The chasm runs the full length of the condominium complex, from the shuttered tennis court to the shuttered pool. Measuring more than 500 feet long and 20 feet wide, the gash divides the complex in two, its weed-choked perimeter cordoned off with chain-link fencing. A grimy trickle of water oozes along the chasm’s concrete floor a dozen feet below, like some ugly open wound that just won’t heal.
Welcome to Coyote Village, a 70-unit condo complex in suburban La Habra whose residents have been living out a homeowner’s nightmare. Over the last four years, portions of the tree-lined greenbelt that once shaded the complex have violently collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth. Running beneath it is a cavernous flood channel that decades ago was sealed with a concrete lid then topped with mounds of soil and landscaped with pine trees.
The first collapse of the concealed lid came in January 2019, when a section of the greenbelt near the tennis court caved in, exposing the flood channel below. The second implosion came in March, when heavy winter rains saturated the greenbelt and the concrete lid couldn’t handle the weight of the soggy soil and towering pines. This time, the collapse took out a huge swath of the greenbelt near the community pool.
Advertisement
Most residents were shocked to learn that their complex was built on top of a private canal that plugs into Orange County’s larger Imperial Channel, which routes storm water out of La Habra, Brea and Fullerton. It stood as the only covered private channel in the county’s 380-mile public storm drain system.
And that “private” designation is where the residents’ encountered another chasm, in the form of a years-long legal battle.
After the 2019 collapse, the county did some cleanup work at the site and provided security fencing around the exposed portion of the channel. Following the March 15 collapse, La Habra brought in construction crews to excavate the channel, which at that point was clogged with dirt, tree limbs and concrete that the city worried would create a damming effect in the broader drainage system during future storms.
But the city’s work stopped there.
La Habra officials have argued since the first collapse that the channel belongs to the complex. And worse, that the channel’s concrete lid had been improperly covered with a breadth of landscaping that violated what had been approved in the city permitting process. According to the city, the homeowners association that represents Coyote Village is responsible for repairing and rebuilding the channel.
The Coyote Village Homeowners Assn. has challenged that stance in a running legal battle, started in 2020, contending the channel is integral to a larger public system and was damaged by public use without just compensation. It has sued the city, the county and the county flood control district, among others, for relief.
“While the conduit runs through the HOA property, the water is public,” said John Peterson, an attorney representing the homeowners group. “The public needs to share in the responsibilities.”
Advertisement
State Sen. Josh Newman, a Democrat whose district encompasses La Habra, tried to broker a solution last summer and was able to secure $8.5 million in state funding to repair the flood channel. “The residents were wholly unprepared and financially unequipped to deal with this,” Newman said. “I was happy to secure those funds.”
But a year later, that money remains unspent.
La Habra initially questioned the propriety of expenditure, asking the state Atty. General’s Office if the allocation could be considered an improper gift of public funds. The state’s Legislative Counsel determined it was not. In the months since, the city and homeowners association have haggled over who would run the major construction project, with the HOA concerned it does not have the expertise and city officials reluctant to take charge of repairs on a canal they consider private property.
Residents have watched in a mix of frustration and resignation as the saga has unfolded.
Jan Duncan, an HOA board member, said she put her Coyote Village loft on the market in June and received six offers the first week. Then came questions about the flood channel and why it hasn’t been fixed in four years. In short order, every offer was rescinded.
“I cannot give buyers anything in writing to guarantee that this is going to be resolved,” she said. “Without that, they’re uncomfortable. I can’t blame them.”
Justin Marinello is among the parents in the complex who worry about the safety risk the exposed channel poses for children. His condo looks out on the gritty channel and his 4-year-old son had a front-row view of the city’s excavation work after the March collapse.
“My son enjoyed watching the construction because he likes giant Tonka toys playing with dirt,” Marinello said. “But it would be nice to be able to open the door up and just have some grass for him to run on.”
On the other side of the chasm, Lizeth Ruiz knew about the exposed channel when she moved to her condo in 2019 but figured it would be quickly repaired. Instead, she finds herself fending off mosquitoes that breed in the canal’s dingy water. “Now, I keep everything closed and have to be more mindful about wearing pants instead of shorts,” Ruiz said, holding her newborn baby tight.
