What’s the first sign that a movie is going to be bad? I’ll go first. When you can tell that the trailer used all its best footage. Sometimes you can just tell, and it never fails to prove true. After someone asked for other examples in an online film forum, here is what moviegoers had to say.
1. Multiple Comedy Trailers Highlighting the Same Joke
When you have seen multiple trailers for the same comedy movie, and they are all centered around the same joke or laughing point, that’s when you know something is up. One individual pointed out, “That’s usually the only joke in the movie.”
2. The Remake of a Previously Successful Movie
If a film or film franchise was already successful, what reason do you have to try to make a reboot? Many agreed, “Feels like it’s just a safe money-grab. It would be cool if movies that didn’t do so hot get reworked into good movie remakes, but I guess that’s too much of a risk for studios to bother with.”
3. Visual Effects and Celebrity Presence
When the only focal point of the film is the significant celebrity presence or the overwhelming reliance on visual effects to captivate the audience, get yourself out of there; it’s going to be a stinker, my friend.
4. Death by Exposition
Exposition in a film can be a helpful tool to move along plot points, highlight character traits, or even just illuminate specific details. What is not helpful is when there is a character giving an exposition to a fellow character who should already know what’s going on.
5. Multiple Writers, Lack of a Clear Idea
We have all seen movie credits that list multiple writers without realizing the correlation to the incoherent plot of the story. It doesn’t always happen, but when there are more than two or three writers, the film can lack coherency. It’s like “the too many cooks in the kitchen mentality.”
6. It’s the Best Movie of the Year, in Late March
It’s a clear sign that the movie has a good chance of flopping when advertised as the “Best Movie of the Year” or “The #1 Movie of the Year.” How can a studio declare something so daring at such an early stage in the year? It’s insane.
7. Someone Is Shrugging on the Ad Poster
Several people shared, “I like to imagine that when they take the photo shoot for the movie posters and promotional material, the lead actor/actress just shrugs like ‘I don’t know what I’m doing here or why I took this gig, but a paycheck’s a paycheck I guess.”
8. Production Took How Long?
Several filmaholics noted the film Chaos Walking. “It changed screenwriter, director, and production company so many times over ten years. It was sold on it being a Charlie Kauffman movie starring Daisy Ridley and Tom Holland. But, unfortunately, Kauffman left in 2013; Ridley and Holland filmed it over years due to so many reshoots and failed screenings.”
9. Snack Refill Without Pausing the Movie
For us, adamant movie viewers, a great perk to home movie viewing is the ability to pause, rewind, etc., as we please. When you have to get up within the first five to ten minutes of the movie and don’t feel the need to pause it, you know this movie isn’t going to be too good.
10. The Trailer Can’t Hide the Terrible Acting
When a well-edited trailer can’t hide how terrible the dialogue of a film is, there’s no hope for the movie at all. You have to remember that the trailer is what visually draws the moviegoer in. If the studio can’t manage to put their best foot forward at the most crucial time, you can’t expect much for the rest of the movie.
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United Airlines is offering passengers affected by the weeklong delays and cancellations 30,000 frequent flyer miles following a bumpy recovery and a string of bad publicity.
“I know this week was hard,” United wrote in an email from Chief Customer Officer Linda Jojo on Saturday to impacted passengers, and obtained by TPG. “Really bad weather, air traffic control issues and some of our own operational challenges led to a rough experience for you and many of our customers.”
Severe thunderstorms spurred widespread travel disruptions last weekend, however, United fared far worse than the other U.S. airlines, as it led in cancellations and delays in the days following the inclement weather.
As a result of the thousands of cancellations and delays United reported within the week, thousands of travelers were left stranded in airports across the country, scrambling for backup flights ahead of July 4, reported to be one of the busiest travel weekends on record.
According to United, the email was sent to customers with trips between June 24-30, and who were delayed overnight or had their flights canceled.
United told TPG via email, “Customers will get a follow-up email later next week with simple steps to automatically add 30,000 miles to their account (existing MileagePlus members will have one path, non-MP members will be given instructions on how to sign up and receive their miles).”
United initially blamed the Federal Aviation Administration for the disruptions, but the carrier also faced staffing issues, with its chapter of the Association of Flight Attendants-CWA reporting long wait times for scheduling.
To add fuel to the fire, Kirby also chartered a private jet from Teterboro Airport to Denver as the Chicago-based carrier struggled to restore its operations. United said it did not pay for Kirby’s flight.
Kirby apologized for flying on a private jet as United faced operational woes in a memo sent to staff.
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“Taking a private jet was the wrong decision because it was insensitive to our customers waiting to get home,” he wrote.
As of Saturday afternoon, United seemed to be on the road to recovery, tallying 523 delays and 56 cancellations, according to FlightAware. Still, 19% of its flights on Saturday were delayed as of 4:48 p.m. ET with most of those delays again coming from its Newark hub.
“Providing these miles is the right thing to do,” Kirby wrote in the email to passengers. “After all, you put your trust in us and expect more.” Customers will receive a follow-up email with how to claim the miles.
United told TPG, “This gesture is in addition to the many other ways we’ve been helping our customers whose travel has been impacted this week, including things like: providing vouchers for hotels and meals, offering amenity carts with snacks and beverages, and giving customers future travel credits and miles.”
Interestingly, United does not suggest it would reimburse all affected customers for costs incurred during the meltdown as Southwest did after a similar mess during Christmas.
“This has been one of the most operationally challenging weeks I’ve experienced in my entire career,” Kirby wrote to employees in a memo first reported by CNBC.
High above the Las Vegas Strip, solar panels blanketed the roof of Mandalay Bay Convention Center — 26,000 of them, rippling across an area larger than 20 football fields.
From this vantage point, the sun-dappled Mandalay Bay and Delano hotels dominated the horizon, emerging like comically large golden scepters from the glittering black panels.Snow-tipped mountains rose to the west.
It was a cold winter morning in the Mojave Desert. But there was plenty of sunlight to supply the solar array.
“This is really an ideal location,” said Michael Gulich, vice president of sustainability at MGM Resorts International.
The same goes for the rest of Las Vegas and its sprawling suburbs.
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Sin City already has more solar panels per person than any major U.S. metropolis outside Hawaii, according to one analysis. And the city is bursting with single-family homes, warehouses and parking lots untouched by solar.
L.A. Times energy reporter Sammy Roth heads to the Las Vegas Valley, where giant solar fields are beginning to carpet the desert. But what is the environmental cost? (Video by Jessica Q. Chen, Maggie Beidelman / Los Angeles Times)
There’s enormous opportunity to lower household utility bills and cut climate pollution — without damaging wildlife habitat or disrupting treasured landscapes.
But that hasn’t stopped corporations from making plans to carpet the desert surrounding Las Vegas with dozens of giant solar fields — some of them designed to supply power to California. The Biden administration has fueled that growth, taking steps to encourage solar and wind energy development across vast stretches of public lands in Nevada and other Western states.
Those energy generators could imperil rare plants and slow-footed tortoises already threatened by rising temperatures.
They could also lessen the death and suffering from the worsening heat waves, fires, droughts and storms of the climate crisis.
Researchers have found there’s not nearly enough space on rooftops to supply all U.S. electricity — especially as more people drive electric cars. Even an analysis funded by rooftop solar advocates and installers found that the most cost-effective route to phasing out fossil fuels involves six times more power from big solar and wind farms than from smaller local solar systems.
But the exact balance has yet to be determined. And Nevada is ground zero for figuring it out.
The outcome could be determined, in part, by billionaire investor Warren Buffett.
The so-called Oracle of Omaha owns NV Energy, the monopoly utility that supplies electricity to most Nevadans. NV Energy and its investor-owned utility brethren across the country can earn huge amounts of money paving over public lands with solar and wind farms and building long-distance transmission lines to cities.
But by regulatory design, those companies don’t profit off rooftop solar. And in many cases, they’ve fought to limit rooftop solar — which can reduce the need for large-scale infrastructure and result in lower returns for investors.
Mike Troncoso remembers the exact date of Nevada’s rooftop solar reckoning.
It was Dec. 23, 2015, and he was working for SolarCity. The rooftop installer abruptly ceased operations in the Silver State after NV Energy helped persuade officials to slash a program that pays solar customers for energy they send to the power grid.
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“I was out in the field working, and we got a call: ‘Stop everything you’re doing, don’t finish the project, come to the warehouse,’” Troncoso said. “It was right before Christmas, and they said, ‘Hey, guys, unfortunately we’re getting shut down.’”
After a public outcry, Nevada lawmakers partly reversed the reductions to rooftop solar incentives. Since then, NV Energy and the rooftop solar industry have maintained an uneasy political ceasefire. Installations now exceed pre-2015 levels.
Today, Troncoso is Nevada branch manager for Sunrun, the nation’s largest rooftop solar installer. The company has enough work in the state to support a dozen crews, each named for a different casino. On a chilly winter morning before sunrise, they prepared for the day ahead — laying out steel rails, hooking up microinverters and loading panels onto powder-blue trucks.
But even if Sunrun’s business continues to grow, it won’t eliminate the need for large solar farms in the desert.
Some habitat destruction is unavoidable — at least if we want to break our fossil fuel addiction. The key questions are: How many big solar farms are needed, and where should they be built? Can they be engineered to coexist with animals and plants?
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And if not, should Americans be willing to sacrifice a few endangered species in the name of tackling climate change?
To answer those questions, Los Angeles Times journalists spent a week in southern Nevada, touring solar construction sites, hiking up sand dunes and off-roading through the Mojave. We spoke with NV Energy executives, conservation activists battling Buffett’s company and desert rats who don’t want to see their favorite off-highway vehicle trails cut off by solar farms.
Odds are, no one will get everything they want.
