Categoria: Housing

Who Buys Electric Cars In California — And Who Doesn’t?

By Nadia Lopez and Erica Yee | CalMatters

In Atherton, one of the nation’s richest towns, giant oaks and well-manicured hedges surround gated mansions owned by some of Silicon Valley’s most prominent billionaires, basketball stars, tech executives and venture capitalists.

Each set on an acre of land, six-bedroom estates, brick-paved pathways, neoclassical statues and cascading fountains are on full display. But increasingly, another status symbol has been parked in these driveways: a shiny electric car — sometimes two.

This tiny San Mateo County community — with an average home value of almost $7.5 million and average household income exceeding half a million dollars — has California’s highest percentage of electric cars, according to a CalMatters analysis of data from the Energy Commission. About one out of every seven, or 14%, of Atherton’s 6,261 cars are electric.

CalMatters’ statewide analysis of ZIP codes reveals a strikingly homogenous portrait of who owns electric vehicles in California: Communities with mostly white and Asian, college-educated and high-income residents have the state’s highest concentrations of zero-emission cars. And most are concentrated in Silicon Valley cities and affluent coastal areas of Los Angeles and Orange counties.

This racial and economic divide may be unsurprising — but it illustrates the mammoth task that California faces as it tries to electrify its 25 million cars to battle climate change, clean up its severe air pollution and reduce reliance on fossil fuels. Under a state mandate enacted last year, 35% of cars sold in California, beginning with 2026 models, must be zero-emissions, ramping up to 68% in 2030 and 100% in 2035.

Electric vehicles parked at a home in Atherton on March 16, 2023. (Photo by Martin do Nascimento) But if people who buy electric cars are largely white or Asian, highly educated, wealthy, coastal suburbanites, will the state’s transformation succeed? Will new electric cars be attainable for all Californians — no matter their race, income and location — in the coming decade?

High upfront vehicle costs, lack of chargers for renters and inadequate access to public charging stations in low-income and rural communities hamper California’s ability to expand EV ownership beyond affluent parts of the Bay Area and Los Angeles area.

The cost of new electric cars is the most obvious factor driving the racial and income disparities in who buys them: The average as of February was $58,385 — about $9,600 more than the average car — although it dropped from about $65,000 last year. Lower-end fully electric cars start around $27,500.

Kevin Fingerman, an associate professor of energy and climate at California State Polytechnic University Humboldt, said the primary reason why more people in white, affluent, college-educated communities own electric cars is that they tend to be early adopters of new technology, with easier access.

“California is prioritizing the rapid electrification of the light-duty vehicle sector and it’s right in doing so. But it’s going to be important in the process to make sure that there is equitable access,” said Fingerman, who co-authored a study on racial and income disparities to electric vehicle charging.

To rapidly electrify the fleet, state officials must address the roadblocks causing the wide gaps in electric vehicle ownership: Expanding the state’s public and in-home charging networks, funding more rebates for low and middle-income residents and increasing the pool of used electric cars. The goal is to give consumers confidence in the reliability and affordability of the cars and reduce their anxiety about limited range and charging availability.

“As more electric vehicles are on the road, we’re going to need to be creative about policy solutions to address those issues to make sure that the benefits of owning an electric vehicle are shared across the demographics in the state of California and beyond,” Fingerman said.

A portrait of electric car hotspots About 838,000 electric cars were on California’s roads in 2021, and under the state mandate, it’s expected to surge to 12.5 million by 2035.

No statewide data exists to break down the race or other demographic characteristics of California’s car buyers. But CalMatters compared the ZIP codes of 2021 electric car registrations with Census information on the race, income and education of people in those ZIP codes. (Electric cars include battery-only models, plug-in hybrids and fuel-cell electric vehicles. ZIP codes with fewer than 1,000 residents were excluded from the analysis.)

California’s highest concentrations of electric cars — between 10.9% and 14.2% of all vehicles — are in ZIP codes where residents are at least 75% white and Asian. In addition to Atherton, that includes neighborhoods in Los Altos, Palo Alto, Berkeley, Santa Monica and Newport Coast, among others.

In stark contrast, California ZIP codes with the largest percentages of Latino and Black residents have extremely low proportions of electric cars.

In the 20 California ZIP codes where Latinos make up more than 95% of the population — including parts of Kings, Tulare, Fresno, Riverside and Imperial counties — between zero and 1% of cars are electric.

And 17 of the 20 communities with the highest percentage of Blacks have between zero and 2.6% electric cars. (Los Angeles’ relatively affluent Ladera Heights and two Oakland ZIPs have between 3.3% and 4.7%.)

Still, not all communities with a lot of electric car drivers are majority white. Four of the top 20 EV ZIP codes have more Asian residents than white. For instance, more than three-quarters of residents in Fremont’s 94539, which is ranked 14th with 11.4% of registered cars electric, are Asian.

Income seems to be a main driver of the disparities, according to CalMatters’ analysis. Most of the median household incomes in the top 10 exceed $200,000, much higher than the statewide $84,097. Typical home values in those communities exceed $3 million, according to Zillow estimates.

In contrast, electric cars are nearly non-existent in California’s lowest income communities: only 1.4% of cars in Stockton’s 95202, where the median household income is $16,976, and 0.5% in Fresno’s 93701, where the median is $25,905. Most are plug-in hybrids, which are less expensive.

Also, at least three-quarters of residents in the top 10 communities for electric vehicle ownership have a bachelor’s degree or higher.

Rural and remote parts of the state — even the entire Central Valley — also are left out of the top ZIP codes with electric cars. With limited charging access, rural residents who drive long distances fear they’ll get stranded if their car runs out of juice.

“It makes sense why we would see way more concentrations of EVs in densely urban areas or populated areas,” Fingerman said. “The barriers to people owning electric vehicles across the demographics in the state are real. But they’re solvable.”

Black and Latino residents — who make up almost half of California’s population — are less than half as likely as whites to have access to a public charger, according to the study Fingerman co-authored. Disparities in access are also higher in areas with more multi-unit housing, the study showed.

Yet interest in electric cars is high across all incomes and races, according to a 2019 survey conducted by Consumer Reports and the Union of Concerned Scientists.

About a third of survey respondents making $50,000 to $99,999 a year and under $50,000 a year expressed some interest in an electric car as their next purchase. People of color also expressed interest, with 42% saying they would consider an electric vehicle as their next car.

Affordability: ‘The average person can’t afford to buy’ an EV Christopher Bowe, 48, of Hayward in Alameda County, considers himself an early adopter of new technology. He purchased his electric Ford F150 Lightning new for $70,000 late last year.

Bowe lives in a ZIP code where only 2% of cars are electric, but he lives next to Fremont’s 94539, where it’s 11.4%, so he regularly sees a lot of drivers with electric models.

Bowe, who makes a little more than $100,000 a year working for FedEx, said his income and living situation made it easy for him to opt for an electric vehicle: He lives in a single-family house with residential solar, which allows him to charge at home and keep his electric bill low.

Bowe had always been interested in buying an electric vehicle, but finding a pickup truck that suited his needs was a challenge for years. The 2022 F-150 Lightning was one of the first electric trucks to hit the market, and it sold out quickly.

“I’ve always been a truck guy and everything previous was kind of small, underpowered,” he said. “I’m a 300-pound guy. I like being up above the traffic and being able to see out in front of me. It fits my body size better.”

Bowe worries that the state’s 2035 timeline for 100% new electric models could be moving too fast because of the lack of affordable options. He said automakers should be given incentives to offer more affordable options.

The California Air Resources Board did build some incentives into its mandate: Automakers qualify for credits toward meeting their zero-emission sales target through 2031 if they sell cars at a 25% discount through community-based programs, or if they offer passenger cars for less than $20,000 and light trucks for under $27,000.

Automakers say they are working to speed up production and develop more affordable models. Tesla in January slashed prices for all models by 20%, which made the cars eligible for a $7,500 federal tax credit. Base prices are now $55,000 and $90,000. Two weeks later, Ford cut the price of its most popular Mustang Mach-E by 6% to 9%, to a starting price of $46,000.