As the summer heat soars, the concrete channel is lined with dry weeds that rise taller than the 6-foot safety fencing. The channel itself is defaced with graffiti. Residents continue to pay $390 in monthly homeowners fees even though the channel’s collapse has sidelined amenities like the tennis court and pool.
It marks a wrenching chapter in the life of a property with an eccentric history.
In mid-century La Habra, a ranch owner flooded a portion of the area to create a lake and islet, deemed “Monkey Island,” where he let feral monkeys roam free. He also eyed the land for a track that would host ostrich races. At the time, ostrich farms were a popular tourist attraction in Orange County.
Later, the lake was drained and La Habra city leaders opted to go a development direction they considered more forward-thinking, erecting a shopping plaza and post office on the site.
In 1978, developer Loren Hendrix proposed an adjacent 70-unit condominium complex, when such communities were still novel in Orange County as an affordable alternative to single-family homes. Without yards to maintain, he envisioned residents being able to stroll along a landscaped creek — a dressed-up version of the flood control channel that crossed the property — as a key selling point.
But Hendrix faced stiff questions from city staff about how he planned to protect children from hazards posed by the channel-turned-creek. Archival records show the county flood control district rejected Hendrix’s creek design. The district recommended design changes Hendrix considered too costly. Instead, the complex would host an enclosed flood channel masked with landscaping.
La Habra City Council members approved the development in April 1979 on the condition that Hendrix’s design be approved by the city’s chief building inspector and the county flood control district. A year later, the building inspector wrote that the complex was “substantially in compliance” with applicable codes. It’s not clear in county records whether the flood control district ever approved the design.
In any case, the condo development and greenbelt were built. And for 40 years, storm runoff flowed through the underground channel unbeknownst to most residents until the 2019 collapse.
La Habra city officials say the cave-ins are more about what was built on top of the channel than what lies below.
Deputy City Atty. Gary Kranker contends that at the time of the 2019 collapse the soil piled above the channel ran 9 feet deep — 6 feet more than the greenbelt design approved by the city — and that the pine trees that by then stood 80 feet tall contributed to the channel lid’s failure.
“It’s the obligation of the individual constructing the channel, or in this case, the channel roof, to make sure it was done properly,” he said. “Based upon the calculations that we have, it would have been done properly had it only had 3 feet of soil.”
And he faults the homeowners association for failing to take aggressive action to alleviate the risks between the first cave-in and the implosion in March. “To be quite candid, [they] did not do anything to try and alleviate this condition,” he said. “They could have hired someone to remove the soil, one wheelbarrow at a time.”
Last year, the homeowners association sued Hendrix, the complex developer, for fraud. The complaint alleged that he concealed the channel and any maintenance responsibilities from the association so he could sell condos “more quickly and at higher prices.” Peterson, the association’s attorney, said a settlement agreement compels Hendrix to find the insurance policies that covered the development and assign the rights over to the association.
Hendrix did not respond to requests for comment through his attorney.
Last week, representatives for the city and homeowners association said they were closing in on an agreement for moving forward with repairs that would free up the $8.5 million in state funding. Once a resolution is reached, the canal’s reconstruction is expected to take at least a year.
Roma Damo, who has lived at Coyote Village for 35 years, doesn’t see much light at the end of the tunnel — or flood channel, in her case.
“I’m seriously thinking about renting this condo out and getting myself an apartment,” said Damo, 88, eyeing the degraded channel outside her condo windows. “I don’t want to spend the rest of my life here looking at this.”
Gary Keller took to the stage at the 2023 Keller Williams Mega Agent Camp in Austin, Texas, Tuesday morning with his usual bravado: a black-and-white video featuring his favorite animal, the buffalo, in a thunderstorm, alongside a motivational message for agents. Rather than fear the storm, Keller Williams agents embody resilience and adaptability to conquer any market challenge. “We are the storm,” the text read.
Keller kicked off the first day of the two-day gathering by offering his take on the housing market and economic conditions. Despite persistent inflation challenges, a volatile mortgage market and limited inventory, Keller said it was still a good time to buy a house.
“It is always the right time to buy the right piece of real estate,” Keller, the executive chairman and founder, said. “Timing is a fool’s game.”
Instead of allowing homebuyers to be educated by “clickbaity” videos espousing an impending real estate crash, Keller told agents that they need to take charge of the narrative and be the ones out there educating consumers on their local housing market.