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The tortoise in the coal mine
Biologist Bre Moyle easily spotted the small yellow flag affixed to a scraggly creosote bush — one of many hardy plants sprouting from the caliche soil, surrounded by rows of gleaming steel trusses that would soon hoist solar panels toward the sky.
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Moyle leaned down for a closer look, gently pulling aside branches to reveal a football-sized hole in the ground. It was the entrance to a desert tortoise burrow — one of thousands catalogued by her employer, Primergy Solar, during construction of one of the nation’s largest solar farms on public lands outside Las Vegas.
“I wouldn’t stand on this side of it,” Moyle advised us. “If you walk back there, you could collapse it, potentially.”
I’d seen plenty of solar construction sites in my decade reporting on energy. But none like this.
Instead of tearing out every cactus and other plant and leveling the land flat — the “blade and grade” method — Primergy had left much of the native vegetation in place and installed trusses of different heights to match the ground’s natural contours. The company had temporarily relocated more than 1,600 plants to an on-site nursery, with plans to put them back later.
The Oakland-based developer also went to great lengths to safeguard desert tortoises — an iconic reptile protected under the federal Endangered Species Act, and the biggest environmental roadblock to building solar in the Mojave.
Desert tortoises are sensitive to global warming, residential sprawl and other human encroachment on their habitat. The U.S. Fish and Wildlife Service has estimated tortoise populations fell by more than one-third between 2004 and 2014.
Scientists consider much of the Primergy site high-quality tortoise habitat. It also straddles a connectivity corridor that could help the reptiles seek safer haven as hotter weather and more extreme droughts make their current homes increasingly unlivable.
Before Primergy started building, the company scoured the site and removed 167 tortoises, with plans to let them return and live among the solar panels once the heavy lifting is over. Two-thirds of the project site will be repopulated with tortoises.
Workers removed more tortoises during construction. As of January, the company knew of just two tortoises killed — one that may have been hit by a car, and another that may have been entombed in its burrow by roadwork, then eaten by a kit fox.
Primergy Vice President Thomas Regenhard acknowledged the company can’t build solar here without doing any harm to the ecosystem — or spurring opposition from conservation activists. But as he watched union construction workers lift panels onto trusses, he said Primergy is “making the best of the worst-case situation” for solar opponents.
“What we’re trying to do is make it the least impactful on the environment and natural resources,” he said. “What we’re also doing is we’re sharing that knowledge, so that these projects can be built in a better way moving forward.”
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The company isn’t saving tortoises out of the goodness of its profit-seeking heart.
The U.S. Bureau of Land Management conditioned its approval of the solar farm, called Gemini, on a long list of environmental protection measures — and only after some bureau staffers seemingly contemplated rejecting the project entirely.
Documents obtained under the Freedom of Information Act by the conservation group Defenders of Wildlife show the bureau’s Las Vegas field office drafted several versions of a “record of decision” that would have denied the permit application for Gemini. The drafts listed several objections, including harm to desert tortoises, loss of space for off-road vehicle drivers and disturbance of the Old Spanish National Historic Trail, which runs through the project site.
Separately, Primergy reached a legal settlement with conservationists — who challenged the project’s federal approval in court — in which the company agreed to additional steps to protect tortoises and a plant known as the three-corner milkvetch.
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The company estimates just 2.5% of the project site will be permanently disturbed — far less than the 33% allowed by Primergy’s federal permit. Regenhard is hopeful the lessons learned here will inform future solar development on public lands.
“This is something new. So we’re refining a lot of the processes,” he said. “We’re not perfect. We’re still learning.”
By the time construction wraps this fall, 1.8 million panels will cover nearly 4,000 football fields’ worth of land, just off the 15 Freeway. They’ll be able to produce 690 megawatts of power — as much as 115,000 typical home solar systems. And they’ll be paired with batteries, to store energy and help NV Energy customers keep running their air conditioners after sundown.
Unlike many solar fields, Gemini is close to the population it will serve — just a few dozen miles from the Strip. And the affected landscape is far from visually stunning, with none of the red-rock majesty found at nearby Valley of Fire State Park.
But desert tortoises don’t care if a place looks cool to humans. They care if it’s good tortoise habitat.
Moyle, Primergy’s environmental services manager, pointed to a small black structure at the bottom of a fence along the site’s edge — a shade shelter for tortoises. Workers installed them every 800 feet, so that if any relocated reptiles try to return to the solar farm too early, they don’t die pacing along the fence in the heat.
“They have a really, really good sense of direction,” Moyle said. “They know where their homes are. They want to come back.”
Primergy will study what happens when tortoises do come back. Will they benefit from the shade of the solar panels? Or will they struggle to survive on the industrialized landscape?
And looming over those uncertainties, a more existential query: With global warming beginning to devastate human and animal life around the world, should we really be slowing or stopping solar development to save a single type of reptile?
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Moyle was ready with an answer: Tortoises are a keystone species. If they’re doing well, it’s a good sign of a healthy ecosystem in which other desert creatures — such as burrowing owls, kit foxes and American badgers — are positioned to thrive, too.
And as the COVID-19 pandemic has demonstrated, human survival is inextricably linked with a healthy natural world.
“We take one thing out, we don’t know what sort of disastrous effect it’s going to have on everything else,” Moyle said.
We do, however, know the consequences of relying on fossil fuels: entire towns burning to the ground, Lake Mead three-quarters empty, elderly Americans baking to death in their overheated homes. With worse to come.
The shifting sands of time
A few miles south, another solar project was rising in the desert. This one looked different.
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A fleet of bulldozers, scrapers, excavators and graders was nearly done flattening the land — a beige moonscape devoid of cacti and creosote. The solar panel support trusses were all the same height, forming an eerily rigid silver sea.
When I asked Carl Glass — construction manager for DEPCOM Power, the contractor building this project for Buffett’s NV Energy — why workers couldn’t leave vegetation in place like at Gemini, he offered a simple answer: drainage. Allowing the land to retain its natural contours, he said, would make it difficult to move stormwater off the site during summer monsoons.
Safety was another consideration, said Dani Strain, NV Energy’s senior manager for the project. Blading and grading the land meant workers wouldn’t have to carry solar panels and equipment across ground studded with tripping hazards.
“It’s nicer for the environment not to do it,” Strain said. “But it creates other problems. You can’t have everything.”
This kind of solar project has typified development in the Mojave Desert.
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And it helps explain why the Center for Biological Diversity’s Patrick Donnelly has fought so hard to limit that development.
The morning after touring the solar construction sites, we joined Donnelly for a hike up Big Dune, a giant pile of sand covering five square miles and towering 500 feet above the desert floor, 90 miles northwest of Las Vegas. The sun was just beginning its ascent over the Mojave, bathing the sand in a smooth umber glow beneath pockets of wispy cloud.
On weekends, Donnelly said, the dune can be overrun by thousands of off-road vehicles. But on this day, it was quiet.
Energy companies have proposed more than a dozen solar farms on public lands surrounding Big Dune — some with overlapping footprints. Donnelly doesn’t oppose all of them. But he thinks federal agencies should limit solar to the least ecologically sensitive parts of Nevada, instead of letting companies pitch projects almost anywhere they choose.
“Developers are looking at this as low-hanging fruit,” he said. “The idea is, this is where California can build all of its solar.”
We trekked slowly up the dune, our bodies casting long shadows in the early morning light. When we took a breather and looked back down, a trail of footprints marked our path. Donnelly assured us a windy day would wipe them away.
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“This is why I live here, man,” he said. “It’s the most beautiful place on Earth, in my mind.”
Donnelly broke his back in a rock-climbing accident, so he used a walking stick to scale the dune. He lives not far from here, at the edge of Death Valley National Park, and works as the nonprofit Center for Biological Diversity’s Great Basin director.
As we resumed our journey, the wind blowing hard, I asked Donnelly to rank the top human threats to the Mojave. He was quick to answer: The climate crisis was No. 1, followed by housing sprawl, solar development and off-road vehicles.
“There’s no good solar project in the desert. But there’s less bad,” he said. “And we’re at a point now where we have to settle for less bad, because the alternatives are more bad: more coal, more gas, climate apocalypse.”
That hasn’t stopped Donnelly and his colleagues from fighting renewable energy projects they fear would wipe out entire species — even little-known plants and animals with tiny ranges, such as Tiehm’s buckwheat and the Dixie Valley toad.
“I’m not a religious guy,” Donnelly said. “But all God’s creatures great and small.”
After a steep stretch of sand, we stopped along a ridge with sweeping views. To our west were the Funeral Mountains, across the California state line in Death Valley National Park — and far beyond them Mt. Whitney, its snow-covered facade just barely visible. To our east was Highway 95, cutting across the Amargosa Valley en route from Las Vegas to Reno.
It’s along this highway that so many developers want to build.
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“We would be in a sea of solar right now,” Donnelly said.
Having heard plenty of rural residents say they don’t want to look at such a sea, I asked Donnelly if this was a bad spot for solar because it would ruin the glorious views. He told me he never makes that argument, “because honestly, views aren’t really the primary concern at this moment. The primary concern is stopping the biodiversity crisis and the climate crisis.”
“There are certain places where we shouldn’t put solar because it’s a wild and undisturbed landscape,” he said.
As far as he’s concerned, though, the Amargosa Valley isn’t one of those landscapes, what with Highway 95 running through it. The same goes for Dry Lake Valley, where NV Energy’s solar construction site is already surrounded by energy infrastructure.
What Donnelly would like to see is better planning.
He pointed to California, where state and federal officials spent eight years crafting a desert conservation plan that allows solar and wind farms across a few hundred thousand acres while setting aside millions more for protection. He thinks a similar process is crucial in Nevada, where four-fifths of the land area is owned by the federal government — more than any other state.
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If Donnelly had his way, regulators would put the kibosh on solar farms immediately adjacent to Big Dune. He’s worried they could alter the movement of sand across the desert floor, affecting several rare beetles that call the dune home.
