Case in point: Today we have 69,000 new homes completed and ready to sell, as shown below. The builders have managed their backlog nicely to ensure this data line doesn’t explode higher on them like we saw in 2008. An average number would be around 80,000 homes for sale, so we are returning to normal.
But a bigger story here is that the builders’ biggest competition isn’t other builders — it’s the number of existing homes on the market. Existing homes are cheaper and have a geographical advantage because they’re all over the map. In 2007, we had more than 4 million total active listings, which was too much supply for the builders to compete effectively. Today, the total number of active listings according to NAR is 1.080 million, and that number is down year over year.
NAR total active listings data going back to 1982:
This explains why the builders and new homes are doing better than the existing home sales market, which deals with higher mortgage rates and low active listings. Some people prefer something other than the current active existing inventory. This means new homes — with all the bells and whistles — can peel some buyers from the existing home sales market, especially if they pay down mortgage rates.
Now on to the report.
From Census:
New Home Sales: Sales of new single‐family houses in May 2023 were at a seasonally adjusted annual rate of 763,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.2 percent (±12.8 percent)* above the revised April rate of 680,000 and is 20.0 percent (±15.5 percent) above the May 2022 estimate of 636,000.
As we can see in the chart below, new home sales aren’t booming like what we saw at the peak of 2005 but are getting back to trend sales growth from the bottom we saw when rates got 5% in 2018. New home sales can be wild monthly, so if we see some negative revisions to this report, just remember: it’s the trend that matters, and it’s gotten much better here.
Also, in the chart below, we can all agree it isn’t housing 2005 or housing 2008 with new home sales.
For Sale Inventory and Months’ Supply: The seasonally‐adjusted estimate of new houses for sale at the end of May was 428,000. This represents a supply of 6.7 months at the current sales rate.
As home sales improve, the builders are winding down their monthly supply, which is good for the economy. I have a straightforward model for when the homebuilders will start issuing new permits with some kick. My rule of thumb for anticipating builder behavior is based on the three-month supply average. This has nothing to do with the existing home sales market — this monthly supply data only applies to the new home sales market and the current level of 6.7 months.
Housing permits will follow since this data line improves as new home sales keep growing. The model below has been my bread and butter for years:
When supply is 4.3 months and below, this is an excellent market for builders.
When supply is 4.4-6.4months, this is just an OK market for builders. They will build as long as new home sales are growing.
When supply is 6.5 months and above, the builders will pull back on construction
The current data has seen significant improvement, as the chart below shows. Also, the only bubble crash this year has been in cancellation rates, not existing home sales prices.
Also, it’s vital to break down the monthly supply data into different supply categories.
1.1 months of the supply are homes completed and ready for sale, about 69,000 homes
4.1 months of the supply are homes that are still under construction, about 259,000 homes
1.6 months of the supply are homes that haven’t started yet, about 100,000 homes
This is a solid report today as the builders are moving products and making deals to get buyers in. I love it.
Housing has always been used as an indicator of the economy. As the builder confidence data rose, many pessimists ignored it because they assumed it was a dead-cat bounce. Now that we are almost to July 4, 2023, it’s a wake-up call. I ask my bearish friends who use housing as a leading indicator going into recession and out what they believe the data is telling them now. So far, I haven’t heard back.
Home Builder Confidence Index
The builder’s confidence index is gold because the builders are thinking about making money, whereas some indexes might have a political or ideological twist. I track the builders’ confidence and the 10-year yield because these two are essential for housing. This report is a plus for the economy because construction worker employment risk will decrease if sales continue to higher and mortgage rates can fall.
This article aims to show how much progress we have made in this sector and why it’s happening. The report today is a positive story for the U.S. Hopefully, this trend continues to go higher because the best way to deal with inflation is always with supply, not demand destruction. Demand destruction is a short-term fix, but supply needs to grow over time to beat inflation.
Ever-higher mortgage rates will leave Rishi Sunak feeling low
Heather Stewart
Tories are likely to bear the brunt of homeowning voters’ anger in marginal constituencies in next year’s election
As the former chancellor who warned presciently during last summer’s leadership contest that Liz Truss would crash the economy, Rishi Sunak’s calm competence was meant to be his key electoral selling point.
But after Thursday’s half-point rate rise by the Bank of England left thousands of voters facing eye-watering mortgage hikes, a shirt-sleeved Sunak was reduced to insisting he was “totally, 100% on it” when it comes to fighting inflation.
With a general election looming in 2024, many of those likely to be hit hardest – as cheap mortgage deals expire and force borrowers on to rates of 6% or even more – are in seats the Conservatives only just held in 2019.
The hit to incomes for those affected is likely to be significant: analysis by the Institute for Fiscal Studies earlier this week showed that almost 1.4 million people – 690,000 of whom are under 40 – would see their disposable incomes fall by more than 20% as they roll off mortgage deals.
And unfortunately for the prime minister, many of those likely to be worst affected are concentrated in seats he will be very keen to hold on to in 2024.
Analysis by the Liberal Democrats of the proportion of mortgage holders in each constituency across the country shows that third highest in the list is Mid-Bedfordshire – where one of four unwanted byelections will take place in the coming months.
Other constituencies in the top 10 for mortgage holders are Dominic Raab’s constituency of Esher and Walton – which he has already decided not to fight – as well as Cheadle and Wokingham, all of which are on the Lib Dem leader Ed Davey’s list of winnable Tory seats.
“If you look at the map of areas being hardest hit, it’s all those blue wall commuter belt areas, and they tend to be ultra-marginal,” said a Lib Dem source.
Of the top 50 seats with the most mortgage holders, 48 of 50 are currently Conservative, many with narrow majorities.
And as the elections expert Patrick English put it in a recent blogpost, “if a huge proportion of voters in a given constituency are applying for or renegotiating mortgages around about the time of a general election and are faced with sky-high rates at levels not seen since the 1980s, they aren’t likely to reward the governing Conservatives for the financial pain that will cause them”.
Davey and Keir Starmer have been working hard to ensure the public associate Sunak and his party with the mortgage mess, just as George Osborne and David Cameron blamed the Labour prime minister Gordon Brown for the financial crash of 2008.
As Davey put it on Thursday: “Homeowners are being treated as collateral damage by Rishi Sunak. This latest rate rise will scar family finances for years to come, all because this Conservative government crashed the economy.”
Labour has been hammering home the slogan “Tory mortgage penalty” to characterise the sharp increase in repayments many have faced.
The party has even produced an online ad aping the famously damaging Conservative election posters from 1992 that warned of “Labour’s tax bombshell” – this time with the slogan “Tory mortgage bombshell” and a large black warhead daubed with the message: “You pay £2,900 more a year under the Tories.”
Sunak sought to shrug off Starmer’s taunts about mortgage rates at Wednesday’s prime minister’s questions by pointing to the fact that inflation is high globally, but Labour strategists think this holds little water with voters – particularly when the prime minister made halving inflation one of his five pledges on taking office.
“Voters tend to think that it may not be the government’s fault but it is their responsibility,” said one Labour adviser. “I don’t think blaming global factors is a winning argument. There’s just a sense that the government is getting things badly wrong, in the round.”
Martin Lewis, the consumer finance campaigner, has been urging the government to do more and pointing to banks’ rising profits, adding to the sense that ministers must bear some responsibility.
Cheap borrowing, with interest rates at below 1% for 13 years from March 2009 to May last year, helped to mask an extended period of stagnant wages and deep public spending cuts, which are now being keenly felt.
Some at Westminster have questioned whether Sunak’s plan to wait until late 2024 for an election looks quite such a good bet now that rates are expected to remain higher for much longer than previously thought.
But the elections expert Rob Ford, speaking for the academic network UK in a Changing Europe, said the prime minister was likely to continue to wait in the hope that things may change for the better or fresh events overtake the current crisis.
“Micawberism and wishful thinking are incredibly powerful forces – and the more unpleasant the outcome you’re facing, the stronger they tend to become,” he said. “The belief that something might turn up to make these things go away will be a hard one for these people to shake.
“In this parliament to date, we’ve had two events that have completely upended the whole political agenda: the pandemic, and then the invasion of Ukraine and the subsequent cost of living crisis. Who can say with any confidence what the next year and a half can bring? Nobody knows.”
