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The millennium brought about so many first-time home buyers across the globe deciding to go big. Many young generations no longer depend on the old folks for shelter. They have now moved into making huge investments at once. Unlike the older generations’ approach of starting small and growing gradually, the modern first-time home buyer has more risk appetite and is making big decisions.
Nonetheless, it is crucial to analyze the market trend, highlight the home buyers’ tastes and preferences, have a contingency budget, review the property location, conduct due diligence on the realtors and have an informed review.
It’s not all that glitters is gold. We all like taking photos that highlight more of our solid features and less of our weaknesses. The photogenic approach taken on a property often does not highlight everything. It’s paramount for the buyer to visit the property and do their reality check. Sometimes real estate agents modify photos to show bigger spaces, great interior designs, and features, which may not be the case in real-life situations. Before making that significant decision, it’s essential to visit the site before reaffirming your decision.
Besides, the pricing often is used to entice the buyer into purchasing the property. Although it’s believed that the higher the price, the more sophisticated the property is. Nonetheless, that may not be the case. Therefore it is essential to compare the market trend, pricing and photos and do a reality check before moving.
Purchasing your luxurious home requires a considerable investment. The chunk of money to be invested should correspond to satisfying your desires on what and how you want your home to look. It is important to emphasize to your realtor what features are most important.
3. Create a contingency budget
As much as your most preferred luxurious home may look, it may not have all the features you may require. As a result, it is crucial to set aside some contingency funds to cater to what is missing. Contingency funds are also significant to cater to additional costs, which the realtor often does not highlight at the purchasing time.
4. Review the property location
Purchasing a house is a big decision and should therefore require enough due diligence before purchase. As a result, it’s essential to get to know your neighborhood, how secure it is and if it’s a beach house, the distance from the beach, and the strategic location to all the essential facilities such as the market, school, hospital and recreation places. Infrastructure, accessibility and drainage are also some of the vital features to take into consideration.
5. Know your realtor’s experience
Purchasing your luxury home through a highly experienced realtor will guarantee efficiency in your home ownership journey. The National Association of Realtors offers certification to ensure home buyers deal with highly experienced real estate agents. The realtor should be attentive to fine details about the exact specification of the features that the home ought to have.
An experienced realtor would be mindful of the standard prices for the apartment, which would help them negotiate for you a fair price. You want to purchase a home that meets the government‘s housing construction standards. Buying an apartment that does not meet the housing construction code puts you at risk of demolition. An inexperienced realtor would not be able to draft binding contracts with the building’s seller risking you losing your house.
Require analysis to establish that the home does not have faults that could further cost you. Electricity connection checks are paramount because having flaws could cause a fire outbreak that could destroy your apartment, leading to financial loss. You also need an engineer’s recommendation to understand whether the building’s foundation was rightly constructed. Cracks in the foundation or the walls could cause the building to collapse, leading to losses. Before purchasing your luxury dream home, it would be necessary to ascertain whether the construction adhered to due diligence.
You should also assess the security of the area where you intend to purchase your dream home. The government’s insecurity data would help ascertain whether the place where your luxury home is located is safe. The government’s crime rate statistics would help you identify areas prone to burglaries and assault. Purchasing a home in an area with a high prevalence of crimes would cause you to live in constant fear, denying you peace of mind.
7. Your realtor’s review matters
Many realtors are driven by their gain more than by giving their clients what they want. Therefore, the home buyer must do a background check on their realtor and their reviews.
The numbers: The National Association of Home Builders’ (NAHB) monthly confidence fell 8 points to 38 in October, the trade group said on Tuesday.
It’s the tenth month in a row that the index has fallen.
Outside of the pandemic, the October reading of 38 is the lowest level since August 2012.
A year ago, the index stood at 80.
The index’s ten-month drop is a new record. The index last fell for 8 months straight in 2006 and 2007.
Key details: All three gauges that underpin the overall builder-confidence index fell.
The gauge that marks current sales conditions fell by 9 points.
The component that assesses sales expectations for the next six months fell by 11 points.
And the gauge that measures traffic of prospective buyers fell by 6 points.
All four NAHB regions posted a drop in builder confidence, led by the south and the west.
It’s also likely that this year will be the first time since 2011 that single-family starts see a decline, the NAHB added.
Big picture: Builders continue to struggle to find buyers with the current rate environment.
Now they’re saying they’re worried about that depressed demand impacting supply moving forward.
Specifically, they’re concerned about housing affordability worsening, with potentially fewer new homes being built in the future.
Mortgage rates have doubled from last year, now exceeding 7%, which has considerably cooled buyer demand.
Home price growth is moderating, but prices have not come down substantially — yet.
The median sales price for a new home was $436,800 in August, according to the U.S. Census Bureau.
What the NAHB said: Builders are expecting single-family starts to fall for the first time in 11 years — and expect additional declines through 2023, said NAHB Chief Economist Robert Dietz, due to the Federal Reserve’s projected rate hikes to control inflation.
“While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates, and ongoing elevated construction costs continue to price out a large number of prospective buyers,” he added.
“This situation is unhealthy and unsustainable,” Jerry Konter, a home builder and developer from Savannah, Ga. and the NAHB’s chairman, said in a statement. “Policymakers must address this worsening housing affordability crisis,” he added.
What are they saying? “The housing sector – sentiment, building activity and sales – is collapsing under the weight of a rapid increase in interest rates and elevated prices, which are crimping affordability and demand,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.
So expect building activity to be depressed, she added.
Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.989%
fell to 3.98% on Tuesday morning.
While the SPDR S&P Homebuilders ETF XHB, +2.15%
traded slightly higher during the morning session, and the big home-builder stocks, from D.R. Horton Inc. DHI, +2.90%
to Toll Brothers TOL, +1.87%
to Lennar LEN, +2.97%,
edged higher.
At least four people were killed and 25 others injured after a Russian SU-34 fighter jet crashed into a residential building in the western city of Yeysk during a training flight Monday, according to Russian state media and authorities.
The incident was due to one of the engines catching fire, reported RIA Novosti, which cited Russia’s defense ministry.
“According to the report of the ejected pilots, the cause of the plane crash was the ignition of one of the engines during take-off. At the site of the crash of the Su-34 in the courtyard of one of the residential quarters, the plane’s fuel ignited,” the ministry said in a statement to RIA.
The conditions of the ejected pilots are not clear.
Yeysk is a port town on the shore of the Sea of Azov and is separated from occupied Russian territory in southern Ukraine by a narrow stretch of the sea.
Images and videos of the crash’s aftermath showed smoke billowing and fire blazing in the residential area. A building, believed to house hundreds of people, was later engulfed in flames, say officials.
Russian President Vladimir Putin told authorities to provide all necessary assistance to the victims of the crash, the Kremlin said in a statement, adding that Putin has received reports from the ministers and the head of the region on the situation.
Officials have opened an investigation into the incident, according to the prosecutor’s office of the Krasnodar Krai region and the military prosecutor’s office of the Southern Military District.
The fire, which raged through more than a dozen apartments in the multistory building, was later contained, said local officials.
“The remains of the aircraft have been extinguished. The evacuation of residents of nearby houses has been cancelled. The fire has been contained,” the head of the Krasnodar Krai region, Veniamin Kondratyev, said on his Telegram channel, citing a statement from the Ministry of Emergency Situations.
About 100 people have been evacuated from the building, local government security services told TASS.
The Russian Ministry of Emergency Situations told RIA the area of the fire caused by the crash was 2,000 square meters wide.
According to the head of the affected district in Yeysk, Roman Bublik, the residents of a nine-story building that caught fire will be provided with all the necessary support.
Earlier on Monday, an eyewitness told Russian state media TASS of the chaos that ensued after the crash: “Plane crashed in our city … Ambulances and firefighters are coming from all over the city, helicopters are in the air,” said the eyewitness.”
Even though China’s economy is beset by problems ranging from a real estate crisis to youth unemployment, Xi Jinping did not offer any grand ideas to set the country back on track during his two-hour opening speech at the Communist Party Congress on Sunday.
The Chinese leader is expected to secure an unprecedented third term in power at the week-long congress. Priorities presented at the political gathering of more than 2,000 party members will also set China’s trajectory for the next five years or even longer.
In his speech Sunday, Xi struck a confident tone, highlighting China’s growing strength and rising influence under his first decade in power. He also repeatedly underscored the risks and challenges the country faces, including the Covid pandemic, Hong Kong and Taiwan — all of which he claimed China had come away from victorious.
But experts are concerned that Xi offered no signs of moving away from the country’s rigid zero-Covid policy or its tight regulatory stance on various businesses, both of which have hampered growth in the world’s second-largest economy.