“We are producing more EVs to reduce customer wait times, offering competitive pricing and working to create an ownership experience that is second to none,” said Marin Gjaja, Ford’s chief customer officer. “We will continue to push the boundaries to make EVs more accessible for everybody.”

David Reichmuth, a senior engineer at the Union of Concerned Scientists who studies EV market trends, said the state’s mandate will help drive the market and lower prices, narrowing the gap between electric models and gas cars over the next 12 years.

“We know that new car buyers, both gasoline and EV buyers, are more affluent than the general population and more affluent than used car buyers,” Reichmuth said. Nearly half of all new cars nationwide are bought by households with incomes exceeding $100,000, according to his study based on 2017 data. “As the new rules kick in, we’re going to see a greater number of options go electric. That’s also going to make these vehicles more affordable.”

In the meantime, state and federal rebates and grants are critical to making the vehicles more affordable, said air board spokesperson Melanie Turner.

The air board last year approved $326 million in purchase incentives for low-income consumers, Turner said. Eligible residents can receive up to $15,000 for a new electric car and up to $19,500 for trading in a gas car — an increase of $3,000 from the state’s previous offerings. The programs accept applications from residents with incomes at or below 300% of the federal poverty level — equivalent to $43,740 for an individual or $90,000 for a family of four.

In recent years, however, the programs have experienced inconsistent and inadequate funding. Last year low-income consumers were turned away — funding had run out and waitlists were shut down because of backlogs.

Problems with the Clean Vehicle Assistance Program were resolved last year, Turner said. “We paid all the applications on the reservation list and we are getting ready to reopen the program with new criteria soon,” she said.

The state credits can be combined with new federal tax credits under the Inflation Reduction Act. Through 2032, eligible car buyers — with caps on income and price – can get up to $7,500 for a new electric vehicle and up to $4,000 for a used one.

“We are hoping this boost in incentives for clean car purchases will help to make a difference,” Turner said.

Electric cars require far less maintenance and have lower operating costs than their gas-powered counterparts, making them less expensive over time. Car drivers will save an estimated $3,200 over 10 years for a 2026 electric car compared to a gas-powered car, and $7,500 for a 2035 car, according to the air board’s estimates.

‘We need better options for renters’ Charging remains one of the biggest concerns for people who own or are interested in buying an electric vehicle. California has about 80,000 public chargers, with another estimated 17,000 on the way. But the state will need 1.2 million for the 7.5 million electric vehicles expected on the roads by 2030.

Many people residing in apartments or condominiums are reliant on public charging stations because they don’t have chargers in their buildings’ parking garages. A standard level 2 charger costs between $500 and $700, plus installing an electricity meter costs $2,000 to $8,000 or more, according to Pacific Gas & Electric.

Urvi Nagrani, 35, of Los Altos in Santa Clara County, charges her 2021 Chevy Bolt at public stations. She lives in an accessory dwelling unit with no home charger.

“People living in Silicon Valley have home chargers,” she said. “But we need to have better options for renters because it hasn’t gotten much better for me as a renter.”

ZIP code 94024, where Nagrani lives, ranks fifth statewide in percentage of electric vehicles. Of its 19,089 car registrations, 13.4% are electric. Nagrani said there are plenty of public charging stations available — but some are broken or occupied, with long wait times.

Even worse, she often takes long road trips and experiences many more challenges finding reliable chargers on the road. Navigating the apps showing the locations of charging stations can be confusing.

“There are trade-offs,” she added. “I got my EV with very clear eyes.”

Nagrani said she leased her Chevy Bolt for $196 per month when she had a $180,000-a-year job . She was recently laid off from her tech job, joining thousands of others in Silicon Valley who are suddenly unemployed.

Richard Landers, 75, a retiree in Santa Monica, earns more than $200,000 a year from his investments. He loves his Tesla 2015 Model S, which he bought new for about $90,000 that year.

“It’s a wonderful drive, I have had essentially no maintenance requirements in seven years and I feel good — not perfect, because it’s still a car — about my reduced environmental impact as a driver,” he said.

Landers, who lives in a mid-rise condominium, said he wouldn’t have switched to an electric vehicle if he couldn’t charge his car in his garage. Landers had Southern California Edison install an electric meter and hired an electrician to equip his parking space in the condo’s garage with a charger, which cost him about $2,500, he said.

Landers’ 90402 ZIP code ranks sixth on the list of California areas with the highest percentage of electric vehicles — 13.3% of its 8,178 cars. But even there, charging is a big problem for his neighbors in Santa Monica’s multi-family dwellings, he said.

“Having the ability to charge at home is very important to making electric vehicles attractive and practical for most people,” he said.

Landers worries that delayed progress in installing chargers in multifamily buildings could delay the transition to electric vehicles.

It’s a widespread problem that state leaders have been trying to address. By January 2025, a new law passed last year will require the state to adopt regulations requiring businesses to install charging stations in existing commercial buildings. Another 2022 law will require new and existing buildings, including hotels, motels and multi-family dwellings, to install charging stations.

The state is helping fund some of these chargers through grants, including a recent investment of $26 million for 13 projects in multi-family homes, said Hannon Rasool, director of the California Energy Commission’s fuels and transportation division.

The rural dilemma: ‘They don’t want to get stuck’ Kay Ogden, 62, an avid environmentalist and executive director of the Eastern Sierra Land Trust, has driven her Ford Mustang Mach-E SUV for a little more than a year. She loves her electric car, which she purchased new for about $60,000.

But Ogden, who lives in the Sierra Nevada foothills 18 miles northwest of Bishop, said her rural community’s lack of public chargers has been a big issue for her. There aren’t enough reliable, working chargers or fast chargers for non-Teslas In Inyo County.

San Mateo County has 4,398 public chargers serving its 747 square miles, while Inyo County has just 49 chargers across its massive 10,140-square miles — home to just 19,000 residents but visited by hundreds of thousands of hikers, skiers, anglers and other tourists. Sierra County, with 3,300 residents, has just one public level 2 charger.

Ogden often drives long distances — at least 80 miles per day — to work, buy groceries and obtain services such as medical care. The region’s cold temperatures also can substantially reduce an electric car’s range.

Ogden initially had range anxiety so she started looking for a hybrid, but changed her mind to avoid purchasing another vehicle with an internal combustion engine reliant on fossil fuels. She chose a model with a longer range, 275 miles, to help ease her anxiety.

“Going from gas, going fully electric seemed so scary,” she said. “But hybrids still have internal combustion engines. So I evolved. I decided, I’m just jumping in. I’m going for it. I’m going to go electric.”

Bob Burris, deputy chief economic development officer at the Rural County Representatives of California, which represents 40 counties, said rural residents have widespread interest in electric vehicles, but the lack of public chargers has deterred many.

“They might have charging in their homes, but it is still a challenge for them to go anywhere,” he said. “They don’t want to get stuck on the side of the road, or if they’re escaping from a wildfire or a natural disaster and you need to move without readily available public charging.”

None of the top ZIP codes with high concentrations of electric vehicles are in the middle of the state — including the vast Central Valley — or in eastern counties. Instead, they are congregated along the coasts in populous parts of the Bay Area and Los Angeles, according to CalMatters’ analysis.

The unpredictability of charging stations in Sierra Nevada towns has been deeply frustrating, Ogden said.

“I go to charge at a certain place and three out of five are broken, or they’ve been vandalized and maybe there’s snow or trash piled up by one and you can’t get to it,” Ogden said. “The companies need to be held accountable for having chargers that are listed on apps that don’t work.”

More than half of 3,500 drivers in a nationwide survey, conducted by the consumer advocacy group Plug In America, reported encountering problems with broken public chargers. Another survey by the air board found barriers to charging and broken chargers.