Home prices have increased significantly in many areas of the US in the last five years. But, the highest appreciating states may surprise you. California is often thought of as a highly appreciating state but did they even make the list? Alabama is often considered as a state with low home prices but how did their home prices fair the last five years? FHFA compiled a list of every state and how much the prices of their homes went up or down in the last quarter, year, 5 years, and since 1991.
Why have home prices increased so much?
You will see many reasons why people think house prices have increased recently. Many people will say investors are to blame or even boomers for not selling their homes. The media bombarded us with articles about investors buying all of the houses but the truth is investors have been selling more houses than they are buying and it is really simple why prices are increasing. The cost to build and repair has risen and there are not enough homes compared to how many people want to buy.
Towns, counties, and states are making it harder to develop land and more complicated to build houses. Whenever it becomes harder or more expensive to build or develop, it makes housing more expensive. I know it will not make many of you feel better, but the US still has the 5th most affordable housing in the world even after interest rates increased.
One reason why it seems like United States housing is so unaffordable is that after the last crash, housing was at the most affordable level ever. Prices were extremely cheap compared to wages. Prices were way below historical norms so when they moved back up it was a huge difference.
What states have seen the highest price increases?
It may surprise you which states had the highest appreciation in the last 5 years. A lot of people assumed California has really expensive housing so they must be one of the places with the highest price gains, but they are actually number 40! These gains are based on the percentage of increase and since California prices are already so high, their percent increase is not nearly as much as lower-priced areas.
State
5-year gain
Idaho
97.89
Florida
81.30
Tennessee
78.18
Arizona
76.51
Maine
76.41
North Carolina
75.50
Montana
74.03
Utah
71.87
South Carolina
70.84
Georgia
69.87
New Hampshire
67.12
Vermont
63.80
Rhode Island
63.02
Alabama
61.42
South Dakota
60.67
Indiana
59.41
Washington
58.64
New Mexico
57.40
Arkansas
57.29
Wisconsin
56.85
Nevada
56.58
Ohio
56.42
Missouri
55.90
Texas
55.74
Michigan
54.04
Kentucky
53.73
Hawaii
53.28
New Jersey
52.46
Oklahoma
52.14
Colorado
52.02
Nebraska
51.94
Wyoming
51.72
Virginia
51.51
Connecticut
51.30
Kansas
50.79
Massachusetts
50.65
Pennsylvania
48.77
New York
48.27
Oregon
48.22
Mississippi
46.79
Delaware
46.14
California
45.54
Minnesota
42.71
Iowa
42.59
West Virginia
38.50
Illinois
37.22
Maryland
35.90
Alaska
35.50
North Dakota
30.97
Louisiana
28.05
District of Columbia
22.76
This data is from: https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx
Alabama which was #1 in my list of landlord-friendly states came in with the 15th highest appreciation when many people may have assumed they would have been towards the bottom. My home state is Colorado and it feels like we have seen massive appreciation but Colorado is in the middle of the pack.
Will prices keep going up?
No one knows what will happen in the future with housing prices. There are so many variables and so many different markets with different rules and regulations. Many people thought higher interest rates would push prices down, which may have happened temporarily but they have been increasing again in 2023 in most markets. The 1970s was the highest appreciating real estate market in the last 100 years in the US and rates went from 5 to 10% in that decade. I talk about many of these factors in my monthly real estate market analysis. You can see the latest episode below.
Retiring at 40 may sound like a dream come true, but even with $4 million in your bank account, it’s important to have a plan for the future. You’ll need to plan out the next half of your life with a clear financial picture in order to truly retire at such a young age. Here are some of the most important questions to ask yourself before you clock out of work for good. If you’d like individualized help planning for retirement, consider working with a financial advisor.
Is $4 Million Enough to Retire at 40?
As of 2023, the life expectancy for the average American was 76.4 years—73.5 for men and 79.3 for women, according to the CDC. Let’s say that you live to the age of 80. Even if you don’t invest your millions to generate any returns, you can spend $100,000 a year for 40 years before your money runs out.
Of course, you don’t want to run out of money at 80 with years ahead of you. With a well-planned investment portfolio, you may very well be able to live quite comfortably off the returns generated by the principal. This means that your $4 million can sit untouched and you can live off the interest and earnings.
For instance, the stock market’s S&P 500 Index has returned an average of 6.5 to 7% per year after inflation for the past 200 years, according to McKinsey. If you invested your $4 million there, 6.5% returns would mean $260,000 per year—like a comfortable sum for most to live on in retirement.
Of course, stock market crashes, poor budgeting and other issues can decimate millions of dollars quicker than you might think. Here are some of the biggest factors you should consider if you’re planning to retire at 40 with $4 million.
1. Plan Wisely for the First Few Years
If you leave the workforce at 40, there are some things to be aware of in the first several years of retirement. First of all, people often spend more in early retirement, then spend less over time as they age, according to a Fidelity analysis of data from the Bureau of Labor Department.
This period of higher spending coincides with an age when government programs won’t be available to you. The earliest age at which you can begin to receive Social Security benefits is 62 and Medicare won’t kick in until age 65. You’ll need to plan to cover your insurance and medical costs without government assistance for 25 years and plan to live without Social Security income for at least 22 years.
Additionally, many of the most popular retirement savings vehicles will also not be available to you without penalty. Penalty-free withdrawals from 401(k) plans and IRAs are available after the age of 59 ½, meaning you should plan to pay 20 years of expenses without touching those accounts.
2. Prepare for the Unexpected
As mentioned above, stock market returns on average can generate a healthy retirement income, but you’ll want to be prepared for events outside of your control. In a market crash, a large portion of your portfolio may essentially disappear and take a long time to reconstitute itself.
According to Morningstar data, the average time it takes for an asset class to recover can vary widely, with many bouncing back after six months. However, others take much longer, with some taking as many as 13 years to fully recover their value.
This is just one of many market pressures that can create challenges for you in retirement. Inflation can also wreak havoc on your retirement savings. According to an inflation calculator, $50,000 in April 1993 had the same buying power as about $105,000 thirty years later. That means in 30 years, the value of your savings could essentially be halved. This is a good argument to be more conservative than you think might be warranted when planning your retirement.
3. Prioritize Diversification
One straightforward solution to the above challenges is a diversified portfolio. If you only invest your money in stocks, the good times may be very good, but the bad times will likely be very bad. If you invest your money in a wide variety of assets, you can mostly insulate yourself from the vagaries of the market.
Think about your ideal asset allocation. You can use a tool like SmartAsset’s asset allocation calculator to get an idea of what your investment breakdown should be based on your risk tolerance and other factors. You should consider different asset types, such as stocks, bonds and mutual funds and holding onto some cash.
You should also diversify within each type—instead of just one company’s stock, you should own multiple stocks in multiple sectors and regions. Instead of just owning 5-year bonds, you should own bonds of multiple durations. Also consider investing in assets that are more immune to inflation, such as real estate investment trusts or Treasury Inflation-Protected Securities.
The idea is that by spreading your money around, you can mitigate the risks of investing while still generating healthy returns. And when you have enough cash and conservative investments on hand, you will be better able to ride out the ups and downs of the market without having to sell assets at a loss.
4. Budget Well
Perhaps the easiest way you can run out of money far too soon is with flagrant spending. While a wisely-invested $4 million should provide you with a six-figure income for the rest of your life, lavish vacations, expensive hobbies or multiple homes can quickly deplete your savings.
You can use SmartAsset’s budget calculator to make sure you have a sound plan for your spending in retirement. There’s no reason you can’t enjoy the finer things in life, but you’ll need to make sure it fits into the big picture of your financial situation. Make a plan for how you’re going to spend your retirement income and stick to it to ensure the coffers don’t run dry.
The Bottom Line
Retiring early with $4 million is very possible, but requires some planning. Make sure you enter your retirement with a diversified investment portfolio, a smart budget and a plan for how to navigate the years before many traditional retirement benefits are available to you. Consider careful planning with a professional to make sure you’ve thought about everything before retiring early.
Retirement Savings Tips
A financial advisor can help you take care of your finances when you’re retired. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
How much do you need to save to fund your eventual retirement lifestyle? If you’re scratching your head at the question, consider using SmartAsset’s retirement calculator.
