Monday Morning Quarterback

(Monday, July 31, 2023)

Interested in rehabbing an original Frank Lloyd Wright home? Well, here’s your chance. Before its untimely destruction, two Wright structures sat on Malibu land and were part of a planned, though never completed, estate Wright called “Eaglefeather.” The residence had been commissioned by Arch Oboler, a writer who worked across many mediums, and his wife, Eleanor. After World War II, Wright designed an estate for the couple and their four children, though only two of the original structures were ever built: the gatehouse, which included a living room, workspace, bedroom, bathroom, and horse stalls; and a small cabin called “Eleanor’s retreat.” The Obolers ultimately made the gatehouse their primary residence while making additional modifications that weren’t supervised by Wright. Sadly, in 2018, the “Arch Oboler Complex” burned down in the Woolsey fires that you’ll recall devastated Southern California that year. Though charred parts of the home remain, government regulations required all remaining fire-affected structures to be demolished out of safety concerns, according to the Frank Lloyd Wright Revival Initiative. At the time, the Frank Lloyd Wright Foundation confirmed that the home had indeed been destroyed (but noting that the tragedy paled in comparison to any loss of human life). Following the fires, the Initiative pledged $45,000 to assist the new owners with the reconstruction costs of the home. However, it has been estimated that the work required will cost millions. Nevertheless, a chance for reinvention presents itself: The land where the home once sat is available for sale. Listed through The Agency, the 100-acre plot is going for just shy of $7.5 million and is represented by Malibu Realtor Sandro Dazzan. “The opportunity now exists to rebuild the 4,000-square-feet gatehouse, compound, or begin anew,” reads the property’s MLS description, adding that by rebuilding, new owners could “experience the genius of Wright firsthand.” Maybe that’s you? In other real estate news, let get down into the weeds…

Wholesale Inflation Slows To A Crawl. My Dad always says if you want to anticipate inflation watch the Producers Price Index (“PPI”). The PPI foretells what inflation will be in the months ahead. Sure enough, the PPI has been predictable for the past two years showing inflation is subsiding. Looking forward, wholesale prices rose a meek 0.1% in June and no longer appear to be going up, suggesting that inflation is likely to continue to decelerate. The PPI report captures what companies pay for supplies such as fuel, packaging and so forth. These costs are often passed on to customers at the retail level and give an idea of whether inflation is rising or falling. The increase in wholesale prices over the past 12 months slowed to 0.1% from 1.1% in the prior month. That’s the lowest reading since September 2020. A separate measure of wholesale prices that strips out volatile food and energy costs and trade margins also increased 0.1% last month, according to the Bureau of Labor Statistics. The cost of goods were unchanged in June, aided by lower food prices. Food prices have fallen in six of the past seven months and they are down 12% in the past year. The sharp decline in wholesale food prices hasn’t fully translated into lower grocery bills for households, however. The wholesale cost of services, meanwhile, rose slightly last month and remains the chief source of U.S. inflation. Meanwhile, service-price increases have slowed to an annual rate of just 2.3%. Inflation further down the pipeline continues to point to softening inflation. The wholesale cost of partly finished goods declined for the fifth month in a row and are down 9% compared to a year earlier. And the cost of raw materials dropped again and are one-third cheaper vs. the same month one year ago. Wholesale prices have slowed even faster this year than consumer prices, perhaps a sign that inflation will retreat faster than the Fed expects. Yet it’s going to take several more months of weak inflation readings, at the very least, to persuade the central bank its job is done. The Fed manages inflation by raising interest rates and slowing our economy. The chief risk? Recession. The higher rates go, the more likely that higher borrowing costs might trigger a recession.

