Cryptocurrency has been around for a bit now and is in widespread use, with its major appeal being how difficult it is to counterfeit or manipulate. It’s usually used to make smaller payments, such as purchasing software or electronics. But as with physical money, cryptocurrency can be used for payments of any magnitude. That includes thinks like home purchases or mortgage payments.
If you’re unfamiliar with cryptocurrency, you may think that because it’s generally used for smaller payments, it must take a lot to be able to afford a house. That’s not exactly true. One popular cryptocurrency, Bitcoin, is actually worth $43,000 per coin currently — most payments are made in mere fractions of coins. The value of cryptocurrency does fluctuate wildly, but the trend has been generally upwards in the past few years, albeit at a declining rate of increase.
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The California Association of REALTORS® (C.A.R.) has launched a new website, www.BringYourFamilyHome.com. This page will provide information to prospective homebuyers, especially aimed at first-time homebuyers, about financial literacy, credit scores, steps in the process, and how to contact agents. And C.A.R. hopes to address a long-standing issue by presenting the page in both English and Spanish.
California has a significant Latinx population, and many of them believe they aren’t able to afford a home. While certainly some of them don’t have enough income for the high prices in California, a significant number have misconceptions about what they can and can’t afford. 85% of Latinx prospective homebuyers still see owning a home as a big part of the American Dream, and the majority of those haven’t given up on it. But four out of five aren’t aware that they qualify for mortgage loans. 25% of Latinx people that are renting actually don’t need to because they can already afford to purchase, but don’t realize that and aren’t aware of the process. By providing educational materials in Spanish, C.A.R. hopes to help many more Latinx households achieve homeownership.
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Property insurance is not legally mandated; however, it is a requirement in order to qualify for the majority of mortgage loans. But with wildfires increasing in frequency in California, higher risk means higher insurance premiums for anyone living in a fire-prone area.
Some people can’t even qualify to renew their insurance because they can’t afford it. Since their lenders still require it, that just means they’ll pay even more for coverage under the Fair Access to Insurance Requirements (FAIR) plan. FAIR is a California state insurance program that anyone in a high-risk area qualifies for. Unfortunately, it’s usually even more expensive and generally provides weaker coverage.
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I’m sure some of you haven’t heard of the term bioprinting. It’s a relatively new concept, combining stem cell research with 3D printing to print biological matter. Earlier this year, ribeye steak was printed using this method in Israel. The latest development out of Japan is a more complex cut of meat — Wagyu beef, known for its intricate fat marbling. The team at Osaka University has managed to perfectly replicate the look of Wagyu beef using 3D printed muscle and fat tissues, and their new methods provide a more accurate texture.
There’s still more research to be done, though. Though it certainly looks and feels like Wagyu beef, no one actually knows whether or not it tastes like Wagyu beef, or is even edible at all. More studies will be needed before the regulatory agencies in Japan will greenlight testing the cooking and consumption of bioprinted meat. In addition, the goal of sustainability is a long ways off with the cost of production being so high.
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The Federal Housing Finance Agency (FHFA) established the First Look Program back in 2009, aimed at promoting neighborhood stability by facilitating occupation of real estate owned (REO) properties by owners. The program created a special time period during which prospective owner occupants, public entities, and nonprofits would have exclusive rights to purchase properties owned by Fannie Mae or Freddie Mac, before investors would have access. Until now, this time period was 20 days. On September 1st, the FHFA extended this period to 30 days. They deemed this move essential during a period of low supply, to reduce the level of competition prospective owner occupants have to contend with.
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The US Senate has now passed a bipartisan bill aimed at improving infrastructure. The bill details budget investments for repairs, updating, new construction, and weatherproofing. Much of the money is aimed at roads and bridges, and various different budget plans all focus on clean environmental efforts, such as clean water, clean energy, and electric vehicle chargers. The bill doesn’t have many provisions that explicitly focus on housing, but improving infrastructure will have an indirect impact.
