Bubble Watch: Investors are 51% of Southern California’s Homebuying Surge

Median price paid by local investors? $898,000

Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: Half of Southern California’s homebuying surge this summer can be tied to a big jump in the purchasing pace by investors.

Source: My trusty spreadsheet reviewed Redfin estimates of investor activity locally and in 40 major metropolitan areas in the third quarter, defined as purchases made by entities with corporate-sounding names or descriptions. 

The Trend

Surging home prices with gains of 30% in two years have clearly been a draw for investors to the four counties covered by the Southern California News Group.

nvestors bought 8,900 residences in the summer or 17.7% of all purchases. These weren’t fixer-uppers, by the way, as the typical sales price for these deals was $898,000.

Compare that with one year earlier, when homebuying was swiftly rebounding from a locked-down spring. Investors bought 6,758 homes in the summer of 2020, or 14.6% of the market. That’s a 32% jump in investor purchases.

Or look at ballooning bets this way: Local investors bought 2,142 more homes this summer vs. 2020’s third quarter — or 51% of the region’s 4,228 overall sales increase.

The Dissection

Let’s start by saying that if this Southern California speculator surge looks bold, it’s tame when viewed using a national yardstick.

Click here to read the full article at the Orange County Register

‘Flash Mob’ Loots California Nordstrom, At Least Two people Arrested

At least two people were arrested at gunpoint after a flash mob of shoplifters robbed a California department store late Saturday night, a report said.

The incident happened at the Walnut Creek Nordstrom store, according to NBC Bay Area reporter Jodi Hernandez.

Some two dozen cars blocked the street as throngs of robbers rushed the store, made off with merchandise and sped away, the reporter tweeted.

Cops with guns drawn arrested two suspects, she said.

Click here to read the full article at NY Post

California Receives Initial $58 Million from DOT for High Speed Rail Transit, Cycling ‘Infrastructure’ Projects

Funding ‘was really supposed to repair and maintain current infrastructure’

Senators Dianne Feinstein (D-CA) and Alex Padilla (D-CA) announced on Friday that the Department of Transportation (DOT) has given its first grants from the recently passed $1 Trillion infrastructure bill to California, with $58 million going to transportation projects in Northern California and to the California High-Speed Rail Authority.

The California High-Speed Rail Authority was the biggest recipient of the Rebuilding American Infrastructure with Sustainability and Equity Grant Program, receiving $24 million to expand state route 46 in the Kern County city of Wasco to be a staging and storing area. Another $18 will go to the San Francisco County Transportation Authority (SFCTA) for an earthquake retrofit of the Yerba Buena Island west side bridge, as well as greater access to the bridge for cyclists.

Oakland will receive $14.5 million to enhance their civic hub by improving walking, cycling, and public transportation projects, with a special focus on connecting Oakland with San Francisco via rail lines such as BART and Amtrak. Finally, the Yolo County Transportation District (YCTD) will get $1.2 million to fill in gaps of their current transportation system, as well as to improve bike and walking networks.

Both Senators noted on Friday the importance of these early infrastructure funding blocks.

“My thanks to Secretary [Pete] Buttigieg and the Transportation Department for these grants that will help California continue to modernize our transportation infrastructure,” said Senator Feinstein. “These projects include providing safer, more connected bikeways and walkways in San Francisco; assisting the City of Wasco with creating safer railway infrastructure; and connecting biking and walking paths in Oakland and Yolo County. Promoting cleaner, safer modes of transportation is a key part of improving California’s infrastructure.”

An initial $58 million in infrastructure funds

Senator Alex Padilla (Photo: Gage Skidmore)

Senator Padilla, who has served less than a year as Senator, also noted that “From day one, I have worked to ensure that we use our infrastructure investments to help reconnect our communities, and I am proud to see federal efforts to do just that. From San Francisco to Wasco, this critical funding will help make our roads and bridges safer, help decongest our highways, and allow for more Californians to access our outdoor trails. As we continue to make significant investments in our state and nation’s aging infrastructure, I will continue to advocate for funding that serves our most in-need communities.”