State officials do not track numbers of broken chargers, Rasool of the California Energy Commission, said. But state lawmakers last year passed legislation establishing a reporting mechanism for broken chargers at publicly funded stations. The state also plans to inspect state-funded chargers to assess how many need repair, he said.

The new law, however, “doesn’t give us the authority to require (reports) from a fully privately funded charging station,” he said. “We’re very committed, but we do think we need to ensure the whole network — whether we fund it or not — is reliable for drivers.”

The rural county organization is helping local governments access public money and streamline their permitting process for building new charging stations.

“If there’s a pretty robust charging system in rural areas, there’s going to be more people interested in buying EVs,” Burris said. “I don’t think we’re going to hit our goals as a state unless rural areas are included a bit more than they have been in recent years.”

Fed Raises Key Rate By Quarter-Point Despite Bank Turmoil

By Christopher Rugaber | The Associated Press

The Federal Reserve extended its year-long fight against high inflation Wednesday by raising its key interest rate by a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.

“The U.S. banking system is sound and resilient,” the Fed said in a statement after its latest policy meeting ended.

At the same time, the Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.”

The central bank also signaled that it’s likely nearing the end of its aggressive streak of rate hikes. In its statement, it removed language that had previously said it would keep raising rates at upcoming meetings. The statement now says “some additional policy firming may be appropriate” — a weaker commitment to future hikes.

And in a series of quarterly projections, the policymakers forecast that they expect to raise their key rate just once more — from its new level Wednesday of about 4.9% to 5.1%, the same peak level they had projected in December.

Still, in its latest statement, the Fed included some language that indicated its inflation fight remains far from complete. It noted that hiring is “running at a robust pace” and “inflation remains elevated.” It removed a phrase, “inflation has eased somewhat,” that it had included in its statement in February.

Speaking at a news conference Wednesday, Chair Jerome Powell said, “The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.”

The latest rate hike suggests that Powell is confident that the Fed can manage a dual challenge: Cool still-high inflation through higher loan rates while defusing turmoil in the banking sector through emergency lending programs and the Biden administration’s decision to cover uninsured deposits at the two failed banks.

The Fed’s signal that the end of its rate-hiking campaign is in sight may also soothe financial markets as they digest the consequences of the U.S. banking turmoil and the takeover last weekend of Credit Suisse by its larger rival UBS.

The central bank’s benchmark short-term rate has now reached its highest level in 16 years. The new level will likely lead to higher costs for many loans, from mortgages and auto purchases to credit cards and corporate borrowing. The succession of Fed rate hikes have also heightened the risk of a recession.

The Fed’s latest decision reflects an abrupt shift. Early this month, Powell had told a Senate panel that the Fed was considering raising its rate by a substantial half-point. At the time, hiring and consumer spending had strengthened more than expected. Inflation data had also been revised higher.

The troubles that suddenly erupted in the banking sector two weeks ago likely led to the Fed’s decision to raise its benchmark rate by a quarter-point rather than a half-point. Some economists have cautioned that even a modest quarter-point rise in the Fed’s key rate, on top of its previous hikes, could imperil weaker banks whose nervous customers may decide to withdraw significant deposits.

Silicon Valley Bank and Signature Bank were both brought down, indirectly, by higher rates, which pummeled the value of the Treasurys and other bonds they owned. As depositors withdrew money en masse, the banks had to sell the bonds at a loss to pay the depositors. They couldn’t raise enough cash to do so.

After the fall of the two banks, Credit Suisse was taken over by UBS. Another struggling bank, First Republic, has received large deposits from its rivals in a show of support, though its share price plunged Monday before stabilizing.

The Fed is deciding, in effect, to treat inflation and financial turmoil as distinct problems, to be managed simultaneously by separate tools: Higher rates to tame inflation and greater Fed lending to banks to calm financial turmoil.

The Fed, the Federal Deposit Insurance Corp. and Treasury Department agreed to insure all the deposits at Silicon Valley and Signature, including accounts that exceed the $250,000 limit. The Fed also created a new lending program to ensure that banks can access cash to repay depositors, if needed.

But economists warn that many mid-size and small banks, to conserve capital, will likely become more cautious in their lending. A tightening of bank credit could, in turn, reduce business spending on new software, equipment and buildings. It could make it harder for consumers to obtain auto or other loans.

Some economists worry that such a slowdown in lending could be enough to tip the economy into recession. Wall Street traders are betting that a weaker economy will force the Fed to start cutting rates this summer.

The Fed would likely welcome slower growth, which would help cool inflation. But few economists are sure what the effects would be of a pullback in bank lending.

Other major central banks are also seeking to tame high inflation without worsening the financial instability caused by the two U.S. bank collapses and the hasty sale of Credit Suisse to UBS. Even with the anxieties surrounding the global banking system, for instance, the Bank of England faces pressure to approve an 11th straight rate hike Thursday with annual inflation having reached 10.4%.

And the European Central Bank, saying Europe’s banking sector was resilient, last week raised its benchmark rate by a half point to combat inflation of 8.5%. At the same time, the ECB president, Christine Lagarde, has shifted to an open-ended stance regarding further rate increases

In the United States, most recent data still points to a solid economy and strong hiring. Employers added a robust 311,000 jobs in February. And while the unemployment rate rose, from 3.4% to a still-low 3.6%, that mostly reflected an influx of new job-seekers who were not immediately hired. In its latest quarterly projections, the Fed predicts that the unemployment rate will rise from its current 3.6% to 4.5% by year’s end.

Credit Card Debt Is At Record High As Fed Raises Rates Again

By Cora Lewis | The Associated Press

As the Federal Reserve raises interest rates again, credit card debt is already at a record high, and more people are carrying debt month to month.

The Fed’s interest rate increases are meant to fight inflation, but they’ve also led to higher annual percentage rates (APRs) for people with credit card debt, which means they pay more in interest. The Fed announced Wednesday that it would increase rates another quarter of a point.

With inflation still high, people are leaning on their credit cards more for everyday purchases.

“It’s the economy, inflation, gas prices, and food costs,” said Lance DeJesus, 46, kitchen manager at the Golden Corral in York, Pennsylvania. “A year ago, you could go to the grocery store with a hundred bucks and come out with a bunch of bags. Now, I come out with just one bag.”

DeJesus said he carries a credit card balance of roughly $2,600 from month to month over several cards, which have interest rates from 16.99% to 21.99%.

Early in the pandemic, when DeJesus lost his job, he said that unemployment payments, stimulus checks, and child tax credits (which went to his household via his wife, who has three children) all helped him stay afloat. Now, with COVID-era emergency relief and stimulus policies ending, he uses credit for emergencies.

He’s not alone: 46% of people are carrying debt from month to month, up from 39% a year ago, according to, an online financial information site.

Bankrate says the average credit card interest rate, or annual percentage rate, has reached 20.4% — the highest since their tracking began in the mid-1980s.

A new poll by The Associated Press-NORC Center for Public Affairs Research finds 35% of U.S. adults report that their household debt is higher than it was a year ago. Just 17% say it has decreased.

Roughly 4 in 10 adults in households making under $100,000 a year say their debt is up, compared with about a quarter in households making more than that. About half of Black and Hispanic adults say their household debt has increased, compared with about 3 in 10 white adults.

Data also shows more people are now falling behind on payments, according to Bankrate analyst Greg McBride. He sees this as evidence of a so-called “K-shaped recovery” from the pandemic, in which the distance between the haves and the have-nots grows larger.

“The more than half who pay in full each month are clearly doing a lot better than the almost half who don’t,” McBride said. “Those who tend to carry balances tend to be younger people, people making lower incomes, and those with lower credit scores. Another factor contributing to rising debt is inflation, which means the cost of day-to-day living is outpacing paychecks.”

Typically, on a national scale, it takes something pretty extraordinary for credit card balances to fall, economists agree. The Great Recession, beginning in 2008, and COVID, beginning in 2020, are two periods when they fell sharply.