“Yesterday’s speech confirms what many China watchers have long suspected — Xi has no intention of embracing market liberalization or relaxing China’s zero-Covid policies, at least not anytime soon,” said Craig Singleton, senior China fellow at the Foundation for Defense of Democracies, a DC-based think tank.
“Instead, he intends to double down on policies geared towards security and self-reliance at the expense of China’s long-term economic growth.”
China is the world’s last major economy still enforcing strict zero-Covid measures, which aim to stamp out chains of transmission through border restrictions, mass testing, extensive quarantines, and uncompromising snap lockdowns.
And China’s economy is in bad shape. Growth has stalled, youth unemployment is at a record high, and the housing market is in shambles. Constant Covid lockdowns have not only wreaked havoc on the economy, but also sparked rising social discontent.
Last week, two large banners were hung on an overpass of a major thoroughfare in Beijing, protesting against Xi’s Covid policy and authoritarian rule. It was a rare protest against the top leadership in the country, signaling the frustration and anger among the public.
Many international organizations, including the IMF and World Bank, have recently downgraded China’s GDP growth forecasts for this year, citing zero-Covid as one of the major drags.
Xi, however, praised the government’s adherence to zero-Covid, saying it has “achieved significant positive results.”
Xi’s speech — a summary of the Communist Party’s work report, or action plan — was similarly short on concrete solutions to other challenges facing the economy in the near term.
“We believe the ongoing Party Congress may not be an inflection point for major policy changes,” Goldman Sachs analysts said on Sunday, adding that they believe China may not loosen its Covid restrictions until at least the second quarter of 2023.
On the property sector, Xi emphasized the need to provide affordable housing and dampen speculative demand — but there was no specific mention of the slump in real estate, whichhas mushroomed into a major crisis over the past few years, threatening both economic and social stability.
“We maintain our view that a comprehensive solution to the beleaguered property sector might not be introduced until after March 2023, when the political reshuffle is fully completed,” said Nomura analysts on Monday.
Nor did Xi mention record youth unemployment, which is mainly a result of his year-long crackdown on the tech industry set against the backdrop of punishing zero-Covid policies.
In the full version of the official 20th Party Congress work report,which was publishedshortly after his speech, Xi emphasized the need to continue the party’s “anti-monopoly” crackdown and regulate “excessive incomes,” a sign that he will continue to get tough on big businesses and wealthy individuals.
Beijing’s sweeping crackdown on the country’s private sector, under the banner of Xi’s “common prosperity” campaign, has pummeled several companies in sectors ranging from tech and finance to gaming and private education.
The government has defended the campaign as necessary for “social fairness” and narrowing income gaps.
In his speech, Xi also made clear that development was the “top priority” and stressed continued focus on “high-quality growth.”
That may dispel some market concerns that the government no longer cared much about economic growth, UBS analysts said.
However, to achieve Xi’s target of making China a “medium developed country” by 2035, the country’s annual real GDP growth needs to average around 4.7% a year from 2021 to 2035, the UBS analysts said. That could be “quite challenging,” they noted, adding they expect China’s potential growth to average between 4% to 4.5% a year this decade, and fall lower after 2030.
Meantime, a comparison between this year’s speech and the last one delivered by Xi in 2017 at the 19th party congress revealed a potentially worrying trend.
The frequency of words such as “security,” “people,” and “socialism” used in 2022 had increased compared to 2017, while that of “economy,” “market” and “reform” declined, Goldman analysts said.
The change was also noticed by Nomura analysts, who said it could point to “a shift in the party’s mandate.”
A customer looking at the price of limes at a fruit stand in Sydney. According to Australia’s Bureau of Statistics, Australia’s inflation rate rose to 6.1 in June, a 21-year high.
Lisa Maree Williams | Getty Images News
The Bank of Queensland said it’s“quite bullish” on Australia’s “very robust economy” — but not everyone agrees.
“We’ve got a very robust economy, which I think when you look at the global challenges, the likelihood of us actually coming out of this in good shape is quite high,” George Frazis, CEO of Bank of Queensland, told CNBC on Wednesday.
“The [Reserve Bank of Australia] has moved fairly quickly to deal with inflation … that’s why I think there’s a good chance that we’ll have a soft landing in Australia,” Frazis said.
“As is the case in most countries, inflation in Australia is too high,” the Australian central bank said. “Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role.”
Frazis cited “very high household savings” and “very low unemployment” as driving forces for the robust economy, despite pressure on housing prices.
“And this is on the backdrop where housing prices have actually increased by 39% over the last two years,” clarifying later that the figure referred to price increases in Australia between June 2019 to April this year.
Figures from Corelogic, one of Australia’s leading property data providers, indicate that national Australian housing values increased by 28.6% in the past two years. Some capital cities experienced price rises of 39% and more.
While the housing sector is highly vulnerable to higher interest rates, actual housing construction should remain solid for a while…
Shane Oliver
chief economist, AMP Capital
The linchpin of whether the housing market gets disrupted or not, according to Frazis, lies with the unemployment numbers, which he said were at an “all-time low.”
“Our view is that [unemployment] is likely to continue and that is the key driver of housing getting disrupted or not.”
The bank’s CEO also expressed confidence that Australia is “well buttressed” against any kind of cataclysmic event within the housing market, citing homeowners were saving up and being ahead on repayments.
However, he maintained that disruption in the Australian housing market is “unlikely” to materialize.
However, not everyone carries the same optimism as Frazis.
According to a financial stability review on RBA, Australia’s higher interest rates will increase borrowers’ debt repayments.
The report pointed out that income growth has not kept up with inflation in Australia and households are left with less capacity to service their debt. Additionally, a small share of borrowers with high debt and low savings are “vulnerable” to payment difficulties.
“Debt-servicing challenges will become more widespread if economic conditions, particularly the level of unemployment, turn out to be worse than expected and housing prices fall sharply,” the report continued.
In addition, Assistant Treasurer Stephen Jones cautioned that Australia’s economy is not “hermetically sealed” from the forecasted downturn of the international economy, Sky news reported.
Jones added that the country’s major trading partners are in a “precarious” and deteriorating” situation, which is going to impact Australia.
He also noted that as inflation rises, the economy slows around the world. This will in turn have an impact on Australia’s growth forecast.
“We just cannot be complacent about those numbers,” he said.
One economist suggested a modest outlook for Australia’s economy, and predicted the country’s growth will slow to around 2%, as opposed to falling into recession.
High household debt in Australia could could hurt consumer spending, according to Shane Oliver, chief economist at AMP Capital. However, inflation and lower wage growth also meant that this risk is lower, he added.
Australian dollar banknotes of various denominations are arranged for a photograph in Sydney, Australia, on Friday, Aug. 4, 2017. High household debt in Australia could risk compromising consumer spending, according to Shane Oliver, chief economist at AMP Capital. However, inflation and lower wage growth also meant that this risk is lower, he added.
Brendon Thorne | Bloomberg | Getty Images
“While the housing sector is highly vulnerable to higher interest rates, actual housing construction should remain solid for a while thanks to a big pipeline of approved but yet to be completed home building projects,” said Oliver.
The economist added that Australia’s gas prices have not shot up anywhere near as much as that in Europe, and the falling Australian dollar will provide a buffer against global weakness.
Burbank — Inflation, soaring mortgage rates and record high prices are making it difficult for many Americans to buy a home. But there could be some relief in sight, as skyrocketing rates have helped cool some of the nation’s hottest housing markets.
According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage now sits at 6.92%, the highest it has been since 2002, and more than double what it was just a year ago. Housing affordability is down 29% from a year ago, according to the National Association of Realtors. Consistent rate hikes from the Federal Reserve are also putting pressure on the real estate market.
Nationwide, home prices soared 43% in two years, according to the S&P CoreLogic Case-Shiller Index.
But now, in cities that had those massive spikes, prices are dropping.
“We have seen mortgage rates double in just this year. And in some markets, we are starting to see prices go down from those sky-high levels,” CBS News business analyst Jill Schlesinger said.
The fastest cooling markets are Seattle, Las Vegas, San Jose, San Diego, Sacramento and Denver, according to S&P. Holding strong are Chicago, Albany and Milwaukee.
“A year ago, people were buying homes sight unseen, multiple offers,” Los Angeles real estate agent Craig Strong told CBS News. “It’s a good time to put an offer on a house at a lower number.”
Strong said buyers and sellers need to adapt to the shifting market, especially during fall’s traditional home sales slowdown.
“It’s just a changing market,” Strong said. “2008, that was a crash landing. But I feel it’s going to be a softer landing. It’s going to be over a period of time as people get adjusted to the new rates and the new purchase price.”
In 2020, when the pandemic put our travels to a halt, my family bought a four-bedroom, 3,600-square-foot home in Golden Oak at Walt Disney World Resort near Orlando, Florida.