However, many critics and experts criticized the funding on Friday for favoring bike projects over safety and repair projects.

“Whether you wanted the bill to pass or not, the point is we have it now,” San Diego-based urban planner and transportation planner Michael McGuiness Jr. told the Globe Friday. “But that was really supposed to repair and maintain current infrastructure, or build new pieces as needed. Instead, California gave a hint at where its money would be going today by putting most of it into mass transit and cycling. There was a needed bridge project in San Francisco, but that’s really about it. The largest chunk even went into the high-speed rail project, which is billions over budget and years behind schedule. So a lot is going into a future white elephant.”

“Plus, they largely ignored huge swats of the state, including all of California south of Bakersfield and north of the Bay. At first glance, these grants don’t look like they’re fairly going out.”

More grants and funding coming into California for infrastructure projects are expected to be announced soon.

This article originally published in the California Globe

MSNBC Host Blasts GOP ‘White Supremacists’ After Rittenhouse Verdict: ‘I Find These People Disgusting’

Tiffany Cross said she took issue with U.S. Reps. Gaetz and Gosar offering to hire Rittenhouse as a congressional intern, a report said

Liberal MSNBC host Tiffany Cross blasted Republican members of Congress as “White supremacists” on Saturday, one day after a Wisconsin jury acquitted Kenosha shooter Kyle Rittenhouse.

Cross, host of “The Cross Connection,” specifically took aim at U.S. Reps. Matt Gaetz of Florida and Paul Gosar of Arizona, Mediaite.com reported. Her comments came during a conversation with The Nation journalist Elie Mystal, who was also critical of the GOP.

During the conversation, Cross referred to 18-year-old Rittenhouse as “this little murderous White supremacist,” even though the jury agreed Rittenhouse acted in self-defense last year when he shot three people, killing two, and that all three people he shot, like Rittenhouse, were White.

Cross said she took issue with Gaetz and Gosar offering to hire Rittenhouse as a congressional intern after the trial concluded, claiming the Republicans were celebrating the outcome of the trial.

“I find these people disgusting, Elie,” Cross told her guest, according to Mediaite. “I’m disgusted at what I’m seeing.”

“Welcome to the modern Republican Party,” Mystal responded. “This is what these people want, and this is what a majority of White people vote for.”

Click here to read the full article at Fox News

California Drought: Proposed Ballot Measure Would Fast-Track Construction of Dams, Desalination Plants and Other Water Projects

California has not built enough new reservoirs, desalination plants and other water projects because there are too many delays, too many lawsuits and too much red tape.

That’s the message from a growing coalition of Central Valley farmers and Southern California desalination supporters who have begun collecting signatures for a statewide ballot measure that would fast-track big water projects and provide billions of dollars to fund them — potentially setting up a major political showdown with environmentalists next year shaped by the state’s ongoing drought.

The measure, known as the “Water Infrastructure Funding Act of 2022,” needs 997,132 signatures of registered voters by April 29 to qualify for the November 2022 statewide ballot.

If approved by a majority of voters, it would require that 2% of California’s general fund — about $4 billion a year — be set aside for projects to expand water supplies. Those could include new dams and reservoirs, desalination plants, recycled water plants, and other projects like upgrading canals and pipes.

The money would continue flowing each year until 5 million acre-feet of new water supply was created, an increase of about 13% in the roughly 39 million acre-feet used in an average year by all the state’s residents, farmers and businesses. That could take several decades and cost $100 billion, according to an analysis by the non-partisan State Legislative Analyst’s Office.

“We think conservation has an important role to play,” said Edward Ring, a spokesman for the campaign, known as More Water Now. “But you can’t get there any more just with conservation. If you want to be resilient against a prolonged drought, you have to have new supplies.”

