Monday Morning Quarterback

Monday Morning Quarterback

(Monday, July 18, 2022)

World population is nearing 8 billion! 8,000,000,000! Wow, that’s a lot of zeros. ?In fact, it will reach this staggering number of zeros on or about November 15, 2022. In a Report released last Monday (World Population Day), the United Nations also says more than half the projected increase in population up to 2050 will be concentrated in just eight countries: Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, Philippines, and Tanzania. The U.N. Report, entitled World Population Prospects 2022 states, “This is an occasion to celebrate our diversity, recognize our common humanity and marvel at advancements in health that have extended lifespans and dramatically reduced maternal and child mortality rates. At the same time, it is a reminder of our shared responsibility to care for our planet and a moment to reflect on where we still fall short of our commitments to one another.” The Report also projects that India, with a current population of 1.412 billion, will surpass China, currently at 1.426 billion, and become the most populous nation in the world. ?Meanwhile, global population growth in 2020 fell below 1% for the first time since 1950. Further, the population of 61 countries or areas are projected to decrease by 1% or more between 2022 and 2050. In countries with at least half a million population, the largest reductions in population size over that period, with losses of 20% or more, are expected to take place in Bulgaria, Latvia, Lithuania, Serbia and Ukraine (I think we know why Ukraine will take the lead on this one). In other highlights, the Report says global life expectancy has improved by almost nine years since 1990 (reaching 72.8 for babies born in 2019) and is projected to reach 77.2 in 2050, as death rates continue to fall. The Report also says that the best-looking babies come from California, especially Los Angeles County (just kidding.) ?As for gender balance, the report says the world counts slightly more men (50.3%) than women (49.7%) in 2022. But this figure is projected to slowly invert over the course of the century.?And finally, my favorite trend, the population above age 65 is growing more rapidly than the population segments below that age. Whoa, that’s a lot of grandmas and grandpas. So the next time you see someone with gray hair, be sure to hug and kiss them!

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U.S. Inflation Climbs To 41-Year High. Surging gasoline prices last month drove the rate of U.S. inflation to a 41-year peak of 9.1%, offering little hope of help soon for Americans suffering from the high cost of living.?The Consumer Price Index (“CPI”) jumped 1.3% last month, marking the third time in the last four months it’s topped 1%. The increase in consumer prices in June pushed the rate of inflation over the past year to 9.1% from 8.6%. The last time inflation was so high was in November 1981. Higher prices for everything ranging from fuel to food to rent may prod the Federal Reserve to sharply raise a key U.S. interest rate?again when senior officials meet toward the end of this month.?By raising rates, the central bank aims to cool off our economy just enough to bring down inflation, ideally without triggering a recession. Yet many economists are doubtful the Fed can succeed in achieving what is referred to as a “soft landing.”?As Fed officials acknowledge, food and gas are a big part of every family’s budget, and the pain households experience is acute.?High inflation is infecting every part of our economy.?But the real problem is that worker wages aren’t keeping up with price increases — real hourly wages have fallen 3.1% in the past year. As a result, consumers face unpalatable decisions on what to buy and what to forego. Meanwhile, businesses are coping with rising costs and reduced demand. And the government has to pay more in interest to service chronic budget deficits.?Unless inflation relents soon, the Fed will keep jacking up interest rates. If rates go high enough, they’ll slow the economy and even put the U.S. at the risk of a second recession in three years.?The Fed , to their credit, is trying to thread the needle, but just a few missteps could cause major damage to our economy, analysts say.?If you’re a landlord (or a tenant for that matter), you already know rents leaped 0.8% in June, the biggest monthly gain since 1986. Rents have risen 5.8% in the last 12 months, the highest in 36 years.?Prices also rose last month for new and used vehicles, auto insurance, clothing, household furnishings and medical care. As a result, the Fed has no choice but to follow through on a more aggressive path, which raises the probability of recession next year.