“Our goal is for you to always be the economist of choice in your local market,” Keller said.
Keller did acknowledge that it has been a slower year for the housing market and agents.
“Our industry is in a recession,” Keller said. “But my bet is that we are already close to the bottom of what the real estate market would do no matter what. I think we’re on Skid Row right now, so I don’t think it is going much lower.”
To illustrate his point, Keller highlighted that the industry is projected to see 4.3 million home sales this year, significantly down from the 6.12 million sales in 2021, but roughly the same as 2009 to 2012.
“If you look at the trend line, given the overall economy, there is not a whole lot of room to go, to get to the bottom,” Keller said. “Yeah, you could drop down to 3 million, but we haven’t seen that in 30 something years in what was a completely different setting than you are in now. In modern times I think that number is more around 4 million, so I don’t think we have anything shocking in the real estate space.”
Fewer overall transaction sides means the average number of sides per agent this year will come in at roughly 5.7 sides, however, the average market volume per agent is projected to come in at $1.44 million, the fifth highest year on record, he said.
Keller attributed this to the increase in median home sale price which is projected to come in at $382,000 for the year, 7% above the trend line of 4% annual increases.
“People say it is way overpriced, but it is not phenomenally overpriced,” Keller said. “The trend line goes up 4%, which is the expect annual appreciation of building a home. In 2006 we were 21% above the trend line and now we are only 7%. Think about it this way, if next year real estate holds, meaning that it doesn’t go up by 4% we are just barely above the trend line and if it drops by a percent then we would be only 2% above the trend line.”
In addition, Keller noted the wave of first-time Millennial homebuyers and move-up Millennial homebuyers who are hitting their peak earning years will be hitting the housing market in the next few years, giving agents more reasons for optimism.
Keller concluded the discussion by circling back to the opening mantra of “we are the storm.”
“If you do the work, you will have a great year in real estate, regardless of the market,” Keller said. “If you don’t do the work, and spend your time trying to avoid contact with people, you aren’t going to like this industry very much.”
A landslide struck Laguna Beach’s Bluebird Canyon in 1978 — smashing cars, buckling streets and destroying 24 homes. An adjacent swath of earth broke loose in 2005, wiping out 12 more homes.
That wasn’t enough to keep Scott Tenney away. In 2010, Tenney and his wife, Mariella Simon, bought a 15-acre hillside ranch near the disaster area despite the listing warning that the property was on the site of an ancient landslide.
“We knew we’d have to do a bit of terracing and retaining, but California is what it is,” Tenney said. “It’s a dynamic place not just culturally, but geologically.”
Advertisement
From an outside perspective, his might seem a confounding decision. But in Southern California it’s an extremely common one, because that geological diversity, as Tenney calls it, is not just the danger. It’s the allure.
Elevation has long been aspirational here — an escape from the urban flats.
Since settlers first started pouring in from the relative flatness of the East Coast and Midwest, they were captivated by California’s vertiginous landscape. Plein air painters flocked to capture the light of the arroyos. Health seekers sought the clean air of the San Gabriel foothills. Folk rockers found inspiration in Laurel and Topanga canyons. And the moneyed elite started building their houses higher and higher above the basin, forever seeking the trophy perch with the show-off view.
But that perch has always come at the risk of catastrophe. Homes slide into a gulch in Palos Verdes. Fires roar over the Malibu hills. A debris flow kills 23 people and destroys 130 homes in Montecito. Heavy snow traps thousands in the San Bernardino Mountains. And winter storms pull fragile bluffs into a rising sea.
These natural disasters so often occur where the tectonic plates collided and folded into beautiful vistas.
Advertisement
While other regions may face only one main disaster threat — tornadoes in the Midwest, hurricanes on the Gulf and East coasts — California’s extreme topography brings siege from all sides: the ocean, the trees and brush, the sky above and the ground below. And oftentimes, the most attractive areas are some of the most dangerous.
A land of disasters
More and more people are crowding into the Wildland Urban Interface — the zone of transition between unoccupied land and human development. It’s where properties mingle with undeveloped (and often steep) land, and it’s uniquely susceptible to natural disasters.
According to the U.S. Fire Administration, this area grows by 2 million acres a year as people fan out to the edges of wilderness in search of affordable houses, more space or simply a break from life in the city. And California holds more homes in this dangerous zone than any other state in the country.