Click here to read the full article at Mercury News

California Analyst Predicts $31 Billion Budget Surplus

SACRAMENTO, Calif. (AP) — California is on track to have so much money that state officials will likely have to give even more of it back to taxpayers to meet constitutional limits on state spending, according to a new forecast from the state’s independent Legislative Analyst’s Office.

The state’s annual “Fiscal Outlook,” released Wednesday, predicts a $31 billion surplus for the 2022 budget year that begins July 1. The analyst’s office says state is on pace to have so much money that it could exceed a constitutional limit on state spending by $26 billion over three years. That could require Gov. Gavin Newsom and state lawmakers to either cut taxes, spend more money on infrastructure or — perhaps the most popular choice in an election year — give rebates to taxpayers and spend more on public schools.

“We think it will … turn out to be a pretty significant issue for the Legislature to consider in this coming budget process,” Legislative Analyst Gabe Petek said.

Newsom won’t reveal his budget proposal until January. But on Wednesday, the governor indicated his favored giving some of the money back to taxpayers. That’s what he and the state Legislature did earlier this year, approving rebates totaling $12 billion for some taxpayers in a state budget that was also projected to exceed the spending limit.

“How we framed that historic surplus last year, similarly, we will frame our approach this year,” Newsom said during a news conference at the Port of Long Beach. “I’m very proud of the historic tax rebate last year, and I look forward to making the decision that I think is in the best interests of 40 million Californians.”

California’s tax collections have continued to soar despite the pandemic. From April through June of this year, California businesses reported a record high $216.8 billion in taxable sales — a 38.8% increase over the same period in 2020 and a 17.4% increase over those months in pre-pandemic 2019. Nick Maduros, director of the California Department of Tax and Fee Administration, said it is “a sign that business owners found creative ways to adapt during a difficult year.”

Click here to read the full article at AP

What Can We Expect in a Frackless California? Economic Devastation, More Energy Imports.

Care to guess the last time the governor’s office issued a new fracking permit? It was February.

Now that’s a meaningless fact without context, so let’s put it perspective: Even though “Newsom endorsed an end to fracking” while running for governor in 2018, says California political legend Dan Walters, his administration early on increased the flow of fracking permits.

But then Newsom later “came under heavy pressure to match his words with action,” Walters continues.

By November 2019, Newsom had set ​a moratorium on fracking projects. Before permits would be issued, Lawrence Livermore National Laboratory researchers would review plans to ensure they met regulatory requirements. Yet it wasn’t terribly long before “the state issued 48 new permits for hydraulic fracturing,” according to the Associated Press.

Then the recall collar got tight in April. The governor’s response was to ban new fracking anywhere in the state by 2024. Even though he previously said he didn’t think he had the authority to prohibit the process and asked the Legislature to do it for him. And even though a legislative attempt never made it out of committee.

So can we expect in a frackless California?

Energy analyst and author Michael Shellenberger says Newsom’s fracking prohibition is simply “​​bonkers.” Assemblyman Rudy Salas, a Bakersfield Democrat, called it “an abuse of power” that will “put the lives, economy and well-being of thousands of California families in jeopardy.” Western States Petroleum Association President and CEO Catherine Reheis-Boyd says it’s an “arbitrary” action that will impose “big impacts on Californians.”

Both the Western States Petroleum Association and the board of supervisors in oil-rich Kern County, which produces roughly two-thirds of the crude that California doesn’t import – making the county the seventh highest oil-producing region in the U.S. – have sued the governor over his order. It’s an existential matter for each party.

In “The Killing of Kern County,” Joel Kotkin, presidential fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute, usefully explains for the many in Sacramento who are missing the point that oil (and agriculture) are the foundations holding up the county’s economy. Despite what’s at stake, Kotkin believes Newsom is more “interested in flattening the area’s aspirations” than unlocking its potential, which the governor once pledged to do.