New-Home Sales Fall 2.5% in June. Sales of new U.S. homes have risen over the last few months, because buyers have more inventory to choose from compared with the resale market. New-home sales fell 2.5% to an annualized rate of 697,000 in June, from a revised 715,000 in the prior month, the Commerce Department reported Wednesday. (The number is seasonally adjusted and refers to how many homes would be built over an entire year if builders continued at the same pace every month.) Overall, new-home sales have been higher because home builders are among the few players offering inventory for home buyers. Median sales prices for new homes sold in the U.S. fell in June, inching closer to the prices​ of existing homes. The median sales price of a new home sold in June fell to $415,400, from $416,300 the month before. New homes have become cheaper over the past few months, getting closer to the median price of an existing home. (In June, the median price of an existing home was $410,200, according to the National Association of Realtors.) The supply of new homes for sale fell 2.8% between May and June, equating to a 7.4-month supply. New-home sales have softened after a stellar increase the previous month. A lack of previously owned homes for sale has pushed many home buyers into the new-home market, but high mortgage rates may dampen demand. To keep buyers interested despite high rates and worsening affordability, home builders are continuing to offer incentives.

Culver City Opens Its First-Ever ‘Safe Sleep’ Site For Unhoused People. Congratulations Culver City. We are proud of you. Culver City is opening the city’s first-ever “safe sleep” site, where unhoused residents can live in tents and access meals, showers, restrooms and health services. The location will have 20 tents, each sleeping one or two people depending on whether they’re family members, Mayor Albert Vera told LAist. Momentum around the idea sped up after L.A. Mayor Karen Bass declared a state of emergency around homelessness in December — prompting Culver City to do the same. Among the amenities are a laundry service, WiFi, mental health services, yoga and meditation, arts and crafts and even gardening to help people re-establish self-respect and dignity, said Tevis Barnes, the city’s housing and human services director. Starting next week, officials hope to move four or five people in at a time. Outreach workers with St. Joseph Center have developed a list of unhoused people interested in living at the safe sleep site, which will be used to offer up beds. The safe sleep site is a step in the right direction (and in a good location close to amenities like a grocery store) though the city’s housing needs are much larger, said Cathy Sweetser, a Culver City homeowner who lives near the site and directs the UCLA School of Law’s Promise Institute for Human Rights. An estimated 312 people lived unsheltered in Culver City as of the latest available data, from last year. Opening the safe sleep site is one of two requirements the city’s council put in place in order to enforce their new anti-camping law, which passed on a split 3-to-2 vote in February. It prohibits people from setting up tents, temporary shelters or beds in public spaces. City officials say they’ll offer people housing and services before doing any enforcement of the anti-camping law. The site will be run by the nonprofit group Urban Alchemy, which manages similar sites in San Francisco and Portland.

The Hollywood Sign. This year, the iconic Hollywood sign turns 100 years old, providing ample reason to take a look back at its surprising and dramatic past. The famous sign shouts its name from over 15 miles away. The conspicuously huge lettering is propped up in the eastern end of the Santa Monica Mountains and greets all who approach Hollywood. With each letter of the sign standing at 45 feet tall and more than 30 feet wide, you can hardly miss it. In 1923, workers used mules to haul wood and sheet metal up the slope. There were originally four more letters than there are today—the sign used to read “Hollywoodland.” It originated largely as a publicity stunt, dreamed up by real estate agents promoting property in the Hollywood Hills. Many wish today that it were lit up at night, as the original version of the sign was. Throughout the sign’s decade of illumination, a German immigrant named Albert Kothe famously maintained its nearly 4,000 bulbs. The Hollywood sign has never stopped making headlines. In 1932, Peg Entwistle, an actress who was struggling to find work in Depression-era Hollywood, climbed up the “H” and plunged to her death. The Great Depression also took its toll on the sign, which was neglected and weather-beaten. In the 1940s, the City of Los Angeles took pity and assumed ownership. When they refurbished the sign, they removed the last four letters that spelled “-land.” In 1978, the Hollywood Chamber of Commerce decided to give the sign a makeover, replacing all the original letters with new ones made of steel girder beams and corrugated sheet metal. But a closeup visit is not going to happen, however: “No access to the Hollywood sign,” you’ll read on smaller signs posted in the 4,300-acre Griffith Park on Mount Lee. If you do want to get a little closer to the giant letters, and avoid threat of arrest or a fine, take a hike in the Santa Monica Mountains. You can get a great view of the sign from Brush Canyon Trail.