During the early pandemic, credit card debt dipped 17%, Bankrate said — thanks in part to stimulus programs, emergency relief, and a decrease in consumer spending.

But in the last three months of 2022, credit card balances in the U.S. increased $61 billion to $986 billion, surpassing the pre-pandemic high of $927 billion, according to the Federal Reserve Bank of New York.

Using a credit card can provide protections for people who can pay off the balance every month. But the cost for those who can’t is high.

“What’s not good is carrying balances, paying interest, and falling behind,” McBride said. “No one wants to be paying 20% every month.”

For Gary Deuvall, 68, of Walls, Mississippi, who worked servicing and repairing motorcycles, stimulus checks brought some financial relief even though the pandemic hurt his business.

Now retired and on Social Security, Deuvall and his wife still have some credit card debt, he said, “in the five figures,” but they’ve also transferred that balance to a zero percent interest card to help contend with high rates.

Zero percent interest offers are generally available only for a limited period, sometimes up to 21 months, and banks sometimes charge a flat fee, such as 3% of the balance transferred.

“We’d hoped to build or buy a house,” Deuvall said. “But interest rates are so high, that’s on pause. Meanwhile, I’ll just rent.”

Dan Stokes, 31, a special education teacher based in Richmond, Virginia, said that a pause on student loan payments that began during the pandemic has helped him make ends meet, but he still carries about $8,000 in credit card debt from month to month across at least three cards.

Of that, Stokes said he’s moved about $1,200 to a zero percent interest card for the next twelve months.

“Honestly, it feels really good that I don’t have to make those student debt payments at the moment,” he said of the emergency policy, which has been extended until the summer. “My pay as a teacher hasn’t kept up with inflation, so there are times when I’m swiping my credit cards just to get by and make it through.”

Credit card rates are one of the fastest ways higher interest rates hit consumers.

“Most car loans and mortgages are fixed-rate. So if you’re new to the market, it has a big effect, but if you have an existing loan, it’s not affecting you,” McBride said. “With credit cards, the higher interest rate gets passed through pretty much right away.”


The poll of 1,081 adults was conducted Mar. 16-20 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 4.0 percentage points.

The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

Prescription For Housing? California Wants Medicaid To Cover 6 Months Of Rent

By Angela Hart | Kaiser Health News

Gov. Gavin Newsom, whose administration is struggling to contain a worsening homelessness crisis despite record spending, is trying something bold: tapping federal healthcare funding to cover rent for homeless people and those at risk of losing their housing.

States are barred from using federal Medicaid dollars to pay directly for rent, but California’s governor is asking the administration of President Joe Biden, a fellow Democrat, to authorize a new program called “transitional rent,” which would provide up to six months of rent or temporary housing for low-income enrollees who rely on the state’s health care safety net — a new initiative in his arsenal of programs to fight and prevent homelessness.

“I’ve been talking to the president. We cannot do this alone,” Newsom told California Healthline.

The governor is pushing California’s version of Medicaid, called Medi-Cal, to fund experimental housing subsidies for homeless people, betting that it’s cheaper for taxpayers to cover rent than to allow people to fall into crisis or costly institutional care in hospitals, nursing homes, and jails. Early in his tenure, Newsom proclaimed that “doctors should be able to write prescriptions for housing the same way they do for insulin or antibiotics.”

But it’s a risky endeavor in a high-cost state where median rent is nearly $3,000 a month, and even higher in coastal regions, where most of California’s homeless people reside. Experts expect the Biden administration to scrutinize the plan to use health care money to pay rent; and also question its potential effectiveness in light of the state’s housing crisis.

“Part of the question is whether this is really Medicaid’s job,” said Vikki Wachino, who served as national Medicaid director in the Obama administration. “But there is a recognition that social factors like inadequate housing are driving health outcomes, and I think the federal government is open to developing approaches to try and address that.”

Bruce Alexander, a spokesperson for the Centers for Medicare & Medicaid Services, declined to say whether the federal government would approve California’s request. Yet, Biden’s Medicaid officials have approved similar experimental programs in Oregon and Arizona, and California is modeling its program after them.

California is home to an estimated 30% of the homeless people in the U.S., despite representing just 12% of the country’s overall population. And Newsom has acknowledged that the numbers are likely far greater than official homeless tallies show. Top health officials say that, to contain soaring safety-net spending and help homeless people get healthy, Medi-Cal has no choice but to combine social services with housing.

Statewide, 5% of Medi-Cal patients account for a staggering 44% of the program’s spending, according to state data. And many of the costliest patients lack stable housing: Nearly half of patients experiencing homelessness visited the emergency room four times or more in 2019 and were more likely than other low-income adults to be admitted to the hospital, and a large majority of visits were covered by Medi-Cal, according to the Public Policy Institute of California.

“What we have today doesn’t work,” said Dr. Mark Ghaly, secretary of the California Health and Human Services Agency, explaining his argument that housing is a critical component of health care. “Why do we have to wait so long for people to be so sick?”

The federal government has already approved a massive social experiment in California, known as CalAIM, which is transforming Medi-Cal. Over five years, the initiative is expected to pour $12 billion into new Medi-Cal services delivered outside of traditional health care. In communities across the state, it is already funding services for some low-income patients, including paying rental security deposits for homeless people and those facing eviction; delivering prepared healthy meals for people with diabetes; and helping formerly incarcerated people find jobs.

The transitional rent program would add another service to those already available, though only a sliver of the 15.4 million Medi-Cal enrollees actually receive those new and expensive social services.

Rent payments could begin as soon as 2025 and cost roughly $117 million per year once fully implemented. And while state officials say anyone who is homeless or at risk of becoming homeless would be eligible, not everyone who qualifies will receive new services due to capacity limits. Among those who stand to benefit are nearly 11,000 people already enrolled in Medi-Cal housing services.

“The ongoing conversation is how do we convince the federal government that housing is a health care issue,” said Mari Cantwell, who served as Medi-Cal director from 2015 to 2020. “You have to convince them that you’re going to save money because you’re not going to have as many people showing up at the emergency room and in long-term hospitalizations.”

Healthcare experiments in California and around the country that funded housing support have demonstrated early success in reducing costs and making people healthier. But while some programs paid for housing security deposits or participants’ first month of rent, none directly covered rent for an extended period.

Stephen Morton has major health problems, including chronic heart disease, diabetes, and asthma. California wants to tap federal health care funding to cover rent for formerly homeless people. (Heidi de Marco/KHN) “Without that foundational support, we are playing in the margins,” Newsom said.

State health officials argue that paying for six months of rent will be even more successful at reducing health care costs and improving enrollees’ health, but experts say that, to work, the initiative must have strict accountability and be bundled with an array of social services.

In a precursor to the state’s current initiative, California experimented with a mix of housing assistance programs and social services through its “Whole Person Care” pilot program. Nadereh Pourat, of the UCLA Center for Health Policy Research, evaluated the program for the state concluding that local trials reduced emergency visits and hospitalizations, saving an average of $383 per Medi-Cal beneficiary per year — a meager amount compared with the program’s cost.

Over five years, the state spent $3.6 billion serving about 250,000 patients enrolled in local experiments, Pourat said.

And a randomized control trial in Santa Clara County that provided supportive housing for homeless people showed reductions in psychiatric emergency room visits and improvements in care. “Lives stabilized and we saw a huge uptick in substance use care and mental health care, the things that everybody wants people to use to get healthier,” said Dr. Margot Kushel, director of the University of California-San Francisco’s Center for Vulnerable Populations at Zuckerberg San Francisco General Hospital and Trauma Center, who worked on the study.

But insurers implementing the broader Medi-Cal initiative say they are skeptical that spending health care money on housing will save the system money. And health care experts say that, while six months of rent can be a bridge while people wait for permanent housing, there’s a bigger obstacle: California’s affordable housing shortage.

“We can design incredible Medicaid policies to alleviate homelessness and pay for all the necessary supportive services, but without the adequate housing, frankly, it’s not going to work,” Kushel said.

