What to do about fireblight and its affect on quince, pear and apple trees

• October 14, 2023

Q I generally leave a lot of the garden/ yard work to my hubby; however, I’ve become concerned – as is he – about the health of our Asian Pear tree. The branches have become all black as have most all the leaves. The fruit is small and burnt-looking, and sucker plants are growing from the bottom/roots. My husband felt he might have overwatered it. I read what you wrote about the loss of black-looking branches just falling off trees and keeping suckers trimmed to ground level (too late). Is there anything we can do to save this tree, or should we cut it down and replace it, or let the suckers take over? Thank you for any advice you can give us.

It sounds like there are at least two issues here. The blackened branches, leaves, and fruit indicate that your Asian pear has been hit by fireblight. This is a bacterial disease that affects quince, Asian and European pears, and apples. 

The first sign of fireblight appears in branch tips, which dry out and turn black as if they had been burned (that’s why it’s called fireblight). If caught early, the affected branches can be removed to prevent or slow spread to the main trunk. When pruning away fireblight, sanitize your pruners or saw with isopropyl alcohol or Lysol so you don’t spread the infection. Sometimes bleach is recommended because it is a very effective disinfectant, but it can be corrosive. If you do use bleach, remember to clean and oil your tools afterwards. Do not compost the infected branches – they should be burned or go directly into the trash.

Fireblight is spread to susceptible trees by bees (disappointing, I know). During flowering, honeybees carry infectious pollen from one tree to another. Ornamental flowering pears are a major source of fireblight. They can be infected, but unfortunately not killed by the disease. If you look at an ornamental pear, you’ll often see blackened branch tips similar to what you’re seeing on your Asian pear. Because life is not fair, these worthless trees can live years with fireblight, but useful fruit-bearing trees can succumb in a year or two.

If your tree has extensive damage, or if the damage has spread to the main trunk, I recommend removing it and replacing it with a fireblight-resistant variety such as Shinko or Kikusui.

Regarding the suckers growing below the graft — they should always be removed. They are from the rootstock and will not produce quality fruit. They also take energy from the fruit-producing part of the tree. Of course, since you’re probably going to remove this tree, this is kind of a moot point. Just something to remember when you plant your next tree.

Los Angeles County

mglosangeleshelpline@ucdavis.edu; 626-586-1988; http://celosangeles.ucanr.edu/UC_Master_Gardener_Program/

Orange County

ucceocmghotline@ucanr.edu; 949-809-9760; http://mgorange.ucanr.edu/

Riverside County

anrmgriverside@ucanr.edu; 951-683-6491 ext. 231; https://ucanr.edu/sites/RiversideMG/

San Bernardino County

mgsanbern@ucanr.edu; 909-387-2182; http://mgsb.ucanr.edu

​ Orange County Register 

Swanson: Warren-Downey rivalry lights up SoFi Stadium for the first time

• October 14, 2023

INGLEWOOD — Who’s ready for some Friday Night Stadium Lights?

The City of Downey, that’s who.

Because 18,815 supporters – which would be about 17% of the city’s population – made the trek to SoFi Stadium in Inglewood on Friday night to see a new twist on one of Southern California’s juiciest rivalries: Downey and crosstown rival Warren became the first high school teams to play at the NFL stadium since it opened in 2020.

A grudge match with more than a half-century of history made more history Friday, and the Warren Bears made it six consecutive victories against the Vikings, with a 28-21 win in the Rams’ – and Chargers’ – House.

What was it like to play in an NFL stadium?

“Man, it felt great, a once-in-a-lifetime experience,” said Downey quarterback Oscar Rios, who couldn’t help but be energized, despite the loss – in which he completed 10 of 14 passes for 73 yards and rushed for a touchdown.

“Oh, it was amazing!” Warren senior running back Jacob Cano said after posing for photographs in the corner of the end zone after the game. “I’m honored to have had this experience.”

What was it like to coach?

“I felt like (Sean) McVay,” said Downey coach Jack Williams, referencing the Rams’ coach, who will be patrolling the same sideline on Sunday against the Arizona Cardinals.