Streaming War-Era Leasing Offers A Buffer For Studio Landlords. The now concurrent strikes of two national unions representing writers and actors will dramatically alter the way Hollywood works. The strikes are likely to have a major economic impact on our city. But, from a real estate perspective, owners of soundstages in Los Angeles and filming hubs across the country seem insulated from the brunt of it. Why? Because of a recent streaming war-fueled trend of securing long-term leases for scarce space, many tenants (i.e. producers) are locked into their leases. And although many producers want to cut costs, real estate typically makes up a relatively small sliver of filming budgets (an estimated 5% to 10%) indicating that those producers will continue to pay for their space, allowing them to get back to business quickly when the strikes are over. “This is a very temporary phenomenon. We’re talking about months or quarters, not years,” Moody’s Senior Analyst Neil Begley said. “I would think that they don't want to lose the [soundstage space] footprint they have, that they're going to need that when this strike is over. They want to hit the ground running.” The impact of the strikes has been noticeable on filming, even before the writers strike began. The streaming boom that began before the pandemic and was accelerated by it spurred a shift in the way that soundstage space is leased in Los Angeles — moving from the more volatile short-term lease that might only be for the weeks it would take to film a show to longer-term leases of five to 10 years. That shift is working in studio landlords’ favor now, as so many stages are dark. It’s hard to be certain how many active leases across all certified soundstages are long-term versus short-term. Major players like AMP studios and household names like NBC Universal, Paramount, Hulu and Amazon, own 35.5% of certified stage space in Greater LA, per FilmLA research, leaving the remainder independently owned and available for lease. There is also a lot of inter-studio leasing. For example, a CBS show might film at a Fox soundstage. Many experts anticipate a rush back to soundstages once the strike is resolved, but several noted that the strike, if resolved in a way that means more pay for actors and writers, could alter the economics of the business in a way that translates to shifts in spending on real estate. 

Ten States With The Shortest Average Marriages. Is there a connection between the length of your marriage and where you live? Because I know that you are concerned, I checked with the Census Bureau. According to the Bureau’s data, of the states that report marriage data, different parts of the country are seeing different trends. The data suggests that marriages are shorter in western states than in Midwestern or eastern ones. States with the longest marriages tend to be in the Midwest or are more northern. Further, people in Utah get married the youngest, the median age being 25.8 years. Those in Washington, D.C. get married the latest, the median age being 31.95, according to the Census Bureau. Washington, D.C. residents are also least likely to be married: only 44.66% of the population has tied the knot. New York comes in second for least amount of married people, with 66.29% of the population married. The state where the biggest portion of the population is married is Idaho, with 72.6% of people being hitched. Meanwhile the divorce rate has been slowly declining for the last 20 years. For every 10 couples who got married in 2000, there were about five marriages that ended in divorce or annulment that year. In 2021, there were only four divorces for every 10 marriages in the U.S. — a drop of about 20%. The 10 places in the U.S. with the shortest marriages: 

1.Washington, D.C.: 10.5 years

2.Alaska: 16.8 years

3.Texas: 17.6 years

4.Nevada: 17.7 years

5.Utah: 18 years

6.Colorado: 18.2 years

7.Oklahoma: 18.2 years

8.Washington: 18.3 years

9.Idaho: 18.6 years

10. Georgia: 18.8 years

Aggressive Otter Attacking California Surfers & Surfboards. If you’ve ever surfed, you’re going to be amazed by this story. Surfers must be careful of a hostile sea otter attacking people in the waters near West Cliff Drive in Santa Cruz. According to the Los Angeles Times, the female otter has been harassing surfers and trying to steal boards since mid-June. A video captured by lifeguard Hefti Brunold last Sunday shows how the aggressive 5-year-old creature attacks. In the clip, the otter bites, thrashes, and claws at an occupied surfboard while the surfer tries to paddle away with the board. "In the past five days now, there's been three more incidents," Native Santa Cruz photographer Mark Woodward told ABC 7 News. "And they've all been much more aggressive. I have photographed a lot of otters over the years; but I have never seen anything like this." "It was a true wrestling match over this surfboard," Woodward told the outlet about the otter attack caught on tape. "And the person finally got it away, and it was damaged. Basically, the board was destroyed." Joon Lee, a 40-year-old software engineer at Apple, also shared his experience encountering the otter. "I was scared. I was trying to swim away, but before I was able to get far, it bit my leash," Lee said of when the otter attacked him, describing the cord surfers wear around their ankles. "So I panicked." In response to the observed rise in otter attacks, signs have been posted along Santa Cruz's shoreline to inform visitors about the upset animal. Woodward posted a shot of one of the signs on Twitter. "Enter the water at your own risk!” The marine mammal (known as Otter 841) was seen attempting to steal at least three other surfboards in the Santa Cruz area over the weekend, according to the California Department of Fish and Wildlife. But here’s where the story gets weird. Otter 841 is actually a California sea otter born in captivity at the Monterey Bay Aquarium. She was released into the wild after she was weaned. Upon her release, Otter 841 was tagged so she could be monitored. But by 2021, officials were receiving reports that the otter was climbing onto kayaks and surfboards. The animal has escalated to more aggressive behavior over the past few years.