But if the feds want to allow solar projects along the highway to the south, near the Area 51 Alien Center?
“Might not be the end the world,” Donnelly said.
He shot me a grin.
“You know, one thing I like to do …”
Without warning, he took off racing down the dune, carried by momentum and love for the desert. He laughed as he reached a natural stopping point, calling for us to join him. His voice sounded free and full of possibility.
Some solar panels on the horizon wouldn’t have changed that.
Shout it from the rooftops
Laura Cunningham and Kevin Emmerich were a match made in Mojave Desert heaven.
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Cunningham was a wildlife biologist, Emmerich a park ranger when they met nearly 30 years ago at Death Valley. She studied tortoises for government agencies and later a private contractor. He worked with bighorn sheep and gave interpretive talks. They got married, bought property along the Amargosa River and started their own conservation group, Basin and Range Watch.
And they’ve been fighting solar development ever since.
That’s how we ended up in the back of their SUV, pulling open a rickety cattle gate off Highway 95 and driving past wild burros on a dirt road through Nevada’s Bullfrog Hills, 100 miles northwest of Las Vegas.
They had told us Sarcobatus Flat was stunning, but I was still surprised by how stunning. I got my first look as we crested a ridge. The gently sloping valley spilled down toward Death Valley National Park, whose snowy mountain peaks towered over a landscape dotted with thousands of Joshua trees.
“Everything we’re looking at is proposed for solar development,” Cunningham said.
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Most environmentalists agree we need at least some large solar farms. Cunningham and Emmerich are different. They’re at the vanguard of a harder-core desert protection movement that sees all large-scale solar farms on public lands as bad news.
Why had so many companies converged on Sarcobatus Flat?
The main answer is transmission. NV Energy is seeking federal approval to build the 358-mile Greenlink West electric line, which would carry thousands of megawatts of renewable power between Reno and Las Vegas along the Highway 95 corridor.
The dirt road curved around a small hill, and suddenly we found ourselves on the valley floor, surrounded by Joshua trees. Some looked healthy; others had bark that had been chewed by rodents seeking water, a sign of drought stress. Scientists estimate the Joshua tree’s western subspecies could lose 90% of its range as the world gets hotter and droughts get more intense.
But asked whether climate change or solar posed a bigger threat to Sarcobatus Flat, Cunningham didn’t hesitate.
“Oh, solar development hands down,” she said.
Nearly 20 years ago, she said, she helped relocate desert tortoises to make way for a test track in California. One of them tried to return home, walking 20 miles before hitting a fence. It paced back and forth and eventually died of heat exhaustion.
Solar farms, she said, pose a similar threat to tortoises. And at Sarcobatus Flat, they would cover a high-elevation area that could otherwise serve as a climate refuge for Joshua trees, giving them a relatively cool place to reproduce as the planet heats up.
“It makes no sense to me that we’re going to bulldoze them down and throw them into trash piles. It’s just crazy,” she said.
In Cunningham and Emmerich’s view, every sun-baked parking lot in L.A. and Vegas and Phoenix should have a solar canopy, every warehouse and single-family home a solar roof. It’s a common argument among desert defenders: Why sacrifice sensitive ecosystems when there’s an easy alternative for fighting climate change? Especially when rooftop solar can reduce strain on an overtaxed electric grid and — when paired with batteries — help people keep their lights on during blackouts?
The answer isn’t especially satisfying to conservationists.
For all the virtues of rooftop solar, it’s an expensive way to generate clean power — and keeping energy costs low is crucial to ensure that lower-income families can afford electric cars, another key climate solution. A recent report from investment bank Lazard pegged the cost of rooftop solar at 11.7 cents per kilowatt-hour on the low end, compared with 2.4 cents for utility solar.
Even when factoring in pricey long-distance electric lines, utility-scale solar is typically cheaper, several experts told me.
“It’s three to six times more expensive to put solar on your roof than to put it in a large-scale project,” said Jesse Jenkins, an energy systems researcher at Princeton University. “There may be some added value to having solar in the Los Angeles Basin instead of the middle of the Mojave Desert. But is it 300% to 600% more value? Probably not. It’s probably not even close.”
There’s a practical challenge, too.
The National Renewable Energy Laboratory has estimated U.S. rooftops could generate 1,432 terawatt-hours of electricity per year — just 13% of the power America will need to replace most of its coal, oil and gas, according to research led by Jenkins.
Add in parking lots and other areas within cities, and urban solar systems might conceivably supply one-quarter or even one-third of U.S. power, several experts told The Times — in an unlikely scenario where they’re installed in every suitable spot.
Energy researcher Chris Clack’s consulting firm has found that dramatic growth in rooftop and other small-scale solar installations could reduce the costs of slashing climate pollution by half a trillion dollars. But even Clack said rooftops alone won’t cut it.
“Realistically, 80% is going to end up being utility grid no matter what,” he said.
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All those industrial renewable energy projects will have to go somewhere.
Sarcobatus Flat may not be the answer. Federal officials classified all three solar proposals there as “low priority,” citing their proximity to Death Valley and potential harm to tortoise habitat. One developer withdrew its application last year.
Before leaving the area, Cunningham pointed to a wooden marker, one of at least half a dozen stretching out in a line. I walked over to take a closer look and discovered it was a mining claim for lithium — a main ingredient in electric-car batteries.
If solar development didn’t upend this valley, lithium extraction might.
On the beaten track
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The four-wheeler jerked violently as Erica Muxlow pressed her foot to the gas, sending us flying down a rough dirt road with no end in sight but the distant mountains. Five-point safety straps were the only things stopping us from flying out of our seats, the vehicle leaping through the air as we reached speeds of 40 mph, then 50 mph, the wind whipping our faces.
It was like riding Disneyland’s Matterhorn Bobsleds — just without the Yeti.
Ahead of us, Muxlow’s neighbor Jimmy Lewis led the way on an electric blue motorcycle, kicking up a stream of sand. He wanted us to see thousands of acres of public lands outside his adopted hometown of Pahrump, in Nevada’s Nye County, that could soon be blocked by solar projects — cutting off access to off-highway vehicle enthusiasts such as himself.
“You could build an apartment complex or a shopping mall here, and it would be the same thing to me,” he said.
To progressive-minded Angelenos or San Franciscans, preserving large chunks of public land for gas-guzzling, environmentally destructive dirt bikes might sound like a terrible reason not to build solar farms that would lessen the climate crisis.
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But here’s the reality: Rural Westerners such as Lewis will play a key role in determining how much clean energy gets built.
Not long before our Nevada trip, Nye County placed a six-month pause on new renewable energy projects, citing local concerns about loss of off-road vehicle trails. Similar fears have stymied development across the U.S., with rural residents attacking solar and wind farms as industrial intrusions on their way of life — and local governments throwing up roadblocks.
For Lewis, the conflict is deeply personal.
He moved here from Southern California more than a decade ago, trading life by the beach for a five-acre plot where he runs an off-roading school and test-drives motorcycles for manufacturers. His warehouse was packed with dozens of dirt bikes.
“This is my life. Motorcycles, motorcycles, motorcycles,” he said, laughing.
Lewis has worked to stir up opposition to three local solar farm proposals. So far, his efforts have been in vain.
One project is already under construction. Peering through a fence, we saw row after row of trusses, waiting for their photovoltaic panels. It’s called Yellow Pine, and it’s being built by Florida-based NextEra Energy to supply power to California.
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Lewis learned about Yellow Pine when he was riding one of his favorite trails and was surprised to find it cut off. He compared the experience to riding the best roller-coaster at a theme park, only to have it grind to a halt three-quarters of the way through.
“I don’t want my playground taken away from me,” he said.
“Me neither!” a voice called out from behind us.
We turned and were greeted by Shannon Salter, an activist who had previously spent nine months camping near the Yellow Pine site to protest the habitat destruction. She and Lewis had never met, but they quickly realized they had common cause.
“It’s the opposite of green!” Salter said.
“On my roof, not my backyard,” Lewis agreed.
Never mind that conservationists have long decried the ecological damage from desert off-roading. Salter and Lewis both cared about these lands. Neither wanted to see the solar industry lay claim to them. They talked about staying in touch.
It’s easy to imagine similar alliances forming across the West, the clean energy transition bringing together environmentalists and rural residents in a battle to defend their lifestyles, their landscapes and animals that can’t fight for themselves.
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It’s also easy to imagine major cities that badly need lots of solar and wind power — Los Angeles, Las Vegas, Phoenix — brushing off those complaints as insignificant compared with the climate emergency, or as fueled by right-wing misinformation.
But many of concerns raised by critics are legitimate. And their voices are only getting louder.
As night fell over the Mojave, Lewis shared his idea that any city buying electricity from a desert solar farm should be required to install a certain amount of rooftop solar back home first — on government buildings, at least. It only seemed fair.
“Some people see the desert as just a wasteland,” Lewis said. “I think it’s beautiful.”
The view from Black Mountain
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So how do we build enough renewable energy to replace fossil fuels without destroying too many ecosystems, or stoking too much political opposition from rural towns, or moving too slowly to save the planet?
Few people could do more to ease those tensions than Buffett.
Our conversation kept returning to the legendary investor as we hiked Black Mountain, just outside Vegas, on our last morning in the Silver State. We were joined by Jaina Moan, director of external affairs for the Nature Conservancy’s Nevada chapter. She had promised a view of massive solar fields from the peak — but only after a 3.5-mile trek with 2,000 feet of elevation gain.
“It’ll be a little StairMaster at the end,” she warned us.
The homes and hotels and casinos of the Las Vegas Valley retreated behind us as we climbed, looking ever smaller and more insignificant against the vast open desert. It was an illusion that will prove increasingly difficult to maintain as Sin City and its suburbs continue their march into the Mojave. Nevada politicians from both parties are pushing for legislation that would let federal officials auction off additional public lands for residential and commercial development.
