Jasmine Irby, a tenant who lives at one of Alvarez’s complexes, told the?Post?she has filed a complaint with the Florida Department of Agriculture and Consumer Services. Irby also reportedly retained an attorney, who sent Alvarez a letter arguing that the vaccine policy broke an order from Florida Gov. Ron DeSantis that banned “vaccine passports” (or proof of vaccination from business patrons) in the state.?Either way, the situation serves as a test case in the emerging legal and culture war over COVID-19 vaccination.
Los Angeles Ranked Third in Nation’s Cities for Second Homes. While there are 137.4 million housing units in the United States, second homes account for only 5.4 million of those homes nationwide. But coming off a year like 2020, second/vacation homes have become more popular than ever, and?AdvisorSmith.com?set out to find what markets are the most popular destinations.?In their analysis,?AdvisorSmith?researched the most popular cities for second homes in the United States, ranked by the number of second homes in each city based upon the population of each city. Large cities were those with over 350,000 residents, while midsize cities had 100,000-350,000 residents, and small cities had 10,000-100,000 residents.?New York was the clear frontrunner with some 74,078 second homes. The Big Apple was followed by retirement-heavy Mesa, Arizona and our very own Los Angeles (which reportedly has 13,850 second homes). Miami and Chicago rounded out the top five in the large cities category.?On the midsize front, Scottsdale came in at no. 1 with 14,575 second homes (10.5 percent of the total homes in the city). Miami Beach was the most popular destination for the small cities (with 17,389 second homes), accounting for 25 percent of the city’s total housing inventory.
With Multi-Count Rape Trial Pending, Danny Masterson Lists L.A. Home. With his career in tatters, his passport surrendered, and a November start date likely for his trial (on three charges?of rape that could land him in the slammer for up to 45 years), “That ‘70s Show” alum Danny Masterson and former model/actress/showbiz scion Bijou Phillips (her father is John Phillips of The Mamas and the Papas), have listed their somewhat celeb-pedigreed pad in L.A.’s Bronson Canyon neighborhood on the market at $6.995 million.?The long-time Scientologists, who have remained a united front despite the devastating allegations (to which Masterson has pleaded not guilty), stand to more than double their money on the historic estate they picked up in 2007 for almost $3 million. Why, you ask, is the estate historical??Glad you asked.?The estate was previously owned for decades by late rock-and-roll pioneer Chuck Berry who sold it (according to tax records), in 2000 for what today seems like an unimaginably low amount: $570,000. ?Ironically (and beyond some rather unusual and disturbing proclivities), the “My Ding-A-Ling” singer also faced numerous allegations of sexual harassment and assault back in the 1980s and ‘90s. Out on bail since his June 2020 arrest, neither Masterson nor Phillips have appeared on the small or silver screen. For Masterson it was the Netflix series “The Ranch” (2016-18), which I never heard of.?Phillips has been accused of emotional and physical abuse herself.?Actress Heather Matarazzo claims?that in 2007 Phillips choked her prior to the filming of “Hostel: Part II,” (although it is not clear whether Phillips choked her because she was a horrible actress or just didn’t like her).?Phillips also had a recurring role on “Raising Hope” back in 2013, which I never heard of either. Given their lack of money-generating acting gigs, it seems likely whatever profit they realize on the sale of their long-time home will be needed to pay for Masterson’s Tom Mesereau-led and no-doubt hugely expensive defense.?An unconventionally circular parcel of about two-thirds of an acre protected behind spiked gates and privately enshrouded in high hedging and billowing foliage, the estate includes a sprawling, four-bedroom, and three-bathroom main house of close to 4,600 square feet, along with a detached structure that houses a studio-style guest apartment with kitchenette and bath, along with a sound-proofed recording studio (where allegedly Chuck Berry may, or may not, have recorded “Johnny B. Goode.”