The most significant impact on the housing industry will be in job creation. While some of the positions that are being funded already exist, others don’t and will need to be created. This means more people will need to be hired. The slow recovery of the job market is the primary reason our recovery from the recession has been so drawn out. The infrastructure bill will hopefully not only establish a better infrastructure for the future, but also create more jobs now to speed up recovery. With a recovery of the job market, housing market stability will soon follow.
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More: https://journal.firsttuesday.us/how-the-infrastructure-bill-supports-housing/79580/ [Note: The article states that the House has yet to vote on the bill. In fact, the House voted on and passed the bill before the Senate voted.]
Our recovery from the 2020 recession has been described as a K-shaped recovery. Generally speaking, this means that the recovery occurred at starkly different paces for different segments of the population. More specifically for 2020-2021, while wealth decreased for many groups, it actually increased for those who were largely unaffected by the circumstances of the recession — in this case, primarily job losses and lockdowns. Many of those who were able to keep their jobs and continue to work from home during lockdowns enjoyed their reduced daily spending and lower mortgage rates.
This led to a increase in demand across the board, but notably in one sector of the market: vacation homes. Those who were affluent enough to possibly purchase an additional home were encouraged to do so by low mortgage rates and increased savings, and higher-income jobs are actually more likely to be able to be done from home. In California, the trend was first made obvious in October 2020, which saw a 120% increase in second-home demand from the prior year. The trend continued, though, demand for second homes increased 178% between April 2020 and April 2021. Rising prices dampened the effect, but it only slowed when lenders tightened restrictions on mortgages for second homes and lockdowns ceased being much of a factor.
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Much of California, especially Central and Northern California, is experiencing a major drought much like the one from 2012-2016. Temperatures are going up and precipitation is going down. While water usage is still below 2013 levels due to lasting changes in water use habits from the last drought, conditions aren’t currently improving. It’s not precipitation levels that directly affect how much water a community receives, though. Some of the communities struggling the most actually have more rainfall than others but are lacking the infrastructure to account for drought conditions, and possibly the money to build said infrastructure.
Speaking of building, the drought is also affecting home construction. At a time when lumber prices are just starting to slip back down, a new threat emerges. And this one hits even the wealthiest of construction companies, who didn’t necessarily mind high lumber prices. Under drought conditions, some areas have placed restrictions on new construction to ensure that they meet water availability standards, and several areas simply never will meet the standards. The city of Marin is considering a move that would effectively ban all new construction for a time — temporarily banning all new water hookups. The legislation isn’t aimed directly at builders, but of course, all new constructions do require water hookups.
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Though certain areas have always been at higher risk for certain types of natural disasters, only since climate change have people heavily prioritized climate risk as a factor in their search. Wildfires, droughts, and floods are becoming much more common, so people are avoiding these areas more. People don’t necessarily know how to research which areas are high and low risk, though. Fortunately, one real estate service, Redfin, is noticing the need and has begun publishing climate ratings.
The ratings aren’t from Redfin — they’re from ClimateCheck, a company which assesses future risk and change in risk on a scale of 0-100. They start with several different global climate models to project risk on a global scale. Then, they localize the data to specific areas by filtering the global risk through local weather patterns. ClimateCheck is now also sending that data to Redfin so that it’s easily accessible for people searching for a home. Of course, you can also visit the ClimateCheck website directly at climatecheck.com.
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Inventory may be low, but housing isn’t the only thing in short supply. Once work from home became more popular, homeowners started looking to upgrade their homes since they would be spending more time there. Part of that was updating their appliances and buying new furniture, particularly stoves and grills because homeowners would be cooking at home more often. Combined with a decrease in manufacturing productivity due to labor shortages, appliances and furniture are selling out quickly.
While increased new construction is a potential solution to low housing inventory, it’s definitely not going to help the appliance shortage. Even with construction being low, the increased demand for already existing homes is stretching the appliance supply thin — and new constructions would require all new appliances. It’s even affecting the timing of real estate transactions. Closing time is being delayed because the new owners want the place to be move-in ready when it closes, and they aren’t able to get their hands on appliances and furniture.
