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Californians have 4th-highest housing expenses in US

October 14, 2023

”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: California’s lofty housing costs are topped by just three places in the nation when you ponder the expense per person.

Source: My trusty spreadsheet reviewed one yardstick of the burden of housing costs – the annual analysis of personal consumption expenditures from the Bureau of Economic Analysis. The study looks at per capita spending in 50 states and the District of Columbia.

Topline

Californians paid $11,262 per person for housing-related expenses and utility costs in 2022 – 23% above the typical American’s $9,161.

If that seems low, note that the typical California household has nearly three residents. Also, remember that many homeowners have no mortgage or a home loan with a low-low interest rate acquired during the heated days of the pandemic.

Consider the scale of California’s housing cost pain: It was topped by DC at $14,959, Colorado at $11,466 and Massachusetts at $11,315.

By the way, the lowest US spending on housing was $6,436 in Mississippi.

Or peek at housing costs this way: The cost of shelter gobbled up 19% of California’s per capita consumer spending (No. 8 share nationally) vs. 17% nationally. Hawaiians spent the most on housing, 20% of all spending. The low was 14% in North Dakota.

Details

Look at the big picture.

Californians spent $60,272 per person on all goods and services last year (No. 5 nationally). That’s 15% above US expenditures. High? $85,732 (District of Columbia). Low? $39,678 (Mississippi).

Then look at high-profile consumer expenses outside of shelter.

Health: $9,335 spent per Californian (No. 11 nationally) – 12% above the US. High? $12,239 in the District of Columbia. Low? $6,213 in Utah. Health is 15% of Golden State per-capita spending (No. 35 nationally) vs.16% nationally. High? 23% in West Virginia. Low? 13% in Utah.

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Food: $4,534 spent per Californian (No. 13 nationally) – 8% above the US. High? $7,217 in the District of Columbia. Low? $3,198 in Oklahoma. Food is 8% of Golden State per-capita spending (No. 42 nationally) vs. 8% nationally. High? 10% in Mississippi. Low? 7% in Minnesota.

Gasoline/energy: $1,442 spent per Californian (No. 37 nationally) – 6% below the US. High? $2,186 in Iowa. Low? $814 in Hawaii. Fuels equal 2% of Golden State per-capita spending (No. 42 nationally) vs. 3% nationally. High? 5% in Iowa. Low? 1% in Hawaii.

Bottom line

Think about overall spending for every man, woman and child.

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California consumers spent $2.35 trillion on goods and services last year (No. 1 nationally) – that’s 13% of the $17.5 trillion in expenditures nationwide.

But more importantly, Golden State spending was up $206 billion from 2021 (No. 1 gain) – and a 9.6% jump (12th largest percentage advance among the states). Americans’ total spending rose 9.2% in the year.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]

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Orange County Register

Orange County restaurants shut down by health inspectors (Oct. 5-12)

October 14, 2023

Restaurants and other food vendors ordered to close and allowed to reopen by Orange County health inspectors from Oct. 5 to Oct. 12.

AB Liquor Market, 7508 Katella Ave., Stanton

Closed: Oct. 11
Reason: Rodent infestation
Reopened: Oct. 12

Medmix, 12105 Brookhurst St., Suite F, Garden Grove

Closed: Oct. 10
Reason: Cockroach infestation
Reopened: Oct. 11

The Home Depot, 27401 La Paz Road, Laguna Niguel

Closed: Oct. 10
Reason: Rodent infestation
Reopened: Oct. 12

Keno’s Restaurant, 2661 W. La Palma Ave., Anaheim

Closed: Oct. 10
Reason: Cockroach infestation
Reopened: Oct. 12

Nekter Juice Bar, 474 E. 17th St., Suite 100, Costa Mesa

Closed: Oct. 6
Reason: Rodent infestation
Reopened: Oct. 6

Baja Fresh, 979 Avenida Pico, Unit A, San Clemente

Closed: Oct. 5
Reason: Rodent infestation
Reopened: Oct. 5

Updates since last week’s list:

Kobe Bistro at 9822 Bolsa Ave., Suite B, Westminster, which was ordered closed Oct. 4 because of a cockroach infestation, was allowed to reopen Oct. 10.

Local News |

Tanner’s restaurant at Pasea Hotel closing amid hotel overhaul

Local News |

Orange County restaurants shut down by health inspectors (Sept. 28-Oct. 5)

Local News |

Orange County restaurants shut down by health inspectors (Sept. 21-28)

Local News |

The Hobbit restaurant temporarily closing for renovations

Local News |

Gem Dining in Fountain Valley announces temporary closure

This list is published weekly with closures since the previous week’s list. Status updates are published in the following week’s list. Source: OC Health Care Agency database.