Mortgage lenders and Chancellor Jeremy Hunt have agreed that people should be given a 12-month break before repossession proceedings start amid soaring interest rates.
After the rise of the base rate to 5%, Mr Hunt met with leaders of financial institutions including Lloyds, NatWest, Barclays and Virgin Money.
They agreed that the repossession break should be introduced – similar to the one implemented during COVID.
Politics latest: Chancellor meets with mortgage lenders after interest rate hike
Mr Hunt spoke after the Downing Street summit about an option for people to go to their banks or lenders and speak about their options, if they are struggling with repayments, without it having an impact on their credit rating – although this had been mentioned as early as March this year by the Financial Conduct Authority (FCA).
He said that people who change the length of their repayment term or go on to interest-only plans can reverse their decision within six months without it impacting their credit rating.
But there was no announcement of support for people who rent, who are facing landlords hiking prices or selling properties from under them due to rising mortgage costs.
And Labour warned that without making the plan mandatory for all banks – the current agreement covers 75% of the market – around two million homeowners could miss out on support.
The chancellor said: “There are two groups of people that we’re particularly worried about.
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“The first are people who are at real risk of losing their homes because they fall behind in their mortgage payments.
“And the second are people who are having to change their mortgage because their fixed rate comes to an end and they’re worried about the impact on their family finance since the higher mortgage rates.”
Chancellor’s mortgage plan might mitigate against chaos – but it will not prevent pain
Rob Powell
Political correspondent
@robpowellnews
There was never going to be an announcement on Friday about direct “bailout” style funding for those struggling with their mortgages.
Both the government and Labour agree that would risk fuelling inflation further.
So what we have instead is a beefing up of existing tools available to lenders and a reintroduction of some of the easements seen during the pandemic.
The difficulty may be that the sheer depth and length of this mortgage squeeze will likely still leave many wanting more from both the banks and the government.
Read Rob’s full analysis here
Similar repossession breaks were introduced during the pandemic.
An announcement several hours later included data from the FCA, showing 0.86% of residential mortgages were in arrears in the first quarter of 2023 compared with 3.32% in 2009 after the financial crash.
It added that the proportion of disposable income spent on mortgage payments is 5.4%, compared with 10% in the 1990s.
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Listen and subscribe to the Ian King Business Podcast here
Martin Lewis, the founder of MoneySavingExpert.com, said; “I met the chancellor on Wednesday and reiterated that the minimum we needed was to ensure that when people asked for help from lenders, they knew that if things changed, it wouldn’t be detrimental to their financial situation and their credit scores would be protected as much as possible.
“I’m pleased to see it looks like the chancellor has listened and those measures are going to be put in practice by the banks. We need to make sure everybody knows their rights if they are in trouble with their mortgage, so they can feel comfortable speaking with their lender and understand the measures that they can request for help.”
Read more: Mortgage rates largely unchanged despite shock interest rise Jeremy Hunt rules out mortgage support and capping food prices Labour unveils five-point plan for mortgage crisis
Banking leaders also offered their support for the measures, with HSBC chief executive officer Ian Stuart saying: “It’s important that customers feel comfortable contacting us if they feel they are getting into financial difficulty because whilst every customer’s situation is different we have a range of options that we can use to help them find their way through.”
But Labour leader Sir Keir Starmer said the public were looking for “actions, not words”, when it came to their mortgages.
He said there are “many mortgage holders, many families, across the country who are now even more worried about paying their mortgage”.
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0:44
Labour: ‘People want action not words’
He said: “They know that the government’s been about for 13 years, they know the government crashed the economy last year.
“What they want, I think, is a much stronger sense that the government is gripping this; action, not words.”
Shadow chancellor Rachel Reeves also attacked the “government’s failure to make this set of measures mandatory”, and said there was “a big lack of clarity and certainty about the timelines”.
She said the Conservatives should “take responsibility” and adopt Labour’s plan, announced on Thursday, that would see all banks made to allow borrowers to switch to interest-only mortgage payments and lengthen the term of their mortgage period.
But a Treasury spokesperson said: “Today’s measures will offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty.
“The chancellor is clear that he expects smaller lenders to sign up and to offer their customers similar flexibilities, and thinks it is the right thing to do – and we are aware several will be considering over the coming weeks.”
Don’t it always seem to go That you don’t know what you got till it’s gone? They paved paradise, put up a parking lot …
—Joni Mitchell
It seemed like old times at my favorite Hollywood restaurant the other night. The rains had stopped and everyone was coming out for their favorite California comfort food. A fire was crackling in the fireplace and dessert soufflés were puffing up in the ovens. The party room upstairs was packed with 35 colleagues at a celebratory business dinner and downstairs every table was filled. But something strange was happening.
When diners finished their meals, they took out their phones and began photographing the place. Pictures on the walls had price tags on them. So did lamps and antique tables. Every now and then people hugged each other and wiped away tears. I was one of them.
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This was the last week of life for Off Vine restaurant, a treasured refuge from the hurly burly of Sunset Boulevard, housed in a bungalow with a 115-year history, a repository of countless, colorful movieland stories.
For me, this was personal. Off Vine had become my own Cheers. Like the theme of the TV show, it was the place “Where everybody knows your name / And they’re always glad you came.”
With my friends and neighbors I found camaraderie and a warm welcome at Off Vine for over 30 years. Like so many other Angelenos, we built memories here and shared delicious meals.
“You’re crying for a restaurant?” she said.
“No,” I said. “I’m crying for all we are losing.”
We also formed a society here called the Oy Luck Club, a tongue-in-cheek title that conveyed this was a place to have a good time. We celebrated birthdays and anniversaries. Some of us brought our children as babies and they grew up with this special group of “aunts” and “uncles.” They are now adults and still came back to Off Vine as if it were a second home, a family home. It was the glue that bound us together for the rest of our lives.
How can I tell you why Off Vine matters? If you have been there for a festive brunch on the graceful patio with its bowers of bougainvillea, you may understand. If you took family there for birthday dinners or, like one of my friends, you hosted foreign dignitaries for lunch to show them another side of Hollywood, you will understand.
Recently a friend told me, “You will have to find a new place to go instead of Off Vine.”
I caught my breath, whispered, “I can’t” and began to cry.
“You’re crying for a restaurant?” she said.
“No,” I said. “I’m crying for all we are losing.”
The owners did not plan this. They hoped to stay for a long time. But this is a story of the cost of insensitive development, the devaluation of our city’s history and a place that deserves to be preserved. Otherwise, a treasured piece of Hollywood history will soon be unremembered by anyone.
Hollywood legends
My own story is linked indelibly to the history of Hollywood.
Long ago and far away in a land called New Jersey, I spent many snowy days of childhood dreaming of a magical place called Hollywood where it was always warm and movie stars were everywhere. My dreams were enhanced by movie magazines, which showed a never-ending stream of glamorous actors dining and dancing at night clubs like Ciro’s, Cafe Trocadero, Mocambo and the Earl Carroll Theatre.
Food and drink played a role in the glamour life. Stars had private booths at the likes of Chasen’s and the Brown Derby, where an artist drew caricatures of the famous that hung on the walls. Even a soda fountain, Schwab’s, was famous because legend had it that Lana Turner had been discovered there sitting on a stool sipping a milkshake.
Years later, I would move to Hollywood, but those places were mostly gone, torn down in the march toward modernization. The celebrated history of the movie capital would become confined to the footprints at Grauman’s Chinese Theatre (now TCL Chinese Theatre), stars on the sidewalk and books about its fabled past. As a journalist with the Associated Press, I had the chance to interview stars at the Brown Derby with its big brown hat on the rooftop looming over Hollywood. But soon that too was gone, as was C.C. Brown’s, the birthplace of the hot fudge sundae.
So often I’d strike out when I went in search of a Hollywood landmark such as the Garden of Allah residential hotel, where stars such as Errol Flynn and famous writers including F. Scott Fitzgerald and Dorothy Parker lived and partied in their heyday. I found it had been demolished and replaced by a bank (which was itself torn down a couple of years back for a never-built Frank Gehry project).