Foreclosure Forum. How to find and buy foreclosure properties. This Saturday, August 5, 2023, 9:00 am to 5:00 pm. Iman Cultural Center, 3376 Motor Avenue, Los Angeles, CA 90034. Iman Cultural Center, 3376 Motor Avenue, L.A., CA 90034. The cost of the Forum is $249.00 per person (Gold Members can attend for FREE.) So don't wait! Register now: www.LARealEstateInvestors.com.

Accessory Dwelling Units (“ADU”). Our August general meeting will be held on Thursday night, August 10, 2023, 6:30 to 9:30 pm. Our very special guest will be Seth Phillips, California’s leading authority on “Accessory Dwelling Units” (“ADU”) and the new laws regarding 2-3-4 units on a single-family zoned lot. If you want to build more units and increase your rental income, you must attend Seth’s presentation. Our meeting will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles 90034 (Culver City adjacent). FREE Admission. Please RSVP at www.LARealEstateInvestors.com.  

Vendors Expo Returns! Our carbon-neutral, bio-degradable, gluten-free, super-duper "Vendors Expo" returns on Thursday night, August 10, 2023. The Vendor Expo opens 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. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034 (Culver City adjacent). FREE Admission. Please RSVP at www.LARealEstateInvestors.com. 

4th Annual Los Angeles Real Estate Grand Expo. Our 4rd Annual Los Angeles Real Estate Grand Expo returns on Saturday, October 21, 2022, 9:00 am to 6:00 pm. This year we’re taking over the entire Iman Cultural Center – it’s all ours for the day! The north hall, the south hall, and the parking lot in the middle (with tents and food trucks). One entire day celebrating real estate investing. The theme of this year’s Grand Expo is “Hedge Inflation - Buy Real Estate.” There will be 14 national speakers in breakout sessions, and 70+ vendors in the North Exhibition Hall. The Grand Expo is a joint presentation of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411. Best of all, the Grand Expo is FREE to attend. Street parking is free or metered, and valet parking will also be available. But please RSVP at www.LAGrandExpo.com

“LARealEstateInvestors.com” Podcast. Are you enjoying our weekly 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. Each week, Bill interviews real estate professionals sharing their insights and advice for real estate investors. Every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google.

Houston Apartment Buildings For Sale (100% Financing). If you’ve read this far, I have a special deal for you. If you’re interested in purchasing five (5) to-be-built garden apartment buildings in Houston, Texas (each valued at approx. $1.2 million), with 100% financing, please let me know. The developer’s only requirements are: (1) $10,000 reservation fee (to be credited against the purchase price), (2) credit score of 740 or above, and (3) annual income of at least $100,000. Just a few buildings left. If interested, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic reports, the JOLTS report, measuring job openings and labor turnover rates, will be released tomorrow. The ISM National Manufacturing Index also will come out tomorrow and the ISM National Services Index on Thursday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be some of the most highly anticipated economic data of the month.

Weekly Changes:

10-year Treasuries:            Rose  010 bps

Dow Jones Average:          Rose  200 points

NASDAQ:                           Rose  200 points

Calendar:

Tuesday (8/1):                      ISM Manufacturing

Thursday (8/3):                     ISM Services

Friday (8/4):                          Employment

For further information, comments, and questions

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC

www.LARealEstateInvestors.com

This email address is being protected from spambots. You need JavaScript enabled to view it.

310-409-8310