Monday Morning Quarterback (Monday, December 4, 2023) To many people, new home construction is synonymous with gentrification. But that’s incorrect! A new analysis reinforces how construction of more houses actually drives down housing costs. Bloomberg reports that a study of new housing construction found that new homes rented by higher-income people set off a chain of moves that opens up housing for lower-income people. A review of recent research into the link between new housing production and apartment affordability offers new evidence that the rules of supply and demand do apply to housing: Building more can slow rent growth in cities and free up more affordable vacant units in surrounding neighborhoods, without causing significant displacement. The analysis, conducted by three faculty directors at New York University’s Furman Center, speaks directly to so-called “supply skeptics.” It cites dozens of studies and debunks concerns that building more housing could do more harm than good to housing affordability. One central disagreement between supply boosters and skeptics is whether building more market-rate apartments depresses or boosts nearby rents. Looking at the research, the analysis reaffirms the finding of past studies that new construction drives rents down — not up! Of course, rents have still gone up in expensive cities around the world, even those that have been adding new supply like our own Los Angeles. But what these studies show is that rents would have risen more if not for new supply. Some supply skeptics dispute this, saying that allowing denser development simply makes the land under housing more expensive and opens the door to “land price speculation.” However, the researchers found that housing production is indeed linked to slower rent growth or even rent decreases nearby. Yes, where housing is built, higher-income and more-educated people tend to follow. But fears that this new housing will drive out lower-income residents are overstated, the researchers conclude. In fact, new construction “either mitigates displacement or elevates it quite modestly,” they write. In other real estate investment news, let’s get under the hood… Great Inflation Surge Will End In 2024 And Rates Will Fall. A handful of big themes are set to take hold in the new year, two of which are the likelihood that the U.S. will lead a drop in inflation across major developed markets, and second, that drops in inflation will produce a downturn in interest rates. That’s the view of Neil Shearing, chief economist at Capital Economics in London, who also expects economic growth to be weaker in most countries than expected in 2024. Soft growth, falling inflation, and lower interest rates should be accompanied by a bond market that rallies, he wrote in a note last Monday. While the soft-landing view is held by big-name economists, one big caveat remains. The path of inflation still isn’t certain, with a Bloomberg survey showing that a number of economists expect underlying prices from the Fed’s favorite inflation measure to remain stubborn through 2024 and to keep interest rates higher. “We think that U.S. inflation will ultimately slow more quickly than Fed officials expect,” Shearing wrote. “But inflation will also drop across the eurozone, the U.K. and other major DMs developed markets…2024 is likely to be the year where core inflation finally moves back toward central banks’ comfort zone of around 2%.” His firm holds the view that the current post-Covid inflation scare is more analogous to the inflation shock which followed World War II than the surge of the 1970s. In other words, inflation is “still being driven heavily by pandemic-related supply distortions” and should continue to come down as those distortions fade, according to Shearing. In turn, central banks across advanced economies “are likely to loosen policy,” with the Fed likely to lead the global easing cycle because the disinflationary process is further along in the U.S. Scotland Castle Solves One’s Man’s Homelessness. A few days after John Dalton declared himself homeless, the Scottish government moved him into Muirhouse Mansion, a 19th century Gothic castle. From his private bedroom, No. 16, he could see an island monastery in the Firth of Forth, an estuary that drains into the North Sea. Of course, not every homeless person in Scotland lives in a castle. But Scotland has what some California politicians and advocates have long sought: a legal right to housing. Because of that policy, the local government here must act quickly to ensure people at risk of becoming homeless find a temporary place to stay — even if that place happens to look like a Harry Potter stage set. Scotland’s guarantee, phased in between 2003 and 2012, is one of the most generous in the world, more comprehensive and durable than the right to short-term shelter in New York (where a 1981 consent decree is under legal and political threat as the city tries to accommodate tens of thousands of newly arriving migrants). In Scotland, people who meet a broad definition of homelessness get immediate access to short-term shelter and then put on a list for permanent housing, which is usually heavily discounted. Few people here sleep on the street — about 30 in Glasgow and 40 in Edinburgh on a given night, according to Simon Community Scotland, a leading charity that deploys outreach teams and offers services in both cities. That’s up from recent years when the numbers could often be counted on one or two hands, for a pair of cities with a combined population of about 1.2 million people. In contrast, the city of Los Angeles, just under four times as populous, estimates that 46,260 people sleep on its streets on a given night. Creating a Scottish-style right to a home in California or at the federal level “would send a market signal” to fragmented governments and the private sector that housing, like public education, is a fundamental societal obligation, said Sacramento Mayor Darrell Steinberg, who co-chairs a California homeless task force for Gov. Gavin Newsom. Chiquita Canyon Landfill Victims To Receive $2,000 Each