My parents had been wanting to buy a vacation home for some time. I have a now five-year-old daughter, and my brother was about to become a father, so we were looking for a place to spend quality time together.
My husband and I live about three and a halfhours away in Miami, but Golden Oak is our home away from home. Since we both work remotely, we’re able to visit at least twice a month with our daughter.
As a travel and parenting blogger, I get a lot of questions from my followers about what it’s like to have a home in Disney’s highly coveted residential community.
Disney’s Golden Oak is a gated property of luxury, single-family homes, just four miles from Disney’s Magic Kingdom Park.
There are about 300 homes that range from 1,800 square feet to 12,000 square feet. One house sold for $12 million this year, and another is currently listed at $9.5 million.
Sectioned into eight neighborhoods, the homes were designed by Walt Disney Imagineering, the Walt Disney Company division that oversees the design and construction of its theme parks.
Residents have access to pools, a fitness center, restaurants and other Disney resorts. They also have membership to the exclusive Golden Oak Club, which offers “concierge-style services,” including private VIP park tours and special event tickets.
Golden Oak first started listing homes in 2010. But despite being a Disney regular, I’d never heard of it until my parents visited friends at their vacation home there in 2020.
Cristie lives in Miami with her husband and their daughter, but they travel to their Disney-themed vacation home near Orlando, Florida twice a month.
Photo: Cristie Anne Cabrera
During their visit, they got to tour one of the newer houses. They FaceTimed my brother and me to show us the home. We all fell in love with the place and put a contract in at full asking price.
Houses in Golden Oak sell quickly, but we got lucky with timing. The entire first floor came furnished, so we were all able to enjoy Thanksgiving weekend there together just days after closing that year.
We live in The Cottages at Symphony Grove neighborhood. Each house has its own whimsical look. Ours was inspired by Belle’s cottage in “Beauty and the Beast.”
Each house in The Cottages at Symphony Grove has its own unique theme.
Photo: Cristie Anne Cabrera
One thing that all the Golden Oak homes have in common are the tiny Disney-themed details. Our property, for example, has over 50 hidden Mickey Mouses. The kids love trying to find them every time they come over.
Our house is styled as a French cottage, particularly on the first floor.
The entrance to the home is styled with a carved door and an elegant chandelier.
Photo: Cristie Anne Cabrera
The kitchen and dining room are complete with wooden beams and other countryside accents.
Distressed wooden details, intricate tiles and a towering kitchen hood give the space a French-countryside feel.
Photo: Cristie Anne Cabrera
Upstairs, the house becomes more clearly Disney-themed. On the second floor, my bedroom has a quote from “Beauty and the Beast” above the bed.
My brother’s room has “Winnie the Pooh” characters hand-painted on the walls.
The bunkbed room (a.k.a. the “Bambi” room) is tiny but full of beautiful details like wood-paneled walls and a small nightlight for each bed.
The cozy bunk beds in this “Bambi”-themed room makes it a family favorite.
Photo: Cristie Anne Cabrera
My favorite feature in entire house is a spiral staircase on the second floor that leads to “Belle’s Reading Room” on the third floor, which is now the girls’ playroom.
It has reclaimed wood beams on the ceilings, hand-painted drawings on the walls, a built-in bookshelf, and the same railing as the staircase on the windows.
Finally, there’s a guest suite that connects to the home through the outdoor patio. That whole area feels like you’ve entered a princess suite, thanks to a few Disney touches like the “Alice in Wonderland” doorknob.
We also have a small pool and jacuzzi. It’s completely surrounded by the home, making the space more private. In the patio area, there’s a dining table for six, a sitting area with a couch and chairs, a fireplace and an outdoor kitchen.
We don’t visit the theme parks too often when we’re in Golden Oak. Most of the time, we just enjoy the neighborhood and spend time at home together.
We have golf carts that we can use to visit Golden Oak’s playground, parks and resident-only clubhouse.
The kids love watching the Magic Kingdom fireworks from the dock at Disney’s Fort Wilderness. We also take my daughter there to ride ponies. In the summer, we use their splash pad and pool that has an amazing slide.
For us, this truly is the happiest place on earth.
Cristie Anne Cabrera, a.k.a. The Traveling Red, is a Miami-based mom, social media influencer and travel blogger. Follow her on Instagram, TikTok, Pinterest and her blog for a look into her travels to Disney’s Golden Oak and road trips in her school bus conversion.
(BEP), Cameco agreed to buy Westinghouse Electric, a servicer to nuclear power plants, for $7.88 billion, including debt. Cameco will own 49% of the joint venture once the deal is completed.
Opinions expressed by Entrepreneur contributors are their own.
Despite a real estate market that is currently reeling from price declines and record-high interest, one fact remains clear: Americans are obsessed with houses. We need only scan the plethora of RE-focused media to observe that as a society, our homes are both our havens and one of our favorite forms of investment and achievement of wealth.
Coupled with our hunger for houses is a rapid thirst for competition-style television fueled by shows like Shark Tank, Billion Dollar Buyer, and The Profit.
A new show, Funding Faceoff,feeds both appetites by giving entrepreneurs who range from newbies to pros the chance to pitch their ideas to experienced investors. In its premier season, original shark Kevin Harrington joins the panel of experts who will react to the RE-themed deals.
The show is the brainchild of RE investment pro Lori Greymont in collaboration with master trainer and coach Adam Leffler. So, what can you learn from a pitch competition on RE investing? In a pre-show interview, Harrington shared his top deal-making hints viewers will be observing in person, both from the show and from his own best and worst experiences in his entrepreneurial past, as follows:
When it comes to deal-making, it’s not about you.
“Too many people are so caught up in the passion of their deal, they’re caught up in their own heads, thinking ‘Anybody is going to do this deal. This is the greatest deal ever,’” Harrington said. “Investors like me are hearing pitches all day in taping, then when we go to eat we’re getting pitched during dinner; I was even getting pitched in the taxi cab on my way to the airport.” Instead, he advises, think about the recipient, who is busy, who is hearing hundreds of pitches, and develop a strategy. Harrington’s favorite is to Tease, Please, and then Seize.
1. First you tease.
“Tease the deal upfront in a way that gets your viewer’s attention,” Harringon said. “So, Billy Mays, he’s selling Oxy Clean,” Harrington says. “In six seconds he eats a meatball sandwich and it drips all over his shirt. ‘Uh oh. Has that ever happened to you?’ So he has your attention.”
In the real estate business, Harrington suggests the tease should look like this: “Instead of showing me how you’re gonna buy something, magically transform it and sell it for an amazing profit, show me the before and afters of the projects you’ve done in the past. If you want attention and credibility, show me some things you’ve already done.”
2, Then you please.
“Show me the details of how you bought a place for $250,000, put $80,000 in, sold it for $800,000 and it looks like it’s worth $1 million,” Harrington said. “Here’s where you’ve got to please. For example, one of the guys who pitched us, he just offered us interest. Interest? I’m not like the bank. I don’t want interest; I want multiples of my investment. ‘I’ll pay you 5 percent interest?’ Just getting a loan would cost today is more than that. So you have to be prepared to make an irresistible offer.”
3. Now you seize.
This tip, in my opinion, is Harrington’s very best. For every audience, you do your homework, you relate it to the individual(s) you’re pitching, and you customize your pitch to succeed at the “seize.” So you Google and research the investors you’re pitching, you take a look at their personalities and their preferences and the prior deals they’ve done that they loved, and you use the information to determine who you should be pitching.
“Everybody should be able to find out who their ‘judges’ are. Look them up. The presenters can Google ‘Rotty’ (Ryan ‘Rotty’ Garcilazo), Google my name, find out what I’m interested in.” (Additional experts on the new show will also include Mike Hambright, Travis Johnson, Joe Marques (Cowboy Joe) and Jon Nolen.)
“So, for example, you wouldn’t pitch Kevin O’Leary on a restaurant deal that’s just requiring cash. He’d be interested in a royalty deal. But Barbara Corcoran, she loves restaurant deals.”
Harrington even shared a tidbit about one of his own prior mistakes. “I had a public company making some $200 million a year and Carl Icon, the big corporate raider, wanted to buy into the company,” he recalled. “And I turned it down because it was too aggressive. He wanted too much, for not enough. So a year later I went back to him with another deal and he said, ‘Kevin, what are you wasting my time for, dude?’ ‘What do you mean?’ I said. ‘I thought you liked deals. We were talking about deals you liked just a year ago,’ to which he replied, ”You’ve got a startup here. I’m not gonna invest in that. Your other company had $200 million in cash flow’. I hadn’t done my due diligence and I had wasted my time. So do the homework.’”
