The California state government’s unique housing policy priorities, a Venezuelan crime gang’s Colorado presence and the debate over Fed rate cuts – from the wild and wooly world of real estate, here are our Hits and Misses for the week of Aug. 26-29.
Miss: California Priorities, Part 1. This week, California’s Department of Insurance approved Allstate’s request to jack up its home insurance rates by an average of 34.1% for its approximately 350,000 customers in the Golden State. This is the largest rate increase in California of any major insurer in the past three years and Allstate’s fourth homeowner’s insurance rate hike in the state in the past five years. Allstate has been trying to muscle the Department of Insurance regulators by refusing to issue new residential policies unless certain regulatory changes are made in its favor. California homeowners who rely on Allstate are certainly not in good hands with either the company or their state government.
Miss: California Priorities, Part 2. This week, the California State Senate voted 23-11 to approve a bill that enables illegal immigrants to access the California Dream for All Shared Appreciation Loans program, where homebuyers can apply for loans that are up to 20% of the home’s purchase price, with assistance provided up to $150,000 per person. The only interest paid on this loan is 15% or 20% of the home’s increase in value upon selling the property, depending on their income level. The program is run by the California Housing Finance Agency and receives state funding. It is unclear whether Gov. Gavin Newsom will sign or veto the bill – he has until the end of September – but the fact this bill made it through the legislature has renewed criticism that California’s state government is not serious about addressing the illegal immigration crisis. And that leads to our next topic…
Miss: The Gang’s All Here. Perhaps the most jaw-dropping story of the week involved reports that members of the Venezuelan Tren de Aragua criminal gang have taken control of several apartment buildings in the Denver suburb of Aurora, Colorado. A video posted online shows gun-carrying gang members roaming a building’s hallway. Both Aurora and Denver police have downplayed the presence of Tren de Aragua in their localities, claiming the gang’s influence in the city was “isolated” while insisting they’ve not taken over properties – which, of course, doesn’t explain why they’re stalking through hallways with guns. These gangsters are believed to have come into the country during the influx of migrants enabled by the Biden-Harris administration, and their Colorado presence is no surprise because Denver has absorbed the highest number of illegal immigrants per capita across the nation with more than 40,000 new arrivals since December 2022.
Miss: Not So Fast! Federal Reserve Bank of Atlanta President Raphael Bostic did his different drummer act this week by contradicting Fed Chairman Jerome Powell with the declaration that there is no rush to cut interest rates. Bostic is demanding more economic data before he would acquiesce to lowering the policy rate from its frozen position in the 5.25%-5.50% range. “I don’t want us to be in a situation where we cut, and then we have to raise rates again – that would be a very bad outcome,” he said. “If I’m going to err on one side, it’s going to be waiting longer just to make sure that we don’t have that up and down.” Meanwhile, the major Western economies have seen their central banks cut rates without creating financial havoc – what do they know that Bostic doesn’t? But on the other hand…
Hit and Miss: Warren on the Warpath. Sen. Elizabeth Warren (D-MA) took aim yet again at Fed Chairman Powell this week by publicly demanding that the next Fed rate cut be a 75-basis-point slash. “The time has come for policy to adjust,” she declared on social media. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” Of course, Powell has paid no attention to any of her recent demands for rate cuts, including her astonishing insistence that he make an emergency rate cut after July’s dismal jobs report. This week, however, Warren deserves a Hit for having the right message – Powell and the Fed have waited far too long to adjust rate policy, to the detriment of the US economy. But she also gets a Miss for being the wrong messenger to deliver that message – Warren’s endless haranguing of Powell calls to mind Elon Musk’s putdown of the obstreperous lawmaker as “Senator Karen.”
In Memoriam: I would like to take a moment to pay tribute to the artist Tao LaBossiere, who passed away on Wednesday of complications of a stroke at the age of 55. LaBossiere was active in and around Hartford, Connecticut, and he is best known for creating imaginative works of public art that enlivened the urban landscape – the photo at the top of the page shows LaBossiere at the creation of his “Bee the Change” mixed-media mural. Hartford Mayor Arunan Arulampalam recalled LaBossiere’s output by observing, “Tao knew how to bring out the beauty in our city, and his artistic impact will live on with us and can be seen all around us. From his many murals to the oak tree throne he just completed at Bushnell Park, his artistry will be remembered by the residents he inspired to see the world through a beautiful lens.” I am friends with several members of his family, and while I only met him on one occasion, I’ve long been impressed with his creative versatility. I would invite you to visit his website and appreciate his wonderful life and career.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Photo courtesy of The Art of Tao LaBossiere
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wow…. the Biden Harris America is a storyline from an Apocalypse movie . kind of hard to believe we have come to this point in American history. never in my wildest dreams could I ever imagine the current state of America. next time I hope we can do better.
“Both Aurora and Denver police have downplayed the presence of Tren de Aragua in their localities, claiming the gang’s influence in the city was “isolated” while insisting they’ve not taken over properties – which, of course, doesn’t explain why they’re stalking through hallways with guns.”
But you can be sure that if armed residents did something about the situation the police would intervene and the DA would prosecute them to the fullest (and most creative) extent of the law. And therein lies the real problem; government siding with the criminals.
There’s a solution for all this in Colorado stop voting Democrat you voted Democrat. You have to deal with this.
Reply to Carl…
HELL YES and the same goes for CA.
Random thoughts on down payment subsidy proposal. Sounds similar to current capital gains process.
1: Buyer receives $100K subsidy after qualifying. Sells property 10 years later for $100K profit. Under the program could likely need to pay $20K gains. Leaves program $80K short.
2: Would they also be liable for standard state & federal gains at that time, or is that forgiven if not used to 1031 tax deferral?
3: (not fact checked) There is noise about a proposal for income property owners that, should their property appreciate & they continue to hold ownership, they might be taxed (annually?) on unrealized capital gains. Dooesn’t seem to be equitable.