But all was not lost. One day in 1989 I was driving around Hollywood with my best friend and fellow reporter, Theo Wilson, when she and I discovered a remaining piece of the wonderland I‘d been searching for. It was a small, hidden oasis of a restaurant called Off Vine. Tucked away on a street just south of Sunset Boulevard and east of Vine Street, it was a delightful bungalow with a traditional porch and an outdoor patio. When we stepped inside, the warming fireplace, coffered ceilings and vintage pictures of old-time stars and movie premieres made us feel we had come home. We learned the place had a colorful Hollywood history and just recently had opened as an eating place.
We sat down for a meal of California cuisine coupled with old-fashioned comfort food that pleased our taste buds. We knew this place was a keeper.
Over the years it became our go-to destination for brunches, dinners, birthdays and pretheater meals. We brought neighbors from our Hollywood Heights enclave and founded the Oy Luck Club, a name that reflected the lighthearted intent of the members who were part of a unique community that was not the glitzy movie capital but was Hollywood, a small town with homes and shops, block parties and interesting people.
At one time there were so many of us that we brought our own huge, round tabletop that unfolded to accommodate up to 16 people, our own version of the Algonquin Round Table.
Amid this idyllic camaraderie, we never imagined that one day we would lose our treasured piece of history and community. Sadly, that time appears to be now unless some rescuer turns up at the last minute to save it.
The parcel of land on which the restaurant sits has been sold to an investor who plans to tear it down and put up a row of apartments on the whole block. Off Vine sits on what will become an underground parking garage. (Cue the Joni Mitchell song.)
For the record:
12:29 p.m. March 29, 2023The final Oy Luck Club gathering at Off Vine was on a recent Saturday, not a Sunday as originally stated.
A couple of Saturdays ago the surviving members of Oy Luck Club gathered at Off Vine to celebrate two birthdays and reminisce about our beloved clubhouse.
One of those being feted was Diva Ward, 31, who had first come to an Oy Luck at Off Vine as an infant in the arms of her mother, Carol, who flew in from Wisconsin for the event. Also celebrating was architect Michael Mekeel, a founding member of Oy Luck. The oldest member present was famed actor Alan Oppenheimer, 92.
We ordered favorites from the brunch menu: a huge Belgian waffle with berries and bacon, eggs Benedict with exquisite hollandaise sauce, omelets, a breakfast quesadilla and salads. The grand finale was, as always, the signature Off Vine soufflé available in chocolate, raspberry or Grand Marnier. It had to be ordered half an hour ahead but was worth the wait. Nowhere else have I ever tasted such a rich, puffy soufflé.
Movie-worthy history
We shared memories with co-owner Richard Falzone who has saved Off Vine repeatedly. Everyone listened as I recounted the colorful story of the little house, which itself could be the inspiration for a movie.
The classic Craftsman bungalow was built in 1908 on a dirt road surrounded by fruit trees and orange groves off a newly formed country path called Vine Street.
With the burgeoning film industry in its infancy, houses began popping up to accommodate the actors, crews and producers who came west to get in on the new art form.
The house at 6263 Leland Way off Vine Street eventually was purchased by theater and nightclub impresario Earl Carroll for the actress and showgirl Beryl Wallace.
Carroll discovered Wallace in New York and put her onstage in his famous and somewhat scandalous “Vanities,” which featured elaborate productions with beautiful, scantily clad showgirls. She was his star. The two fell in love and for the next two decades she would be his girlfriend and constant companion. When he left Broadway under a cloud due to increasingly risqué shows, he decided to go West to seek a new venue for his extravagant dreams. He brought Wallace with him to Hollywood, where she had small roles in 23 films and performed at the Earl Carroll Theatre, a supper club and entertainment venue on Sunset Boulevard. The building’s exterior bore a 24-foot neon likeness of Wallace with the slogan, “Through these portals pass the most beautiful girls in the world.”
The club, which was colossal in size and from 1997 to 2017 housed Nickelodeon’s TV production studios, is set for renovation and has been declared a historic monument. Built by Carroll in 1938, it housed a 1,000-seat showroom where productions featured 60 showgirls performing on a double revolving stage. Members of Hollywood royalty were among those who paid $1,000 each for VIP lifetime memberships.
Wallace was its premier star, and Carroll felt she needed a residence that would also serve as a retreat between shows. He purchased the charming bungalow on Leland Way that became Wallace’s home. Later her mother lived with her there while the town of Hollywood grew around them. The Pantages Theatre is a few blocks away and the Cinerama Dome is around the corner. Schwab’s was up the street at Hollywood and Vine.
But not all Hollywood stories have happy endings. Tragedy struck in 1948 when Wallace and Carroll, en route to New York to discuss an even bigger project, died together in a plane crash in Pennsylvania. A year later, her mother, suffering from depression over the loss of her daughter, committed suicide.
The little bungalow was home to Beryl’s sister for a time and then was rented to several short-term tenants, including a music production company and a shoe repair shop.
In 1989 it emerged from hiding and became the unexpected restaurant known as Off Vine, which offered an escape from the chaos and glitz that is current-day Hollywood. One historian of the area said of the spot: “It has survived through the Roaring Twenties, the Great Depression, Hollywood’s Silent and Golden eras, numerous earthquakes, ambitious landowners and, in 2007, a disastrous fire.” But even the electrical fire that gutted the upper story and forced closure of the restaurant for two years while repairs were done could not kill Off Vine. Its savior since 1997 has been Falzone, a former Broadway theater performer who came West in search of his movieland dreams.
He found an unexpected career change when he took a temporary job as a server at Off Vine. He loved the place, worked his way up to general manager and became a part owner with two partners. Eight months later the fire sparked in antiquated wiring panels devastated the house.
But Falzone persisted. He set up an office on the front porch to handle calls from loyal customers and to deal with the city and insurance companies. Two years later, the Craftsman bungalow, looking the same as ever, reopened. It took $750,000 to save it.
The owners were required to bring the house up to code and added a sprinkler system, larger restrooms, a wheelchair ramp and a new state-of-the-art kitchen. The upper floor, used for parties, was restored with its 13-foot coffered ceiling.
“Our journey has been long and tumultuous, full of struggles and setbacks,” Falzone said at the reopening ceremony. “It also has come to exemplify the strength of a community that has continually offered guidance, encouragement and support to a small business that found itself struggling to reopen its doors during one of the worst economic crises our country has ever seen.”
Then L.A. City Council president and future mayor Eric Garcetti said, “This Hollywood gem adds to the continued revitalization of our community.” Loyal customers, including the Oy Luck Club gang, returned in droves. The rebirth of the Pantages Theatre as a venue for Broadway road shows brought audience members there for pretheater meals.
Things were going so well that Falzone decided it might be time to apply for designation as a Hollywood historic landmark. He was supported by Hollywood Heritage, a preservation group whose co-founder, architect Fran Offenhauser, has spearheaded campaigns to save historic buildings from the wrecking ball.
But the arbiters of such decisions looked at its history and ruled that because of the fire, which resulted in a few visible exterior changes, Off Vine did not qualify.
Then the pandemic hit and Falzone had to close. But again the little restaurant that could, with the help of government COVID subsidies, survived. Off Vine reopened as soon as it was safe and struggled to get enough servers. Some loyal employees returned. Amid all of that, Falzone was blindsided by the sale and was given notice that when the lease expires this April he would be required to vacate the property.
It turns out that Earl Carroll, in a seeming premonition and an act of love for his inamorata, added a codicil to his will stating that if he and Wallace should die together the property would go to her heirs. It was still owned by Wallace’s descendants 75 years later when they yielded to a multimillion-dollar offer from Invesco, a development firm that was interested not in the lovely little house but the land on which it stands.
Notice also was given to other nearby restaurants. A Chipotle has already relocated.
“This has been my life for 26 years. It’s been my heart, my soul, my baby and my family. It’s been my everything,” Falzone told me. “It’s not just a restaurant. People are coming into a family home and they are our family. It’s a home where there’s love, good food and good cheer.”
Offenhauser, who also is a founding member of the Oy Luck Club and a powerful advocate for Hollywood preservation, sees this as another nail in the coffin of Hollywood’s history.
“There is a real Hollywood and it’s getting smothered,” she told me as we commiserated about the impending loss. “It is not a sign of progress to destroy things that are meaningful. It’s important to integrate them with whatever is new that is compatible and complementary.