And prices keep soaring. It doesn’t matter if a house sits on stilts on the side of a cliff, if it’s a landslide complex slowly sliding toward the sea, or if it’s predicted to be knee-deep in water in a couple of generations — there will always be a buyer.
As Californians flock to risky areas, disasters take a greater toll. Over the last decade, the state has experienced 20 disasters that each cost at least $1 billion in damage from flooding, wildfire and extreme heat. Those 20 alone combined for 783 deaths, according to National Centers for Environmental Information.
According to the real estate listing database Redfin, the trend is nationwide. Last year, the country’s most flood-prone, heat-prone and fire-prone counties all saw more people move in than out. Redfin researcher Sheharyar Bokhari blames one primary factor: the housing affordability crisis.
“L.A. and most other coastal cities are expensive. With remote work becoming more of an option, people are finding they can have more space and finally afford a home if they move to riskier areas,” he said.
Bokhari said another L.A.-specific factor is development — mainly that there’s not as much being built in the city compared to the more rural areas surrounding it.
He points to the Inland Empire, which is typically more affordable than L.A. County. In Riverside County, roughly 600,000 homes face a high risk of wildfire, the most of any of the 306 high-fire-risk counties in the country. Despite that, the county’s population grew by 40,000 over the last two years.
Even if experts — and common sense — say to stay away from certain areas, Bokhari said that won’t likely happen because local governments aren’t incentivized to push people out.
“These disaster-prone cities need revenue and people paying taxes,” he said. “They just claim that they’ll be more resilient and take more safety measures going forward,” he said.
Where else would I go?
Since moving onto the ancient landslide zone, Tenney and his wife founded Bluebird Canyon Farms, which offers workshops and grows food for local markets. His time is split between that and taming the erosion-prone land beneath the farm.
To combat sliding land, Tenney installed a gravity wall, 200 feet long and 9 feet tall, to retain the hillside. In addition to grading the terrain to make the slopes gentler, he added powerful drainage systems and timber-and-concrete cribbing to keep structures in place.
The work never stops, and Tenney keeps a monthly schedule to keep up with tasks. Clear brush in spring. Clean storm drains in September. Inspect terracing every few months.
Newsletter
Subscriber Exclusive Alert
If you’re an L.A. Times subscriber, you can sign up to get alerts about early or entirely exclusive content.
You may occasionally receive promotional content from the Los Angeles Times.
“You can run but you can’t hide,” he said, adding that urban centers such as L.A. have their own laundry lists of things to worry about: crime, homelessness, etc. “You won’t experience a wildfire in downtown L.A., but there are plenty of other things to be concerned with.”
Cribbing systems used by Tenney have become commonplace in Portuguese Bend, a small coastal community on the Palos Verdes Peninsula situated on a slow-moving landslide complex. Land moves up to 8 feet a year, and at that rate residents would rather ride the sliding earth toward the sea than sell and move somewhere else.
“I’ll be here until I can’t be here anymore. I’ll slide away with the land,” Claudia Gutierrez told The Times in July after a nearby landslide in Rolling Hills Estates sent a handful of homes careening down a canyon.
You’d think the real estate market in disaster-prone areas would eventually slow down, but there are no deals to be found for house hunters. Longtime residents often stay put post-disaster, and incoming residents consistently pay a premium to live in a scenic, though potentially dangerous, area.
In cities tucked among the foothills of the Verdugo and San Gabriel mountains such as Altadena and La Cañada Flintridge, buying in a high-fire-risk zone might be ever-so-slightly cheaper than buying in a safer place. And buyers pounce.
“My clients try to choose low-fire-risk zones, but if the house in the fire zone is the right price, that is more important,” said Brent Chang of Compass.
When Lisa and Michael McKean got home to Malibu Park from their honeymoon on Nov. 8, 2018, they were so exhausted that they went straight to sleep. The newlyweds didn’t even bother unpacking their suitcases of swimsuits still wet with Caribbean saltwater.
When they woke up, Lisa looked out her back window and saw a 10,000-foot cloud of billowing black smoke.
The Woolsey fire was ravaging the Malibu hills.
The pair grabbed their still-packed suitcases and fled to the Zuma Beach parking lot, where they spent the day surrounded by horses, dogs, cats and neighbors all wondering if their homes would survive.