Here are some bonus words of advice for succeeding in the real estate market:
Focus is vital
“Observe everything from the vantage point of learner and student as well as provider and pro,” Harrington says. “Small tweaks in the modeling of a deal and during the deal-making process can lead to significantly better results.”
Partners are paramount
“Find the ways to optimize both cash in hand and future profit-sharing opportunity, which can produce exponentially bigger returns in the long term,” Harrington says. “For example, find the opportunities to pair well-known personalities and influencers with significant platforms with worthy products and ideas in their early stages. This gives the chance to massively accelerate audience acceptance and growth and to generate additional profitability on the upside.”
Accept both success and failure
Funding Faceoff creator and host Lori Greymont noted: “I’ve experienced both wild success and devastating failures and learned powerful lessons from both. One of my biggest takeaways is that collaboration beats competition every time. I was able to bounce back from failures much faster because of the support and guidance from having the right people around me.”
Season One begins Oct 13, 2022, on Bargain House Network with additional distribution on Amazon Fire TV, Apple TV, Roku, and Samsung TV Plus, with talks underway for additional distribution and seasons.
Rent growth is beginning to cool. But it’s descending from a heck of a peak.
Rental prices climbed 7.2% between September 2021 to September of this year, the largest annual increase since 1982, according to consumer price data released Thursday. Overall, shelter costs were also among the most significant drivers in rising consumer prices, along with the cost of food and medical care, the Labor Department said.
Still, it’s not all bad news for tenants. A new report from Realtor.com out Thursday found that nationwide, median rental prices in 50 large metros grew at their slowest annual pace in 16 months in September — at 7.8%. That marked the second consecutive month of single-digit year-over-year growth for 0-2 bedroom properties, and it meant that median asking rents fell by $12 in a month, Realtor.com said.
Housing inflation in the Consumer Price Index lags trends in the rental market, though, meaning the slowdown in rent growth might not register in the data for a while.
While median rental prices are still nearly 23% higher than they were two years ago, they’re no longer climbing at breakneck speeds with no end in sight. These days, economists say, that counts as a silver lining.
“After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cool-down,” Realtor.com Chief Economist Danielle Hale said in a statement. “But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago.”
“This return of more seasonal norms indicates that rental markets are charting a path back toward a more typical balance between supply and demand, compared to the previous year,” Hale added. “We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets.”
(Realtor.com is operated by News Corp NWSA, +1.64%
subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
A Redfin RDFN, -3.55%
report out Thursday, meanwhile, said rents grew 9% year-over-year in September — the slowest pace since August 2021. Rents were still way up year-over-year in cities like Oklahoma City (24.1%), Pittsburgh (20%), and Indianapolis (17.9%.)
It’s a double whammy for would-be homebuyers. Not only are interest rates soaring, it’s getting harder to qualify for a loan.
The average rate on the popular 30-year fixed mortgage climbed over 7% at the end of last week, according to Mortgage News Daily, and is expected to hit around 7.125% on Tuesday. It’s been over 7% for several days.
Meanwhile, mortgage credit availability is now at the lowest level since March 2013, which was when housing was in a slow recovery from the financial crisis at the end of the prior decade. It fell for the seventh consecutive month in September, down 5.4% from August, according to a monthly index from the Mortgage Bankers Association.
While lenders may be desperate for business, as mortgage demand drops due to higher rates, they are also more concerned about a weaker economy, which could lead to higher delinquencies. Executives and economists have warned that the U.S. could fall into a recession in the coming months as the Federal Reserve hikes rates to battle high inflation.
“There was a smaller appetite for lower credit score and high [loan-to-value] loan programs,” Joel Kan, a Mortgage Bankers Association economist, said in a release.
Mortgage delinquencies, at the moment, sit near record lows. While new foreclosure actions rose 15% from July to August, they were still 44% below pre-pandemic levels, according to Black Knight, a mortgage software and analytics company.
Credit availability fell the most for jumbo loans, which more borrowers today have to use due to higher home prices, according to the Mortgage Bankers Association. Higher prices also have more borrowers turning to adjustable-rate mortgages, because they offer lower interest rates. These loan rates can be fixed for up to 10 years, but they are considered riskier mortgages.
Borrowers are clearly concerned that mortgage rates will move even higher. While mortgage rates don’t follow the federal funds rate exactly, they are influenced heavily by the Fed’s policy.
“The Fed is determined to hike rates as high as it can and keep them there as long as it can, even if that means the economy suffers,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote on its website.
Graham noted the Fed is not considering mortgage rates or the housing market because home prices are overheated and a correction is “good and necessary.”
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
New York CNN Business
—
September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.
But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.
White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.
What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.
Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.
The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.
Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.
What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.
Friday’s numbers indicate that we’re beginning to see that impact in the employment data.
What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.
Coming up:Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup
(C), Morgan Stanley
(MS) and BlackRock
(BLK) reporting. Investors will be watching closely for any guidance on hiring and layoff plans.
Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.
A panel of top US economists just released its economic outlook for the next year, and it’s not great.
The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.
Most of the worries come down to the Federal Reserve’s interest rate policy.
“More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”
NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.
The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”
Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.
Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.
Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.
Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.
Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.
Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?”
In May 2020, 35.4% answered yes.
Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.
The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.
Coming later this week:
▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase
(JPM), Wells Fargo
(WFC), Citigroup
(C), Morgan Stanley
(MS), PNC
(PNC) and US Bancorp
(USB) and consumer staples like Pepsi
(PEP), Walgreen
(WBA)s and Domino’s
(DMPZF).
▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released.
After rising for six weeks in a row, mortgage rates retreated last week.
The 30-year fixed-rate mortgage averaged 6.66% in the week ending October 5, down from 6.70% the week before, according to Freddie Mac.
Mortgage rates have more than doubled since the start of this year as the Federal Reserve continues its unprecedented campaign of hiking interest rates in order to tame soaring inflation. But uncertainty about the possibility of a recession and the impact of rate hikes on the economy have made mortgage rates more volatile.
“Mortgage rates decreased slightly this week due to ongoing economic uncertainty,” said Sam Khater, Freddie Mac’s chief economist. “However, rates remain quite high compared to just one year ago, meaning housing continues to be more expensive for potential homebuyers.”
The average mortgage rate is based on a survey of conventional home purchase loans for borrowers who put 20% down and have excellent credit, according to Freddie Mac. But many buyers who put down less money upfront or have less than perfect credit will pay more.
Investors and analysts have been scrutinizing each piece of economic data, searching for clues about the Fed’s next steps and the future of the US and global economies, said Danielle Hale, Realtor.com’s chief economist.
The Fed does not set the interest rates borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they often sell government bonds, which sends yields higher and mortgage rates rise.
Over the past month, yields on 10-year Treasuries soared from 3.25% to nearly 4% before falling back around 3.75% this week.
Hale likened investors’ actions to a driver navigating a road in dense fog, prone to over-correcting at each turn.
“Signs that we are closer to the end of the tightening cycle – such as a surprisingly steep decline in job openings – tend to cause rates to slip, while rates bounce higher on signals like robust activity in the services sector,” Hale said.
Even though rates dipped slightly this week, the average interest rate for a 30-year, fixed-rate loan is still more than double what it was at this time last year.
A year ago, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 2.99% had a monthly mortgage payment of $1,314, according to calculations from Freddie Mac.
Today, a homeowner buying the same-priced house with an average rate of 6.66% would pay $2,005 a month in principal and interest. That’s $691 more each month.
As rates have been rising over the last several weeks, fewer people have been applying for mortgages said Bob Broeksmit, president and CEO of the Mortgage Bankers Association.
Ongoing economic uncertainty together with Hurricane Ian’s devastation in Florida resulted in a 14% decline in mortgage applications last week from the week before, he said.
MBA also found that an increasing number of borrowers are applying for adjustable rate mortgages, or ARMs. Applications for ARMs climbed to nearly 12% of all applications last week.
The average rate for the ARM tracked by Freddie Mac (a 5-year Treasury-indexed hybrid ARM) was 5.36%, more than a percentage point lower than the 30-year fixed rate.
“While rate increases are needed to tame inflation and alleviate the burden it places on household budgets, higher borrowing costs have caused consumers to think twice about major purchases like homes and cars,” said Hale.
With more prospective buyers sitting on the sidelines, those still looking to buy have a little more breathing room.
Correction: “Today’s home shoppers have more choices, but for many, the increased cost of financing and higher home prices mean fewer affordable options,” Hale said. “As challenging as it may be to set and stick to a budget in this environment of rising prices and rates, it’s more important than ever to do so.” A previous version of this story misstated the number of weeks mortgage rates have been rising. Rates rose for six consecutive weeks before falling this week.
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
New York CNN Business
—
The global bond market is having a historically awful year.