Vegas and other Western cities could limit the need for more suburbs — and sprawling solar farms — by growing smarter, Moan said. Urban areas could embrace density, to help people drive fewer miles and reduce the demand for new power supplies to fuel electric vehicles. They could invest in electric buses and trains — and use less water, which would save a lot of energy.
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“As our spaces become more crowded, we’re going to have to come up with more creative ideas,” Moan said.
That’s where Buffett could make things easier.
The billionaire’s Berkshire Hathaway company owns electric utilities that serve millions of people, from California to Nevada to Illinois. Those utilities, Moan said, could buck the industry trend of urging policymakers to reduce financial incentives for rooftop solar and instead encourage the technology — along with other small-scale clean energy solutions, such as local microgrids.
That would limit the need for big solar farms — at least somewhat.
Berkshire and other energy giants could also build solar on lands already altered by humans, such as abandoned mines, toxic Superfund sites, reservoirs, landfills, agricultural areas, highway corridors and canals that carry water to farms and cities.
The costs are typically higher than building on undisturbed public lands. And in many cases there are technical challenges yet to be resolved. But those kinds of “creative solutions” could at least lessen the loss of biodiversity, Moan said.
“There’s money to be made there, and there’s good to be done,” she said.
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It’s hard to know what Buffett thinks. A Berkshire spokesperson declined my request to interview him.
Tony Sanchez, NV Energy’s executive vice president for business development and external relations, was more forthcoming.
“The problem for us with rooftop solar,” he said, is that it’s “not controlled at all by us.” As a result, NV Energy can’t decide when and how rooftop solar power is used — and can’t rely on that power to help balance supply and demand on the grid.
Over time, Sanchez predicted, a lot more rooftop solar will get built. But he couldn’t say how much.
Rooftop solar faces a similarly uncertain future in California, where state officials voted last year to slash incentive payments, calling them an unfair subsidy. Industry leaders have warned of a dramatic decline in installations.
As we neared the top of Black Mountain, the solar farms on the other side came into view. They stretched across the Eldorado Valley far below — black rectangles that could help save life on Earth while also destroying bits and pieces of it.
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Moan believes the key to balancing clean energy and conservation is “go slow to go fast.” Government agencies, she said, should work with conservation activists, small-town residents and Native American tribes to study and map out the best places for clean energy, then reward companies that agree to build in those areas with faster approvals. Solar and wind development would slow down in the short term but speed up in the long run, with quicker environmental reviews and less risk of lawsuits.
It’s a tantalizing concept — but I confessed to Moan that I worried it would backfire.
What if the sparring factions couldn’t agree on the best spots to build solar and wind farms, and instead wasted years arguing? Or what if they did manage to hammer out some compromises, only for a handful of unhappy people or groups to take them to court, gumming up the works? Couldn’t “go slow to go fast” end up becoming “go slow to go slow”?
In other words, should we really bet our collective future on human beings working together, rather than fighting?
Moan was sympathetic to my fears. She also didn’t see another way forward.
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“We really need to think holistically about saving everything,” she said.
The sad truth is, not everything can be saved. Not if we want to keep the world livable for people and animals alike.
Some beloved landscapes will be left unrecognizable. Some families will be stuck paying high energy bills to monopoly utilities, even as some utility investors make less money. Some tortoises will probably die, pacing along fences in the heat.
The alternative is worse.
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In a nondescript building adorned with the LATAM logo sits a handful of Delta Air Lines employees — an arrangement that would’ve been unthinkable just a few years ago.
Earlier this month, Delta officially inaugurated its new South Florida offices, which are now in LATAM Cargo’s Miami headquarters.
There you’ll find about 10 full-time Delta employees, some of whom are working closely with LATAM to build out a joint-venture partnership between the two carriers.
The walls feature pictures of Delta and LATAM airplanes, and the space is so new that one of the conference rooms hasn’t even been built yet.
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The Delta employees working from this office even have a front-row view of LATAM’s cargo operations, watching as some of the airline’s freighters load and unload their goods before their next mission.
Every few minutes, you might even glimpse an American Airlines jet taking off in the distance — a somewhat ironic sight considering the circumstances.
Until mid-2020, the South American conglomerate LATAM was a member of the Oneworld frequent flyer alliance and a partner with American Airlines.
However, Delta wooed the airline away from its U.S. rival back in late 2019, in a move that shocked many industry observers. It acquired a 20% ownership stake in LATAM and also filed plans to begin a joint venture partnership (that includes profit sharing and schedule coordination) between the U.S. and South America.
That joint venture was approved in late September, and both Delta and LATAM have raced to implement it.
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Now that we’re nine months into the tie-up, Delta and LATAM invited me to check out their new digs and learn more about their nascent joint venture. Here’s what I learned.
Delta bolsters presence in key region
From Delta’s perspective, the joint venture was designed to quickly fill a noticeable gap in the airline’s global route map, Perry Cantarutti, senior vice president of alliances for Delta, said.
“When we looked at the world, that was one part of the world where we were not very well covered,” Cantarutti told TPG.
Before the tie-up, Delta was far from being the market leader in flights between the U.S. and South America. It offered just 122 flights on average a week between the two regions. Cirium schedules show that this was well below the 475 and 200 weekly flights American Airlines and United Airlines offered in 2019, respectively.
Nowadays, “We are together the No. 1 player between North and South America,” Cantarutti was proud to share.
The joint venture already connects more than 200 North American destinations served by Delta to the more than 120 South American destinations served by LATAM.
Also, at least nine new routes were teased as part of the pact, and five of them were formally announced, including:
Orlando-Bogota, Colombia (starts July 1)
Los Angeles-Sao Paulo (starts Aug. 1)
Miami-Medellin, Colombia (starts Oct. 29)
New York-Rio de Janeiro (starts Dec. 16)
Atlanta-Cartagena, Colombia(starts Dec. 22)
Together with some additional frequencies on existing routes, this translates to a 75% capacity increase since the pact was implemented — an impressive feat for such a new partnership.
Miami is becoming a ‘gateway hub’
When the joint venture was announced, Delta promised to turn Miami into a “gateway hub.”
Since then, Delta and LATAM have grown the Miami operation by nearly 40% more flights, according to Luciano Macagno, Delta’s managing director of Latin America, the Caribbean and South Florida.
From Miami, Delta has launched or recently increased service to Boston, Los Angeles, Orlando, Salt Lake City and Washington, D.C.
Additional domestic connectivity may be in the works. However, Delta’s existing domestic flights now cover most of the demand for travelers headed to or from Miami and those connecting beyond Miami into South America (and vice versa), Macagno said.
For instance, that short Orlando flight — a rare point-to-point route for Delta — is largely about funneling connections through Miami.
In addition to the new routes, Delta is upgrading its Miami terminal to better support the LATAM joint venture. This includes a more streamlined connecting experience when landing from an international destination, as well as adding Spanish signage across the entire facility.
Delta’s operations are co-located with LATAM’s in Miami (and a handful of other key airports). That’s a big improvement for travelers who used to connect from LATAM to American — a process that required a ton of walking and maneuvering around the airport.
The airline is also modernizing and expanding its Miami Sky Club to accommodate a total of 320 flyers with more than 12,000 square feet. Delta is even starting to insource its ground handling in Miami, too.
Although it’s not necessarily specific to Miami, Delta unveiled a Spanish version of its mobile app last week, a project that was accelerated due to the joint venture. Portuguese support is coming soon, according to Cantarutti.
Delta fills a bigger gap than American
When Delta purchased a stake in LATAM, it sent shockwaves throughout the aviation industry. The news upended some long-standing alliances throughout the hemisphere, perhaps most notably the deep-seated tie-up between American and LATAM.
While some industry insiders might’ve been surprised by the move, it makes total sense from LATAM’s perspective: Delta fills a bigger gap than American, providing access to more one-stop destinations for flyers.
“We’re very excited about the access to the interior of the U.S. and their gateways,” Marty St. George, chief commercial officer at LATAM, said in an interview.
Relative to American’s operation in Miami (the key connecting city under the American-LATAM pact), Delta’s Atlanta hub offers “many, many more destinations,” St. George said. “The thing I say to my team is that we will be selling customers to cities you have never heard of in your entire life.”
There is a “very, very long tail of demand to and from South America,” which accounts for roughly 20% of the traffic between the two continents, St. George added. The Delta joint venture enables LATAM to serve these cities with one-stop itineraries that wouldn’t have been possible with American.
While LATAM isn’t as big in Miami — the key U.S. gateway to South America — as it was with access to American’s big hub there, St. George isn’t worried. “We can manage Miami on our own … we have a lot of service there anyway,” he said.
SkyTeam membership could be coming
Delta and LATAM have already added reciprocal loyalty benefits, giving frequent travelers access to perks, such as lounge access, regardless of which airline they fly.
You can now earn and redeem miles on either airline, too.
But as exciting as the Delta partnership is, LATAM was once a key member of the Oneworld frequent flyer alliance. Membership in a global airline alliance helps boost connectivity and provides access to a broader network of customers. LATAM might consider joining Delta’s alliance, SkyTeam.
“Our focus right now is Delta … I think the concept of SkyTeam is a little bit in the future,” St. George said.
Pressed further, he added that the “experience working with Delta has been fantastic so far. They’re a great poster child for what the possible benefit of the SkyTeam would be.”
Reading between the lines, I wouldn’t be surprised if LATAM’s long-term plan includes membership in SkyTeam.
For now, though, it maintains a limited partnership with two Oneworld airlines, Iberia and Qantas, which help bolster its connectivity to Europe and Australia, respectively.
Metal neutrality is the goal
So far, executives at both airlines are happy with the progress that they’ve made in just under a year.
