When the pandemic hit, event venue The Grand in Long Beach was no longer able to host events, most of which are weddings. Rather than panic about the loss of income, The Grand decided to get involved in the community. They contacted the City of Long Beach numerous times and eventually were able to find a deal where they could cater to Roomkey and Homekey sites, which are former hotels converted into homeless housing.
Though The Grand did charge for their meals, since they were already at a loss from the pandemic closure, that wasn’t the main purpose. Each meal was only between $5 and $6, so the primary benefit to The Grand was feeling like a part of the community. And the homeless community benefitted immensely. Not only were they provided with meals without needing to leave the safety of their homes, but this was professionally catered food from a business that does events for a living. It’s good food, and helps give the homeless community hope and feelings of self-worth.
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The City of Long Beach approved the Commercial Rental Assistance Grant (CRAG) back in January, and their application period is now open. It allows small businesses to get up to $4000 in funding to help them pay rent. The funding, which is approximately $1.7 million, comes from the federal COVID relief funds. Eligible businesses must be in a designated CRAG zone within Long Beach, conform to the Health Code, and have no more than 50 full-time employees. The application period began June 11th and goes until July 22nd, and applications can be done online.
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We’re all aware of racial disparities when it comes to homeownership, even if we don’t all know the extent of the disparity. What may come as a surprise is that the issue even extends to refinancing for those Black and Latinx households that do already own a home. Surely Black and Latinx households can benefit from refis just as much as white households — so why don’t they? The increasing volume of refis this year, due to lower interest rates, could shed some light on the issue.
Two of the major reasons are actually readily observable. Because Black and Latinx households are usually lower income, they also tend to have lower credit scores and higher loan-to-value ratios. Both of these pose risks to lenders, which causes lenders to quote higher interest rates. These combined probably account for about 80% of the disparity. Possible reasons for the remaining 20% include lower education, lower financial literacy, less employment stability, and weaker social networks. All of these are, in fact, underpinned by systemic inequality. While changes in the mortgage and lending industry can help to address the disparity, the long-standing effects of systemic inequality will dampen any such efforts.
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With demand being so high in the housing market, house sales are happening quickly. But that’s not the only thing selling quick. Those new homeowners are also looking to purchase new appliances and electronics for their new house. Best Buy in particular has exceeded their sales expectations. They’ve particularly noted sales of big screen TVs and home consultations and installations. Home Depot and Lowes are also faring well, and Walmart has increased their investment in home goods.
Representatives from Best Buy say that it’s the consultations and installations that put them over the top. There are many companies that sell appliances or TVs or office supplies. But most don’t also offer home services along with the sales. Services such as internet tech support are in high demand for buyers just moving in, who don’t want to waste any time getting connected. However, they’re less certain about their future in the second half of the year, as pandemic restrictions are ending and people are spending less time at home.
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Relativity Space, an aerospace company headquartered in Long Beach, has announced its new rocket the Terran R. The Terran R is fully 3D printed and is reusable. The 3D printing process allows for manufacture in under 60 days, with 100 times fewer parts than traditionally built rockets. Relativity was also working on a smaller rocket, the Terran 1, but decided to raise $650 million from investors to accelerate development of the Terran R.
The Terran R is intended to be a space freighter, capable of carrying cargo between Earth, the moon, and Mars. Relativity believes software-based 3D printing is the future of aerospace manufacturing and can enable efficient space travel. Their eventual goal is human colonization of Mars.
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Union labor is strong in Long Beach, where the International Longshore and Warehouse Union (ILWU) has a large workforce. Despite unionization, some things are out of their control. Terminal operators currently are frequently union workers working for a public entity, since ports are usually owned by the city. But the terminals themselves are often owned by private companies, and leased to the city.
In Long Beach, the Pier T terminals are owned by Total Terminals International (TTI), which is itself jointly owned by companies based in Switzerland and South Korea. TTI is in the process of considering terminal automation to improve efficiency. While they may achieve their efficiency goal, it will also cause many of the ILWU workers to lose their jobs as terminal operators. With the terminals being internationally owned, TTI doesn’t have much incentive to care about US workers, unless their decision causes the City to want to break ties with them.
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Last year, the California Public Utilities Commission (CPUC) imposed a moratorium on utility disconnects for nonpayment. The CPUC moratorium applies to both residential and commercial buildings, and they regulate the majority of electric and gas companies. However, this moratorium is slated to end July 1st, and the total amount owed is fast approaching $2 billion.
Utility companies aren’t about to simply forgive all of these charges. Fortunately, they’re thinking of plans that can help people balance their debts without owing large lump sums. Possibilities include partial forgiveness and/or rate categories, or even full forgiveness for qualifying households. California is also working on including utility aid in their state budget plan.
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As a concession to restaurants during COVID-19 restrictions, they were given access to expanded outdoor dining space and the option to provide alcohol as part of takeout orders. Indoor capacity restrictions have recently been removed, but in California, these options are staying throughout the rest of the year.