The yield on the 10-year US Treasury bond, a proxy for borrowing costs, briefly moved above 4% on Wednesday for the first time in 12 years. That’s a bad omen for Wall Street and Main Street.
What’s happening: This hasn’t been a pretty year for US stocks. All three major indexes are in a bear market, down more than 20% from recent highs, and analysts predict more pain ahead. When things are this bad, investors seek safety in Treasury bonds, which have low returns but are also considered low-risk (As loans to the US government, Treasury notes are seen as a safe bet since there is little risk they won’t be paid back).
But in 2022’s topsy-turvy economy, even that safe haven has become somewhat treacherous.
Bond returns, or yields, rise as their prices fall. Under normal market conditions, a rising yield should mean that there’s less demand for bonds because investors would rather put their money into higher-risk (and higher-reward) stocks.
Instead markets are plummeting, and investors are flocking out of risky stocks, but yields are going up. What gives?
Blame the Fed. Persistent inflation has led the Federal Reserve to fight back by aggressively hiking interest rates, and as a result the yields on US Treasury bonds have soared.
So while we’d normally see a rising 10-year yield as a signal that US investors have a rosy economic outlook, that isn’t the case this time. Gloomy investors are predicting more interest rate hikes and a higher chance of recession.
What it means: Portfolios are aching. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. That puts it on track for its worst year since it was created in 1986. The iShares 20+ Year Treasury bond fund
(TLT) (TLT) is down nearly 30% for the year.
Stock investors are also nervously eyeing Treasuries. High yields make it more expensive for companies to borrow money, and that extra cost could lower earnings expectations. Companies with significant debt levels may not be able to afford higher financing costs at all.
Main Street doesn’t get a break, either. An elevated 10-year Treasury return means more expensive loans on cars, credit cards and even student debt. It also means higher mortgage rates: The spike has already helped push the average rate for a 30-year mortgage above 6% for the first time since 2008.
Going deeper: Still, investors are more nervous about the immediate future than the longer term. That’s spurred an inverted yield curve – when interest rates on short-term bonds move higher than those on long-term bonds. The inverted yield curve is a particularly ominous warning sign that has correctly predicted almost every recession over the past 60 years.
The curve first inverted in April, and then again this summer. The two-year treasury yield has soared in the last week, and now hovers above 4.3%, deepening that gap.
On Monday, a team at BNP Paribas predicted that the inverted gap between the two-year and 10-year Treasury yields could grow to its largest level since the early 1980s. Those years were marked by sticky inflation, interest rates near 20% and a very deep recession.
What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.
The Bank of England held an emergency intervention to maintain economic stability in the UK on Wednesday. The central bank said it would buy long-dated UK government bonds “on whatever scale is necessary” to prevent a market crash.
Investors around the globe have been dumping the British pound and UK bonds since the government on Friday unveiled a huge package of tax cuts, spending and increased borrowing aimed at getting the economy moving and protecting households and businesses from sky-high energy bills this winter, reports my colleague Mark Thompson.
Markets fear the plan will drive up already persistent inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. Mortgage markets have been in turmoil all week as lenders have struggled to price their loans. Hundreds of products have been withdrawn.
“This repricing [of UK assets] has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central bank said in its statement.
“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”
Many final salary, or defined-benefit, pension funds were particularly exposed to the dramatic sell-off in longer dated UK government bonds.
“They would have been wiped out,” said Kerrin Rosenberg, UK chief executive of Cardano Investment.
The central bank said it would buy long-dated UK government bonds until October 14.
Steep drops in bond prices may be signaling doom and gloom for the economy, but some analysts say short-term bonds are still looking more attractive than equities right now.
“Record low yields have kept fixed income in the shadow of equities for decades,” said analysts at BNY Mellon Wealth Management in a research note. “But the aggressive shift in Fed policy is beginning to change this.”
Central banks around the globe have responded to elevated inflation by hiking interest rates– and bond yields have increased alongside them. The two-year US Treasury bond is currently yielding nearly 4%. That’s still a relatively low return, but better than the S&P 500’s dividend yield of around 1.7%.
“For the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities…you now get paid for owning them,” wrote Barry Ritholtz of Ritholtz Wealth Management on Wednesday.
Consider the alternative: the S&P is down more than 20% year to date.
The US Bureau of Economic Analysis releases its third estimate for Q2 GDP and US weekly jobless claims.
When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.
But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.
Below is a list of 21 stocks drawn from the S&P Composite 1500 Index SP1500, +3.12%
that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500 SPX, +3.06%,
the S&P 400 Mid Cap Index MID, +3.18%
and the S&P Small Cap 600 Index SML, +3.80%.
The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.
Cash flow is key
One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.
If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.
For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:
Dividend yield of at least 5.00%.
Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.
Estimated 2023 free cash flow yield of at least double the current dividend yield.
For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.
For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.
Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:
Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:
For the REITs, (Uniti Group Inc. UNIT, +7.36%
and Macerich Co. MAC, +8.18%
), consensus AFFO estimates were used.
Consensus EPS estimates were used for Prudential Financial Inc. PRU, +5.66%,
Invesco Ltd. IVZ, +6.76%
and Franklin Resources Inc. BEN, +4.37%.
Stocks declined again on Friday, closing out September with large losses across the board as the rally from the June lows partway through August faded into memory.
The S&P 500 SPX, -1.51%
fell 1.5% on Friday. The benchmark index slumped 9.3% for September, leading to a 2022 loss of 24.8%. The Dow Jones Industrial Average DJIA, -1.71%
gave up 1.7% on Friday, for a September decline of 8.8%. The Dow has now fallen 20.9% for 2022. The Nasdaq Composite Index COMP, -1.51%
pulled back 1.5% on Friday for a September drop of 10.5% and a year-to-date plunge of 32.4%. (All price changes in this article exclude dividends.)
Below is a list of stocks in the S&P 500 that fell the most during September.
Nike Inc. NKE, -12.81%
was down 13% on Friday for a September decline of 22%, after the company warned that discounting to clear inventory would continue to affect its earnings performance. Here’s how analysts reacted.
Most financial planners advise young people to start saving early — and often — for retirement so they can take advantage of the so-called eighth wonder of the world – the power of compound interest.
And many advisers routinely urge those entering the workforce to contribute to their 401(k), especially when their employer is matching some portion of the amount the worker is contributing. The matching contribution is – essentially – free money.
New research, however, indicates that many young people should not save for retirement.
The reason has to do with something called the life-cycle model, which suggests that rational individuals allocate resources over their lifetimes with the aim of avoiding sharp changes in their standard of living.
Put another way, individuals, according to the model which dates back to economists Franco Modigliani, a Nobel Prize winner, and Richard Brumberg in the early 1950s, seek to smooth what economists call their consumption, or what normal people call their spending.
According to the model, young workers with low income dissave; middle-aged workers save a lot; and retirees spend down their savings.
Source: Bogleheads.org
The just-published research examines the life-cycle model even further by looking at high- and low-income workers, as well as whether young workers should be automatically enrolled in 401(k) plans. What the researchers found is this:
1. High-income workers tend to experience wage growth over their careers. And that’s the primary reason why they should wait to save. “For these workers, maintaining as steady a standard of living as possible therefore requires spending all income while young and only starting to save for retirement during middle age,” wrote Jason Scott, the managing director of J.S. Retirement Consulting; John Shoven, an economics professor at Stanford University; Sita Slavov, a public policy professor at George Mason University; and John Watson, a lecturer in management at the Stanford Graduate School of Business.
2. Low-income workers, whose wage profiles tend to be flatter, receive high Social Security replacement rates, making optimal saving rates very low.
Middle-aged workers will need to save more later
In an interview, Scott discussed what some might view as a contrary-to-conventional wisdom approach to saving for retirement.
Why does one save for retirement? In essence, Scott said, it’s because you want to have the same standard of living when you’re not working as you did while you were working.
“The economic model would suggest ‘Hey, it’s not smart to live really high in the years when you’re working and really low when you’re retired,’” he said. “And so, you try to smooth that out. You want to save when you have relatively high income to support yourself when you have relatively low income. That’s really the core of the life-cycle model.”
But why would you spend all your income when you’re young and not save?
“In the life-cycle model, we are assuming you are getting the absolute most happiness you can out of income each year,” said Scott. “In other words, you are doing your best at age 25 with $25,000, and there is no way to live ‘cheaply’ and do better,” he said. “We also assume a given amount of money is more valuable to you when you are poor compared to when you are wealthy.” (Meaning $1,000 means a lot more at 25 than at 45.)
Scott also said that young workers might also consider securing a mortgage to buy a house rather than save for retirement. The reasons? You’re borrowing against future earnings to help that consumption, plus, you’re building equity that could be used to fund future consumption, he said.
Are young workers squandering the advantage of time?