In the future, Delta and LATAM will continue working toward “metal neutrality,” Alain Bellemare, Delta’s president-international, said. This basically means that fares, loyalty benefits and the passenger experience will be aligned between both airlines.
The executive teams at both carriers meet once a quarter to go over long-term plans. They gather in cities that are commercially important to the joint venture, such as Atlanta, Miami and Lima, Peru.
While more route announcements and flyer benefits are in the works, both carriers are also doubling down on building their brands and awareness across the continents; this is especially true for Delta, which has historically been weak in South America.
Such measures include an advertising campaign and customer outreach across the continent. “We find it’s important because people don’t know what Delta is as a credit card or a faucet,” Cantarutti said.
Fast forward a few years, and I bet South American flyers will know Delta as the airline that’s partnered with LATAM — and vice versa in the U.S.
What if you could tame long-term inflation? Right now, this is one of the biggest questions in financial circles. After nearly 40 years of very stable money, in 2021 and 2022 prices surged. For the first time in a generation, inflation seriously beat the Federal Reserve’s 2% benchmark.
As of July 2023, this immediate problem appears to be easing somewhat. But investors as a group are understandably spooked. Was last summer’s 9% inflation rate a one-shot problem brought on by the unique conditions of a pandemic economy, massive federal spending and a destabilizing war? Or will inflation return as a cyclical issue?
Consider working with a financial advisor to build an investment portfolio that accounts for inflation.
Financial advisor and author Allan Roth of ETF.com thinks that investors would be wise to prepare in case inflation remains high, or even surges back to 2022 levels. This is a particular risk, he warns, for retirees without the luxury of new wages that keep pace with higher prices.
What if, he writes, inflation averages 5% during your retirement? Over the course of 20 years, a retiree who started out withdrawing $4,000 per year from a given account would need to increase those withdrawals to $10,613 just to keep up with prices. This could easily shatter carefully planned finances.
To fix this, Roth writes, “I built and purchased a 30-year TIPS ladder with roughly $1 million of my own money… By buying as close as possible to bonds maturing each year, I was able to create a 30-year cash flow paying me an inflation-adjusted average of $43,800, or 4.38% annually.”
In other words, by building a TIPS ladder fund, Roth argues that he has added a stable source of inflation-protected income to his retirement fund. A TIPS ladder fund could help investors hedge against both market risks and inflation. While not explicitly a “growth” strategy, it could be a very strong security-oriented strategy for retirees. Here’s how it works.
How a TIPS Ladder Fund Works
A ladder fund is a portfolio of maturing assets, like bonds or CDs, built around staggered maturity dates. For example, you might buy a portfolio with bonds that mature in 5, 10, 15 and 20 years. This fund would “ladder,” as the bonds would mature in stages like the rungs of a ladder, as opposed to all at once.
The idea behind a ladder fund is to hedge against timing risk. For example, say you had invested in bonds in 2019, when rates were extremely low. A portfolio of long-term assets might be stuck with low-value, low-yield assets. A ladder fund, on the other hand, would have short-term bonds. As those assets mature, you could collect back your principal and invest in new, higher-interest assets.
A TIPS bond, or Treasury Inflation Protected Security, is a marketable Treasury asset built to correct for inflation. Each month the Treasury adjusts the underlying principal on all TIPS bonds based on the Consumer Price Index. When the bond matures, the holder receives the greater of either the bond’s original value or its inflation-adjusted value. Since the bond calculates interest based on its underlying principal, this means that the asset’s periodic interest payments will also increase based on inflation.
A TIPS ladder fund, as suggested by Roth, is a portfolio built out of TIPS bonds with staggered maturity dates. This, he argues, would provide a source of inflation-protected income, due to the structure of a TIPS bond, while also giving investors a hedge against market timing risks due to the periodic maturity of the ladder.
Can TIPS Ladders Protect Your Money From Inflation?
While a niche and technical idea, the TIPS ladder fund has been well received. Morningstar’s John Rekenthaler writes that it can potentially offer investors a strong supplement to more traditional assets like stocks and annuities.
“TIPS ladders take the concept of bond ladders a giant leap further,” Rekenthaler writes. “Whereas traditional ladders merely reduce investment risk, TIPS ladders eliminate the possibility entirely. In that they are unique. Conventional Treasuries face no conceivable credit risk, but they certainly court inflation risk… In contrast, every inflation-adjusted penny from a TIPS ladder is known in advance.”
Thanks to the combination of bond interest payments and inflation adjustment, you can know exactly what this portfolio will pay out for its entire lifetime. Thanks to its nature as a government asset, you can know that this portfolio will not default. That’s about as much security as anyone can ask for.
Does this mean that TIPS ladders will be an investor’s forever home? Not entirely, as there are two main catches to this portfolio. First, a TIPS ladder is difficult and expensive to construct, with relatively marginal yields on low-value transactions. As a result, most retail investors won’t have the skill set or capital to build a useful TIPS ladder on their own.
This is why both Rekenthaler and Roth recommend an ETF that offers this structure. A large-scale fund, built and managed by professional investors, could solve both the complexity and the funding problems. Retail investors could buy in using the flexibility of the ETF structure, making this far more practical for them.
Second, a TIPS ladder still offers government interest rates. The reliability of a Treasury asset comes at the cost of lower returns relative to the market at large, even if those returns are inflation protected. This is why Rekenthaler points out that a TIPS ladder should be treated as a specialized asset rather than an all-purpose investment.
“The concept is unsuited for workers,” he writes, “as they attempt to grow their assets rather than spend them… However, to the extent that Social Security payments fail to meet a retiree’s fixed expenses, a TIPS ladder fund would fill the gap – more neatly, I think, than any conceivable competitor.”
A TIPS ladder might not help you build the retirement account that you need. For that, higher-value assets like stocks will probably do better. But once you approach retirement, it might help you build exactly the kind of security that you need. It’s a good investment to keep an eye out for.
Inflation Investing Tips
A financial advisor can help you build a comprehensive investing plan. 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.
Check out SmartAsset’s inflation calculator to get a quick estimate of the buying power of a dollar over time.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
A GUY who criticized his sister’s “tacky decor” has compared it to a bad home goods store.
Three items, in particular, came under his reproachful eye, and he was not impressed.
But his ironic delivery was lost on many viewers, who considered his appraisal unfair and disrespectful.
In the comments section of his post, he faced his own roasting and an onslaught of critics who wanted to forcefully share their views.
Alex Van Gurp (@alex.vangurp) has over 36,000 followers and another 455,000 likes.
In this video, he filmed himself at his sister’s home, reclining on the stairs, as he posed a question to his followers: “Would you have these things in your house?”
He then continued, focusing his attention on three household accessories: “There are tacky things in my sister’s house, that make no sense,” he said.
In his consideration, it wasn’t giving good vibes: “It’s giving bad Home Goods,” he shuddered.
First was an innocuous placemat with a jaunty nautical theme that said: “Life is better at the beach.”
“How do you not make fun of that? It’s right in front of you,” he said.
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Then came a sign that read: “Our Family,” mounted on the wall dedicated to her moms, dad, brothers, and sisters.
“Our family,” he said dripping with sarcasm.
Lastly, it was a utensil pot in the kitchen that was labeled: “Home sweet home.”
In another post, Alex acknowledged the flack he attracted after his video went up.
“You guys tore me apart,” he said. But he was at pains to explain that all was good between him and his sister.
“For real it’s all in good fun. Me and my sister are very close and I make fun of her house every single time I go.”
An example of the criticism he faced included this comment: “You forgot to include the judgemental sanctimonious brother.”
But there were those who also completely got his irony: “Yes, the signs that say kitchen, laundry, pantry. Lol. Live. Laugh. Love. No,” said this commenter.
The final remark reckoned he was hilarious: “I think it’s as funny as hell,” they said.
Nationally known as a hub of scientific progress thanks to its connection to NASA (Houston, we have a problem), Houston is also one of America’s most desirable cities in terms of diversity, entertainment, food and cost of living.
When it comes to hidden gems around the city, there are more than a few that longtime Houston locals want to keep to themselves. We’re here to open up the door to you and highlight some of Bayou City’s best places for food, drinks, entertainment and outdoor excursions.
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Underrated Houston Restaurants
The Houston culinary scene is defined by an entirely unique combination of flavors that reflects the diverse population of the city. These flavors include traditional Texas barbecue, Viet-Cajun seafood, creative breakfast tacos and crispy chicken, just to name a few. Listed below are eight great restaurants that are sure to show off the best of what the Houston culinary scene has to offer.
Phat Eatery
You simply can’t talk about the Houston food scene without mentioning Phat Eatery. Headed up by James Beard-nominated chef/owner, Alex Au-Yeung, this strip mall-based gem is hidden away a little over a half hour outside of Houston in Katy and well worth every minute of the drive it takes to get there. Phat Eatery serves up Malaysian fare with a passion that is seldom seen in any industry. Known for an unbeatable selection of appetizers, a great atmosphere and dim sum that is to die for, Phat Eatery is something you need to experience to understand.
Theodore Rex
Ever wonder what the “T” in “T-Rex” stands for? Well, turns out it’s not tyrannosaurus, it’s actually Theodore. If you ask Theodore Rex chef and owner Justin Yu, that is. This New American restaurant serves up elegant dishes in an elevated space but somehow manages not to feel stuffy at all. Great, vibes, artisanal drinks and food made with care, sound good? The menu may be small but it sure is mighty. Regulars will likely recommend you try everything at least once.
Afrikoko
Afrikoko is undeniably one of, if not the, best West African restaurants in Houston. Opened with the goal of giving the people around Braeburn a place to experience Ghanaian cuisine, Afrikoko serves up authentic stews, fufu, jollof rice and more for lunch and dinner seven days a week.