Said Warren’s Kevin Pearson: “I’m a Rams fan – I shed a tear when they came back and I saw the blue and gold uniforms – so to be able to play here? I was a little bit overwhelmed when I first came out.”

And to watch?

“It’s crazy how a high school football game is being played at a professional football stadium,” said Warren senior Jeremy Ramirez, a senior on the track team. “It’s a fun experience – Oh! Ohhh!”

Ramirez lost his train of thought because Madden Iamaleava (23-of-28 passing for 195 yards and four touchdowns) connected with Darius Maddox for a 17-yard touchdown to tie the score at 7-7, and the Warren student section – aka “The Cave” away from home – went wild.

My view of this: https://t.co/RzaU1nejaK pic.twitter.com/vevTq9fh5d

— Mirjam Swanson (@MirjamSwanson) October 14, 2023

The setting stopped being novel between the lines: “We have a saying,” Pearson said, “‘It’s not who you play, it’s how you play.’ But here it was, ‘it’s not where you play, it’s how you play.”

Otherwise, it was definitely different, seeing all the trappings of a high school football contest transported inside of the expansive, state-of-the-art SoFi Stadium.

It was something of a glorious hassle. A chaotic honor. A sensory-overloading thrill.

Cheerleaders did their thing; fans chanted; both sides – Downey’s cardinal-wearing fans were on the east side of the stadium, Warren’s supporters in blue on the west – moaned when calls didn’t go their way.

It took a while for everyone to find a seat and settle down, and even longer in line for concessions, but all those fans – who paid $35 apiece for tickets, with the exception of students and fans, who paid $15 – filled the lower bowl to the brim and created a horseshoe of humanity on the second deck.

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There wasn’t a scoreboard for down and distance, nor were there any sideline reporters, because they all were relegated to a suite-turned-press box four stories up. There also wasn’t any alcohol, or the thumping jock jams that reverberate through the building during Rams and Chargers games.

But there was a ton of support, and it was plenty loud. There was even a first-quarter wave. It was the perfect matchup for a prep premiere at SoFi. Because the city of Downey takes this rivalry between the schools – located about a mile apart – seriously. Last year, approximately 10,000 fans showed up to watch quarterback Nico Iamaleava lead Warren to a 49-22 win at home over Downey, which learned from that loss and went on to win the CIF-SS Division 4 championship.

And there were all variety of partisan T-shirts on Friday by students and alumni, family members and friends and faculty. One popular blue shirt worn by Warren supporters listed all 34 of the Bears’ previous victories over Downey (6-2 this season), dating back to 1916’s 14-0 victory. And maybe the most popular shirt among Vikings fans put it succinctly: “Friends Don’t Let Friends Wear Blue.”

The game was the first of a Friday Night Lights series that will be hosted by the L.A. Bowl, the college bowl game that will feature the Mountain West Conference champion against the Pac-12’s No. 5 finisher on Dec. 16. With the win, Warren (6-2) receives an invite to be honored at that game.

On Friday, the honor was in playing, after which Bears tackle Rogelio Baca made his way toward the stands in the north end zone, finding his family and shouting up at them, on behalf of everyone who participated: “Thank you for coming.”

pic.twitter.com/7QZfl7DWBU

— Mirjam Swanson (@MirjamSwanson) October 14, 2023

​ Orange County Register 

RFK Jr. versus the genius Nobelists

• October 14, 2023

In recent weeks, Bobby Kennedy Jr. published a co-authored book, “Vax-Unvax: Let the Science Speak,” which does not let the science speak, but rather traffics in the same kind of conspiracy theories he often spins about Bill Gates and the supposed dangers of getting vaccinated against killer diseases such as COVID-19 — the miraculous vaccines against which are gorgeously effective — using discredited studies that if heeded would put millions of lives around the world in jeopardy.