In Grant Money. Last week, the South Coast Air Quality Management District ordered the Chiquita Canyon Landfill to reduce odors after hearing more than 2,100 complaints from the community. The 639-acre landfill opened back in 1972, 15 years later the Val Verde Civic Association agreed to shutdown the landfill by 2019 or when it had reached 23 million tons of garbage. But the landfill reached that limit in 2016 and L.A. County decided to extend its lifetime date. As a result, nearby homeowners for years have been complaining about the odor, saying it's caused aggravated asthma. "Many households have racked up high electricity bills by keeping their windows shut and constantly running their air conditioning systems as a way to keep the smell from penetrating their homes," Los Angeles County Supervisor Kathryn Barger said in a statement. Residents of Val Verde, Castaic and communities surrounding the Chiquita Canyon Landfill will be eligible for grants up to $2,000 for dealing with the odors from the landfill. The grants will reimburse residents for their electric utility expenses between May 1 and Oct. 31 of this year. Anyone who needs help filling out the application can make an appointment at the Los Angeles County Castaic Library to receive in-person support. Two California Cities Growing Faster Than All Others. While the trend of Californians flocking to more affordable states continues, turns out certain parts of the Golden State continue to grow. Specifically, two California cities recently ranked on SmartAsset's list of fastest-growing cities in the U.S. The study, which analyzed cities with populations over 100,000 in America, looked at 344 cities based on U.S. Census data. Menifee in Riverside County and Roseville in Placer County both ranked in the top 20. According to the data, Menifee ranked No. 9 overall as it saw its population grow from 90,599 in 2017 to 109,399 in 2022, or 17.4%. Meanwhile, Roseville ranked No. 20, with its population surging from 135,325 to 154,826, or 12.2%. The study also found that during the same time period, California's largest cities (which are also the most expensive) lost residents. San Francisco reported the biggest decrease (7.8%), followed by San Jose (5%), Los Angeles (3.8%), and San Diego (2.7%). Data showed California suffered a net loss of 342,000 residents last year. 2023 is expected to be worse! Best And Worst Colleges in the United States. There are some colleges nearly everyone across the nation knows about, regardless of whether they even got a degree or not. These are the Ivy League schools that are generally considered the best of the best. Stanford is one of them, with US News & World Report placing it as the third best college to study in the US. Judging by some of its statistics, it’s probably not hard to see why it’s one of the best colleges in the US. Within four years, 81% of students graduate, and they do so with an exceptional education. It might be extremely difficult to get accepted here, and studying might come with a hefty price tag, but it’s worth it. • Location: Stanford, California • Acceptance rate: 4% • 4-year graduation rate: 81% • In-state tuition and fees: $56,169 Worst Colleges in the United States. It’s inevitable that other institutions in California won’t necessarily rank up to the standards of Stanford. However, while some colleges definitely fare better than others, Simpson University is easily at the very bottom of that list, having been put on probation back in 2017 for various reasons and never removed. Issues around financial planning, the removal of dozens of positions, and a vote of no confidence in the institution’s president puts the college in a dangerous position. Although it’s started trying to claw its way back, the stats still work against this college. High tuition and fees, alongside a questionable graduation rate, really can’t compare to colleges like Stanford. • Location: Redding, California • Acceptance rate: 67% • 4-year graduation rate: 34.2% • In-state tuition and fees: $37,480 China Boldly Claims It Will Mass Produce Humanoid Robots Within Two Years. Last week, China revealed ambitious plans to mass produce humanoid robots, which it believes will be as "disruptive" as smartphones. In an ambitious document, China's Ministry of Industry and Information Technology (“MIIT”) said the robots would "reshape the world." The MIIT believes that by 2025, the robots will have reached "advanced level" and be mass produced. It made the statements in the development goals listed in its roadmap. Per Bloomberg, the document was "short on details but big on ambition." However, some Chinese companies are seemingly helping to tackle the country's robotic ambitions in earnest. For example, Chinese startup Fourier Intelligence said it would start mass producing its GR-1 humanoid robot by the end of this year, South China Morning Post reports. The Shanghai-based company told the publication it aspired to deliver thousands of robots in 2024 that can move at five kilometers an hour and carry 50 kilograms. It's not the only humanoid robot-maker that's ramping up its efforts with the goal of mass production. US-based Agility Robotics is opening a robot factory in Oregon next year, where it plans to build hundreds of its bipedal robots that can mimic human movements like walking, crouching, and carrying packages. Amazon is testing Agility Robotics' Digit robot at a research and development center near Seattle to see how it can be used to automate its warehouses. Even Tesla is developing its own humanoid robots called Optimus, or Tesla Bot, as Elon Musk revealed in 2021. However, it still has a long way to go before it's ready for mass production as Musk said at a recent Tesla AI Day event that it was the first time the prototype had walked "without any support" when it walked onto the stage. Invasion Of The Super Pigs. An exploding population of hard-to-eradicate “super pigs” in Canada is threatening to spill south of the border, and northern states including Minnesota, North Dakota and Montana are taking steps to stop the invasion. In Canada, the wild pigs roaming