Theirs, built a year earlier, did not.
“The entire neighborhood burned,” Lisa said. “Everything was black, scorched earth.”
Devastated, the pair spent six months crunching numbers on the cost of rebuilding versus moving. The home that was destroyed had taken four years to approve and three years to build. Their next one could take even longer.
Despite the damage, and despite the ceaseless, inescapable risk of a future fire, they ultimately decided to stay and rebuild.
Cheryl Calvert has lived in Malibu since 1985 and has adapted to a life of fire. To her, the flames are nearly routine.
“Once you make it through your first one, you realize it’s manageable. But you have to plan ahead,” Calvert said.
She keeps two bags packed at all times: one full of goggles and N95 masks and one with dog supplies.
Calvert has experienced plenty of fires during her time in the coastal community, but the worst was the Corral fire in 2007. She was in the driveway as the flames arrived, and she sprayed the corner of her wooden home with a hose as it ignited. Her guesthouse and garage burned down, but the house was saved.
She never considered leaving. Instead, she became more prepared, installing an extra water tank and leaving a pair of shoes by the front door at all times for quick escapes.
“We have to do crazy things, but it’s only crazy for an hour or two every five or 10 years,” she said.
She ran down the usual list of reasons why people move to Malibu: the beautiful landscape, the ocean breeze, the sweeping views. But she said the main reason her and so many of her neighbors stay is because of the community.
“We’re all living near like-minded people who are willing to risk themselves for each other,” she said. “It’s a bunch of hippies. Rich hippies.”
The psychology of staying
A life among the trees, coasts and cliffs is often what lures Californians to disaster-prone communities, but according to experts, the factors that make them stay after a disaster strikes are much more complicated.
Age, race and class can all indicate whether someone is more or less likely to move after experiencing a disaster. For example, Zhen Cong, professor of environmental health sciences at the University of Alabama at Birmingham, found that in the wake of tornados, the middle class might be the most inclined to move since the upper class has the resources to stay and rebuild, while the lower class is often trapped and has no other choice but to stay.
Other relocation factors include the level of damage to the home and whether the person owns the place or rents. But often the most important factor is one that can’t be easily quantified: “People who have a strong sense of place and a strong sense of community are less likely to move,” Cong said.
Ironically, some disasters can even encourage people who otherwise would have left to stay.
In studying post-tornado relocation decisions across the country, Cong found that after a disaster, people increase their disaster preparedness. Part of that includes gathering supplies, but it also includes social engagement: talking to neighbors, sharing information on social media and attending meetings. That engagement, which might not happen if a tornado doesn’t strike, brings a greater sense of community, leading people to stay in that community.
Anamaria Bukvic, an assistant professor at Virginia Tech who studies coastal hazards and population displacement, found that after Hurricane Sandy struck the East Coast in 2012, non-geophysical factors mattered the most in deciding whether to stay or leave. For example, confidence in adapting to future disasters was a more relevant indicator if someone would stay than how close they lived to the ocean.
“The experience of flooding can be emotionally disturbing and traumatic,” Bukvic said. “When facing problems, some people try to avoid them. Others try to resolve them.”
She added that confidence in government plays a major role as well. If a person believes the government responded well to the disaster and will keep them safe during the next disaster, they’re more likely to stay.
That’s something that Malibu Mayor Bruce Silverstein thinks about when overseeing the city’s disaster response plan. Although L.A. County is responsible for physically fighting the fires that plague the area, Malibu has instituted a free service in which residents can request a fire-hardening expert to inspect their property to better prepare them for the next blaze.
The city also outlaws certain types of vegetation susceptible to fire and tries to prevent excessive population growth in order to make evacuation from hills and canyons easier during emergencies. It’s the main reason accessory dwelling units (ADUs) are harder to build in Malibu than L.A.
“Unlike L.A., we don’t have standards that encourage growth,” Silverstein said. “We maintain the status quo and try to keep space between properties so if one catches on fire, it doesn’t extend to the neighbors.”
Michael Dyer, a former Santa Barbara County fire chief who now serves as public safety director for Calabasas, said safety became a top priority for the city after Woolsey, energizing the community into forming multiple volunteer commissions that plan for disaster preparedness.