Newsom acknowledges that criticism. “The crisis of homelessness will never be solved without first solving the crisis of housing,” he said last week, arguing California should plow more money into housing for homeless people with severe mental health conditions or addiction disorders.

He will ask the legislature to put before voters a 2024 ballot initiative that would infuse California’s mental health system with at least 6,000 new treatment beds and supportive housing units for people struggling with mental health and addiction disorders, many of whom are homeless. The proposed bond measure would generate from $3 billion to $5 billion for psychiatric housing and treatment villages aimed at serving more than 10,000 additional people a year. The initiative also would ask voters to set aside at least $1 billion a year for supportive housing from an existing tax on California millionaires that funds local mental health programs.

“People who are struggling with these issues, especially those who are on the streets or in other vulnerable conditions, will have more resources to get the help they need,” Newsom said.

For transitional rent, six months of payments would be available for select high-need residents enrolled in Medi-Cal, particularly those who are homeless or at risk of becoming homeless — and those transitioning from more costly institutions such as mental health crisis centers, jails and prisons, and foster care. Medi-Cal patients at risk of inpatient hospitalization or who frequent the emergency room would also be eligible.

“It’s a pretty big challenge; I’m not going to lie,” said Jacey Cooper, the Medi-Cal director. “But we know that people experiencing homelessness cycle in and out of emergency rooms, so we have a real role to play in both preventing and ending homelessness.”

Public health experts say the problem will continue to explode without creative thinking about how to fund housing in health care, but they warn the state must be wary of potential abuses of the program.

“It has to be designed carefully because, unfortunately, there are always people looking to game the system,” said Dr. Tony Iton, a public health expert who is now a senior vice president at the California Endowment. “Decisions must be made by clinicians — not housing organizations just looking for another source of revenue.”

Stephen Morton has major health problems, including chronic heart disease, diabetes, and asthma. California wants to tap federal health care funding to cover rent for formerly homeless people. (Heidi de Marco/KHN) For Stephen Morton, who lives in the Orange County community of Laguna Woods, the journey from homelessness into permanent housing illustrates the amount of public spending it can take for the effort to pay off.

Morton, 60, bounced between shelters and his car for nearly two years and racked up extraordinary Medi-Cal costs due to prolonged hospitalizations and repeated emergency room trips to treat chronic heart disease, asthma, and diabetes.

Medi-Cal covered Morton’s open-heart surgery and hospital stays, which lasted weeks. He landed temporary housing through a state-sponsored program called Project Roomkey before getting permanent housing through a federal low-income housing voucher — an ongoing benefit that covers all but $50 of his rent.

Since getting his apartment, Morton said, he’s been able to stop taking one diabetes medication and lose weight. He attributes improvements in his blood sugar levels to his housing and the healthy, home-delivered meals he receives via Medi-Cal.

“It’s usually scrambled eggs for breakfast and the fish menu for dinner. I’m shocked it’s so good,” Morton said. “Now I have a microwave and I’m indoors. I’m so grateful and so much healthier.”

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

Evictions Rise, Tenants Scramble For Help As LA County Protections Expire

By Alejandra Reyes-Velarde | CalMatters

Irma Cervantes could barely afford the $750 monthly rent for the converted garage apartment she lives in with her children in East Los Angeles when she worked full-time at a laundromat.

When the pandemic shut down non-essential businesses, Cervantes was out of a job. Then she got sick with long COVID-19.

Now she owes 10 months rent, she said, and is trying to pay it down. Her three children, ages 19 to 23, are helping by working part-time jobs.

Her landlord has increased demands for payment and wants her out, Cervantes said. And on March 31, L.A. County’s tenant eviction protections are set to expire.

READ MORE: LA Mayor Bass’ first 100 days: As promised, homeless crisis front and center

“I’m left thinking, what will happen when there aren’t any protections,” Cervantes said. “What will I do with my kids? We can’t pay $1,600 rent.”

Across California nearly 600,000 people owe a total of $2.1 billion in back rent, researchers say. In Los Angeles city and county, nearly 200,000 people owe more than half a billion dollars in unpaid rent. 

RELATED: Raising rent 10% is too much, says lawmaker proposing California bill to prevent more homelessness

Many tenants, like Cervantes, are on edge because state protections and rental assistance across the state diminished, and now local protections like L.A. County’s are phasing out. Housing rights advocates and attorneys say eviction lawsuits already are rising in the state’s most populous county; they’re bracing for even greater spikes once county pandemic protections go.

“Because both state and local eviction protections enacted during the pandemic have come to an end, it’s an even bigger crisis,” said state Sen. María Elena Durazo, a Los Angeles Democrat, during a recent press conference.

Protections end California’s statewide tenant relief and protections ended in June 2022. The pandemic-era programs had shielded many tenants harmed by COVID-19 from eviction and offered financial assistance to help them pay back rent.

Since then some city and county local measures kicked in to keep tenants in homes. Los Angeles County protections from evictions stepped in for city residents on Jan. 31.

READ MORE: Tenants facing evictions should get free legal representation, LA councilmembers say

L.A. County’s tenant protections don’t prevent landlords from filing eviction lawsuits, which are called unlawful detainer suits. But the protections do give certain low-income tenants a defense in court if their rent was late between July 2022 and March 31 of this year due to the pandemic.

Beginning April 1, landlords will be able to evict tenants for a variety of reasons, but they’ll have to give tenants 30 days’ notice.

However housing justice groups may be making headway in their push to extend some tenant protections.

County supervisors Lindsey P. Horvath and Hilda Solis are expected to propose a motion today that would protect tenants from no-fault evictions until March 2024.  If it’s approved by a majority of the five supervisors, tenants who are paying rent could not be evicted, even if they had a pet or a person move in during the pandemic in violation of their lease.

Horvath said as a renter she recognizes that thousands would be at risk of losing housing after March 31 without this change, which is in keeping with L.A. Mayor Karen Bass’ efforts to reduce homelessness.

RELATED: New law in LA: Landlords must pay relocation costs if they raise rents too high

“If we are going to solve this crisis, we must stop the inflow of people falling into homelessness by keeping them in the housing they are already in,” Horvath said in a statement. 

Patchwork of protection Solis said it’s the county’s duty, as “the safety net for our most vulnerable,” to protect people from losing their homes.

Once countywide protections expire, tenant protections will return to a patchwork of local measures in some of the county’s 88 cities, leaving many renters without protection.

Already in L.A. County unlawful detainer filings for eviction have surged over the prior two years, when there were more layers of protection for tenants.

In 2020 and 2021, there were 13,796 and 12,646 unlawful detainer filings, respectively — record lows in what had been a steady downward trend in eviction filings since the 2008 recession, said Kyle Nelson, an eviction researcher at UCLA.

But last year there were 34,398 unlawful detainer filings in L.A. County. That’s not quite at 2019 levels, when there were 40,572 eviction filings, but experts expect another jump after the first back-rent deadline.

Even before state protections expired, housing analysts worried about a “tsunami” of evictions. Nelson said he now thinks that was an overestimation, but “we are seeing the wave.”

It could vary by city, though.

“I would expect the spikes to happen when the rental debt is due,” he said, ”because in various moratoria policies there are different windows for when debt for different periods of time is due.”

Rental debt The National Equity Atlas, a collaboration between Oakland research group Policy Link and the USC Equity Research Institute, estimates that 199,520 households in L.A. County are behind on rent, by a total of $542 million.

Its estimates are based on the Census Household Pulse Survey, which measures the pandemic’s impact on families.

Selena Tan, who leads Policy Link’s racial equity data lab, said rental debt estimates are likely lower than reality, partly because the Pulse survey responses represent a single point in time and may leave out renters who drop in and out of debt.

Advocates say the best remedy for evictions are programs that pay down rental debt for tenants, such as the Statewide Emergency Rental Assistance Program, which awarded more than $4.6 billion to renters before it expired in March 2022.