Orange County Register

The immigration system vs. legal workers

October 14, 2023

Something weirdly revealing happened in July, when Canada launched a small immigration program for holders of the coveted American H-1B visa, an employer-sponsored visa for working professionals, such as engineers, physicians, software developers. These workers are among “the best and the brightest” who come to America.

The H-1B is hard to get. Out of 700,000 applications for 2024, only 85,000 will be approved. Yet, when Canada offered 10,000 spots for H-1B holders to relocate there — expecting the spots to be claimed within 12 months — it took only 48 hours.

Why are so many highly skilled foreign workers who are already in the U.S. so eager to move to Canada, especially after beating the odds to get to America in the first place?

The reason may surprise you: It’s because the U.S. immigration system is designed to push hard-working visa holders out — people who came here legally and are following the rules. The immigration system doesn’t want the best and the brightest to stay in America.

Consider Rohan, an engineer who decides he can’t achieve his dreams in his home country. But in the U.S., he thinks, hard work and ambition are rewarded, so he decides to try to come to America. He secures a job offer from a U.S. employer, which agrees to apply for an H-1B visa.

The H-1B process is extremely involved: Rohan’s employer has to pay hefty fees and file a mountain of paperwork just so Rohan can be placed in a lottery, along with hundreds of thousands of other applicants. His chances are slim — remember there are only 85,000 visas available. If he’s selected and his application is approved, he’ll be allowed to come to America for three years and maybe renew for three more years. If he’s not selected, it’s tough luck — it won’t matter how talented Rohan is or how much his U.S. employer wants him, he will just have to try again next year.

But imagine he does make it. Rohan aspires to build a life here, to excel in his career, to raise a family, to fulfill the American dream. Not so fast, says the U.S. immigration system: the rules are designed to make it difficult for immigrants to do that.

Rohan is ambitious and constantly seeks new challenges. He may at some point outgrow the company that sponsored him and want to move on. But finding more challenging, better-paying work is often not an option for H-1B holders: The cumbersome, uncertain, and expensive process keeps the pool of H-1B employer-sponsors very small. Even if Rohan were lucky enough to find a new sponsor, he’d have to go through the application process all over again. This makes it hard for ambitious people to advance their career while on H-1B visas.

Faced with these limitations on his employment options, Rohan thinks of opening a small business to supplement his income and keep growing his career. But to do this without being in violation of his visa, his lawyer tells him, he would have to form a company, assign a board of directors, and then have them hire him, which involves more immigration paperwork. Rohan can’t afford to build this legal infrastructure.

Trying to build a career and a life with this uncertainty takes a toll. Rohan doesn’t know if he’ll be allowed to stay in the U.S. after his visa expires. If he loses his job, he may be forced to leave America. He would have to find a new sponsor (which is hard) within 60 days — with no guarantee of obtaining the visa again. Rohan struggles to plan anything long-term. He dreams of buying a house, but the uncertainty holds him back: what if he buys a home and then loses his visa? He wants to start a family with his wife who also holds a H-1B, but they’re deeply conflicted about taking such an important step with all the uncertainty — will they have their lives uprooted in six months? Nine months? Two years?

For Rohan, this nightmarish uncertainty will never end, even though he’s in the U.S. legally. No matter how hard he works in his current job, how much he pays in taxes, how much value he creates, his chance of obtaining a green card is basically zero. This is because Rohan is from India, and the backlog for employment-based green cards for Indians is upward of 100 years due to country caps. If Rohan were Chinese, it would take a couple of decades. If Rohan were British, it would take much less time: at least five years to meet eligibility, and then however long it takes for the immigration agency to process the green card, assuming his employer applies for one. Even in that best case scenario, putting life on hold for five years is an unreasonable ask.

H-1B holders encounter roadblocks at every turn. It’s hard to be ambitious when the system encourages stagnation. And economic downturns or sudden layoffs can mean the end of Rohan’s life in the U.S. With such perpetual uncertainty, it’s next to impossible for H-1B workers to plan and build a life in America.

Canada, on the other hand, offered 10,000 H-1B holders open work permits, basically without any of these restrictions. And they can apply for the equivalent of a green card in less than a year. It’s no wonder so many H-1B holders chose Canada over the U.S.

The rules for H-1B visas reveal the true intention of the U.S. immigration system: to push immigrants out, not to welcome them in. It is designed to make life as difficult as possible for people who come to America to work hard and build a better life.

When the goal of the so-called immigration system is to discourage immigration and push hardworking people out, this means that it’s not enough to make some tweaks to the law. The whole premise of the system is backwards. This system doesn’t need to be reformed — it needs to be rethought entirely.