“It’s not rocket science to be able to save Off Vine,” she said. “If you recognize something is important you can build around it. It’s possible to build new and not destroy the old. In the alternative, the building could be moved to another lot. It’s not that complicated.”
We reflected on how many of us who are transplants to Hollywood made it our real hometown.
“For whatever reason when we came to Hollywood we bonded with it deeply,” Offenhauser said. “This bungalow reflects that. It means something much bigger than our individual personal memories. It manifests what neighbors mean; what Beryl’s life meant; how Richard knit people together with his unique grasp of food in a home; what a livable humanistic neighborhood in Hollywood — with neighbors walking by that porch — did mean and should mean.”
When I asked Falzone the other day what happened to the pictures and memorabilia of the beautiful Beryl Wallace that adorned the walls of Off Vine as long as I had been going there, he said the family came and collected everything. Sadly, there remains no evidence that the glamorous star ever lived there.
Deutsch, longtime special correspondent for the Associated Press, is known for covering the trials of O.J. Simpson, Angela Davis, Phil Spector, Patty Hearst, Charles Manson, Robert Blake, Lyle and Erik Menendez, Michael Jackson and many more. She has been a resident of Hollywood for more than 50 years, first in the Hollywood Heights and currently the Hollywood Dell.
Are you a Gen Z or Millennial hoping to purchase your first home? If so, it may be a bit tougher than you realize. The current real estate market can make buying a property feel like an impossible task. With rising prices and stringent financial requirements, purchasing your first house may be more complicated than ever before.
In this post, we’re going to dive into the complexities of home-buying for Millennials and Gen Z—talking about some of the common obstacles house-hunters face.
1. Building from Scratch
One user posted, “The only way I can afford to have a home at this point is if I buy raw land, harvest and process the trees to build it myself.”
Another said, “In the UK, this is more expensive than buying a brick house.”
“This is a dream for some people, but in the UK land is expensive, and we have to import/buy most of our wood because wood foraging* tree felling is illegal* without a licence because of course it is,” another commenter responded.
“With a few exceptions, those kinds of rules and regulations are common sense solutions to stop something bad from happening again, because people will take the piss when they’re allowed to do whatever they want. There’s often unintended consequences or annoying red tape, but the goal is protecting people and the environment from arseholes,” another user added.
2. Monthly mortgages
One Redditor shared, “I can afford the month to month mortgage. I cannot however afford a down payment. EDIT :- Thanks for the advice in the replies guys, but I’m not American.”
“My parents’ house’s mortgage is like half of rent in my area. I can afford that, and probably most of the utilities and such by myself. That being said, the price of the house has almost tripled in value since they bought it. I could probably swing the down payment by myself but would definitely make me uncomfortable. I honestly feel like I’ll have to get married just to get a house,” another user added.
Another Redditor also shared some glimpse of his expertise, “This should be the top comment.
Here’s a detailed example:
Wife and I bought our home in 1998 when our first child was born. The house sold for $105k, and we put $10k down.
We hadn’t done anything major to the home when we cleaned it up in 2017 to secure a refinance to lower the interest rate and get cash to top off a remodel. Appraisal was $180k. That’s value growth fueled fully by the loss of so many independant home builders after the market crash.
Brought the kitchen and bathroom up to modern standards (stone countertops, new cabinets and fixtures), refinished the wood floors, added a door off the dining room and a large deck. The house appraised in 2021 for $290k. Two on our street sold for over $300k last year, one of them in rough shape.
Banks here are requiring 30% down for new buyers right now. For my oldest son that is two years out of college, he would have to provide a down payment that is nearly as much as we bought the house for 25 years ago.
For a 1000 sq-ft home. Let that sink in.
A lot of small construction company owners, the kind that would build small homes, went out of business or retired after the housing crash, and the industry hasn’t recovered. This has caused a greater impact for those needing starter homes, lower supply means higher prices. On top of that, renting homes is a good source of passive income, so an industry of corporations built specifically to make money off of them has grown like fungus on a rotted log in this nation.
Home values are ridiculous, down payments are ridiculous, and corporate cash offers are desirable for sellers, making the first housing purchase a nightmare for many.”
3. Property Tax
One user posted, “I’m affording the mortgage payments just fine, but the property tax is killing me.”
“My escrow just went up 120 a month due to property taxes. Shit is rough,” another user added.
A third commenter replied, “That’s what people don’t mention when they say you’re wasting money renting instead of what you could afford with a similar mortgage payment. Insurance is the other kicker. Escrow is the hidden cost of home ownership (as well as all the maintenance and repairs.)”
One Redditor also shared, “If you weren’t paying escrow, you’d still be paying that in taxes anyway. My mortgage broker tries to keep the escrow they collect nearly even with our taxes and insurance payments. They went heavy the first year and just paid me out the difference, but its been increased every year since. A landlord and homeowner still end up having to pay for the same things, mortgage (usually, but not always), taxes, insurance, and maintenance. The landlord is probably adding something for profit though because the renter is either looking for a short term deal, or doesn’t have the credit to make it through the mortgage application.”
4. COVID Housing Bubble
One Redditor shared, “In 2019 I could afford the mortgage but not the down payment. Now I can just barely afford the down payment, but list prices and loan rates have shot up so much that I can’t really afford the monthly payments anymore unless I go for an absolutely unlivable crapshack of a property (the sort that includes phrases like “bring your tools!” and “investment opportunity!” and “calling all contractors!” in the listing).”
Another user replied, “Honestly, I would not buy a home in this market. I’d wait for 3-5 years. COVID caused an insane housing bubble.”
“The thing that scares me is all the people who say this is a new paradigm shift and that prices will not come back down. It’s very very hard to build a house nowadays (I tried) and businesses and rich people are buying more and more of the existing inventory so the little guy owns nothing and has to rent forever at increasingly exorbitant rates,” one commenter added.
5. Injury claims
One user jokingly shared, “What sort of injury scenario are we looking at to get into a million dollar payout range? Quadriplegic? Lost limbs?”
Another added, “No loss of limbs. Pretty bad foot break. A bunch of screws and plates. 3 surgeries. Non-stop physical therapy. And a great injury lawyer.”
Another Redditor posted, “Wow, I had a similar thing in the UK, nearly 6 years into my claim and I’m looking at 30 to 60k. My solicitor warned me the UK had shit payouts compared to the USA.” One also added, “We got lucky it was Door Dash’s insurance that paid. Their max payouts are way higher than a regular person usually has.”
Source: Reddit.
Who is one actress you can never stand watching, no matter their role? After polling the internet, these were the top-voted actresses that people couldn’t stand watching.
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We’ve all heard the famous adage that “no publicity is bad publicity,” and while it tends to be accurate, there are certainly exceptions. But what about those few stars who stay out of the limelight and get along without a hint of trouble?
These 7 Celebrities are Genuinely Good People
Have you ever known someone and thought you liked them—until you learned about their hobbies? Then you get to know them and then you’re like, “Wow, red flag.” Well, you’re not alone.
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Some celebrities definitely seem to enjoy the limelight and keep working to stay in the public eye. While others quickly move out of the spotlight. Many of these actors and actresses stepped out of the spotlight to live a more private life without constant media pressures.
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We’ve all been there – sitting through a movie that we can’t help but cringe at, but somehow it still manages to hold a special place in our hearts.
These 10 Terrible Movies Are Still People’s Favorites
How would you like $4,290,387? It’s easy! Just go back to 1972 and invest $100,000 into a well-diversified portfolio. Not enough money for you? Well, then, here’s how you can add $334,124 to that tidy sum: Simply rebalance this well-diversified portfolio annually.
Okay, despite my fondness for Marty McFly, there’s no way to travel back 38 years and open a brokerage account. But the past few decades may provide clues about the next few, especially regarding portfolio behavior and the value of rebalancing. Below, we’ll look at three common beliefs about rebalancing and explain whether they’re true or false — and why.
Reduce, Reuse … Rebalance? In case you’re new to the concept, rebalancing is the process of returning a portfolio to an investor’s predetermined appropriate allocation (for example, 65% stocks and 35% bonds). A balanced portfolio is key to ensuring steady, growing returns, but the movement of various investments over time can cause that initial, balanced allocation to change; assets that have done well become a bigger piece of the pie, while the laggards shrink to a smaller portion.