City officials agree that outdoor dining has brought something to the cities that they were lacking. Even though many of these new spaces are not zoned for eating areas, San Francisco mayor London Breed says they brought new life to the city even during a pandemic. In fact, she wants them to stay permanently, not just through 2021. There’s also a bill to extend to-go alcohol indefinitely.
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Data from 2021’s Quarter 1 Housing Affordability Index is now available, and while the numbers haven’t changed much from last quarter, the continuing downward trend is apparent. Affordability is equal to or slightly lower than the Q4 2020 numbers in all major categories, including overall US affordability.
Only seven counties experienced an increase in affordability: Kings, Merced, Butte, Plumas, Siskiyou, Tehama, and Humboldt. The already lowest affordability rating of Mono County took an enormous nosedive, dropping from 11 to 3. Lassen County remains the most affordable county at 62, despite being down from 67, but the top spot may be up for grabs as Kings County went up one point to 58.
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Buying sight unseen has increased in popularity recently, as walkthrough technology has improved and the pandemic has forced fewer in-person interactions. But take care — improved technology means online walkthroughs don’t necessarily reflect reality. If you must buy sight unseen, it’s best to make sure you trust whoever is creating the images or videos for you.
Most everyone is aware of image editing software, even if it’s only Photoshop. A bad Photoshop job can be obvious, but professional photographers know how to use their camera’s inherent features to even better effect. These can include lighting modes, image enhancement, recoloring, and even splicing multiple images. Savvy buyers may instead look for video walkthroughs, which provide a better view how the various spaces interrelate. Don’t be fooled, though. Videos are almost as easy to edit as images.
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The Mortgage Credit Availability Index (MCAI) is a measurement of how easy it is to acquire a mortgage tax credit, which allows buyers with lower incomes to acquire mortgages without worrying so much about the tax payments. The MCAI went up by 0.6% in April, indicating loosening standards for getting a mortgage credit. First-time homebuyers, presently a large homebuying cohort, are especially helped by this since they often have lower incomes, lower credit scores, and outstanding debt.
This move is not without risks, though. One of the differences between the current recession and the recession of 2007 is that our lending standards are tighter now. Tighter lending standards are part of what helped the real estate industry avoid the brunt of the current recession. However, first-time homebuyers are seeing far more competition than they would have ever expected. In many cases they’re losing out to more established buyers with better credit or higher incomes. Loosening standards is a risk, but it may pay off if we can help lower income homebuyers get their foot in the door.
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Real estate has consistently been considered a strong long-term investment, stronger than either stocks or gold, which take the second and third spot. In the current economic climate, real estate is continuing to prove itself a highly resilient industry, able to bounce back from a recession and become highly active and competitive even while the recession is still going on. The confidence in real estate as the best long-term investment is now the highest it has ever been in Gallup’s 11 years of reporting the statistic, at 41%. Stocks are now a long way behind at only 26%. Just a year ago, the confidence in real estate was 35%.
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Sellers will frequently repaint their home before selling, since it can give a good first impression to buyers. As important as it is, if done wrong, it could actually actually make a worse impression. In addition, it could be a waste of money if you’re planning to sell to a developer, who isn’t going to care what the house looks like.
The first thing to remember is that neutral colors are most likely to sell. Even if the buyer is going to repaint anyway, keeping it neutral helps buyers to envision their options. Neutral doesn’t necessarily mean only whites and browns, either. It could include blues or yellows. Another thing to watch for is the Pantone colors of the year. These are based on existing or expected trends, and will be popular. It’s important to note that for trending colors, a little can go a long way. An extra benefit of choosing neutral colors for most of your home is that it allows you to use most any accent colors, regardless of what they may be.
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The real estate climate is currently in a state of rapidly rising prices, while in the midst of a recession. Some people are having flashbacks to the Great Recession of 2007 and fearing a housing bubble and imminent crash. But there are some important factors that make this nightmare not a likely reality.
Leading up to 2007, there was an overabundance of supply due to high rates of construction. Loose lending practices were the trigger, as they resulted in mass foreclosures and subsequent drop in demand, making sellers who were liable for foreclosure unable to find buyers to get them out of their hole. This is the opposite of what’s happening now. Supply is incredibly low due to a lack of construction, and buyers are facing cutthroat competition. There are no foreclosures happening right now because of the foreclosure moratorium. Even when the moratorium ends, the number at risk of foreclosure is much lower.
In some ways the real estate market is actually a strong point of the current economy, despite the recession. So a housing bubble isn’t to be expected. But that doesn’t mean we’re out of the water; the recession still exists. And it’s not going away until job recovery happens, which isn’t expected until 2024-2025.
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After lockdowns ended, the real estate market was inundated with prospective buyers who seemed to be itching to take advantage of low interest rates. Interest rates have started to climb back up, yet demand currently shows no signs of slowing, despite continuously rising prices. So what’s the actual reason demand is high, and perhaps more importantly, is it a good reason?