Also in recent weeks, COVID vaccine pioneers Katalin Karikó and Drew Weissman won the Nobel Prize in physiology or medicine for their brilliant work in the lab that led to the development of anti-coronavirus vaccines swiftly administered to billions of people around the world, bringing an end to the worst part of the pandemic that we would still be in the throes of without their genius.

Let’s see, who should I celebrate here, the rich-kid whack job with the oddly circa-1963 skinny ties and permanent hoarse voice on the hustings, or the two selfless scientists whose dogged efforts saved the world’s collective bacon?

I think I’ll let the science speak.

Remember when COVID first began its killer path around the world, mowing down whole swaths of the population, from infants to mostly old folks, from Italian villages to nursing homes in the Bronx? When the concept of creating a vaccine against the disease was first broached, the common wisdom was that the problem at hand was that it would take years to develop and test them.

Whereas in fact, in a matter of months, both Moderna and Pfizer BioNTech vaccines were developed and made available, and they worked — not necessarily preventing getting COVID, which many of us did, but dramatically reducing the disease’s severity, so that when vaccinated people such as your columnist got it, we basically had the sniffles for a couple of days rather than dying in the ICU, our lungs filled up with liquid.

Reading the news stories about the new Nobelists many of us learned the real reason behind the dichotomy: Scientists such as Karikó and Weissman actually drew on decades of painstaking work they had quietly been doing to chemically tweak so-called messenger RNA in our bodies in order to create the supposedly “instant” versions of the two major vaccines.

The pair began to work together as far back as 1998, when they were fighting for access to a photocopy machine at the University of Pennsylvania. They discovered a shared interest in what was thought to be the eccentric notion that mRNA could be used to develop a vaccine against HIV and AIDS.

“The mRNA was delicate, so much so that when it was introduced to cells, the cells instantly destroyed it. Grant reviewers were not impressed,” The New York Times reported.

But Karikó, who long languished as an adjunct professor unable to get funding, and Weissman persevered. They overcame the initial problems. And in so doing they “fundamentally changed our understanding of how mRNA interacts with our immune system,” according to the Nobel panel, and “contributed to the unprecedented rate of vaccine development during one of the greatest threats to human health in modern times.”

Whereas RFK Jr.? His new book scoffs at the Nobelists’ work that eliminated so much misery because the COVID vaccines are indeed new and “experimental” and can contain aluminum and mercury like the childhood vaccines he has made his bones railing against. I’ll side with getting the sniffles rather than dying a horrible unvaxed death, Bobby.

Larry Wilson is on the Southern California News Group editorial board. lwilson@scng.com.

​ Orange County Register 

Some thoughts on the fire resistance of California native plants in your garden

• October 14, 2023

Nancee Wells, a field guide in the Dana Point/Laguna Beach area, sent me an email asking about the fire resistance of California native plants. Although California natives will eventually go up in flames in a major conflagration as all plants do, the fire resistance of many native species is significant. In the words of Bert Wilson, the legendary founder of Las Pilitas Nursery: “A watered apple tree leaf burns faster than an unwatered Ceanothus leaf.”

Wilson’s research showed that samples of detached leaves of many California natives that went an entire summer without water took longer to ignite than the leaves of non-natives that had been regularly watered. The reason for this is that many natives have leaves that are small and leathery, characteristics that impart fire resistance. In a flammability test conducted by Wilson in September of 2005, following a series of 90-degree days, the leaves of a large number of California native species that had not been watered all summer took more than a minute to ignite. Among these, Ceanothus species in general, and Ceanothus ‘Wheeler Canyon’ in particular, were singled out as particularly fire resistant with the suggestion that they could potentially serve as a “heat shield” in our landscapes.

Wells inquired about the fire resistance of certain widely planted California natives, with toyon being foremost among them. In the manner of many California natives, the aerial portions of the plant will catch fire without the whole plant burning to the ground. And regardless of how much it burns, it will probably not die in a fire, with fresh shoots growing up from the charred base of the plant soon enough. The name “toyon” was given to the plant either by the Ohlone, a native American tribe in central California or by Spanish explorers in the 1800s, since “tollon” is an old Spanish word for “canyon,” a habitat amenable to toyon’s growth. It’s also called Christmas berry or holly berry since its toothed foliage and winter fruit are vaguely similar to those of the classic holly used for holiday wreaths. There are those who say that Hollywood was, in fact, named after this plant which can be seen growing around the iconic Hollywood sign until today. 