Agustina Vergara Cid is an associate fellow at the Ayn Rand Institute. You can follow her on Twitter @agustinavcid

Orange County Register

How sky high mortgage rates rates slow commercial real estate

October 14, 2023

Welcome to our glorious SoCal fall!

As days shorten, leaves crunch underfoot, and temperatures cool – our commercial real estate market faces several headwinds.

Hamas’ blatant attack on Israel, the ouster of our House speaker, and the 10-year bond yields at 20-year highs headline the obstacles.

The first two – Israel being attacked and a certain game of pattycake in the House of Representatives each create uncertainty. As I’ve said here many times: In the face of uncertainty, long-term decisions are postponed or scrapped entirely until things level.

Headlines in my frame of reference target mortgage rates and highs not seen since the financial meltdown of last decade. Such high rates create gridlock in the housing market. As residential transactions ebb, we also feel it in the commercial sector.

How, you may be wondering? Allow me to expand on a few scenarios.

Turnover generates commerce

My mind is drawn to the pre-pandemic spate of deals in our small enclave of houses in East Orange.

On our street, my wife and I have owned our home the second-longest among neighbors. Kitty-corner to us are original owners since 1984. Their multi-generational setup remains today – only with a new generation.

But lately, several of our neighbors tapped out for assisted living or passed away, leading to four homes changing hands. Also, one rental converted into an ownership.

In every instance, a dramatic interior redo occurred followed by a freshening of the outside as well.

So let’s break this down. First, a transaction happened. In the process, real estate agents were deployed for the buyer and seller. Staging, signage, glossy brochures and touchup repairs preceded the sale. Maybe a lawyer or two got a look at the contract.

Then escrow officers, title representatives and lenders were engaged. Home inspectors, termite companies and moving vans were hired. Insurance for the new digs was a closing component.

And let’s not forget the bump in property taxes, which funds our governments. Once the deed records and title transfers, an army of contractors descends on the early 1980’s structure. Paint, flooring, kitchen upgrades, bathroom remodeling, wall removal, and additional square footage is added, all in earnest.

The old furniture surely can’t be set inside this pristine interior. So a trip to Living Spaces, Daniels, or Mathis Brothers follows.

Now an elderly couple – with limited consumption – is replaced by a family of four or five. Groceries, gasoline, dry cleaning, sports equipment, school clothes, orthodontics, urgent care, pets and pet supplies and Amazon home deliveries are all fueled by the new residents.

You see, commercial real estate activity is bolstered by the sale of houses!

Please take a moment to review the steps above. In every case, office, industrial and retail are enhanced. Residential real estate agents, escrow and title plants, lawyers, physicians, and insurance brokers all use office spaces, for the most part. Moving and storage, contractors and landscape companies ply their trades from industrial buildings.

Finally, buying stuff. Yes! Retail storefronts or online portals.

But absent such turnover in houses, these businesses are forced to downsize, close their doors or look elsewhere for new work.

Rate shock

The 10-year Treasuries eclipsed 4.8% last week for the first time since 2007!

It’s great news for savers but lousy for those looking to buy a house, refinance a mortgage, expand a business or purchase commercial real estate.

Two years ago today, that same yield was 1.61%. Yes, yields today are roughly three times where they were two years ago.

Now, backed by the full faith and credit of the United States government, passive investors can make a nice risk-free return on their money. Avoided are the gyrations of the stock market or the downside of real estate ownership – such as losing a tenant.

However, this astronomic rise in rates makes borrowing more expensive. Therefore, affordability in house purchases becomes less so.

If you’re among the unfortunate few who have maturing loan balances to refinance, brace yourselves. Finally, expanding a business becomes richer.

Here’s what I mean. Banks price loans based on their cost of funds and the strength of the collateral. As we just discussed, a saver can make 4.8% in Treasuries so banks must raise Certificate of Deposit rates to attract new money into their bank.

Expanding an enterprise into an uncertain economy could be viewed by some lenders as risky. Therefore, to hedge against default, the rates charged must compensate. And the circle continues.

For those hoping to secure ownership in a location to house their operation, many will encounter a debt service too expensive compared with a rental. More will find leasing to be more affordable.

This year, I’ve been quite bullish on our economy and the resilience of the consumer. When others predicted a slowdown, I took the contrarian position. Now, with student debt repayment ramping up after pandemic hibernation, home savings balances declining, the government money spigot ending, high interest rates ramping plus some new global unrest, I’m afraid a recession is inevitable. When, how deep and how long remain questionable.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at [email protected] or 714.564.7104.

Orange County Register