Condo Prices Rise at Oceanfront Counties Around U.S. Last week, ATTOM released a special report looking at condominium sales and prices in oceanfront counties around the U.S. The Report (following up on the June 2021 collapse of the beachfront Champlain Towers South condominiums in Florida), shows that median condo values and price increases in oceanfront counties in the second quarter of 2021 closely tracked national trends.?The Report found that median condo prices in 50 percent of those oceanfront counties surpassed the typical $305,000 condo price nationwide, while 50 percent fell below.?It also revealed that median condominium prices increased during the second quarter of 2021 by at least 20 percent (measured year over year), in slightly more than half of the oceanfront counties analyzed. Less-expensive oceanfront condo markets, concentrated in the South, generally showed bigger year-over-year gains, while the most expensive counties (located mainly in the West), showed the smallest.?The report looked at 86 counties around U.S. that bordered the Atlantic Ocean, Pacific Ocean, or the Gulf of Mexico, and had enough data to analyze, meaning that they had at least 25 condo sales in the second quarter of 2021, the first quarter of 2021 and the second quarter of last year. The report sought to analyze condo price trends in areas similar to the one where the building collapsed in Surfside, Florida.?The second-quarter-of-2021 condo price gains in oceanfront counties came at a time when the national housing market boom was roaring into its 10th?year, with median single-family home and condo prices rising annually by more than 15 percent across a majority of the U.S. Condo values have continued to rise in oceanfront areas amid a combination of historically low mortgage rates and the ongoing appeal of living along or near oceanside communities.?Florida had the most sales in the second quarter (58,404), followed by California (20,042), Hawaii (4,686), South Carolina (4,617) and Massachusetts (4,198).?The five counties with the most transactions accounted for 37 percent of all condo sales in the areas analyzed. They were Palm Beach County (West Palm Beach), FL (10,454 condo sales); Miami-Dade County, FL (9,396 sales); Los Angeles County, CA (7,228 sales); Broward County (Fort Lauderdale), FL (6,890 sales) and San Diego County, CA (4,740 sales).?
CA Has Rent Relief, But It’s Bypassing Immigrant Tenants.?Bottom of FormCalifornia has a $5.2 billion rent relief program for tenants facing eviction during the pandemic. But that help is evidently not making it to the hands of non-English speaking immigrants most in need.?An early analysis of California’s rent relief program showed that language barriers were reported at the highest rate by Asian and Pacific Islander survey participants.?Another issue is that many immigrant workers in blue-collar and service sector jobs rent rooms or share a house without formal lease agreements that are requested from applicants as proof of tenancy.?Some workers discovered right away they weren't eligible for help with rent they already paid. Unaware that there was a statewide eviction moratorium that just expired last month, they borrowed money during the pandemic from family or lenders to keep up to date on the rent.?So far about 55,000 California households have received more than $650 million in rent and utilities assistance from the state. About 724,000 households are estimated to be $2.5 billion?behind on rent, according to the National Equity Atlas.?For both online and printable applications for rent relief, the state website provides translation in Spanish and four Asian languages — Vietnamese, Korean, Tagalog and Chinese.?But with the online application, translations are mixed in with some English. Applicants are asked to type in their location in a space that says “find address or place,” and afterward press a “view” hyperlink that takes them to eligibility questions.?Immigrant advocates have for months been pressuring the state to improve language and disability access on its state housing website. In response, the housing agency has also increased advertising and outreach activities in different languages, devoting 12.3% of its marketing budget — or about $1 million — to Asian language strategies through television, social media and billboards. The bulk — 40% — is going into radio advertisements.?Tenants who know they will have trouble paying rent in the future are encouraged to apply because the state program will pay prospective rent up to three months at a time. ?This could help those tenants who took out loans to be current with rent, but are still struggling. Nevertheless, the average turnaround from the time a completed application is submitted to the time money is disbursed is four to five weeks.