The stimulus packages are a likely culprit. A government stimulus is always going to effect short-term change, but its goal is also long-term change. This is done by a multiplier effect — when people have more money to spend, they spend more, which causes the money to recirculate and improve GDP. However, it’s important to realize what the money is being spent on. Between a quarter and 40% of stimulus money was spent on food, household goods, and debt, and much of the remainder was saved. The stimulus certainly helped people to get through the recession, but it didn’t actually do much to improve the economy as a whole.
From the outside, the real estate market looks like it’s recovering, since it’s becoming more competitive when there isn’t much reason for it to be any longer. In reality, most of the people who can afford to buy right now could already afford to buy before the pandemic, and the rest are perhaps falsely optimistic. The primary factor that can result in long term recovery hasn’t happened yet, and that’s job recovery. The job market isn’t expected to recover until 2025, long after the eviction and foreclosure moratoriums end.
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Currently, Millennials are the largest group of homebuyers. The second largest is Gen X, who have a fair number of similarities with Millennials despite being in the workforce much longer. Gen X, like Millennials in 2007, also experienced a major recession in 1980 — and a fair number even lost their homes in 2007 that they had only recently been able to purchase. All in all, Gen X hasn’t had much luck with homebuying. They haven’t lost hope, though — the current hot market appears to be attractive to Gen X prospective homebuyers.
The effect is clearer in some cities than others. The most popular metros for Gen X to move to are in the southeast. This includes several metros in Florida, as well as Memphis, Atlanta, New Orleans, Raleigh, D.C., and Baltimore. By contrast, the least popular metros are primarily not in this region, with the exception of Nashville. The others are San Jose, Seattle, Pittsburgh, Austin, Buffalo, Boston, Minneapolis, Denver, and Salt Lake City.
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When discussing economic sectors, nonprofits are often lumped in with for-profit businesses, or simply ignored. But ignoring them doesn’t paint a full picture, and they aren’t impacted by economic crises in the same way as businesses. In fact, depending on the type of nonprofit, they aren’t affected the same way among each other, either. One may expect nonprofits to struggle more than businesses that are able to utilize profits as an emergency fund. During this pandemic, that was true for arts and culture based nonprofits, but the opposite was true of basic needs nonprofits.
During an economic and health crisis, food services, support programs, and health education programs are in high demand. Nonprofits focused on these types of projects flourished. Food Finders, which partners with nonprofits to provide food to those in need, acquired 400 new volunteers in 2020 and supplied 6 million more pounds of food than the prior year. Charitable donations in the US are way up, with an estimated 4.1% increase.
The arts, on the other hand, took an enormous nosedive. International City Theatre had a great year in 2019, but 2020 was shocking. Revenue went down a whopping 90% in 2020. The majority of their revenue is one-time subscriptions and ticket sales. No one is going to purchase a subscription while under lockdown, and even though they tried implementing virtual programs, they weren’t in high demand. Fortunately, smaller arts nonprofits weren’t hit as hard, since they have lower overhead costs.
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Though it’s been six years since same-sex marriages were legalized in the US, that didn’t mean an end to discrimination. It was only this year that LGBTQ+ discrimination was banned at a federal level. The LGBTQ+ homeownership rate is only 49%, compared to the overall number of 65%. The rate is particularly low for transgender individuals, at a mere 25%.
Part of the lower homeownership rate for the LGBTQ+ community can be attributed to secondary factors, but not all of it. Many of these people live in urban areas, where they are more likely to rent as opposed to buy. But even that has discrimination as an underlying factor, since a major reason they tend to live in urban areas is that these areas are usually more welcoming to the LGBTQ+ community. Moreover, the estimated purchasing power of the community as a whole is $1 trillion. It’s certainly the case that more than 49% of them have the income to purchase a home.
The fact is that LGBTQ+ people face discrimination not only from their communities, but also from real estate professionals and lenders. Less than a quarter report no discrimination at all. 13.8% say they signed documents that misrepresented themselves in order to get their documents in order. 10.6% report discrimination from real estate professionals and 5.2% from sellers. It’s not just prospective homeowners, either; 5.3% of LGBTQ+ members attempting to rent a home were denied by the landlord. Fortunately, with the anti-discrimination order being signed this year, things are looking up.
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Prior to the increasing popularity of work from home models, most people only travelled on vacation when, well, on vacation. While they were working, they needed to live close enough to work to have a reasonable commute. That meant resort areas such as Palm Springs and Lake Tahoe didn’t have a high permanent population, just a lot of transient residents, especially during holidays. Now, these areas are in high demand for homebuyers who wish to live there permanently.
It’s true that vacation towns are generally expensive. You’ll get that anywhere where tourism is a major source of the city’s income. But the 30% price jump in Palm Springs over the past year was not because of tourism, since tourists don’t buy houses there. Demand is increasing for areas close to recreation, since the same people can also work there, at their new home, instead of commuting. This is especially true of outdoor recreation, but even Truckee, with its numerous art galleries and clothing boutiques, doubled its median home price.
Some of these towns are struggling to take in new residents, though. Housing can’t be built overnight. While vacation towns often have more than enough space for their relatively small number of permanent residents, it’s frequently in the form of hotels, AirBnBs, and second homes. The former two are generally still occupied as well, just not by their owners.
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