Although the program helped renters and landlords during the pandemic, it also rejected many applicants seemingly without reason. Three community organizations sued the state last year, arguing the rejections were discriminatory and vague. A judge partially agreed.

“There were all kinds of problems with the way it was administered,” said Christina Livingston, executive director of the Alliance of Californians for Community Empowerment Institute. “But for the people it helped, it really did keep them from homelessness,”

Alliance leaders had hoped to persuade lawmakers to keep emergency rental assistance going as a way to eliminate tenant debt, Livingston said, but “there isn’t a will for that.”

Mom-and-pop landlords Assemblymember Kate Sanchez, a Republican from Murietta, said blanket eviction protections and bureaucracy make it difficult for landlords to collect past-due rent. And state and local programs haven’t provided enough support to struggling mom-and-pop landlords.

“My office and my Republican colleagues have been helping these small property owners navigate Sacramento’s horrible bureaucracy to get the payments they need to pay their mortgages and keep their investments,” Sanchez told CalMatters. “The state should not tip the scale in favor of renters without providing adequate support to our mom-and-pop property owners.”

There still are some tenant supports in Los Angeles County.

Tenants at risk for eviction can still tap federal and state funds to pay back rent. But first they need to get an attorney through Stay Housed L.A., a partnership of agencies and legal service providers, said Javier Beltran, deputy director of the Housing Rights Center, which administers the funds.

In L.A. city, new tenant protections impose a threshold on how much a tenant must owe before they can be evicted — one month’s “fair market” rent, which in 2023 is about $1,747 for a one-bedroom apartment.

Landlords who increase rent by more than the state cap, which is now at 10% — 5% plus inflation — will have to pay relocation assistance to the tenant, an L.A. city ordinance states.

Groups representing landlords have sued the city and county over these protections, including the L.A.’s most recent ordinance.

Renters vs. owners Landlords have struggled to collect thousands — or millions — of dollars of rental debt. Tenant protections and regulations limit garnishing wages, said Daniel Yukelson, executive director of the Apartments Association of Greater Los Angeles.

“Over 80% of landlords in California are independent owners, mom and pops,” he said.

“They got crucified the last three years at the hands of the government. The government continues to use landlords as a scapegoat for the unhoused we see on our city sidewalks every day, because they haven’t come up with solutions to that problem.”

Several mom-and-pop landlords said privately that they would prefer to compromise with tenants rather than evict them. But going so long without rental income puts a strain on their finances. Some added that government rental assistance didn’t go far enough to pay the bills.

Tenant advocates countered that lobbying by landlord associations and campaign donations from the real estate industry make it difficult to pass tenant-friendly legislation, such as a law establishing a legal right to counsel for tenants in court.

In L.A., organizers have made progress with the city council. Recently a motion to explore establishing a right to legal counsel in eviction proceedings passed in the city council’s housing and homelessness committee.

The challenge will be finding funding sources, said Pablo Estupiñan, who directs Strategic Actions for a Just Economy’s counsel campaign.

Housing advocates want a recently approved one-time transfer tax to help pay for eviction representation, he said. That tax will be tacked onto real estate sales. It also would pay for affordable housing and renters’ education and outreach.

State help But housing advocates are still focusing on the state to strengthen tenant protections.

The Alliance of Californians for Community Empowerment Institute is prioritizing   Durazo’s placeholder Senate Bill 567, Livingston said.

The bill, when it is complete, would expand the California Tenant Protection Act of 2019 by further limiting rent increases, closing some loopholes that allow for abuse of eviction rules, and improving enforcement of housing rights, Durazo said.

“The government response to addressing this crisis has been focused primarily on rehousing people after they lose their housing, and this is important,” Durazo said,  “but it needs to be together with an effort to prevent people from becoming houseless.”

But the existing tenant protections in L.A. city and proposed changes to state law won’t erase the millions of dollars that at-risk renters already owe landlords. L.A. tenant advocates are looking into alternatives, such as creating a mom-and-pop landlord fund, for instance.

But progress is slow and any funds potentially available aren’t enough to cover all of  L.A.’s rental debt, they said.

Faizah Malik, an attorney, said she has concerns about any proposed rental relief programs moving forward. Malik works for Public Counsel, a nonprofit pro bono organization that has sued the state over its rental relief program.

“We do have a ticking clock on rental debt and evictions for that debt in the city of L.A.,” Malik said. “We have a lot of concerns about how rental assistance programs are being set up. The most efficient way to handle the rent debt would be to cancel it. That is the ultimate demand of the tenant movement.”

That remedy could change Cervantes’ life, enabling her to stay in her home.

“The home is the base of life for every human,” she said. “Here we can laugh, we can rest, we can cry. Having a home is a right, it’s not an option.”

California Homeownership Hits 11-Year High But Still Nation’s 3rd Lowest

”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: The share of Californians living in their own home hit an 11-year high last year but the state’s homeownership rate is third-worst in the nation.

Source: My trusty spreadsheet analyzed state homeownership stats from the Census Bureau, looking at 2022’s average rate vs. the pre-pandemic 2010-19 average.

Topline California’s 55.3% average homeownership rate in 2022 was the state’s best since 2011 – but only Washington, D.C., at 42% and New York at 54% were lower.

The highest ownership rates in 2022 were found in West Virginia at 79%, then Wyoming at 75%, Minnesota at 75%, Maine at 75% and Delaware at 75%.

And what of California’s economic rivals? Texas was No. 45 at 64%, while Florida was No. 31 at 67%.

Details The pandemic era’s low mortgage rates and increased urges for larger living spaces elevated ownership rates in many places

Look at California’s rate. It rose 0.6 percentage points vs. the pre-coronavirus 2010-19 average of 54.7%. That was the 16th-smallest rise nationally.

The biggest jump was seen in Rhode Island which rose 5.1 points to 65.9% vs. 60.8%. Then came Wyoming (up 4.3 points – 75.2% vs. 70.9%), Maryland (up 4.2 points – 71.9% vs. 67.6%), Iowa (up 3.9 points – 73.8% vs. 69.9%) and Nevada (up 3.9 points – 60.3% vs. 56.4%).

Let’s also note that 10 states saw falling homeownership.

The largest drops were in Connecticut (down 2.4 points – 64.8% vs. 67.2%), Massachusetts (down 1.6 points – 61.2% vs. 62.8%), Ohio (down 1.6 points – 66% vs. 67.6%), New Jersey (down 0.8 points – 64.2% vs. 65%) and North Carolina (down 0.7 points – 65.9% vs. 66.6%).

Texas ownership grew 0.6 points – 63.6% vs. 63%, 34th best, while Florida increased 1.2 points – 67.3% vs. 66.1%, No. 25.

Bottom line Boosting homeownership is a complex issue, but in some ways, it’s simple and mostly tied to prices.

Look what we see when my spreadsheet sliced the states into thirds based on their homeownership ranking.

The 17 states with the highest ownership averaged 73.7% in 2022. That rate was up 1.9 percentage points vs. 2010-19. And the average home values in these states, using Zillow data, ran $287,400.

The 17 states with the lowest ownership averaged 61.7% last year, up 0.8 points vs. 2010-19. Homes there cost $437,500.

So, in the places where homes cost one-third less, homeownership runs one-fifth higher.

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

Jonathan Lansner | Business columnist Jonathan Lansner has been the Orange County Register’s business columnist since 1997 and has been part of the newspaper’s coverage of the local business scene since 1986. He is a past national president of the Society for Advancing Business Editing and Writing and a 1979 graduate of the University of Pennsylvania’s Wharton School.

Silicon Valley Bank’s Other Key Partners: Affordable Housing Developers

By Dana Hull and Sarah Holder | Bloomberg

Construction on The Kelsey Civic Center, a 112-unit affordable housing project across from San Francisco City Hall, was supposed to begin this week.

But the lender for the project’s $52 million construction loan was Silicon Valley Bank.