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The National Bureau of Economic Research (NBER), a private non-profit economic research institution well known for researching recessions, has declared that the 2020 recession is over. In fact, it ended quite a while ago, and only lasted two months, the shortest recession in history. NBER defines the start of a recession as the month following a peak in economic activity, and the end of a recession as the month at the bottom of economic activity. In this case, those months were March 2020 and April 2020 respectively. The delay in declaration is because it generally takes several months to figure out whether a recession is truly over or not, since there can be ups and downs in between the peak and trough. With this declaration, another downturn would officially be considered a separate recession.
So what does this mean? Well, it doesn’t mean the economy is healthy again. It just means we’re past the worst of it, and are in the recovery stage after the recession. We’ve been in recovery for quite some time, and will continue to be. It’s important to note that while the start of the pandemic and the start of the recession occurred at approximately the same time, they aren’t codependent. Rather, the pandemic was merely an exacerbating factor in a recession that was already approaching. Many of the effects, both psychological and government mandated, of the combined scare of a simultaneous recession and pandemic are still lingering and slowing down the recovery. The major factor keeping us back is lack of recovery in the job market.
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Even though racial discrimination against homeowners was banned in 1968, the homeownership gap between White and Black households in the US is actually higher now than it was before the ban. Between 1960 and today, the gap has increased by 4% and sits at 31% nationwide, and 27% in California.
In order to address this issue, the Black Homeownership Collaborative has drafted a plan that they hope will bring homeownership to 300,000 more Black households by 2030. Their 7-point plan was approved by the Mortgage Bankers Association. The focal points are homeownership counseling and education, down payment assistance, affordable construction, improved credit and lending opportunities, increased civil and consumer rights, sustainability of homeownership, and marketing and outreach towards Black communities. Similar proposals are also in the works for Latinx communities, which make up a significant percentage of California’s population.
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The FHFA established a new refinance fee at the end of 2020 called the Adverse Market Refinance Fee, which was designed to cover projected losses during the pandemic. But they’ve now said that their losses were not severe and that the market was not as adverse as they expected. Only 2% of single-family loans remain in forbearance. So, this fee is going to be removed come August 1st. The FHFA hopes this encourages more buyers to take advantage of low rates.
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NASA has set the date for their Near-Earth Asteroid (NEA) Scout to this November, when it will launch along with the Artemis I test flight mission. The NEA Scout is a small craft with solar-powered sails, the first of its kind to be released outside of Earth’s orbit. If the mission goes well, it’s a good sign for an expected 2025 mission named Solar Cruiser, with a much larger solar sail. The NEA Scout is outfitted with a high-powered camera and its pictures are expected to provide valuable information about a certain class of asteroids. But it will take two years for the NEA Scout to reach its destination, even though it’s only a small asteroid near Earth.
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California is proposing a plan to start the “California Dream Fund,” which is intended to allow the state to subsidize purchases by first-time homebuyers without any tax increases. They hope to achieve this by allowing investors to use their money to subsidize the purchase, in exchange for an equivalent share of ownership. This will be limited to 45% to prevent the investors from owning a majority share.
The plan is still in the works, but there are already a few criticisms. Currently, there is no indication of who is liable if the property goes into default. Is it only the buyer? Do the investors have a stake, since they have an ownership share? Is the state liable since they’re the ones providing the subsidy program? Perhaps these questions will be answered later, but if the answer is simply as existing law, the program is no different from a state matchmaking program between investors and prospective homebuyers. Furthermore, subsidizing home purchases does nothing to address the real problem — the fact that home prices are so exorbitantly high in the first place that the plan is being discussed to begin with. Subsidies will increase demand, but demand is already high; it’s the low supply that needs to be addressed.
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The eviction moratorium for federally backed mortgages was set to expire at the end of last month, but on June 24th, it was extended through July 31st. California has even gone above and beyond the CDC recommendations, extending the state residential moratorium through September 30th. With a third of renters in California feeling they were likely be evicted in July or August, and an additional 6% being quite sure of it, something needed to be done. 10% of California renters are still behind on their payments, and over a fifth of them had little to no confidence in their ability to make their July payment.
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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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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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