Regulators, for instance, turned down 21 fracking applications in Kern County in a single month over the summer. With one of every seven workers in the county either employed by or reliant on the oil industry, the denial of so many jobs is not an insignificant blow to the economy.

The energy producers of the WSPA are also at risk. Court rulings in Newsom’s favor make the next step – the complete shutdown of oil production across the state – much easier to take.

Maybe the oddest part of any California energy story is the fact that officials and activists seem to have no reservations about importing what they consider “dirty” energy from other states. That reliance is only going to grow as long as Sacramento is at war with fossil fuels.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

This article was originally published by the Pacific Research Institute

California Plans to Throw More Money at Homeless Despite Homelessness Rising

During the COVID-19 pandemic, homelessness in California tripled, meaning that only 36% of homeless people lived that way before the pandemic. Now, the Golden State is attempting to turn the situation around with a $12 billion spending package to create more permanent housing and mental health centers for the homeless. This is by far the largest spending spree California spent on this crisis, but as always, big spending doesn’t mean big solutions.

One solution goes towards providing each homeless person a bed to sleep on, as across California, the ratio of beds to people is 1. 3. The bill created two projects which give homeless people temporary housing in hotel and motel rooms (Project Roomkey) and created roughly 6,000 new units (Project Homekey).

However, creating new short-term shelter options doesn’t help get people into permanent homes. Additionally, many homeless people don’t want to return to shelters where they are in danger of theft and violence by other destitute there.

Click here to read the full article at San Diego News Desk

School Walkout: ‘Government Is Not A Co-Parent’ Rally At State Capitol Monday

‘Bow to the state or they will take everything from you’

The “Government Is Not A Co-Parent” rally At California’s State Capitol Monday was vast. The “Statewide School Walkout” rally was exactly what it professed it would be: moms, dads, children, grandparents, teachers, and concerned citizens, showed up en masse at the Capitol armed with homemade signs to protest public schools and teachers unions, which pushed to keep schools closed, forced kids into distance learning, and wearing masks all day, and now Gov. Newsom’s mandatory vaccine for children.

“Medical freedom” was/is at the root of the rally. The Globe spoke with parents whose children are otherwise fully vaccinated, but say Gov. Gavin Newsom’s COVID vaccine mandate is unconstitutional and a violation of their medical freedoms.

Speaking at Monday’s rally was Matthew Oliver, owner of House of Oliver wine lounge & restaurant in Roseville, CA. Oliver, a father of five, has protested the business and school lockdowns since the beginning in March 2020. “Welcome to the parent revolution,” Oliver said to loud cheers from the crowd.

“They tried to silence us, and tell us we didn’t matter,” Oliver said. “They tell us our voice doesn’t have power, but it does. Our governor and Legislature need to hear our voice.”

Oliver told the crowd that “now is the time to stand,” otherwise “silence is an endorsement.”

Ponderosa High School teacher Michael Wilkes was put on administrative paid leave after teaching classes while not wearing a mask. Wilkes, a father of three children, has achieved national attention for his stand.

Wilkes said it is important to stand up for individual freedoms and our love of liberty. “They are attempting to divide us over our own children – the tyranny of the powerful over the powerless – bow to the state or they will take everything from you.”

In a recent interview with WCSI, he said he encourages debate in his classes. “He said parents are growing tired of these mandates and pointed to last week’s protest in Sacramento as evidence,” WCSI reported. “The (October 26) protest included parents who lashed out against the Newsom vaccine mandate.”

Wilkes said the district is conducting an investigation and he may lose his job.

At the heart of the protest was Ponderosa high schooler Lexi, who said this all started one day she lowered her mask down below her chin, as many other students had. That went without incident, so she stopped wearing it altogether, and came to school without a mask for one entire week before one of her teachers sent her to the school administrators. Lexi said she walked into the office and none of the administrators were wearing masks. She called them on it, but they told her they only have to wear masks when students are present.