Vacant Zombie Properties Rising in Second Quarter.?ATTOM released its second-quarter 2022 “Vacant Property and Zombie Foreclosure Report” showing that 1.3 million (1,304,007) residential properties in the United States sit vacant. That represents 1.3 percent, or one in every 76 homes, across our nation.?The report also reveals that 259,166 residential properties in the U.S. are in the process of foreclosure in the second quarter of this year, up 12.7 percent from the first quarter of 2022 and up 15.9 percent from the second quarter of 2021. This is also the third straight quarter that the count of pre-foreclosure properties has gone up since a nationwide foreclosure moratorium, imposed early during the Coronavirus pandemic, was lifted at the end of July 2021. Among those pre-foreclosure properties, 7,569 sit vacant in the second quarter of 2022, meaning that the number of “zombie-foreclosure properties” went up quarterly by 2.8 percent.?The number of zombie-foreclosures does remain down 6.3 percent from a year ago and continues to represent just a tiny segment of the nation’s total stock of 99.7 million residential properties. Just one of every 13,171 homes in the second quarter of 2022 are vacant and in foreclosure, meaning that most neighborhoods have none. The portion of pre-foreclosure properties that have been abandoned into zombie status also continues to decline, down from 3.6 percent a year ago to 3.2 percent in the first quarter of 2022 and 2.9 percent in the second quarter of this year.?A total of 7,569 residential properties facing possible foreclosure have been vacated by their owners nationwide in the second quarter of 2022, up slightly from 7,363 in the first quarter of 2022 but still down from up from 8,078 in the second quarter of 2021.?Amid numbers that remain extremely low, the biggest increases from the first quarter of 2022 to the second quarter of 2022 in states with at least 50 zombie foreclosures are in Michigan, (zombie properties up 74 percent, from 54 to 94), Arizona (up 56 percent, from 32 to 50), Georgia (up 29 percent, from 62 to 80), Nevada (up 26 percent, from 68 to 86) and Iowa (up 17 percent, from 132 to 155).

California Eviction Ban Ends. Good news landlords.?A final extension of California’s COVID-era eviction moratorium expired last week, ending emergency housing protections for thousands of families just in time for summer.?Tenant advocates say the end of the ban on evictions will further exacerbate a statewide homeless situation for which the term “crisis” no longer has any meaning. Landlords counter that the protections had been in place for more than two years. The latest extension of the moratorium was signed into law just this March, when Acting Gov. Eleni Kounalakis (filling in for Governor Newsom, who was on vacation), signed legislation that kept eviction protections in place for people participating in rental assistance programs until June 30.?The state program had provided rental assistance to more than 309,000 households at that point, Newsom’s office said, with an average payment of more than $11,000. ?“With an average of 2.33 individuals per household assisted,” the statement said, “the state program has kept more than 720,000 adults, children and seniors in their homes. And with the hard work of local jurisdictions that are running their own rent relief programs, an additional 233,000 households have been served, assisting a total of more than 500,000 residents. In all, the number of people kept stably housed exceeds 1.2 million.” As of Thursday, 329,327 of 398,526 households that applied for rent relief were served, according to the state’s rent relief dashboard. State officials in June said that case managers had reviewed every application submitted through the “Housing is Key” portal, and that workers were calling applicants who have incomplete applications.?Residents of the city of Los Angeles and their landlords still have a little more time to prepare. The city’s eviction moratorium?will remain in place until at least July 22, 2023, and L.A. County has its own tenant protections?as well.

Southern California Housing Prices Will Fall, Experts Say. The only question is when and how much??Rising mortgage rates have slowed the housing market across the nation, including Southern California. Sales are down, inventory is rising and many prospective buyers and sellers have a simple question: When will home prices fall??According to some analysts, the prospect of falling prices is growing more likely as the slowdown deepens, with some now adjusting their forecasts to call for actual price declines by the end of this year.?Such predictions mark a major shift from earlier this year, when there was general consensus that rising mortgage rates would simply slow price appreciation. That is: Prices would keep climbing but less than they had in the last two years.?Some analysts still see that slower-growth scenario as likely. But the fact some major forecasters now foresee sustained price declines (something that hasn’t happened in more than a decade) underscores to investors just how quickly our housing market is changing. Two factors helped shift their view.?Mortgage rates started the year in the low 3% range but had risen above 4.5% by late March, surpassed 5% in April and surged to nearly 6% this month, according to Freddie Mac.?For a $760,000 house (the current median price in Southern California), this means a monthly mortgage payment in early January would’ve been $3,493 (including property tax and insurance), with a 20% down payment, according to a Redfin mortgage calculator.?In March, that payment was $506 more expensive; in April, $655 more; and as of last week, it was nearly $1,000 higher at $4,428.?That $1,000 differential disqualifies a lot of potential buyers. As a result, a growing number of home sellers have responded to waning demand by dropping their list prices, a first step if overall sales prices are going to fall in the future.?But for now, economists expect the California median sales price for all of 2022 to be up 9.7% from a year earlier, a sharp slowdown from the nearly 20% growth seen in 2021. Then in 2023, they expect the Federal Reserve’s actions to fight inflation will cause a mild recession.?And the combination of job losses and higher rates will cause the statewide median price to fall 7.1% compared with this year, with similar declines in Southern California. So investors get ready. In 2023, economists anticipate declines in the mid-single digits in Los Angeles and Orange counties and for prices to fall in the high-single digit range in the Inland Empire.?Most economists think any recession will be mild.