World of Interiors?Under Hamish Bowles.?If you’re a real estate investor into architecture (who isn’t), you already read Architectural Digest magazine.?But what about World of Interiors magazine??Few magazines are as resistant to the winds of change as?the World, which has had only two editors in its 40-year history! ?Come January 2022, it will get its third. Rupert Thomas (the 22-year stalwart and protégé of its founding editor, Min Hogg), will step down, and Hamish Bowles, a 25-year veteran of?Vogue?and a longtime lieutenant of Anna Wintour’s, will step in.?Both Vogue and World of Interiors?are owned by Condé Nast.?You will love World of Interiors.?World?is a small jewel of a magazine (its circulation hovers around 55,000, piddling compared with?the more celebrity-focused?Architectural Digest,?the other magazine owned by Condé Nast), but proud. Founded in 1981 by Hogg, a wealthy but still raffishly bohemian Londoner (whose father was ear-nose-and-throat doctor to the Queen),?World concerns itself with gorgeous but not overly perfected manses (“a certain sort of mellow and knocked-about English country house predominate”). ?What it does NOT concern itself with is Hollywood, how-to’s, budget decorating, or, to a large extent, the internet. Its web page remains a fairly cursory affair, though it does have an Instagram account, with 698,000 followers. “When Condé Nast purchased the American magazine Architectural Digest, Hogg declared, “We knew for certain that Condé Nast has no taste.” Architectural Digest, now in the hands of fellow?Vogue?alum and Wintour protégé Amy Astley, is at the very least clear: Architectural Digest proudly features the homes of the likes of?Kylie Jenner ,?Ashton Kutcher ,?Serena Williams , and?Drake .?You won’t dare find those people in World of Interiors! ?These Economic Updates, on the other hand, will stoop even lower…
Pamela Anderson Sells Malibu Mansion.?Baywatch fans take heart.?Six months after placing her?Malibu home?on the market and moving back to her roots in?Canada, supermodel Pamela Anderson?sold it?for $11.8 million.?The 5,500-square-foot beachfront house in the gated Malibu Colony community had belonged to the 53-year-old star of the 1990s cult TV series?Baywatch?since 2000 when she bought the property for $1.8 million. It originally held a smaller cottage that the actress replaced with a luxurious beach home.?In March, Anderson and her bodyguard-turned-husband Dan Hayhurst?listed?with Tomer Fridman from Compass for $14.9 million and announced that they were moving back to where Anderson was born on Vancouver Island. She and Hayhurst are currently living in and renovating a six-acre farm that had belonged to Anderson’s grandmother.?The Malibu home comes with four and a half bathrooms, an open floor plan and a detached lofted guesthouse that is separated from the main property by a pool with a swim-up bar and a sun deck. The house is kept away from prying eyes by a gate and a large garden of olive, orange and avocado trees.?Known for her platinum blonde hair and her numerous “appearances” in?Playboy?magazine in the 1990s, Anderson has spent the last decade-plus advocating for animal rights and leading a quiet life away from the press.?Over the 20 years that Anderson spent living in the Malibu property, she renovated it to be more energy-efficient and sustainable as she evolved into a vocal environmentalist.
Annual Los Angeles Real Estate Grand Expo.?Our Grand Expo returns on Sunday, October 31, 2021 (Halloween day), 9:00 am to 6:00 pm, a the beautiful Skirball Cultural Center.?We’ve taken over the entire Skirball – it’s all ours for this magical day!?The theme of this year’s Grand Expo is “How to Invest in a Post-Pandemic World.”?The Grand Expo is presented by the Los Angeles Real Estate Investors Club, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411.?There will be 14 national speakers in breakout sessions, and 70+ vendors (in an area the size of a football field)!?Keynote speaker will be Amy Mahjoory, star of HGTV’s “House Hunter.”?Best of all, the Grand Expo will be FREE and parking is also FREE. But you’ll need to RSVP at www.LAGrandExpo.com .
Basic Training Boot Camp.?On Saturday, November 13, 9:00 am to 6:00 pm, is our semi-annual Real Estate Basic Training Boot Camp.?Everything you ever wanted to know about real estate investing, but were afraid to ask.?The best news of all is that this Boot Camp will be LIVE In-Person!?The cost of the Boot Camp is $249.00 per person if paid before November 6th.?After November 6th, the price jumps to one million dollars!?So hurry and sign-up now.?Gold Members can attend for FREE.?You can register at LAREIC.com.
Weekly “Rubbing Elbows” Podcast.?Pictured below are my two favorite juvenile delinquents, Chuck Dorfman and Lior Yehuda.?When not getting into trouble, Chuck and Lior co-host a weekly podcast, “Rubbing Elbows,” which is sponsored by LAREIC.?Every Thursday live at 8:00 pm (and streaming anytime thereafter), Chuck and Lior interview real estate professionals sharing their insights and advice.?Its real estate uncensored and unfiltered.?These guys may be unorthodox, but they know what they’re talking about.?You can enjoy “Rubbing Elbows” wherever you view podcasts (i.e. YouTube, Facebook, Google, Apple) and LAREIC.com/RubbingElbows .
This Week.?Looking ahead, investors will closely watch Covid case counts and vaccination percentages around the world. They also will look for hints from Fed officials about the timing for changes in monetary policy. Beyond that, it will be a light week for economic data with a focus on the housing sector. The U.S. Census Bureau will release Housing Starts on Tuesday (10/19) and the National Association of Realtors will release Existing Home Sales on Thursday (10/21).
?Weekly Changes:
领英推荐
10-year Treasuries:???????????? Fell????005 bps
Dow Jones Average:?????????? Rose?500 points
NASDAQ:????????????????????????????? Rose?300 points
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Calendar:
Monday (10/18):??????Industrial Production??????????????????????????????????
Tuesday (10/19):?????Housing Starts?????????????????????
Thursday (10/21):????Existing Home Sale
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For further information, comments, and questions:
Lloyd Segal
President
Los Angeles Real Estate Investors Club
310-409-8310