She was given few choices other than to comply with the mask mandate or she could be transferred to online learning. “My education should matter more than a mask,” Lexi said. The administrator told her he agreed, but said he couldn’t do anything without losing his job. Lexi told him to stand up for himself and the students, but fear of losing his job was too great. “It’s okay, I’ll stand up for you too,” Lexi told the administrator at her school. She left Ponderosa High School.

Click here to read full article at the California Globe

This Republican’s Marijuana Legalization Bill Aims To Build Bipartisan Support for Repealing Federal Prohibition

When Senate Majority Leader Chuck Schumer (D–N.Y.) unveiled a “discussion draft” of a marijuana legalization bill last July, he said he wanted to start a conversation that would eventually produce legislation resolving the longstanding conflict between the Controlled Substances Act (CSA) and state laws that allow medical or recreational use of cannabis. But his 163-page Cannabis Administration and Opportunity Act was full of unnecessarily contentious provisions that seemed likely to alienate potential Republican allies. A bill unveiled today by Rep. Nancy Mace (R–S.C.) tries to address that problem by outlining a simpler and less burdensome approach that entails less federal involvement, lower taxes, and greater deference to state policy choices.

Mace’s bill, the States Reform Act, has five initial co-sponsors: Reps. Tom McClintock (R–Calif.), Peter Meijer (R–Mich.), Don Young (R–Alaska), Kenneth Buck (R–Colo.), and Brian Mast (R–Fla.). It is endorsed by Americans for Prosperity, the Cannabis Freedom Alliance, and the Global Alliance for Cannabis Commerce.

Mace says the bill is designed to accommodate state marijuana policies, which range from complete prohibition to general legalization for adult use. “Every state is different,” Mace says in a press release, noting that her own state, South Carolina, has gone no further than allowing medical use of the nonpsychoactive cannabinoid CBD, while “California and others” allow commercial production and distribution of marijuana for recreational use. “Cannabis reform at the federal level must take all of this into account. And it’s past time federal law codifies this reality.”

Thirty-six states have legalized marijuana for medical use, while 18 states, accounting for more than two-fifths of the U.S. population, also allow recreational use. The latest Gallup poll found that 68 percent of American adults favor legalization, which matches last year’s record level of support. “Washington needs to provide a framework which allows states to make their own decisions on cannabis moving forward,” Mace says. “This bill does that.”

Geoffrey Lawrence, director of drug policy at Reason Foundation (which publishes this website), provided model language for the bill and technical feedback on Mace’s drafts. He hopes the States Reform Act will prove more appealing to Republicans than Schumer’s bill, which so far has not attracted any GOP support, and the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which the Democrat-controlled House approved last December with support from just a handful of Republicans. “The States Reform Act is a relatively simple bill that gets to the heart of what most people can agree on when it comes to legalizing cannabis at the federal level,” Lawrence says.

At 131 pages, Mace’s bill is just 20 percent shorter than Schumer’s, and it includes several similar provisions. Both bills would remove cannabis from the CSA’s schedules of controlled substances, and both would establish a nationwide minimum purchase age of 21. Both would require automatic expungement of federal criminal records related to nonviolent marijuana offenses, bar the Small Business Administration (SBA) from discriminating against state-licensed cannabusinesses, and allow Veterans Health Administration doctors to recommend medical marijuana. Both would leave states free to ban marijuana but would bar interference with shipments between jurisdictions where cannabis is legal.

One big difference is the level of federal taxation. Schumer’s bill would impose a federal excise tax on marijuana starting at 10 percent and rising to 25 percent by the fifth year, which would be in addition to frequently hefty state and local taxes. The tax would be based on either the wholesale price per ounce or, for “any THC-measurable cannabis product,” the price per gram of THC. Mace’s bill, by contrast, would impose a straightforward 3 percent excise tax, which would remain at that level for at least 10 years.

According to Mace’s summary of the bill, the 10-year moratorium on raising the excise tax is meant to “ensure competitive footing in the market.” In other words, a relatively low tax rate will help legal marijuana businesses compete with black-market dealers, who do not collect taxes.