In 2012, the title of the official native plant of the city of Los Angeles was bestowed upon it. Toyon grows in both sunny and somewhat shady locations, in almost any soil, and can go virtually without water after a couple of years in the garden. Its fruit attracts a variety of birds, as well as coyotes and bears, who consume it voraciously as well. In the first years of the last century, cutting toyon branches for Christmas decoration became so widespread that the state of California, in order to prevent the destruction of the species, passed a law in the 1920s outlawing this practice. The only toyon branches you were allowed to cut were those taken from plants growing on your own property; it’s a law that is still in force.

Wells was also curious about the fire resistance of lemonade berry (Rhus integrifolia). Yes, this plant also burns slowly, taking more than 60 seconds to ignite in Bert Wilson’s test, a time matched by the closely related sugar bush (Rhus ovata). Both plants grow into handsome informal hedges up to ten feet tall, with lemonade berry more appropriate for coastal locations, and sugar bush better suited to our inland climate. The fruit of both species, when pressed and soaked in hot water, makes a tart beverage.

Coyote brush (Baccharis spp.) was another plant whose fire resistance was queried by Wells. The Pigeon Point cultivar used in landscaping is fire retardant, also lasting more than a minute before igniting in Wilson’s test. There is no ground cover more drought tolerant than coyote brush, a group of plants that includes robust shrubs that are much more floriferous than the ground covers. Snow in Summer (Baccharis pilularis consanguinea), as its name implies, is covered with a blanket of white blooms in late June and early July.

Keep in mind that dead growth in any plant is an invitation to fire so make sure you prune your plants regularly if you live in a wildfire area. It is also true that, when all is said and done, the best defense against wildfire damage is a fire-resistant roof such as those clay tiles you say on Spanish-style homes. Your house may have nothing but gravel surrounding it but if an ember or firebrand blows onto your shingle roof, you may lose everything. 

In “Firescaping your Home” (Timber Press, 2023) by Adrienne Edwards and Rachel Schleiger, I learned that a neighborhood in Santa Rosa was burned to the ground due to a wildfire that raged five miles away. Firebrands or embers blown from that fire were carried in the wind, landing on the flammable roofs of closely spaced homes that had been considered to be in a fire-safe zone. This book contains a plethora of fire-resistant plant selections, many of them California natives, as well as long lists of plants you should avoid due to their flammability.

As always, do your own research, talk to experts and find out what are the best choices for your particular circumstances.

California native of the week: Bush sunflower (Encelia californica) was the final species whose fire resistance aroused the curiosity of Nancee Wells. Like daisy family members in general, it is noteworthy for attracting beneficial insects, the kind that devour or parasitize insect pests. It is useful for planting on slopes following a fire due to its fast rate of growth and tough roots that prevent erosion on denuded sloping terrain. It grows three to five feet tall with a similar girth and shows off two-inch yellow daisies in winter and spring. Although not long-lived it will self-sow and thus perpetuate its presence in the garden. It is not particular about soil but has allelopathic properties, meaning that it contains chemicals that deter other plants from growing in its vicinity.

To those of you who have encountered wildfires where you live, are there any plants, native or otherwise, that have proven to be fire-resistant? If so, please let me know about them by writing to joshua@perfectplants.com. You can also send questions or comments about gardening practices or problems and your photos — taken with horizontal orientation for possible publication here — are always welcome.

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​ Orange County Register 

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 jlansner@scng.com

Leaving California?

Which state ‘culture’ is your best alternative?
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Here are the healthiest states to consider
If you want ‘fun’ lifestyle, here are states to move to
States with the strongest job markets
What state is the best bargain?

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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.

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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 abuchanan@lee-associates.com or 714.564.7104.

​ Orange County Register