Loro
Loro is an Asian smokehouse and bar that serves up smoked meats with an Asian fusion twist. Running the show are two James Beard winners in Chef Tyson Cole and Aaron Franklin. Needless to say, when you walk through the doors at Loro, you’re in not just good hands, but quite possibly the best hands. Stop by and chow down on some of Houston’s tastiest brisket, enjoy a slice of classic peach cobbler and let loose with happy hour deals and delicious cocktails including house-made frozen drinks.
Nobie’s
The fine people behind Nobie’s set out to create a restaurant that gave off strong living room vibes. They succeeded. Nobie’s welcoming atmosphere is entirely unique and curated through an obvious attention to detail that’s apparent from the moment you walk in. Spinning vinyl records and churning out great food Wednesday – Sunday, this New American restaurant specializes in artisan pizza, crowd-pleasing small plates and rustic main dishes you aren’t likely to find anywhere else. Be warned, they unapologetically play their records at near-full volume. If you are sensitive to noise, be sure to reserve a table on the patio ahead of time!
Lankford’s Grocery and Market
Lankford’s Grocery and Market is a classic no-frills spot to grab a big breakfast, traditional chicken fried steak or even authentic enchiladas. Established in 1937 and featured on Guy Fierri’s Diners, Drive-Ins and Dives, where Guy highly recommended the Firehouse Burger, this gem is perfect for a quick bite in a nostalgic setting.
Street to Kitchen
If you’re looking to find authentic Thai flavors in Houston, look no further than Street to Kitchen. Known around the city for its legendary drunken noodles, this casual stop is located next to a gas station and offers limited parking. Be sure to make a reservation beforehand if you don’t want to wait as Street to Kitchen has quickly become the go-to spot for Houstonians looking to scratch that authentic Thai food itch.
Blood Brothers BBQ
Hot links, pork ribs, jalapeño cheddar sausage and even fried rice grace the menu at this casual spot for top-notch barbecue with an Asian-Cajun flair. Established in 2013, Blood Bros BBQ is located in the nearby Bellaire area about fifteen minutes south of Houston. Ask around and you’ll hear all about their pork belly burnt ends, jalapeño creamed corn and banh mi offerings.
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Houston hot spots for drinks
From cold beers to craft cocktails in a scenic setting, Houston is full of fun spots to chill out and enjoy a drink with those closest to you. Here are three Houston hotspots that are making waves now.
Rabbit’s Got the Gun
Nestled comfortably in the heart of Houston’s Northside neighborhood, Rabbit’s Got the Gun is a small craft bar known for its mural-adorned walls, meticulously crafted cocktails and on-site taco truck. Opened with the goal of being more of an experience than simply a place to get a drink, Rabbit’s Got the Gun is consistent with the vibe and constant with the quality. Can’t ask for much more out of a neighborhood hangout.
NettBar
Large outdoor area? Check. Dog-friendly? Check. Cold beers and fun games? Double check. NettBar is one of those all-day-hangout-type-places. You can get there around lunch, head out at closing and feel like you had a full day when you get home. Located south of Houston’s Greater Heights neighborhood, this locally-adored bar was built around a structure that has existed at their location since the 1950s. This watering hole has been a meeting place for families, young professionals, and people passing through town since they first opened their doors.
Trash Panda Drinking Club
Not to disrespect any of the other businesses appearing on this list, but you just can’t beat a name like Trash Panda Drinking Club. Accompanied by a great name, this little neighborhood dive bar has just the right mix of punk rock attitude and instagramable aesthetics. Stop in, enjoy a craft cocktail and see for yourself.
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Best under-the-radar coffee shops in Houston
With artisan lattes, creative cold brews and great vibes, these four coffee shops and cafes are the most ideal places in Houston to start your day.
Mo’ Better Brews
Mo’ Better Brews is a 100% vegan coffee shop, breakfast spot, restaurant, bar, community hangout and so much more. Truly a one-of-a-kind shop, Mo’ Better Brews sets out to accomplish a lot and does it all extremely well. Ideal for a get-together with old friends, a quiet morning on your own, or a chill night out with that special someone, Mo’ Better Brews is the coffee shop that does it all and looks darn good doing it.
Slowpokes
Beyond having a great name, Slowpokes is a stellar coffee shop. With three locations around the Houston area in the Greenway Upper Kirby area, Spring Ranch and Independence Heights, Slowpokes serves as a morning pick-me-up stop for a substantial percentage of Houston locals. If you’re hungry, Slowpokes also serves up breakfast food, sandwiches, snacks and local goods in addition to happy hour drinks for the 21-and-over crowd.
Day 6 Coffee Co.
Located about a block off Market Square Park, Day 6 Coffee Co. is a brick-walled coffee shop with a great vibe. Natural light, hanging plants, skilled baristas and tasty baked goods are just a few of the attributes that keep locals and passersby alike coming back and making this quintessential coffee shop a staple in their morning routines.
The Nook Cafe and Bar
The Nook Cafe and Bar is an industrial-style space filled with local art. This cozy cafe was established in 2013 by a group of University of Houston alumni. They opened this shop with the simple goal of improving the quality of life for UH students and the residents that live around the campus. Now with ten years of business under their belt, it’s safe to say this hip coffee shop has done just that.
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Houston’s live entertainment options
There’s no shortage of talented performers in Houston. Luckily for you, there’s also no shortage of stage time. Check out these top spots for live entertainment in Houston and catch a show tonight.
Scott Gertner’s Rhythm Room
This Louisiana-style restaurant and live performance venue serves up casual plates and inventive cocktails in a cool setting. Scott Gertner’s Rhythm Room is a staple in the Rice Military neighborhood. Famous for its steak night and live jazz, Scott Gertner’s is an ode to the past in the best possible way. Catch a live show and experience it for yourself.
The Secret Group
The Secret Group is a small bar with a rooftop patio that hosts a number of different types of live shows like standup comedy, concerts, emo karaoke, 90s nights and more. This off-the-wall watering hole is a great place to make new memories with old friends and is always good for people-watching and low-pressure performances.
Dan Electro’s
Since the late 80s, Dan Electro’s has been the premier spot in Houston’s historic Greater Heights area for live music. Walk through the doors at this storied venue and you’re liable to catch a show of almost any musical genre. The only constant here is quality. Quality on the stage, quality behind the bar and quality people filling the space. Stop in and enjoy the real Houston in all its glory!
Miller Outdoor Theater
Maybe not technically a hidden gem, Miller Outdoor Theater is Houston’s premier amphitheater and, as such, hosts everything from community theater and chorus events to movie nights to touring concert acts. Perfect for a family night, romantic evening or low-key outing with friends, Miller Outdoor Theater is located right next to Rice University and worth checking out if you find yourself in the area on a nice day.
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Four things to do outside in Houston
You can’t come to Houston and not enjoy the great outdoors. Here are a few suggestions to help you reconnect with mother nature during your time in Bayou City.
Buffalo Bayou
The Buffalo Bayou is a slow-moving body of water—technically not a river—that runs through Houston and feeds into Galveston Bay and eventually the Gulf of Mexico. Extensive efforts are underway to clean up the Bayou and a lot of progress has been made thus far. If you’re hoping to spend a day around the water, you’re in luck. Boat tours and ample walking paths near the water allow anyone to soak up the sun, sit on (or by) the water and watch the day go by.
Rooftop Cinema Club
Only operating in seven U.S. cities, Rooftop Cinema Club is the top organization for setting up al fresco movie viewing experiences. The team at Rooftop Cinema Club scouts out locations that provide breathtaking city views and sets up the entire theater experience. They provide seats, personal listening devices and a full food and drink menu. Pair that with a curated selection of iconic movies and you’re in for a beautiful night under the stars.
Memorial Park
First opened in 1924, Memorial Park is closing in on 100 years of providing Houston locals with a green area to escape the urban sprawl and reconnect with the natural world. One of the largest urban parks in the country, Memorial Park is located right across from the Memorial neighborhood and is frequented by neighborhood dog walkers, midday workout warriors, artists looking for inspiration, children playing and more.
Rice University Loop
Unknown even to some Houston locals, the Rice University Loop is a six-mile jogging trail centered around the Rice Campus, south of Downtown Houston. This trail is not just for Rice University students and is open to the public. Perfect for getting those steps in on a Sunday morning or a leisurely stroll after a long day at work, this treelined trail is a tranquil retreat hidden in Houston’s urban jungle.
SOURCE: FACEBOOK.COM/POSTHOUSTON
Bonus gem
Not hidden by any means, but POST Houston is somewhere you need to know about if you don’t already.
POST Houston
Decidedly not a hidden gem, POST Houston is a massive former U.S. Postal Service complex that has been transformed into Houston’s “hub for culture, food and recreation.” The spaces features a large co-working space, multiple restaurants in an elevated food hall-style setting, bars, event venues and a “Texas-sized” rooftop garden. Ask anyone who has been before, it’s easy to spend a whole day in this large complex filled with Houston hotspots.
Houston has it all
Whether you’re an outdoor enthusiast, a dedicated foodie, a weekend warrior or anything in between, Houston has what you’re looking for. Check out some of the spots listed above and find your new favorite place.
Profitability Analysis, Closed-End 2nd Products; Ginnie Ticket Primer for Government Program Lenders
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Profitability Analysis, Closed-End 2nd Products; Ginnie Ticket Primer for Government Program Lenders
By: Rob Chrisman
1 Hour, 19 Min ago
Hey, I’ve got news for you: 2023 is half over. Sometimes reality bites, and vendors and lenders can’t sit there, wringing their hands, waiting for things to get better on their own. Are lenders suddenly going to make huge margins on lots of volume in the second half? Are LOs who were doing 2-3 loans a month in the first half suddenly going to do 4-6? Are vendor reps suddenly going to double their clients? Are rates going to plummet? Is the number of houses for sale going to skyrocket? Banks, credit unions, and depositories are certainly doing something. An analysis of call reports shows that mortgage banking income at banks and thrifts increased by 36 percent on a sequential basis. JPMorgan Chase and Wells Fargo individually more than doubled their MB income from the fourth quarter to the first. Others, like Truist and PNC followed, as Inside Mortgage Finance points out. That said, to the surprise of no one, mortgage-banking income at banks and thrifts was down 38 percent from the first quarter of 2022. (Today’s podcast can be found here and this week’s is sponsored by Gallus, the premier business intelligence tool for the mortgage industry. With hassle-free insights and user-friendly functionality, Gallus empowers you to make faster, data-driven decisions for enhanced profitability. Hear an interview with Gallus Insights’ Augie Del Rio on how mortgage companies are best leveraging data in a high-rate environment.)