Schumer’s bill would use revenue from the marijuana tax to create three new grant programs aimed at helping “economically disadvantaged individuals” and “individuals adversely affected by the War on Drugs.” Mace’s bill would create a Law Enforcement Retraining and Successful Second Chances Fund, which would funnel marijuana tax money to three existing programs: the Crisis Stabilization and Community Reentry Grant Program, the Edward Byrne Memorial Justice Assistance Grant Program, and the Community-Oriented Policing Services Program. Some of the money also would be assigned to “veterans’ mental health,” “state opioid epidemic responses,” “preventing underage use of cannabis,” and the SBA “for supporting newly licensed small [marijuana] businesses through its various programs.”

Under Schumer’s bill, state-licensed marijuana businesses, which already are regulated by state and local governments, would also be supervised by the Food and Drug Administration (FDA), the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB), and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). Mace’s bill likewise imagines roles for all of those agencies, but it says the FDA “shall have the same authorities with respect to cannabis products that it has with respect to alcohol,” such as label regulation for certain beverages, “and no more.”

According to the summary, that provision “ensures that cannabis products in interstate commerce will be treated like alcohol and that the regulatory issues harming the industrial hemp-derived CBD industry will not be repeated in the cannabis space.” The bill also “grandfathers ‘designated state medical cannabis products,'” including “those produced consistent with state law,” to ensure “continued access” for patients. The FDA “may still prescribe serving sizes, certify designated state medical cannabis products as a ministerial duty, and authorize new drugs or approved new uses of drug applications to create new pharmaceutical grade products, but may not prohibit the use of cannabis or its derivates in non-drug applications, such as in designated state medical cannabis products, dietary supplements, foods, beverages, non-drug topical solutions, or cosmetics.”

Continuing the analogy to alcohol, the TTB “will be the primary regulator of cannabis products in interstate commerce,” while the ATF “will serve as the primary law enforcement agency supporting the TTB’s work, exactly as it does in the alcohol space.” The Department of Agriculture would regulate cannabis crops in the same way it regulates raw materials for alcoholic beverages, such as grain and hops. The bill “applies to cannabis the same recordkeeping, liability, reporting, packaging, and labeling requirement[s]” that apply to the alcohol industry under the Internal Revenue Code. The bill would prohibit cannabis advertising that is false, misleading, or aimed at minors.

Mace is playing up the aspects of the States Reform Act that should appeal to her fellow Republicans without alienating Democrats. A poster she used at today’s press conference says the bill, in addition to descheduling marijuana and regulating it “like alcohol,” imposes a low excise tax, “protects kids,” “protects veterans,” “protects each state’s unique laws & reforms,” and implements “safe criminal justice reform.”

Mace’s bill summary elaborates on that last point, noting that the States Reform Act “provides opportunities for reentry for non-violent, non-DUI cannabis offenders who had no relation to a foreign drug cartel and pose no further threat to society, consistent with the policies of the Department of Justice under President Trump for clemency for non-violent cannabis offenders.” Mace also could have noted that Trump supported drug sentencing reform and, unlike his successor, said he favored reconciling state and federal marijuana laws.

“The States Reform Act completely removes federal prohibition and allows states to compete and decide how they wish to treat cannabis,” Lawrence notes. “It removes federal tax penalties against marijuana companies and opens up banking. It recognizes that legal markets must compete with black markets on price and therefore charges only a 3 percent excise tax, along with licensing fees not to exceed $10,000. Finally, it extends these changes back in time by expunging the records of those who have been arrested for nonviolent federal cannabis crimes.”

Rather than “going too far in any direction by including elements that splinter the realm of agreement,” Lawrence says, “the beauty of the States Reform Act is that it’s both simple and reasonably comprehensive. Enacting major social change requires broad, bipartisan agreement, and the States Reform Act checks that box.”

This article was originally published by Reason.com