On Friday — the date the project’s financing was slated to close — regulators shut down the bank, known for its ties to the tech community but also a financing source for local developers. The Kelsey and its co-developer are now talking to other potential lenders and hoping that any delays can be minimized.

“SVB was an important player in the tech scene and the startup scene, but they were also a really important player in the affordable housing scene,” Micaela Connery, co-founder of The Kelsey, said by phone.

No state is under more pressure to build affordable housing than California, which is losing residents partly because of chronic housing shortages caused by sky-high rents and home prices. More than 1.2 million households lack access to an affordable rental home, according to the California Housing Partnership, and sprawling tent encampments of unsheltered residents are common in major cities.

READ MORE: Most cities still falling behind affordable housing mandate, state numbers show

The fallout of SVB comes as Gov. Gavin Newsom and California’s attorney general are ramping up enforcement of a new state law intended to increase the state’s critically low housing stock. The median single-family home price is about $750,000, more than twice the US median.

The aggressive push is pitting the state against local authorities that Newsom accuses of obstructing his plan to add 3.5 million new homes in California, including affordable units. Last week, Newsom and Attorney General Rob Bonta announced the state is suing Huntington Beach for failing to comply with the new multifamily zoning laws intended to create more housing.

READ MORE: Newsom sues Surf City for affordable-housing snub

On Sunday, Newsom praised the Biden administration for their actions to protect SVB depositors, which he said in a statement had “profoundly positive impacts” on several pillars of California’s economy, including “affordable housing projects that can continue construction.”

Developers of lower-cost housing say they’re confident other lenders will step into the void left by SVB. But underwriting takes time, and any delay often adds to a project’s overall price tag. Rising interest rates and inflation are already lifting construction costs.

Laura Foote, the executive director of YIMBY Housing, a nonprofit that advocates for housing growth in the region, said the sector was heartened by the federal government’s actions over the weekend.

Affordable-housing developers “are very stressed about the delays, but they’re not yet saying ‘oh my gosh, and now this building won’t get built,’” said Foote.

RELATED: Irvine eyes 4,536 new rentals: Why building homes isn’t always war

Silicon Valley Bank has invested and loaned more than $2 billion to fund affordable housing projects in the Bay Area between 2002 and 2021, where it says it’s helped build or rehabilitate about 10,000 affordable units. In its 2022 ESG report, the bank outlined a plan to invest more than $1 billion more in residential mortgages in low- and moderate-income areas in Massachusetts and California by 2026.

The Kelsey “will find a path forward,” said Connery. “The big loss is scheduled. Any delay is an opportunity cost.”

Will Silicon Valley, Signature Bank Crashes Send Mortgage Rates Plummeting?

When Silicon Valley Bank and Signature Bank were shut down by the Feds within 48 hours of each other, no quicker than a banking regulator could say “give me your keys,” the bond market rallied, and mortgage rates dropped about a quarter point.

Now, we’re left to wonder what will come of the mortgage industry if this bank contagion expands. Will mortgage rates plummet, perhaps back to the go-go days of two short years ago? Will the economy contract as the troubled banks cut off credit and claw back lines of credit for commercial businesses?

Keep in mind, SVB bondholders and shareholders are unprotected — only the depositors are protected.

My prediction: If the scene worsens, home prices will likely drop but not too far. With limited inventory on hand, demand, to some degree, should buoy supply.

So far, this regional banking conundrum created a brief but consequential crack in the ascent to 7% mortgages. This week the Freddie Mac 30-year fixed rate declined to 6.6%.

READ MORE: Fannie Mae halts financing for 6,102 condos in Laguna Woods

“The most immediate impact of the two bank failures triggered a sharp increase in bond/Treasury investments, which brought down Treasury and mortgage rates in the short-term,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance. “Going forward it remains to be seen if rates will drift higher or lower. A lot may depend on what the Fed does with rates in the next week or so.”

Regulators should be acknowledged for taking quick action, stemming any broader runs for deposits. Instead, the feds gave banks lines of credit and upped deposit insurance guarantees above $250,000.

RELATED: Silicon Valley Bank bailout: Did regulators have a choice?

It’s also important to note that regional banks are small, with assets between $10 billion and $100 billion, according to the Board of Governors of the Federal Reserve. And they’re an even smaller player in the mortgage marketplace.

For example, the top 100 mortgage lenders funded a combined $413.63 billion in mortgages in the third quarter of 2022. Of that total, regional banks funded just $12.04 billion or 0.029%, according to Inside Mortgage Finance.

What we know right now is that inflation and consumer prices are still high, despite a recent softening to 6% in the U.S. That, combined with these new bank failures, likely will keep the Federal Reserve from hiking its benchmark rates significantly at its meeting March 21-22.

“So far, the Treasury and the Fed have contained this (Silicon Valley Bank and Signature Bank),” said Raymond Sfeir, director of Anderson Center for Economic Research at Chapman University. “The inflation rate is still the main issue.”

Sfeir sees the Fed likely raising short-term mortgage rates by a quarter point when it meets March 21-22. But for the two banks being taken over, Sfeir thought the Fed would have raised half a point.

Finding consensus in the mortgage arena was tough this week, with some saying the bank failures likely would have minimal effect on the housing market. Others weren’t so quick to agree. Here’s what they had to say …

“I don’t think the SVB failure will impact mortgage rates, the housing market, and the broader economy for very long,” said Mark Zandi, chief economist at Moody’s Analytics. “I suspect the Fed will pause its rate hikes at the upcoming meeting, given the uncertainties, but resume its rate hikes at the May meeting.”

“The mini-bank crisis could encourage mortgage borrowers to look more favorably on non-banks (non-depository banks) as a source of funding, but that is just speculation at this point,” said Guy Cecala, CEO and publisher of Inside Mortgage Finance. “Generally, borrowers shop for mortgages based on interest rates and not whether they are a bank or nonbank.”

READ MORE: Silicon Valley Bank collapse: A one-off calamity or sign of more trouble for California?

Richard K. Green, director of the Lusk Center for Real Estate, is sounding a very different alarm bell. Too many banks, not just regional banks, Green said, invested in 10-year Treasuries offering a 2% yield and mortgage-backed securities at a 2.5% yield when mortgage rates were dirt cheap. But now they are paying (out) 4-5% interest.

Depositors chasing high yields are called “hot money depositors” according to Dave Stevens, retired CEO of the Mortgage Bankers Association.

If banks don’t have the funds to pay out to folks (in a run on the bank) then they may have to sell assets to make good.

If you sell the bonds and mortgage-backed securities, “you get 80% of what you paid for them,” Green said. “If you are a bank and you have a lot of long-term assets, you’re screwed. It’s not confined to a very small number. I don’t know how large a problem this is.”

Is this a bank deposit epiphany?

How many 5-year, 7-year and 10-year jumbo rate bank portfolio mortgages did we originators across America write between 2019 and 2021 with rates in the 3s or perhaps less? The banks used depositor funds for which they were paying zero or near zero interest. Certainly, it was as good a deal for the banks as for the mortgage borrowers at the time.

“If the Fed continues to raise interest rates, it will make things worse,” Green said. “A banking crisis is a far worse outcome than more inflation.”

Sleep on that quandary tonight, Federal Reserve Chairman Powell.

Freddie Mac rate news The 30-year fixed rate averaged 6.6%, 13 basis points lower than last week. The 15-year fixed rate averaged 5.9%, 5 basis points lower than last week.

The Mortgage Bankers Association reported a 6.5% mortgage application increase from last week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $726,200 loan, last year’s payment was $1,104 less than this week’s payment of $3,534.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.375%, a 15-year conventional at5.25%, a 30-year conventional at 5.875%, a 15-year conventional high balance at 5.875% ($726,201 to $1,089,300), a 30-year high balance conventional at 6.5% and a jumbo 30-year fixed at 6.25%.

Note: The 30-year FHA conforming loan is limited to loans of $644,000 in the Inland Empire and $726,200 in LA and Orange counties.