Historically, broad asset classes tend to (but don’t always) revert to the mean, which is a fancy way of saying that the best investments over the past several years will often be among the worst over the next several years, and vice-versa. By rebalancing a portfolio, you’re aiming to sell hot investments before they turn cold, then use the proceeds to buy investments that are warming up. Doing this ensures that every asset remains represented at the level you find appropriate.
Let’s examine the behavior of stocks since 1972, a period during which the market had its share of hard times. The decline of the “Nifty Fifty” stocks during the market crash of 1973 and ’74 was at the time the biggest drop since the Depression, and during the “lost decade” we’ve just experienced, U.S. stocks posted their worst 10-year return ever, including the Depression.
Would rebalancing have helped during that time? Let’s find out. Join me in the plutonium-powered DeLorean and travel back to the year Al Pacino’s horse head beat out Jon Voight’s pretty mouth for the Best Picture Oscar.
The Asset Allocation Under Inspection The investment portfolio we’re studying has the following assets:
U.S. large-cap stocks: 25%
U.S. small-cap stocks: 15%
International stocks: 15%
Real estate investment trusts: 10%
Intermediate-term government bonds: 35%
We’ll examine how this portfolio performed from 1972 (the first year with reliable numbers for each asset class) through the end of 2009, and compare the returns under two scenarios: one in which it is never rebalanced, and one in which it is rebalanced annually. We’ll then compare our back-tested portfolios to the S&P 500, since the typical American portfolio is dominated by S&P 500 stocks.
But first, let’s put our guinea-pig portfolio under the microscope to see what history has to say.
1972-2009
No Rebalancing
Annual Rebalancing
S&P 500
Annualized Return
10.4%
10.6%
9.9%
$100,000 Turned Into …
$4,290,387
$4,624,511
$3,622,187
Number of Calendar-Year Declines
7
5
9
Worst Calendar-Year Declines
(32.6%), (12.4%), (11.9%)
(20.4%), (13.1%), (10.4%)
(37.0%), (26.5%), (22.1%)
Source: My calculations using data from Ibbotson, MSCI EAFE, and NAREIT
Armed with these numbers, we can prove or disprove our three basic principles.
True or False: Rebalancing Always Significantly Improves Returns? At first glance, the extra return gained from rebalancing our case-study portfolio doesn’t appear extraordinary: a mere 0.2% a year. However, the rebalanced portfolio is worth $334,124 more than its counterpart — an amount that is more than three times the original investment. And who wouldn’t want an extra $330,000 for about an hour of work a year?
It just goes to show how earning a tiny bit more, compounded over decades, can really pay off. We see this even more when comparing the annually rebalanced portfolio to the S&P 500, which earned 0.7% less a year but grew to “just” $3,622,187. The diversified, rebalanced portfolio was worth $1,002,324 more — that’s a 27.7% increase. Shazam!
That said, if you rebalance out of an asset that’s on an upward trend, you can actually earn less. Let’s break down the returns from our non-rebalanced and annually rebalanced portfolios by decade:
Annualized Returns by Decade
1970s*
1980s
1990s
2000s
No Rebalancing
8.6%
16.8%
12.3%
3.9%
Annual Rebalancing
9.0%
17.5%
11.8%
5.2%
*1972-1979
The benefit of rebalancing during the ’70s, ’80s, and 2000s was higher than the 0.2% annual increased return observed over the entire 38 years. But the 1990s were a different story; during that time, rebalancing actually reduced returns. That’s because U.S. stocks, particularly large caps, were on a tear through most of the decade. Rebalancing in those years would have required investors to sell those asset classes before they had run out of gas, then buy lower-performing assets like international stocks and Treasuries — which posted less than half the return of U.S. stocks during the 1990s.
However, U.S. stocks got their comeuppance (actually, come-down-ance) in the 2000s. One reason the benefit of rebalancing has been greater over the past decade (1.3% per year, on average) is that the rebalanced portfolio entered the 2000s with lower exposure to U.S. large caps, meaning it was more protected when they reverted with a vengeance.
True or false? False. The boost rebalancing gives to returns is inconsistent — sometimes big, sometimes small, sometimes nonexistent, depending on market conditions. However, in the long term, you can expect it to add a smidge to your returns, which could add a not-insignificant amount to the portfolio’s final dollar value.
True or False: Rebalancing Is About Managing Risk? Look back at the table of our back-tested results, and you’ll see that the rebalanced portfolio was less risky. It had fewer “down” years — and the declines it did have weren’t as bad. A non-rebalanced portfolio is subject to “asset drift,” when winners grow to take up a bigger proportion of a portfolio. We can illustrate this by reviewing the allocations of our non-rebalanced portfolio at three points: (1) at the start of our study, (2) right before the dot-com bust that began in 2000, and (3) right before the “Great Recession” crash of 2008.
Time
Large Caps
Small Caps
International Stocks
REITs
Treasuries
Beginning of 1972
25%
15%
15%
10%
35%
End of 1999
34%
28%
8%
18%
11%
End of 2007
22%
36%
16%
16%
11%
In each case, the portfolio became considerably more aggressive, eventually coming to hold less than a third of its targeted allocation to bonds — right before two major stock-market corrections. Mazahs! (That’s the opposite of “Shazam!”) By the end of 1999, the portfolio’s largest holding by far was U.S. large caps — on the eve of their worst decade ever. And by the end of 2007, more than a third of the portfolio was in U.S. small caps, the most volatile asset class in our study.
A study by fund company Vanguard shows an extreme example of what can happen to a non-rebalanced portfolio. The researchers found that a portfolio created in 1926 with 60% stocks and 40% bonds would have ended 2009 with 97% of its assets in stocks. This is the opposite of the approach most investors should take; in general, your portfolio should get more conservative as you approach and enter retirement. By determining a proper asset allocation and regularly rebalancing, the investor — not the market — determines the level of risk in the portfolio.
True or false? True … usually. Rebalancing can move you out of highfliers poised for a fall. The degree to which that reduces your risk depends on what you’re rebalancing your portfolio into. Which brings us to our next point …
True or False: The Stock-Bond Split Is Key? If the investments in your portfolio tend to move together in the same direction and to similar degrees, rebalancing is less useful. Conversely, when those holdings don’t move in lockstep, rebalancing does a better job at managing risk.
In the investment world, that lockstep is known as correlation — the degree to which assets perform similarly in any given year. Broad categories of stocks — e.g., large caps and small caps, or U.S. stocks and European stocks — are at least somewhat correlated, often highly so. Stocks and bonds, on the other hand, are only mildly correlated, and most importantly, bonds tend to smell rosy when stocks stink. Thus, if the biggest reason to rebalance is to control risk (which is usually done by investing in bonds), then the most important allocation to monitor and rebalance is your stock-bond split.
Let’s return to our example portfolio but remove the bonds, instead adding 10% to large caps, small caps, and international stocks, and 5% to REITs. The results: The non-rebalanced portfolio posts an annualized return of 11.3% (turning $100,000 into $5,785,943), whereas the rebalanced portfolio returns an annualized 11.5% (ending with $6,328,103). Once again, we see a rebalancing bonus of 0.2% a year.
However, on the risk-reduction front, rebalancing added nada. Both portfolios experienced seven years of declines of similar degrees. The three worst calendar-year declines for the non-rebalanced portfolio were 38.1%, 23.2%, and 18.2%, and the three worst for the rebalanced portfolio were 38.6%, 23.0%, and 18.7%. The rebalanced portfolio earned higher returns in the 1970s, 1980s, and — interestingly — the 1990s. However, the bond-free rebalanced portfolio slightly trailed the bond-free non-rebalanced portfolio in the 2000s — the decade when risk reduction was needed most.
True or false? In general, true. Ensuring the right split between stocks and bonds can lower your risk of sharp declines — and of running out of money in the future.
Tips for Rebalancing Enough theory! Here are some practical considerations when it comes to rearranging your portfolio.
Account for taxes and other costs. If rebalancing results in big commissions or tax bills, the potential boost to returns could easily disappear. Whenever possible, rebalance in tax-advantaged accounts — such as IRAs or 401(k)s — and keep costs low by limiting transactions to no-load funds and discount brokerages. That said, don’t let the tax tail wag the investment dog. Plenty of people held onto stocks in the 1990s just because they didn’t want to pay the capital gains taxes. The market took care of that for them — by significantly reducing or eliminating the gains.