Lender and Broker Software, Services, and Products
Artificial intelligence (AI) is here, and as everyone works to determine how AI can enhance business processes, many are also scratching their heads over the new challenges. If you’re attending the American Legal and Financial Network (ALFN) Answers 2023, don’t miss the panel on Tuesday, July 18, “AI: Like It or Not, It’s Here. Are You Ready? Ethical and Business Challenges to the Utilization of Technology in a Default World.” This lunch session will cover current and future AI uses for industry law firms, service providers and others. Black Knight SVP of Servicing Technologies & Product Innovation Dana Federspiel will participate in this informative discussion to share her expertise in default processing within the mortgage industry. Take advantage of this opportunity to gain a better understanding of the intersection between AI and its potential uses in our industry. Contact Black Knight to learn more about solutions for today’s market challenges.
“I love chasing borrowers down for appraisal fees” said no one ever. With Fee Chaser by LenderLogix, you definitely won’t be saying that. Give your borrowers an easy, secure way to pay their appraisal, lock-in and condo doc fees with Fee Chaser’s seamless integration into Encompass® by ICE Mortgage Technology™. It can even handle first mortgage payments. Head over to LenderLogix and get a demo texted to your phone.
“Did you know that by yearend 2022, a remarkable 82 percent of homeowners enjoyed an interest rate below 5 percent, and an impressive 92 percent of homeowners had an interest rate below 6 percent? Consequently, there has been a decline in the demand for traditional cash-out refinancing. This is exactly where Vista Point’s Closed-End Second loan proves valuable! Rather than discarding the original low interest rate, a second loan creates a blended rate giving your borrower a lower payment solution while tapping their built-up equity. Discover the potential savings for your specific situation by visiting here and see how much your borrower can reduce their monthly mortgage payment by using our Closed-End Second Cash-Out Equity Solution. Give your borrower access to the cash they need without sacrificing their advantageous interest rate, with second line amounts up to $550K and combined lien amounts up to $2.5M. For more information, please contact us.”
Does your mortgage accounting team dream about having the ability to analyze the profitability of each loan the company originates? For Smartfi Home Loans, this dream came true with its new, industry-focused finance system, Loan Vision. Smartfi found they were able to gain efficiency and improve their processes with the help of Loan Vision’s immense drill down capabilities. “With Loan Vision, there is this wealth of information at your fingertips,” says Bill Berg, Finance, Technology, and Servicing Leader at Smartfi®. “To understand the ins and outs at the loan level, there’s a tremendous amount of analytical power there. I’m not sure how you would be able to successfully understand your business without it.” Interested in learning more about how your General Ledger should be helping you maximize efficiencies in your accounting department and gain access to financials faster? Contact Carl Wooloff to schedule a call today.
Government Loans and Servicing
Traditionally FHA and VA loans have a higher profit margin than other loan types. But originating them is not a walk in the park. James Hedvall, Chief Capital Markets Officer with Doorway Home Loans, put down some notes he titled a, “GNMA Primer.”
“I’ve been in this business for many years and have seen things done well and things done poorly. And I receive a fair number of questions regarding secondary execution. One typical question is whether a lender should pursue obtaining their ‘Ginnie Ticket,’ or to become a GNMA Approved Issuer.
“Having the ability to take FHA, VA, and USDA loans, turn them into securities, is a powerful tool for well-equipped secondary groups. Why? Well, first it allows you to underwrite straight to AUS findings, manual underwrites and originating loans that are outside correspondent overlays, provide competitive pricing and service to underserved communities, as well as allowing for efficient execution into the capital markets. However, there are a few considerations that need to be understood, because it’s not for every originator.”
James writes, “There are approximately 350 issuers spread across large and small depositories, credit unions, servicers, and independent mortgage bankers. The approval process, sometimes referred to sarcastically within capital markets circles as the GNMA Denial Department, can be long and challenging. There are plenty of cases out there where relatively large originators, with good balance sheets, are rejected by Ginnie Mae. I have witnessed first-hand the approval process a few times, and my best piece of advice is that ‘all battles are won, before they’re ever fought.’ Successful applicants have a few things in common: good financial standing, very competent Secondary and Accounting departments, plenty of operational redundancies, strong quality control oversight, last but not least, updated and complete Policies and Procedures which cover the entire origination cycle.
“For those interested in servicing, when you’re approved to issue GNMA bonds, you will be servicing your loans (PIIT agreements aside). This is why you deliver to the GSEs and issue GNMA bonds in the first place; originators should have a strategy with servicing and its intricate oversite, even if they are utilizing a sub-servicer. Historically, servicing GNMA loans (primarily FHA & VA) is costlier than its conforming cousin. A good sub-servicer can minimize this financial burden.
“In terms of keeping, maintaining, and tracking documents, if you’re FNMA/FHLMC approved, you certainly know what a document custodian does. More times than not, when I hear complaints about a custodian, it has to do with a problem on GNMA loans, as they will be the ones who review your loan collateral and initially certifies your pools for trade (most pools are traded after getting initial certification, although not a requisite).
“Ideally, a good custodian will perform a single document review that accommodates all requirements at once. This eliminates “exception surprises” at the time of sale due to different requirements delaying settlement. Choosing your custodian wisely can save headaches down the road, headaches which normally cause delays in settlements, resulting in an erosion of gain-on-sale.
“In the capital markets, broker/dealers come into play. Outside Secondary Marketing, Broker/Dealers are normally given very little thought by originators. If you’re hedging a pipeline for mandatory execution, broker/dealers are the ones your Secondary group trades forward TBA contracts with, that off-set interest rate exposure from the time the loan is locked, until the time the loan funds and gets committed. But for Issuers, they play an important role in the execution of GNMA pools as they are the ones who are buying them from the Issuer. A good relationship with your broker/dealer goes further than just execution. They can also help with pool formation and optimization. Without going down the rabbit-hole on coupons vs note rates vs high balance di-minimus requirements, B/D’s can help you build out pools that can increase the spread that is willing to be paid above (and sometimes below) what TBA’s are trading at; what you hear as the ‘spec pool pay up.’
“Lenders must pay attention to operations within the Originator. A strong Secondary Marketing team is imperative. Having a good Secondary Manager who understands the entire process: what can be pooled, when can it be pooled, when to create a pool in GinnieNet, and purview into the whole mortgage pipeline not just funded loans, helps in the dozens of moving parts in the process. A strong CFO/Accounting Dept who understands the financial risk of issuing GNMA securities pays dividends.
“Some may not know, but part of the financial risk in issuing has to do with covering P&I shortages every month. GNMA doesn’t buy loans directly like FNMA & FHLMC do. They act primarily as an insurance company, guaranteeing that bond holders receive timely payments of cash flow (for this service GNMA charges 6 bps on every loan, referred to as their Guarantee Fee, or G-Fee). When borrowers are late with payments, or miss payments, it’s the responsibility of the issuer to make up for the missed P&I payment to the holder of that security. This can be a huge outflow of cash per month considering your responsibility is to EVERY bond that has ever been issued by the originator. Anyone issuing GNMA securities back in early 2020 when COVID hit, and the term “forbearance” went mainstream, remembers that moment. Possessing the capital to weather P&I shortages is an absolute must.
“Most often overlooked is your Trailing/Final Docs department. Your last responsibility as an issuer is to make sure that trailing docs (final title/deed or mortgage) get to your custodian for final certification. This needs to be done within 365 days of issuance. This may not be a huge problem for some, but states like Hawaii come to mind, where turn times of county recorders are historically slow and getting a certified copies of anything may take months.”
James wrapped up with, “Everything above is scrutinized by GNMA during the approval process. As I mentioned before, possessing the right individuals, having strong relationships with vendors, and possessing very strong operational controls should be viewed as a requirement before submitting your application.” Thank you, James!
Capital Markets
Many mortgage rates are firmly in the 7 percent range now, and certainly 6 and 6.5 percent pass through mortgage securities are the norm for hedging. We might just be here for the remainder of 2023. The solid economic news certainly doesn’t point to lower rates any time soon.
Monday was a quiet day for those in the mortgage industry, with few locks, many people out of the office, and an early close ahead of the Independence Day holiday. Markets shook off warnings about cooling growth and a slowdown in manufacturing, likely because the highlight of the week will be Friday’s fresh look at the labor market, with June Nonfarm Payroll data following May’s big upward payroll surprise. U.S. IHS Markit Manufacturing PMI remained in contractionary territory for the eighth consecutive month in the final reading for June while the ISM Manufacturing Index fell further into contractionary territory. The manufacturing sector continues to operate in a state of contraction as optimism about the second half of 2023 weakens amid recession concerns. Some would argue that investors are still too optimistic about the prospects for economic growth and the ability of the Fed to stamp out inflation.