Many institutions and advisers recommend just the opposite of what the life-cycle model suggests. They recommend that workers should have a certain amount of their salary salted away for retirement at certain ages in order to fund their desired standard of living in retirement. T. Rowe Price, for instance, suggests that a 30-year-old should have half their salary saved for retirement; a 40-year-old should have 1.5 times to 2 times their salary saved; a 50-year-old should have 3 times to 5.5 times their salary saved; and a 65-year-old should have 7 times to 13.5 times their salary saved.
Scott doesn’t disagree that workers should have savings benchmarks as a multiple of income. But he said a high-income worker who waits until middle age to save for retirement can easily reach the later-age benchmarks. “Savings for retirement probably is more in the zero range until 35 or so,” Scott said. “And then it is probably faster after that because you want to accumulate the same amount.”
Plus, he noted, the home equity a worker has could count toward the savings benchmark as well.
So, what about all the experts who say young people are best positioned to save because they have such a long timeline? Aren’t young workers just squandering that advantage?
Not necessarily, said Scott.
“First: saving earns interest, so you have more in the future,” he said. “However, in economics, we assume that people prefer money today compared to money in the future. Sometimes this is called a time discount. These effects offset each other, so it depends on the situation as to which is more significant. Given interest rates are so low, we generally think time discounts exceed interest rates.”
And second, Scott said, “early saving could have a benefit from the power of compounding, but the power of compounding is certainly irrelevant when after-inflation interest rates are 0% – as they have been for years.”
In essence, Scott said, the current environment makes a front-loaded lifetime spending profile optimal.
Low-income workers don’t need to save either
As for those with low income, say in the 25th percentile, Scott said it’s less about the “income ramp that really moves saving” and more that Social Security is extremely progressive; it replaces a large percentage of one’s preretirement income. “The natural need to save is not there when Social Security replaces 70, 80, 90% (of one’s preretirement income),” he said.
In essence, the more Social Security replaces of your preretirement income, the less you’ll need to save. The Social Security Administration and others are currently researching what percent of preretirement income Social Security replaces by income quintile, but previously published research from 2014 shows that Social Security represented nearly 84% of the lowest income quintile’s family income in retirement while it only represented about 16% of the highest income quintile’s family income in retirement.
Source: Social Security Administration
Is it worth auto-enrolling young workers in a 401(k) plan?
Scott and his co-authors also show that the “welfare costs” of automatically enrolling younger workers in defined-contribution plans—if they are passive savers who do not opt-out immediately—can be substantial, even with employer matching. “If saving is suboptimal, saving by default creates welfare costs; you’re doing the wrong thing for this population,” he said.
Welfare costs, according to Scott, are the costs of taking an action compared to the best possible action. “For example, suppose you wanted to go to restaurant A, but you were forced to go to restaurant B,” he said. “You would have suffered a welfare loss.”
In fact, Scott said young workers who are automatically enrolled into their 401(k) might consider when they’re in their early 30s taking the money out of their retirement plan, paying whatever penalty and taxes they might incur, and use the money to improve their standard of living.
“It’s optimal for them to take the money and use it to improve their spending,” said Scott. “It would be better if there weren’t penalties.”
Why is this so? “If I didn’t understand that I was being defaulted into a 401(k) plan, and I didn’t want to save, then I suffered a welfare loss,” said Scott. “We assume people figure out after five years that they were defaulted. At that point, they want their money out of the 401(k), and they are optimally willing to pay the 10% penalty to get their money out.”
Scott and his colleagues assessed welfare costs by figuring out how much they have to compensate young workers at that five-year point so that they are OK with having been inappropriately forced to save. Of course, the welfare costs would be lower if they didn’t have to pay the penalty to cash out their 401(k).
And what about workers who are automatically enrolled in a 401(k)? Are they not creating a savings habit?
Not necessarily. “The person who is confused and defaulted doesn’t really know it’s happening,” said Scott. “Maybe they’re getting a savings habit. They’re certainly living without the money.”
Scott also addressed the notion of giving up free money – the employer match — by not saving for retirement in an employer-sponsored retirement plan. For young workers, he said the match isn’t enough to overcome the cost of, say, five years of below-optimal spending. “If you think it’s for retirement, the match-improved benefit in retirement doesn’t overcome the cost of losing money when you’re poor,” said Scott. “I’m simply noting that if you are not consciously making the choice to save, it is hard to argue you are making a saving habit. You did figure out how to live on less, but in this case, you did not want to, nor do you intend to continue saving.”
The research raises questions and risks that must be addressed
There are plenty of questions the research raises. For instance, many experts say it’s a good idea to get in the habit of saving, to pay yourself first. Scott doesn’t disagree. For instance, a person might save to build an emergency fund or a down payment on a house.
As for the folks who might say you’re losing the power of compounding, Scott had this to say: “I think the power of compounding is challenged when real interest rates are 0%.” Of course, one could earn more than 0% real interest but that would mean taking on additional risk.
“The principle is about, ‘Should you save when you are relatively poor so you can have more when you are relatively rich?’ The life-cycle model says, ‘No way.’ This is independent of how you invest money between time periods,” Scott said. “For investing, our model does look at riskless interest rates. We argue that investment expected returns and risks are in equilibrium, so the core result is unlikely to change by introducing risky investments. However, it is definitely a limitation of our approach.”
Scott agreed there are risks to be acknowledged, as well. It’s possible, for instance, that Social Security, because of cuts to benefits, might not replace a low-income worker’s preretirement salary as much as it does now. And it’s possible that a worker might not experience high wage growth. What about people having to buy into the life-cycle model?
“You don’t have to buy into all of it,” said Scott. “You have to buy into this notion: You want to save when you’re relatively rich in order to spend when you’re relatively poor.”
So, isn’t this a big assumption to make about people’s career/pay trajectory?
“We consider relatively rich wage profiles and relatively poor wage profiles,” said Scott. “Both suggest young people should not save for retirement. I think the vast majority of median wage or higher workers experience a wage increase over their first 20 years of working. However, there is certainly risk in wages. I think you could rightly argue that young people might want to save some as a precaution against unexpected wage declines. However, this would not be saving for retirement.”
So, should you wait to save for retirement until you’re in your mid-30s? Well, if you subscribe to the life-cycle model, sure, why not? But if you subscribe to conventional wisdom, know that consumption might be lower in your younger years than it needs to be.
This week Freddie Mac said the average interest rate on a 30-year mortgage loan in the U.S. had climbed to 6.70% from 6.29% the week before and 6.02% two weeks ago. The average rate a year ago was 3.01%.
Would-be sellers who have low-rate mortgage loans are reluctant if it means they need to take out a new loan to fund their next home. Would-be buyers are forced out of the market, as the monthly principal and interest payment for a new 30-year loan, based on Freddie Mac’s figures, has increased 53% from a year ago.
Home-sale contracts are being canceled at a record pace in some areas.
The dollar has strengthened as the Federal Reserve has taken the lead among central banks in raising interest rates. This is reverberating across the world, making it more costly for countries to make interest payments on dollar-denominated debt and increasing the cost of any commodity traded in dollars.
The rising dollar lowers prices on imported goods for Americans and can also lower their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500 SPX, -1.51%
would decline as a direct result of the strong dollar and called the current foreign-exchange backdrop an “untenable situation” for the stock market.
This is what happens when bearish sentiment runs high
Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund BFGFX, -0.76%,
who describes opportunities cropping up as institutional investors dump stocks. He also explains his winning long-term strategy, which has included a very long-term investment in Tesla Inc. TSLA, -1.10%.
When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive.
Khuram Chaudhry, a European equity quantitative strategist at JPMorgan in London, makes the case for buying bonds now.
What about preferred stocks?
Getty Images/iStockphoto
Preferred stocks feature stated dividend yields and prices that move the same way bond prices do. That means prices for many issues are now heavily discounted to face value and that current yields are much higher than they were at the end of 2021. Here’s an in-depth guide on how to research preferred stocks and make your own selections.
Stanley Druckenmiller predicted a “hard landing” in 2023 for the U.S. economy while speaking at CNBC’s Delivering Alpha Investor Summit on Sept. 28.
Bloomberg
Stanley Druckenmiller predicted a U.S. recession in 2023 as a result of monetary policy tightening by the Federal Reserve. That may not be much of a stretch, considering that the U.S. economy contracted during the first half of 2022, according to revised GDP figures from the Bureau of Economic Analysis.
After the new U.K. government of Prime Minister Liz Truss announced a massive tax cut along with a new spending program to help counter rising fuel costs and new borrowing, the pound hit a new low against the dollar on Sept. 26 as investors and money managers panicked and sold-off U.K. government bonds. Steve Goldstein explains how and why the Bank of England came tot the rescue.