Eye catcher loan program of the week: A 30-year VA fixed-rate at 5.375% with 1 point cost.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or

Irvine Eyes 4,536 New Rentals: Why Building Homes Isn’t Always War

In an age where conflict over homebuilding appears to be the norm, an intriguing deal in Irvine with land giant Irvine Co. could help the city meet its state-approved homebuilding goals.

The tentative “memorandum of understanding” would see Irvine getting 4,536 new apartments at six sites – 1,025 with affordable rents. Developer Irvine Co. will pay $65 million in fees for the construction that could be completed to meet the city’s 2029 home-production deadline.

It’s a road map for 2,157 rental homes at three sites previously announced by Irvine Co. plus another 2,379 units at three other locations.

Now, city council approval is required for this memorandum to move ahead. And Irvine politics is hard to handicap as the debate over the deal begins at Tuesday’s city council meeting. But it’s noteworthy that the deal was negotiated by a city committee that includes Mayor Farrah Kahn and Vice Mayor Tammy Kim.

Irvine’s seemingly cooperative process runs in sharp contrast to what’s going across Southern California.

At least nine cities in the region face housing proposals from developers trying to bypass the normal approval process because those cities don’t have state-approved state-approved housing goals. Or there’s La Habra, which is being sued by a homebuilder after it canceled a previously approved housing project. And there’s Huntington Beach, where state officials and the city are suing each other over the local government’s refusal to adopt some of California’s pro-housing development laws. Now you’d think homebuilding would be simple. But getting building plans approved anywhere in California requires cities and developers to navigate a maze of regulations. And some of those rules can force outcomes neither side really wants.

So, to get anywhere close to California’s lofty housing dreams, adult conversations between stakeholders with serious give-and-take become a necessary requirement.

Look, the somewhat symbiotic relationship Irvine and Irvine Co. is a half-century old. So it’s not what every municipality faces.

But Irvine Co. believed the homes could have been built without much city oversight or fees paid. Conversely, the city could have made that construction as challenging as possible. Let’s look inside the deal to get a glimpse of the tradeoffs involved.

So what does Irvine get? Homes: To meet state goals, the city needs 23,600 new units by 2029 with roughly 15,000 deemed affordable for households earning less than local median wages. Irvine Co.’s plan would provide a big step toward meeting those intense demands.

Cash: There’s as much as $65 million paid to the city – a $14,500 per-unit fee – and the freedom to use that money as local policymakers see fit.

Financial flexibility is important to the city because a traditional affordable-housing deal would mean developer fees could be spent only on park construction. And the city, home to the ever-evolving Great Park project, already has plenty of recreational spaces.

Control: The state is trying to limit housing supervision by all cities because that oversight often throttles residential development. But Irvine Co. agreed that all plans for these units will go through typical city approvals.

“It’s a deal everyone could feel good about,” said city manager Oliver Chi as it “respects the principles of the original master plan.”

What does the company get? Rentals: This is not charity work. Obviously, Irvine Co’s apartment portfolio of roughly 65,000 units statewide will grow.

Location: The memorandum allows the developer to turn vacant or unproductive land into non-traditional sites for income-generating housing, primarily in the city’s jobs hub around Irvine Spectrum.

Corporate tenants: Do not forget about the company’s huge portfolio of office and industrial properties across the city, especially in the Spectrum neighborhood.

Orange County employers are desperate for talent and places to house those workers. Housing near workplaces is especially valued. These rentals are close to Irvine Co.-owned retail sites, too.

So, view the $65 million in fees as an Irvine Co. investment that benefits many parts of its business.

“Few cities have the ability to master plan new communities next to Fortune 500 companies, innovative tech startups, and world-class hospitals,” said a statement from Irvine Co. senior vice president Jeff Davis. “This framework agreement reflects that unique opportunity to meet the needs of Irvine’s workforce, businesses, and residents.”

And what will residents get? Rent relief: The plan calls for 337 units with rents for tenants earning annual household incomes of about $50,000; 160 units would be reserved for those earning up to $80,000; and 528 for those making up to $100,000.

Extended relief: Rent limits on 1,025 rentals, adjusted for inflation, would last for 75 years vs. the typical 30-year arrangement.

Added savings: It’s not part of the memorandum but Irvine Co. says roughly half of the remaining units built would be smaller than the landlord’s usual specs. That will mean the company, known for its high-end and high-priced apartment complexes, will offer rents well below what it typically charges.

Common living: These apartments also might not fit your possibly tarnished view of affordable housing.

Full-price units and residences for lower-income folks will be mixed within the complexes. And the housing will be fashioned with a Mediterranean look much like the company’s stylish Los Olivos complex across the 405 from the Irvine Spectrum shopping center.

What’s the bottom line? Housing development should be pretty simple.

But when the state’s economic needs clash with local political desires and the industry’s profit demands you often get a combustible brew.

In this Irvine deal, the city needs housing, especially affordable rentals. And Irvine Co., by far the city’s biggest apartment developer and owner, has properties to spare – empty stores and land once planned for uses that are out of favor.

A reasonable match provided the foundation for a deal.

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

California Is Suing Huntington Beach For Limiting Housing Developments

California is suing Huntington Beach, accusing the city of knowingly violating state housing laws.

In a clear warning to other cities, Gov. Gavin Newsom and Attorney General Rob Bonta, along with other state officials, lambasted Huntington Beach’s recent housing decisions. Just a day before, Huntington Beach councilmembers voted to extend the city’s moratorium on accepting new applications for accessory dwelling units and to ignore the “builder’s remedy” homebuilding process, which allows developers to sidestep zoning restrictions in cities without state-approved housing plans. The ban on builder’s remedy in town will take a second vote later this month to go into effect.

California is suing Huntington Beach over its ban on new ADU applications, but officials warned more action could occur should the City Council continue with its plan to oppose the builder’s remedy process.

Starting in 2017, state laws lifted barriers to building secondary units on a single lot. Housing advocates and state officials argue ADUs will help meet housing goals, offering living space for extended family or much needed rentals, making use of larger lots that were traditional in many communities.

“Huntington Beach has decided to slam the door in homeowners’ faces,” Bonta said. “No one gets to pick and choose the laws they want to follow.”

“The laws are clear as is Huntington Beach’s willful, intentional refusal to follow them. That’s why we’re in court,” Bonta said.

As housing goals were handed out to cities throughout California for the number of homes — including mandates at various levels of affordability — they have to plan for over the next decade, the pushback was quick and loud. But most also got to work identifying in their required local planning where developers could build what the state figured is needed to meet housing needs.

As of Feb. 9, there were 245 California cities, including 117 in Southern California that hadn’t gotten their planning signed off by the state. That opens them up to the builder’s remedy process, where developers can plan housing projects with cities having less say in what’s planned.

“At the end of the day, the state’s vision as it relates to housing cannot be realized anywhere else except locally,” Newsom said.

Huntington Beach, Newsom said, is not serving its community well with these housing policies and will “waste time, energy and taxpayer dollars.”

Councilmember Pat Burns said Tuesday night in supporting an extension of the city’s ban on further ADU applications that the relaxed state provisions on their construction harms the qualify of life in single-family neighborhoods.

It is all “part of the resistance to the state overreach that is trying to ruin this city with overbuilding in single-family, residential neighborhoods,” he said. “Sacramento thinks they can tell us how to zone our properties. And we need to resist it in any way we can.”

City attorney Michael Gates said Huntington Beach would file a new lawsuit this week challenging the state-mandated goal of planning for the construction of 13,368 new homes by 2030. City officials are expected to announce the lawsuit later Thursday.

“If Huntington Beach’s City Council majority wants to change the law, they are welcome to reach out to their state legislators, but to date my office and I have not heard from them on this issue, making clear that this is political theater of the worst kind, and a huge waste of Huntington Beach taxpayer dollars to boot,” Sen. Dave Min, a Democrat who represents Huntington Beach, said in a statement.

Staff Writer Jeff Collins contributed to this report.

This is a breaking news story and will be updated.