There was a better-than-expected Construction Spending report for May, in at +0.9 percent month-over-month. On a year-over-year basis, total construction spending was up 2.4 percent due to renewed strength in new single-family construction despite a jump in mortgage rates. Economic data over the last week continued to show a resilient U.S. economy. The final estimate of first quarter GDP was unexpectedly revised higher from 1.3 percent to 2.0 percent as additional data on consumer expenditures contributed to the increase. The personal consumption expenditures index (4.1 percent) remained well above the Fed’s target. Home price data from Case-Shiller indexes showed increasing prices in April while building permits increased 5.6 percent to an annualized rate of 1.496 million units in May. The lack of existing homes for sale has led to price increases on the limited available for sale inventory as well as an increase in new construction. Consumer confidence reached its highest level since January 2022 due to a strong labor market and receding fears of recession. We also learned last week that consumer confidence rose to its highest level in 17 months in June amid a brighter take on the current situation and a less dire assessment of the future.
Markets return to a relatively quiet calendar today, though there is some potential market moving potential from the release of the minutes from the June 13/14 FOMC meeting, Redbook same store sales, May factory orders, and remarks from New York Fed President Williams. We begin Wednesday with Agency MBS prices little changed from Monday and the 10-year yielding 3.86 after closing Monday at 3.86 percent; the 2-year is up to 4.91 percent.
Jobs
“In our most recent Chrisman post, MWF announced our Growth Strategy into the mid-west and Southeast markets. Most recently, we are pleased to announce the addition of Jeff Hemm RVP in Idaho and the Pacific NW, and the expansion of our new Branch in North Carolina. Jeff is a well-known leader in our industry and will bring a strong leadership presence in our new markets. MWF is excited to have TJ Powell on our team and the entire North Carolina team as we grow in new markets and expand in Florida. “I’m proud of our Team and the efforts to expand the MWF family in new areas. This is part of our written growth strategy and an important part of our overall company expansion,” Ed Adams, SVP Production. For information about our growth plans and career opportunities, contact Ed Adams.”
“Is your firm interested in launching a wholesale mortgage enterprise that’s mission-driven? Our group has a combined 100-year history in mortgage banking (operations, sales, underwriting, and capital markets) with a proven track record of generating over $2 billion annually over the last three decades. There are two participation opportunities: investment or joint venture. Our team includes an experienced and trusted sales force, operators, tech stack, warehouse lines, and take-out investors. Although we are currently based in California, we are actively working towards expanding to the East Coast and Southeast regions. Our expertise lies in Non-QM; however, we offer conventional and will offer government loans as well. Our focus is on serving underserved communities, and our long-term goal is to become a CDFI to ensure fair lending practices. If interested, please reach out to Chrisman LLC’s Anjelica Nixt to forward your note.
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The era of low mortgage rates is over. Embracing this reality will hasten your owning a house that meets your needs.
Low rates flourished for 11 years, as the 30-year mortgage remained below 5% from February 2011 to April 2022. Since then, it has remained mostly above 5%, averaging 6.72% in June in Freddie Mac’s weekly survey.
Some forecasters predict that rates will decline over the next 12 months. But they don’t foresee rates dropping below 5% anytime soon. If you want to buy a home, it’s tempting to be in denial that this is happening. But as you start to accept that we’re now in a time of higher rates, you can achieve closure (literally, when you close on the purchase of a home).
“People are still working through their five stages of grief on this mortgage rate stuff,” says Lisa Sturtevant, chief economist for Bright MLS, the real estate listing service for the mid-Atlantic region. “And I think you have to reach the stage of acceptance at some point that certainly rates aren’t going to come down to where we were back during 2020 and 2021.” (When the median 30-year rate was 2.99%.)
Forecasters predict a modest decline in rates
Let’s brighten that grim outlook by detailing how Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors all forecast a gradual, moderate decline in mortgage rates through at least the first three months of 2024.
Those three organizations are not alone in their prediction that mortgage rates will go down, but no one expects rates to plunge back to where they were two years ago.
“I still think we’re going to see rates stabilizing and then moving slowly down this year and we’re going to end 2023 at 6%,” Sturtevant says.
Danielle Hale, chief economist for Realtor.com, said in an email that “our base expectation is that it will take until the end of this year or early next year before mortgage rates get back to 6%.”
A dissenting voice comes from Zillow, where senior economist Orphe Divounguy said by email, “Buyers should not count on any dramatic rate falls in the next few years.” Mortgage rates, he said, will end 2023 above 6%.
One takeaway from these forecasts: Sure, mortgage rates might drop a little. Maybe. If the forecasters are right. But if you hold out for dramatically lower rates, you’ll probably wait in vain. And if they do fall substantially after you buy, you can refinance.
Inflation is the wild card
What if you want to do your own research? Economists monitor tons of data when forecasting mortgage rates. But if you ask them what regular folks should keep an eye on, they reply as one: inflation.
According to Hale, “It’s not linked one-to-one with mortgage rates, but an easing in the pace of general price increases will help bring mortgage rates down for two reasons.”
For starters, diminished inflation will hasten the end of Federal Reserve rate increases. Second, lenders will “stop baking in a larger inflation premium into mortgage rates.” They do that “to account for the fact that future dollars that are used to pay back the investment aren’t as valuable,” Hale explained.
Most people gauge inflation by the price of gasoline and eggs. Your boss’s boss’s boss swears by the consumer price index. The monetary policymakers at the Federal Reserve rely on an inflation measurement called core PCE, for personal consumption expenditures. “Core” means that energy and food (gasoline and eggs) are stripped out because their prices are volatile.
The Fed’s goal is to keep core PCE around 2%, but it has been higher than 3% for more than two years. From January through April (the latest data available), core PCE was 4.6% or 4.7%. Core CPI has been higher but falling.
“As long as inflation eases, that’s the main factor that will bring our mortgage rate down,” says Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors.
But if inflation stays spitefully high, mortgage rates will remain elevated.
If you’re pining for 3% rates — they’re not coming back
Let’s say the Fed eventually succeeds in taming inflation to 2%. That will be worth celebrating, but it doesn’t necessarily mean mortgage rates will wander south of 5%.
The Mortgage Bankers Association forecasts the 30-year mortgage will dip below 5% toward the end of 2024, but Fannie Mae and the Realtors don’t predict rates will fall that far.
Do what makes you happy
It’s not realistic to put a home purchase on hold in the hope that mortgage rates will return to 2020 and 2021, when the 30-year mortgage held its breath under 4% the entire time. The median rate over the past 30 years is 5.77%. That’s the reality that we’ve returned to.
If you want to buy your first home, you’re probably going to pay well above 5% on a 30-year mortgage, and you’ll have to establish a budget with that in mind. If you’re a homeowner, you dread giving up your current low-rate mortgage and getting a higher-rate loan on the next house. That’s understandable, but as Miranda Lambert once sang, “there’s freedom in a broken heart.”
Whether you’re looking for a bigger place or a smaller home, or one better located for schools or your commute, you might end up satisfied — even after trading a low rate for a higher rate.
The nation’s largest mortgage lender has agreed in principle to settle a longstanding lawsuit with the United States Department of Justice and the Department of Housing and Urban Development (HUD) over faulty FHA loans the company originated from 2001 until 2010.
In an SEC filing released this week, Wells Fargo said it would pay $1.2 billion to resolve certain civil claims that the Federal Government had lodged against it for making FHA loans that quickly soured.
It also covers “potential civil claims relating to the Company’s FHA lending activities for other periods.”
Reckless Trifecta
The bulk of the suit relates to a claim made in late 2012 that Wells took part in a the “reckless trifecta” of deficient training, underwriting, and disclosure, all while exploiting the backstop of government insurance.
Manhattan U.S. Attorney Preet Bharara claimed the bank aimed for quantity over quality, incentivizing volume with bonuses instead of making sure good loans were being originated.
This involved giving “improper bonuses” to underwriters to ensure they approved as many loans as possible, while also hiring temporary staff and failing to properly train them.
And even if the loans turned out to be bad news, Wells Fargo apparently hid that fact to avoid any scrutiny or indemnification.
Wells allegedly certified that some 100,000 FHA loans between May 2001 and October 2005 met HUD’s requirements and were eligible for FHA insurance despite knowing a substantial portion were unacceptably risky.
In fact, during some months nearly half of the FHA loans originated didn’t meet HUD’s requirements because the bank failed to determine if borrower’s could actually pay back the loans.
Wells Said Only 300 FHA Loans Were Bad
The suit also alleged that between October 2005 and June 2011, Wells Fargo only reported about 300 loans to HUD as “seriously deficient” despite thousands carrying that distinction.
And before that didn’t report a single loan as having material underwriting violations or fraud until after a HUD-conducted lender review took place in 2005.
Before that the company was self-reporting its FHA loan quality. By their own account, Wells internally identified 6,558 seriously deficient loans, but supposedly hid 6,320 of them from HUD.
That total included a whopping 3,142 loans that contained early payment defaults, or loans that were 60 days late within just six months. In other words, really bad loans that didn’t have a shot and probably shouldn’t have been approved.
As a result, HUD had to pay out roughly $190 million dollars in insurance claims for defaults on those loans. Apparently millions more was paid out due to Wells not disclosing the early payment defaults.
Will Homeowners Be Compensated?
The original suit makes no mention of whether borrowers or past homeowners will receive any compensation as a result of the settlement.
In fact, the word “borrower” was written only once and “homeowner” was never mentioned, so it’s unclear if individuals will receive any compensation as a result of this massive payout.
It sounds like Wells Fargo just made a bunch of bad loans, as most companies did at the time. Whether homeowners were injured as a result is another question.
Interestingly, Wells agreed to lower credit score requirements for FHA loans to 500 from 600 back in 2011 after pressure from HUD and housing advocates.
However, the bank only made the change in its retail channel and required a 10% down payment along with a maximum DTI of 31% to offset that terrible credit risk.
Whether this will affect their future ability/motivation to underwrite FHA loans remains to be seen, but it could certainly damage the relationship.
Quicken Loans, the self-described “nation’s largest FHA lender,” actually preemptively filed a suit against HUD and the Department of Justice last year to put to an end a three-year investigation.
In other words, you might be getting your FHA loan from a…smaller lender.