After Tesla CEO Elon Musk said the upcoming Cybertruck would be sufficiently waterproof to “serve briefly as a boat,” the San Francisco Bay Ferry offered this advice to patrons.
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The numbers: Mortgage rates continue to march towards 7%, continuing to pressure potential homeowners looking to buy a home.
The 30-year fixed-rate mortgage averaged 6.7% as of Sept. 29, according to data released by Freddie Mac FMCC, +0.75%
on Thursday.
Mortgage rates are up as the Federal Reserve pushed key interest rates up to deal with the worst inflation the country has seen in 40 years.
That’s up 41 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.
The rise in rates is bad news for prospective buyers, as it potentially adds hundreds of dollars to their mortgage payments.
Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.
“Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.”
Bloomberg’s chief economist Michael McDonough said a $2,500 monthly mortgage payment — with 20% down — would have gotten a buyer a $758,000 home last year.
This year? You’d get a lot less house — with $2,500 per month, you’d only be able to afford a $476,000 home, he wrote on Twitter TWTR, -1.12%.
The median price of an existing home in the U.S. was $389,500 in August, down from $403,800 the previous month, the National Association of Realtors said.
The average rate on the 15-year mortgage also rose over the past week to 5.96%. The adjustable-rate mortgage averaged 5.3%, up from the prior week.
“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” Sam Khater, chief economist at Freddie Mac, said in a statement.
Khater added that Freddie Mac’s survey of lenders revealed a large dispersion in rates, so home buyers should shop around with lenders to find a good quote.
Mortgage applications also fell in the latest week, as cautious buyers continue to pull back as rates march towards 7%.
The yield on the 10-year Treasury note TMUBMUSD10Y, 3.784%
rose slightly above 3.8% in morning trading on Thursday.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
Editor’s Note: Affected by the storm? Use CNN’s lite site for low bandwidth. You also can text or WhatsApp your Ian stories to CNN +1 332-261-0775.
CNN
—
Hurricane Ian is poised to make landfall in southwest Florida on Wednesday and is already bringing a catastrophic trifecta of high winds, heavy rain and historic storm surge to the state.
Ian is a Category 4 hurricane with sustained winds of 155 mph,and its center was located about 35 miles west-southwestof Fort Myers as of 1 p.m. ET, the National Hurricane Center said. The storm is moving at about 9 mph and is expected to make landfall, perhaps north of Fort Myers near the Port Charlotte and Punta Gorda areas, this afternoon, the center said.
Much of west-central Florida and places inland face disaster: “Historic” storm surge up to 18 feet is possible and could swallow coastal homes; rain could cause flooding across much of the state; and crushing winds could flatten homes and stop electricity service for days or weeks.
“This is a wind storm and a surge storm and a flood storm, all in one,” CNN meteorologist Chad Myers said. “And this is going to spread itself out across the entire state. Everybody is going to see something from this.”
Photos: Hurricane Ian barrels into Florida
NOAA/AP
A satellite image shows the eye of Hurricane Ian approaching the southwest coast of Florida on Wednesday, September 28.
Photos: Hurricane Ian barrels into Florida
Pedro Portal/El Nuevo Herald/TNS/Abaca/Reuters
Sailboats anchored in Roberts Bay are blown around in Venice, Florida, on Wednesday.
Photos: Hurricane Ian barrels into Florida
Crystal Vander Weit/TCPalm/USA Today Network
Melvin Phillips stands in the flooded basement of his mobile home in Stuart, Florida, on Wednesday.
water was receding from Tampa Bay due to a negative storm surge on Wednesday.” class=”gallery-image__dam-img” height=”1125″/>
Photos: Hurricane Ian barrels into Florida
Bryan R. Smith/AFP/Getty Images
A man walks where water was receding from Tampa Bay due to a negative storm surge on Wednesday.
Photos: Hurricane Ian barrels into Florida
Stephen M. Dowell/Orlando Sentinel/AP
Utility trucks are staged in a rural lot Wednesday in The Villages, a Florida retirement community.
Photos: Hurricane Ian barrels into Florida
Marco Bello/Reuters
Traffic lights are blown by strong gusts of wind in Fort Myers, Florida, on Wednesday.
Officials believe it was caused by a tornado fueled by Hurricane Ian.” class=”gallery-image__dam-img” height=”1265″/>
Photos: Hurricane Ian barrels into Florida
Greg Lovett/The Palm Beach Post/USA Today Network
Damage is seen at the Kings Point condos in Delray Beach, Florida, on Wednesday. Officials believe it was caused by a tornado fueled by Hurricane Ian.
Photos: Hurricane Ian barrels into Florida
Marco Bello/Reuters
A TV crew broadcasts from the beach in Fort Myers on Wednesday.
Photos: Hurricane Ian barrels into Florida
Shannon Stapleton/Reuters
Highways in Tampa, Florida, are empty Wednesday ahead of Hurricane Ian making landfall. Several coastal counties in western Florida were under mandatory evacuations.
Photos: Hurricane Ian barrels into Florida
Wilfredo Lee/AP
An airplane is overturned in Pembroke Pines, Florida, on Wednesday.
Photos: Hurricane Ian barrels into Florida
Joe Cavaretta/South Florida Sun-Sentinel via AP
Zuram Rodriguez surveys the damage around her home in Davie, Florida, early on Wednesday.
causing an islandwide blackout.” class=”gallery-image__dam-img” height=”1953″/>
Photos: Hurricane Ian barrels into Florida
Ramon Espinosa/AP
People play dominoes by flashlight during a blackout in Havana, Cuba, on Wednesday. Crews in Cuba have been working to restore power for millions after the storm battered the western region with high winds and dangerous storm surge, causing an islandwide blackout.
Photos: Hurricane Ian barrels into Florida
Chris O’Meara/AP
Workers board up windows on the University of Tampa campus on Tuesday, September 27.
Photos: Hurricane Ian barrels into Florida
Yamil Lage/AFP/Getty Images
People walk through a flooded street in Batabano, Cuba, on Tuesday.
Photos: Hurricane Ian barrels into Florida
Chris O’Meara/AP
Southwest Airlines passengers check in near a sign that shows canceled flights at the Tampa International Airport on Tuesday.
Photos: Hurricane Ian barrels into Florida
Ramon Espinosa/AP
Maria Llonch retrieves belongings from her home in Pinar del Rio, Cuba, on Tuesday.
Photos: Hurricane Ian barrels into Florida
Willie J. Allen Jr./Orlando Sentinel via AP
Traffic builds along Interstate 4 in Tampa on Tuesday.
Photos: Hurricane Ian barrels into Florida
Alexandre Meneghini/Reuters
A man carries his children through rain and debris in Pinar del Rio on Tuesday.
Photos: Hurricane Ian barrels into Florida
Alexandre Meneghini/Reuters
People drive through debris in Pinar del Rio on Tuesday.
Photos: Hurricane Ian barrels into Florida
Joe Raedle/Getty Images
Frederic and Mary Herodet board up their Gulf Bistro restaurant in St. Pete Beach, Florida, on Tuesday.
Photos: Hurricane Ian barrels into Florida
Yamil Lage/AFP/Getty Images
People stand outside a flooded warehouse in Batabano on Tuesday.
Photos: Hurricane Ian barrels into Florida
Jim Watson/AFP/Getty Images
NASA’s Artemis I rocket rolls back to the Vehicle Assembly Building at the Kennedy Space Center in Cape Canaveral, Florida, on Tuesday. The launch of the rocket was postponed due to the impending arrival of Hurricane Ian.
Photos: Hurricane Ian barrels into Florida
NASA via AP
Hurricane Ian is seen from the International Space Station on Monday, September 26.
Hurricane Ian reaches Cuba on Monday.” class=”gallery-image__dam-img” height=”1145″/>
Photos: Hurricane Ian barrels into Florida
Photos: Hurricane Ian barrels into Florida
Yamil Lage/AFP/Getty Images
A Cuban family transports personal belongings to a safe place in the Fanguito neighborhood of Havana on Monday.
Photos: Hurricane Ian barrels into Florida
Shannon Stapleton/Reuters
Local residents fill sandbags in Tampa on Monday to help protect their homes from flooding.
Photos: Hurricane Ian barrels into Florida
Adalberto Roque/AFP/Getty Images
A family carries a dog to a safe place in Batabano on Monday.
Photos: Hurricane Ian barrels into Florida
Phelan M. Ebenhack/AP
People wait in lines to fuel their vehicles at a Costco store in Orlando on Monday.
Photos: Hurricane Ian barrels into Florida
Mike Lang/USA Today Network
Ryan Copenhaver, manager of Siesta T’s in Sarasota, Florida, installs hurricane panels over the store’s windows on Monday.