Alberta, Saskatchewan and Manitoba pose a new threat. They are often crossbreeds that combine the survival skills of the wild Eurasian boar with the size and high fertility of domestic swine to create a “super pig” that’s spreading out of control. Feral swine are “the most invasive animal on the planet” and “an ecological train wreck.” By the way, pigs are not native to North America. Though they’ve roamed parts of the continent for centuries, Canada’s problem dates back only to the 1980s when it encouraged farmers to raise wild boar. But the market collapsed after peaking in 2001, and some frustrated farmers simply cut their fences, setting the animals free. It turns out the pigs are very good at surviving Canadian winters. Smart, adaptable and furry, they eat anything, including crops and wildlife. They tear up land when they root for bugs and crops. They can spread devastating diseases such as African swine fever to hog farms. And they reproduce like bunnies! A sow can have six piglets in a litter and raise two litters in a year. That means 65% or more of a wild pig population could be killed every year and it will still increase. Hunting just makes the problem worse. The success rate for hunters is only about 2% to 3%, and several states have banned hunting because it makes the pigs more wary and nocturnal — tougher to track down and eradicate. Pig experts have documented 62,000 wild pig sightings in Canada. Their aerial surveys have spotted them on both sides of the Canada-North Dakota border. They’ve also recorded a sighting in Manitoba within 18 miles of Minnesota. Feral swine have been reported in at least 35 states, according to the USDA. The agency estimates the swine population in those states totals around 6 million. Disappearing Island Off The Coast Of Africa. Nyangai island off the west coast of Sierra Leone is disappearing before our very eyes, swallowed up by the relentless sea. As recently as ten years ago, it measured some 2,300 feet from end to end. But what's left today is a patch of sand barely 300 feet long and 250 wide. The forests are gone, swamped by saltwater. The soccer field lies under water for 22 hours of the day. And the land is rapidly vanishing beneath the waves. In as little as two years, locals fear, Nyangai may no longer exist at all. With global sea levels projected to rise between 1 and 3 feet by the end of the century, along with an increase in extreme weather events, the experience of this West African island offers a glimpse into the possible fate of countless other low-lying areas around the world. Low-lying and with loose, sandy soils, the island has always been shaped by the sea. But the scale of the destruction of Nyangai, and the speed at which it's playing out, is like nothing the islanders have ever seen. The island's chief, Mustafa Kong, estimates that 20 years ago there were more than 500 homes on Nyangai, with an average of 8 people living in each. Now there are barely 70! The islanders say the storms have become more severe and more frequent, the rainfall more violent and less predictable, and the winds stronger, driving ever more destructive waves that batter and erode their shrinking island. For the roughly 400 people who remain, life is becoming increasingly intolerable. The island's well has been flooded with sea-water, forcing islanders to travel 45 minutes each way by boat to collect drinking water from neighboring islands during the long months of the dry season. Worse, there's no longer anywhere private for them to relieve themselves, so the islanders simply hide behind bushes on the shore, timing their toilet trips so that the beach can be washed clean by incoming tides. Without space to play soccer or forests to play in, children mill around looking bored or devise games among the stumps of the uprooted trees that ring much of the island. Yellow bellies. At the turn of the last century, French knife grinders were known as "Ventres Jaunes" (meaning "yellow bellies" in English) due to the yellow dust produced by the grinding wheel. This 1902 photo depicts workers lying on their stomachs to alleviate back strain. They were encouraged to bring their dogs to work for companionship and extra warmth, with the dogs resting on their owners' legs. Vendors Expo Returns! Our world-famous "Vendors Expo" returns on Thursday night, December 14, 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. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034. FREE Admission. Metered and free street parking. Please RSVP at www.LARealEstateInvestors.com. Out-of-State Summit. For our annual Summit, LAC-REIA has identified the four strongest cities in the USA that have dynamic job and population growth, along with affordability, landlord-friendly laws, renter desirability, and positive cash flow. We then identified the most professional turnkey operators in each of these cities and invited them to speak at our Out-of-State Summit: Michael Drew (Indianapolis, IN), Emily Nesselroad (Montgomery, AL), Michael Scher (Little Rock, AK), and Phil Alexander (Baltimore, MD). Thursday night, December 14, 2023, 6:30 to 9:30 pm, Iman Cultural Center, 3376 Motor Avenue, Los Angeles, CA 90034 (Culver City). RSVP: www.LARealEstateInvestrors.com. “LARealEstateInvestors.com” Podcast. We are so very excited about our podcast, "LARealEstateInvestors.com" (cleverly named after our domain) hosted by our very own Bill Gross. Bill has been a Realtor, broker and real estate investor since the Ice Age! 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. Every Tuesday at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google. This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic reports, the Institute for Supply Management National Services Index will come out on Monday. The JOLTS report, measuring job openings and labor turnover rates, will come out on Tuesday. 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: Fell 015 bps Dow Jones Average: Rose 500 points NASDAQ: Fell 050 points Calendar: Monday (12/4): ISM Services Tuesday (12/5): JOLTS Friday (12/8): 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