10 California Cities Ranked As Safest In 2022.?Out of California’s 1,345 cities, 10 were listed as the safest cities in the Golden State, according to crime statistics analyzed by SafeWise.?SafeWise, a security product review platform, ranked the cities using recent crime statistics and data from the Federal Bureau of Investigation, the U.S. Census Bureau and the Gun Violence Archive. SafeWise also included demographic information and the results in its “State of Safety” research study. (No California cities made the 10 safest cities in America.)?Here are the top 10 safest Golden State cities in 2022, according to SafeWise:

1.???Danville

2.???Rancho Santa Margarita

3.???Moorpark

4.???Aliso Viejo

5.???Yorba Linda

6.???Laguna Niguel

7.???Poway

8.???Mission Viejo

9.???Rancho Palos Verdes

10. Thousand Oaks

Top of Form

Bottom of Form

Surprisingly, California’s violent crime rate held steady over 2022, avoiding a spike otherwise seen across the nation. The state reported 4.4 crime incidents per 1,000 people, which surpassed the national rate of 4.0 but avoided an increase over the previous year, according to the analysis.?Nationwide, the violent crime rate rose 5 percent year over year, from 3.7 incidents per 1,000 people to 4.0. As for property crime in California, that rate fell 9 percent from 23.4 incidents per 1,000 to 21.4. That rate is again higher than the national average but is falling steadily, SafeWise reports.?Some 54 percent of California residents said they were highly concerned about violent crime happening to them. That’s 13 percentage points higher than the rest of the U.S.?Despite those fears, all of California’s “safest cities” identified in the report have violent crime rates below the state and national rates.?The nation’s most populous state also reported the third-highest number of mass shootings in 2021, with 46 incidents — an 18 percent increase over the previous year, SafeWise said.?Just 8 percent of Californians use firearms to defend their property, compared to the national average of 26 percent, and my Texas cousin at 100%.

Dramatic New 6th Street Bridge Delivers “Love Letter” To Los Angeles.?Move over Hollywood Sign, City Hall, LAX towers, the Coliseum.?There’s a new icon in town.?And it’s a bridge, or more accurately, a viaduct.?The new 6th Street Viaduct actually crosses more industry than water, spanning a scruffy flat of lofts, warehouses and rail lines. The $588-million bridge, that opened last weekend is designed as a Los Angeles monument in its own right, an iconic space to gather and to celebrate the city.?With its 10 pairs of tilted arches, it is the largest and most expensive bridge Los Angeles has ever erected. The viaduct connects downtown to Whittier Boulevard (the heart of the historic Eastside), and replaces a beloved Depression-era bridge that was demolished in 2016 because it was falling apart.?The construction took six years, stalled by the pandemic and unforeseen soil conditions. But unlike most bridges built mostly to sustain the weight of big rigs barreling down them, the new bridge is meant to hold massive celebrations.?Engineers wonderfully tailored its capacity for tens of thousands of people, not just cars and trucks. And its thousands of LED lights, tucked into the arches and under the beams, can turn the gray viaduct to Dodger Blue or any other color of the rainbow the occasion calls for. Officials have dubbed the new bridge the “Ribbon of Light.”?The 3,500-foot-long bridge was designed by architect Michael Maltzan.?His design was selected by the Bureau of Engineering through an international contest.?On an aesthetic note, walking the bridge and taking in the view captures so much of what makes Los Angeles special. The freeways and skyscrapers, fancy lofts and rusting warehouses, jails, art, graffiti, palm trees and homeless camps, the mountains and the sea breeze, the grit and beauty of the city in one big sweep.?The bridge, which was more than $100 million over budget and delayed by two years. The six years of construction was a massive undertaking, with 89 subcontractors, 8,250 tons of steel and 15,000 feet of steel cable. Even as it opened last weekend, the railings on the stairs leading up and down the viaduct have yet to be delivered because of shipping delays and labor shortages. Underneath the bridge is a sprawling park costing $40 million that Mayor Garcetti says will be the city’s next “Central Park.” It is scheduled to open by 2024 and will feature a small amphitheater, soccer fields and walking paths.

That Lifeguard Shortage You’ve Not Have Heard About? With low unemployment and fewer in-person training sessions during the pandemic, there are alarming reports of lifeguards shortages across the country.?But the good news close to home? That hasn’t been the case for L.A. County.?Pono Barnes, an ocean lifeguard specialist and spokesperson for the L.A. County Fire Department says unlike other places, L.A. County sees lifeguarding as “an essential public service” throughout the year and says the department is constantly recruiting.?“Los Angeles County — the first thing that people think is the beach, Baywatch, and the Santa Monica Pier, and so regardless of the season, it’s always a good beach day down here in L.A.,” Barnes said. In other Southern California cities, lifeguard chiefs say it’s been slower to recruit new guards this year, but they’ll have beaches fully staffed this summer.?Brian O’Rourke, chief lifeguard in Newport Beach, says only about 40 people showed up to the department’s swim test this year. In years past, that number was over 100.?“Coming out of the pandemic, or moving through it, we haven’t been able to get our lifeguard recruiters out to schools. We’ve been doing it through social media, and I think that has definitely hurt the effort,” O’Rourke said.?But he said the department, which guards about six miles of the coast in Orange County, is still running at full staff.?What's going on elsewhere? ?The shortage is affecting about a third of public pools across the country, leading some public pools to reduce hours or close altogether, the American Lifeguard Association says. And it says the shortage could extend into next year.?The pandemic has taken a toll on the number of lifeguards. It's meant two years of very little lifeguard training and expiring certifications on top of that, Bernard J. Fisher II, director of health and safety for the lifeguard association says.?The shortage nationwide has the lifeguard association offering incentives to become lifeguards throughout this year.