Rebalance with contributions and withdrawals. You can gradually rebalance your portfolio with strategic inflows and outflows. If you’re still working, use savings to buy more of underweighted assets (those that take up less of your portfolio than current market conditions warrant); retirees, on the other hand, should sell what’s become overweighted. An analysis by asset manager and author Phil DeMuth found that selling what has performed the best over the past year could prolong the life of a portfolio.
Rebalance annually — at most. Rebalancing more than once a year (e.g., monthly or quarterly) is more trouble than it’s worth. You’ll spend more in time, costs, and taxes to get a lower return. In technical terms, such behavior is known as “silly.” In fact, you’ll likely realize slightly higher returns and lower transaction costs if you rebalance even less frequently than annually — perhaps every two to three years. For example, you could rebalance once an asset class reaches a certain level — such as being 20% below your target allocation, or 20% beyond it. Thus, if your goal is that a certain asset make up 10% of your portfolio, you’d rebalance once that asset declined to less than 8% or grew beyond 12%.
In the end, it’s most important that you choose the strategy you’ll really do. For ease of implementation, it’s hard to beat annual rebalancing. As asset manager Rick Ferri wrote in All About Asset Allocation:
What is best for you is [a plan] you will actually maintain without procrastination. Annual rebalancing is simple and cost-effective, and it takes only a little time each year to implement, which means that you are more likely to get it done.
J.D.’s note: I had intended to tackle re-balancing myself next week, but Robert beat me to it. That’s okay. He knows more about it anyhow. Instead, I’ll chronicle the process as I try to rebalance my own portfolio.
Who’s the best villain you’ve watched in a movie or television series? After polling the internet, these are the top-ranked twenty-five villains of all time.
1. Ian McShane as Al Swearengen in Deadwood
One person suggested, “Al Swearengen from Deadwood, played by Ian McShane. It’s the story of a villain defending his village. He’s so good that the entire series pivoted to being about him.” “He’s a bad guy you’d want on your side, that’s for sure. My favorite TV character,” a second confessed.
2. Tony Dalton as Lalo Salamanca in Better Call Saul
“Lalo Salamanca in Better Call Saul. When he jumped down that cliff, I knew he was a maniac,” claimed one. A second said, “He was so well-written and a charming devil.”
3. Marc Alaimo as Gul Dukat in Star Trek: Deep Space Nine
One user noted, “Gul Dukat in Star Trek: Deep Space Nine. He goes from evil Hitler type to loving father on the run from his government to crazy possessed madman in a single series.”
4. Darth Vader in The Star Wars Franchise
“Darth Vader” shared one. A second admitted, “I’m shocked I needed to scroll so far for this. He was only in the original StarWars for nine minutes and made a global impact.” A third agreed, “I’m astonished this isn’t the top comment. He’s one of the best-written villains, let alone a cultural icon.”
5. Hannibal Lector
“Hannibal Lector. Anthony Hopkins from the film franchise and Mads Mikkelsen from the series both did a fantastic job,” suggested one. “This was instantly my first thought. So unbelievably scary but equal parts intriguing, and the intelligence and likability of his character were so interesting,” a second added.
6. Andrew Scott as Moriarty In Sherlock Holmes
Someone shared, “Andrew Scott as Moriarty In Sherlock Holmes. I kept thinking, ‘I don’t like this actor,’ and then I saw him in other roles. Finally, it hits me that it’s not that I don’t like this guy. His specific acting as Moriarty is so good he is subconsciously bothering me in a way that no one had managed to do before!”
7. Walton Goggin as Boyd Crowder in Justified
“Boyd Crowder (played by Walton Goggins) in Justified,” shared one. “He’s not particularly strong in season one, but by season two, you want him to keep getting away to have more. That he’s Raylan’s frenemy and not just a generic evil guy was such a nice touch.”
8. Gary Oldman as Lord Shen in Kung Fu Panda 2
One person volunteered, “Lord Shen in Kung Fu Panda 2.” Another admitted, “I love the way they create characters in these movies. A literal bird was the villain; A BIRD.”
“He was somehow more terrifying and threatening than any other villain in the trilogy. Birds like him aren’t supposed to be so powerful, yet Dreamworks convinced me otherwise.” Finally, a third added, “That’s also the power of Gary Oldman.”
9. Vincent D’onofrio as Wilson Fisk/Kingpin in Daredevil and Hawkeye
“Vincent D’onofrio as Wilson Fisk/Kingpin in Daredevil and the Hawkeye Marvel series on Disney+,” shared one. Others noted he was also a fabulous villain in The Cell, Full Metal Jacket, and Men in Black.
10. Grey DeLisle as Azula in Avatar: The Last Airbender Series
“AGREED. I was searching for that comment. The way she NEVER looked into a mirror until the episode she went crazy and all those other tiny little details… She was, is, and always will be the best villain in cinematic history,” expressed one.
11. Eartha Kitt as Yzma in The Emperor’s New Groove
“Eartha Kitt as Yzma in The Emperor’s New Groove is a remarkable and underrated Disney villain,” suggested one. After several people quoted the film, one stated, “That whole movie is just so quotable. Eartha Kitt killed it as Yzma.”
12. Leonardo DiCaprio as Calvin Candie in Django Unchained
“Leonardo DiCaprio in Django Unchained was on point,” one expressed. However, “Stephen (Samuel L. Jackson) was also pretty great, and if anything, was the real villain in that movie,” a second user argued.
13. Christopher McDonald as Shooter McGavin in Happy Gilmore
One person suggested, “Christopher McDonald as Shooter McGavin in Adam Sandler’s Happy Gilmore is easily one of the best villains of all time.” However, another argued, “I would go further and say the caretaker (Ben Stiller) at the old folks home was worse.”
14. Louise Fletcher as Nurse Ratched in One Flew Over the Cuckoo’s Nest
“Nurse Ratched in One Flew Over the Cuckoo’s Nest just because of how implicitly she tortured the inmates. She was such a good, evil actress, and I instantly hated her as Kai Wynn in Star Trek: Deep Space Nine, too,” one said. Another noted, “She apparently couldn’t watch the film for years because of her performance. Imagine playing a villain so well that it psychs you out.”
15. Javier Bardem as Anton Chigurh in No Country for Old Men
One person volunteered, “Javier Bardem, as Anton Chigurh in No Country for Old Men.” “Chigurh is terrific not only because he’s a terrifying psychopath, but he holds the delusion of being an agent of fate – then the car crash which nearly kills him happens in the end. Chigurh isn’t immune to fate. He’s just insane,” a second added.
16. Imelda Staunton as Dolores Umbridge in Harry Potter
“Dolores Umbridge,” one replied. “The thing with her is that she is such a REAL, COMMON character to everyday life. For example, you’re not going to encounter a Darth Vader or Lalo Salamanca, but chances are that you have already met someone like Umbridge. She is almost the perfect definition of a lawful evil character.”
17. Alan Rickman as Hans Gruber in Die Hard
“Hans Gruber. Alan Rickman portrays him so well,” one noted. “This needs to be higher! Rickman was also an incredible villain like The Sherriff of Nottingham in Robin Hood: Prince of Thieves, but Hans Gruber in Die Hard is the greatest villain of all time,” a second professed.
18. Erik Lehnsherr/Magneto From the X-Men Comics and Films
“Magneto. There are times when you can sympathize with him, and his actions almost seem justified. The most likable villain,” said one. A second added, “How can you go wrong with Ian McKellen and Michael Fassbender? The combination did an outstanding job as Erik Lehnsherr/Magneto, undoubtedly one of the best younger and older acting combinations ever.”
19. Jack Gleeson as Joffrey Baratheon in Game of Thrones
“Joffrey Baratheon in Game of Thrones,” said one. “Let’s all be honest. Jack Gleeson did an outstanding job acting that we all hated him.” A second shared, “Joffrey, please put some respect on this tragically messed up character who made Jack Gleeson take an acting hiatus.”
20. David Tennant as Killgrave in Jessica Jones
One user admitted, “I found Killgrave in Jessica Jones to be a fantastic villain. David Tennant nailed the role! Which is strange after only seeing him play good characters like The Doctor.” A second stated, “Easily one of the best Marvel villains who doesn’t get enough attention.”