Photos: Hurricane Ian barrels into Florida
Kevin Morales/AP
A woman takes photos while waves crash against a seawall in George Town, Grand Cayman, on Monday.
Photos: Hurricane Ian barrels into Florida
Yamil Lage/AFP/Getty Imagaes
A man helps pull small boats out of Cuba’s Havana Bay on Monday.
Photos: Hurricane Ian barrels into Florida
Gregg Newton/AFP via Getty Images
Shelves are empty in a supermarket’s water aisle in Kissimmee, Florida, on Monday.
Photos: Hurricane Ian barrels into Florida
Martha Asencio-Rhine/Tampa Bay Times via ZUMA Press Wire
Cathie Perkins, emergency management director in Pinellas County, Florida, references a map on Monday that indicates where storm surges would impact the county. During a news conference, she urged anyone living in those areas to evacuate.
Photos: Hurricane Ian barrels into Florida
NOAA/NASA
This satellite image, taken Monday at 1 p.m. ET, shows Hurricane Ian near Cuba.
Photos: Hurricane Ian barrels into Florida
Andrew West/USA Today Network
Sarah Peterson fills sandbags in Fort Myers Beach, Florida, on Saturday, September 24.
Photos: Hurricane Ian barrels into Florida
Andrew West/USA Today Network
Besnik Bushati fills gas containers at a gas station in Naples, Florida, on Saturday. The station had only premium gas that morning.
Fort Myers Beach was already feeling the brunt of the storm’s powerful eyewall just after noon Wednesday. Frank Loni, an architect from California staying in the community, posted video from a building’s balcony of some of the flooding on the streets below.
“The storm surge is very significant. We’re seeing cars and boats float down the street. We’re seeing trees nearly bent in half,” Loni said. “There’s quite a bit of chaos on the streets.”
Mandatory evacuations have been ordered for flood-prone areas on the coast, and the National Weather Service warned those who stayed behind to move to upper floors in case of rising water levels.
“This is a powerful storm that should be treated like you would treat” a tornado approaching your home, Gov. Ron DeSantis said around 8 a.m.
Images showed extensive flooding in coastal neighborhoods in Naples, where officials asked residents to shelter in place until further notice.
In some areas, such as Charlotte County, Florida, 911 response teams have stopped emergency service due to the high winds and dangerous conditions. Sarasota Mayor Eric Arroyo said on CNN’s “At This Hour” that police officers were being taken off the streets due to the wind speeds and hazardous conditions.
“It is too late to evacuate at this point,” Arroyo said.
About 480,000 Florida utility customers already were without power as of 2 p.m., according to PowerOutage.us.
Ian poses several major dangers:
• Storm surge: Some 12 to 18 feet of seawater pushed onto land is forecast Wednesday for the coastal Fort Myers area, from Englewood to Bonita Beach, forecasters said. Only slightly less is forecast for a stretch from Bonita Beach down tonear the Everglades (8 to 12 feet), and from near Bradenton to Englewood (6 to 10 feet), forecasters said.
Lower – but still life-threatening – surge is possible elsewhere, including north of Tampa and along Florida’s northeast coast near Jacksonville.
• Winds: Southwest Florida is facing “catastrophic wind damage.” Winds near the core of Hurricane Ian could exceed 150 mph, with gusts up to 190 mph, the hurricane center said. Multiple locations, including Sanibel Island, already have recorded wind gusts above 100 mph.
Ian is expected to retain hurricane strength for some time as it crosses the peninsula, with hurricane warnings issued for not only southwest Florida but also much of central Florida from coast to coast.
• Flooding rain: Because the storm is expected to slow down, 12 to 24 inches of rain could fall in central and northeastern Florida – including Tampa, Orlando and Jacksonville. That makes for a top-of-scale risk for flooding rainfall across this area.
Prior to nearing Florida, Hurricane Ian pummeled Cuba on Tuesday, leaving at least two dead and an islandwide blackout.
Since then, residents of Florida’s vulnerable Gulf Coast have been boarding up and leaving in droves on congested highways. More than 2.5 million people were advised to flee, including 1.75 million under mandatory evacuation orders – no small ask in a state with a large elderly population, some of whom have to be moved from long-term care centers.
Storm surge already was rising late Wednesday morning – more than 4.5 feet above normal highest tides was recorded before noon in Naples, already higher than the previous record there of 4.02 feet from Hurricane Irma in 2017.
After making landfall in southwest Florida, Ian’s center is expected to move over central Florida through Thursday morning. Heavy rain and flooding also is possible in southern Florida, Georgia and coastal South Carolina.
Ian is slowing as it approaches land, and that will cause the worst conditions to remain over some areas for eight or more hours.
“Widespread, life-threatening catastrophic flash, urban, and river flooding is expected” across central and southern Florida, the hurricane center said.
By late Thursday, Ian is due to emerge over the Atlantic Ocean, where it could strengthen again and affect another part of the US.
Parts of far southern Florida by early Wednesday morning had begun feeling the storm’s effects, with tropical storm-force winds and at least two possible tornadoes reported in Broward County, including at North Perry Airport, where planes and hangers were damaged. Major flooding was being reported in Key West due to storm surge, along with power outages.
Schools, supermarkets, theme parks, hospitals and airports had announced closures. The Navy moved its ships, and the Coast Guard has shut down ports. As winds pick up, gas stations may temporarily run out of fuel, DeSantis said.
In Tampa, police went door to door Tuesday in a mandatory evacuation zone, making sure residents were ready to flee. Earlier projections had Ian on track to slam Tampa Bay, and even as the hurricane’s path shifted south, mandatory evacuations and preparations continued, Tampa Mayor Jane Castor said.
Law enforcement officials around the state warned that people who stayed behind in evacuation areas cannot expect rescuers to respond to calls for help during the storm when winds are high.
“If you call for help, once we pull (officers) off the road … we’re not coming. … We’re not putting people in peril when (others) didn’t heed the mandatory evacuation order,” Pinellas County Sheriff Bob Gualtieri said Wednesday.
Not everyone moved. Chelsye Napier, of Fort Myers, stayed home with her fiance and cats despite being in an evacuation zone, she told CNN Wednesday. They waited “because we don’t know anyone down here,” and ultimately decided to stay put, she said.
Ian’s winds could be catastrophic
Category 4: 130-156 mph
• Most of the area is uninhabitable for weeks or months.
• Power outages last weeks to months.
• Fallen trees and power poles isolate residential areas.
+ Well-built framed homes sustain severe damage.
Category 5: 157+ mph
+ A high percentage of framed homes are destroyed.
“If anything happens, we have everything that we need here. We’ve got food, we got water. We have everything that we need here,” she said. “So it’s all OK for right now. We’ll see, though, later on.”
Preparations across Florida have been underway for days as residents braced for Ian’s wrath. People lined up to pick up sandbags and flocked to stores to stock up on supplies like water and batteries.
And as the hurricane marched closer, the closures began.
Across Florida, 58 school districts have announced closures due to storm as campuses turned into shelters for evacuees. Disney World is set to close Wednesday and Thursday, as is Kennedy Space Center’s Visitor Complex. And hundreds of Publix grocery stores shut their doors Tuesday evening, expected to remain closed through Thursday.
As millions were told evacuate, 176 shelters opened statewide and hotels and Airbnbs opened to people leaving evacuation zones, DeSantis said.
Local governments and state agencies also prepared those living in nursing homes and other senior care facilities to evacuate.
Florida has around 6 million residents over the age of 60, according to the state’s Department of Elder Affairs – nearly 30% of its total population. As of Tuesday, all adult day cares, senior community cafes and transportation services in evacuation zones are closed, according to the department.
Authorities also readied services to fan out and respond to calls for rescue and then, in the aftermath of the hurricane, for recovery and repair efforts.
Nearly 400 ambulances, buses and support vehicles were responding to areas where the hurricane was expected to make landfall, according to the governor’s office.
DeSantis activated 5,000 Florida National Guard members for Ian’s response operations, and 2,000 more guardsmen from Tennessee, Georgia and North Carolina were being activated to assist.
Florida urban search and rescue teams also were prepping.
“We have five state teams that are activated with additional five FEMA teams that are in play,” Florida Chief Financial Officer Jimmy Patronis said at a news conference Tuesday night. “We have over 600 resources to bear in addition to these out-of-town teams.”
water was receding from Tampa Bay due to a negative storm surge on Wednesday.” class=”gallery-image__dam-img” height=”1125″/>
Officials believe it was caused by a tornado fueled by Hurricane Ian.” class=”gallery-image__dam-img” height=”1265″/>
causing an islandwide blackout.” class=”gallery-image__dam-img” height=”1953″/>
Hurricane Ian reaches Cuba on Monday.” class=”gallery-image__dam-img” height=”1145″/>