Strangest Airbnb Ever.?Outside of Boise, Idaho, you can spend a night inside a giant Idaho potato. Yep!?The Idaho Potato Commission originally created the big spud for its 75th anniversary celebration in 2012. Recycled from the Commission’s “Big Idaho Potato Tour,” this 6-ton potato traveled on the back of a semi to 48 states for seven years of baked potato celebrations. Afterward, Big Idaho Potato was transformed into a cozy retreat, with whitewashed walls, pink armchairs, and an antler chandelier.?Now resting on good ol’ Idaho farmland, just south of downtown Boise, this gigantic potato has been meticulously designed by Kristie Wolfe (former Big Idaho Potato Tour spokesperson in the photo below), to allow for stylish private comfort and amenities such as power outlets for your electronic devices, a mini fridge, old records to play and a custom-built bed. If you love the fluffy feeling you get when you eat Idaho potatoes, you’ll love staying in a giant potato turned cozy, grown-up getaway for two!?There is also a customized silo turned into a spa retreat perfect for soaking while looking up at the stars. For an extra dose of cuteness, the Big Idaho Potato comes with the cutest jersey cow in the world who will be your fuzzy pet for your stay. The Potato is surrounded by 400 acres of farmland. The Union Pacific Railroad runs along the right side of the farm. The only other neighbor is the National Guard training facility, but you’ll never see or hear them. If you’re looking for a comfortable potato to spend the night the next time you’re in Boise, this is it! But sorry, sour cream and chives not included.

“How to Fix & Flip Houses.”?Our special guest speaker at our August meeting will be the incomparable Joe Arias. Joe is an experienced house flipper and will be showing us how to get started finding, financing, fixing and flipping houses.?Joe and his team have flipped more than 100 houses in Southern California and has just written a book about his experiences, “Flipped for Real Success.” ?Don’t miss Joe’s presentation on August 11, 2022, 6:30 to 9:30 pm. ?Location: Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, 90034 (Culver City adjacent).?FREE Admission.?Metered and free street parking. (But don’t come “fashionably late” or you’ll be forced to park in Long Beach and taking an Uber!) RSVP: LARealEstateInvestors.com.

Vendors Expo Returns!?Our carbon-neutral, bio-degradable, gluten-free, super-duper "Vendors Expo"?returns on Thursday night,?August 11, 2022. The Vendor Expo opens starting at 6:30 pm. We'll have 40+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034 (Culver City adjacent).?FREE Admission.?Metered and free street parking. Please RSVP at www.LARealEstateInvestors.com.

New “LARealEstateInvestors.com” Podcast.?We are so very excited to announce our new podcast, "LARealEstateInvestors.com" (named after our domain) hosted by our very own Bill Gross. Bill has been a Realtor, broker and real estate investor forever!?No one is more experienced in local Southern California real estate than Bill Gross. Plus he is an expert on probates and so many other strategies. Each week, Bill interviews real estate professionals sharing their insights and advice. Every Tuesday at 3:00 pm, and thereafter anytime on YouTube, Facebook, and Google.

This Week. Looking ahead, investors will continue to look for additional Fed guidance on the pace of future rate hikes and bond portfolio reduction. Later today (7/18), the National Association of Home Builders will release its “Housing Market Index” for July. Tomorrow (7/19), the Census Bureau ‘s “New Residential Construction” statistics for June will be released.?Beyond that, “Housing Starts” will be released on Tuesday (7/19) by the Commerce Department. The National Association of Realtors will release its “Existing Home Sales” for June on Wednesday. The next European Central Bank meeting will take place on Thursday, and the next US Fed meeting on July 27.?

Weekly Changes:

10-year Treasuries:????????????Rose??005 bps

Dow Jones Average:??????????Rose??200 points

NASDAQ:?????????????????????????????Rose??200 points

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Calendar:

Tuesday (7/19):???????????????????Housing Starts

Wednesday (7/20):??????????????Existing Sales

Thursday (7/21):??????????????????ECB Meeting

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?For further information, comments, and questions:

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC

www.LARealEstateInvestors.com

[email protected]

310-409-8310