21. Giancarlo Esposito as Gus Fring in Breakign Bad
“Gus Fring helped me understand that Walt was genuinely evil. For example, when the villain is more honorable than the protagonist, there may be a problem with the protagonist (morally, not thematically),” one suggested. A second added, “I came here to say this, and more broadly, Giancarlo Esposito. He plays villains who are so nuanced and terrifying.”
22. Ellen McLain as GLaDOS From The Portal Video Game Series
Someone suggested, “Everything GLaDOS says is pure, sarcastic gold. She can pull all of it off so well. “A second confessed, “I’m playing Portal for the first time, and I’ve known how GLaDOS is pretty sarcastic, but I still got pleasantly surprised and just a little hurt by her dialogue. I wasn’t expecting the fat jokes.”
23. Antony Star as Homelander in The Boys
Someone volunteered, “Homelander from The Boys is one of them. Whenever I thought he couldn’t get any worse, he’d do something even more depraved. He is selfish and self-centered and gets away with it because he’s so powerful. Oh, and what makes him the most dangerous is that he’s pretty dumb.”
24. Matthew Goode as Ozymandias in Watchmen
One user quoted Ozymandias from Watchmen, “You don’t think I’d explain my plan if there were the slightest chance you could stop me, do you? I did it 35 minutes ago.” A second added, “This was a brilliant piece of meta-dialogue. They didn’t break the fourth wall entirely, but it was a great way to address what is often such a silly movie trope.”
25. Christoph Waltz as Hans Landa in Inglourious Basterds
“Christoph Waltz in Inglourious Basterds is the first that came to mind,” confessed one. “Hans Landa was terrifying in so many ways. This actor is insanely good,” replied another.
What do you think? Did Reddit get this right, or is your favorite villain missing from this list?
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The goal of higher rates, in my view, is to cool down price growth and get more days on the market. A few key data lines can tell us if we are heading in that direction.
We are still seeing numbers in the teens for days on market, which isn’t good. We would like to get this back to 30 days, but anything in the 20s is a victory. Inventory falling again in 2022 created more forced bidding wars, which frustrates buyers, keeps potential sellers from wanting to list, and creates stress for real estate agents doing a lot of work with nothing to show for it. In addition, the Federal Reserve isn’t comfortable with home prices going up every year.
This is a first-world problem compared to a housing bubble, a credit boom, and a crash, but a problem nonetheless. Some data to consider:
1. In NAR‘s most recent existing-home sales report, as you can see below, the days on market is still at a teenager level. We need our housing market to go to college and find a room to rent in their 20s.
2. Inventory is still showing negative year-over-year data. Even this week, on tax day, it is still showing a decline. However, the year-over-year declines are getting less. We went from a 30% year-over-year decline at the end of 2021 to just a negative year-over-year decrease of 14.8%. I find this to be a very positive trend because the No. 1 goal for me is to see inventory have some positive prints, and we are at least heading in the right direction From Altos Research:
Are higher rates working now?
So how can we tell if higher rates are doing their job and we can achieve the goals above? Purchase application data has always been an excellent way to understand how the markets work. It’s also a bit of a funky data line if you don’t have experience reading it.
Historically, this data line is instrumental in tracking the year-over-year data from the second week of January to the first week of May. Typically after May, volumes fall! COVID-19 has wrecked the comps for many economic data lines, so COVID-19 adjustments need to be made. Considering that, what do we know so far?
I would say that we are seeing legit softness so far in 2022, but nothing too dramatic. The last time this data line was fragile was back in 2013-2014. Mortgage rates shot over 4% quickly, and it created a negative year-over-year trend in 2013-2014. The 2014 data showed a 20% year-over-year decline trend and sales fell that year.
2014 was the very last year total housing inventory grew in America. It wasn’t a lot of inventory, but still, weakness in demand created more homes on the market. My ultimate goal for housing inventory is to get back into a range between 1.52 – 1.93 million. Historically, that is considered low inventory, but that is a much more sane marketplace than what we have currently.
2018 was the last time mortgage rates got to 5%, and sales trended from 5.72 million at the end of 2017 to 4.98 million in January of 2019. Inventory didn’t grow that year and purchase application data only had three negative prints year over year, and they were mild too.
That is a good reference to look at, so let’s move toward 2022 because it’s much different now. Sales are working from a higher level and price growth has been hotter, but inventory is much lower this year than any period in history, and demographics are solid in America.
Three points to focus on
1. Week-to-week data the last three weeks have had two positive prints and one negative — so that’s not much either way. Three weeks ago, we had a positive 1% print, two weeks ago a negative 3% print, and this week 1% growth. I am not a big fan of reading week-to-week data unless we are considering them within some short-term event like COVID-19 or spiking mortgage rates.
2. COVID-19 created very high comps in this data, so it’s been negative year over year since June of 2021. Unless you make COVID-19 adjustments, you’ll get confused with this data line. I believe many people did this last year because the data showed negative data for the second half of 2021, but if you made those adjustments, you could have seen that the data was getting better toward the end of the year.
Purchase application data showed meaningful increases from October to December, which was why existing home sales got to a high-level sales print of 6.5 million in January this year. I still believe that number had some December sales closed in January that made it look high.
3. Focus on the year-over-year data and remember that percent increases or decreases aren’t an exact science compared to sales. Look at this data line as a trend survey, and you need big moves to see a material change. If housing was doing great or crashing, we would need to see activities 20%-30% up or down. This can amount to just a couple of hundred thousand home sales for the existing home sales market up or down.
If you’re looking for a significant macro trend change, positive or negative, single-digit gains or losses aren’t that meaningful in the enormous macro sense for the existing home sales market.
Here are some examples. When COVID-19 created a pause in home buying, the worst four-week year-over-year declines looked like this: -24%, -33%, -35%, -31%
When we saw make-up demand after the COVID-19 paused, the data looked like this: +33%, 27%, 22%, and 22%.
We want to forget the year-over-year comps in 2021 using the crazy 2020 data, so I won’t even bother showing you those data lines.
2022 Data
Now let’s take a look at 2022! What have we learned from this year’s purchase application data? As you can see below, the housing market from 2018 to 2022 doesn’t look like anything we saw from 2002 to 2005.
If I didn’t know mortgage rates had passed 5%, I would be saying the same thing with the purchase application data all year long: not too much is happening, but some softness for sure. However, since mortgage rates got above 5%, I have been keen to see if the data has broken toward a more aggressive negative direction. So far, that hasn’t happened.
I believe I can stop using the make-up demand comps to compare the year-over-year data after mid-February. So with that adjustment, this is what I am seeing over the last four weeks, starting from 4 weeks ago: -12%, -10%, -9% and -6% year over year.
The year-over-year declines have been falling; some are due to more reasonable comps. This week -6% is the smallest year-over-year decline for the year. The four-week average is running at 9.25%.
2022 is shaping up to be the first legit year of negative year-over-year declines in purchase application data since 2014. The 2018 market, which had to deal with higher rates, was primarily positive every week except for three weeks. So, for sure, we have some softness in 2022 after making some proper adjustments, but the softness in the data is mild so far.
I had anticipated more substantial year-over-year decline numbers than this, and so far, nothing. I often mention on social media that higher rates need duration to work themselves in the housing data for the existing home sales marketplace. It can be quicker to see the results in the new home sales market because there isn’t a homeowner factor in that equation.
When we see a weakness in the housing data, it should create more days on the market. The real goal is to stop the downtrend in inventory over the past few years.
Again, I am a man who believes in balance and what we have in housing right now is savagely unhealthy. My 23% home-price growth model for 2020-2024 has already been smashed and we are heading for 35%-40% cumulative home-price growth in thee years, which is not a good thing in my book.
Purchase application data is seasonal, and total volumes typically fall after May. We will see if we get some more buyers with the seasonal rise in inventory every year. We saw this happen last year.
However, mortgage rates being at 3% is much different than mortgage rates at 5%. Hopefully, we can balance the housing market with these higher rates. In the summer of 2020, I wrote that a 10-year yield over 1.94% could cool down housing, but that was before the significant price-growth run we’ve seen in America.
However, we are here now, and hopefully, we don’t start 2023 at fresh new all-time lows because a balanced housing market is the best housing market.