“We have to provide that service as a government,” Dyer said while monitoring a brush fire in Topanga from his front porch. “No one has forgotten Woolsey yet. And as long as I’m here, we won’t.”
No simple fix
As the climate crisis worsens and the Wildland Urban Interface grows in size, experts are eyeing ways to mitigate the effects of natural disasters to save both the environment and human lives.
L.A. is currently considering an ordinance that would limit development in the Santa Monica Mountains. Using recent wildfires and the Rolling Hills Estates landslide as examples, supporters said the measure would make it harder to build mansions and large hillside homes as a way to limit damage caused by disasters, as well as protect open space and wildlife.
In addition, national insurers such as State Farm and Allstate are no longer selling insurance policies in wildfire-prone areas after a series of catastrophic fires raised premiums. Without insurance, people might be disincentivized from buying and building homes in risky areas.
Redfin is also tinkering with a way to warn people of a home’s potential dangers. The company conducted an experiment in which it showed a listing’s flood risk score to certain users but not others and found that those who were shown the scores were less likely to bid on the home.
The scores have since expanded to show risk for fire, heat, drought and storms.
In the meantime, Californians continue to build, and rebuild, in disaster-prone areas. Lisa and Michael McKean, whose home burned down in 2018, moved back into Malibu Park in 2021.
As neighbors slowly filter back into the neighborhood, they walk around to measure progress and congratulate those who have returned.
“We used to hate cement trucks and jackhammers, but now we celebrate them,” Michael said. “The cheery sound of construction.”
U.S. counties most prone to flooding saw 384,000 more people move into them than out of them over the past two years, a 103% increase during that time. Similar trends are being observed in areas prone to wildfires and excessive heat as home prices have remained generally elevated well after the pandemic-driven homebuying boom.
This is according to data from Redfin, which conducted an analysis of migration patterns sourced from the U.S. Census Bureau cross-referenced with climate risk scores from the First Street Foundation, a research-oriented nonprofit that aims to define the risks of climate change in the U.S.
A combination of an explosion in remote work combined with record-low interest rates during the height of the COVID-19 pandemic has caused people to search for more affordable housing, fewer taxes and warmer weather. This pushed migration into states like Florida, Texas and Arizona, despite the fact that these states carry higher levels of risk from extreme heat, wildfires, drought and storms.
“It’s human nature to focus on current benefits, like waterfront views or a low cost of living, over costs that could rack up in the long run, like property damage or a decrease in property value,” said Redfin Deputy Chief Economist Daryl Fairweather. “It’s also human nature to discount risks that are tough to measure, like climate change.”
While the U.S. continues to reckon with issues related to housing supply, disaster-prone areas generally have a higher pool of available homes, leading to reduced prices. But a lot of building activity is also concentrated in areas associated with higher climate-related risks.
“America is increasingly building housing in places endangered by climate change; more than half (55%) of homes built so far this decade face fire risk, while 45% face drought risk, a separate Redfin analysis found,” the data explained. “By comparison, just 14% of homes built from 1900 to 1959 face fire risk and 37% face drought risk. New homes are also more likely than older homes to face heat and flood risk.”
Homeowners and renters may not have felt the full impact of climate-related disasters since, oftentimes, they do not end up directly paying for renovations or repairs necessitated by an adverse climate event, Fairweather said.
“Insurers and government programs frequently subsidize the cost of rebuilding after storms hit, and mortgages mean homeowners are ceding some risk to lenders—especially if their house goes into foreclosure after a storm,” he explained. “But with natural disasters intensifying and insurers pulling out of disaster-prone areas including Florida and California, Americans may start feeling a greater sense of urgency to mitigate climate dangers—especially if their home’s value is at risk of declining.”
Which, for many Americans surveyed by Redfin, is a concern. According to a survey of roughly 2,000 U.S. residents commissioned by Redfin and conducted by Qualtrics in May and June 2023, nearly half (48.7%) of respondents who moved within the last year believe that an increasing frequency or intensity of climate events like natural disasters, excessive temperatures and/or rising sea levels will “likely impact home values in their area in the next 10 years,” the data said.
Among the top migration destinations most impacted by climate risk, coastal Florida has seen nearly 60,000 more people move in than move out over the past two years. This includes to areas like Lee County, which includes Fort Myers and Cape Coral. The area was most recently ravaged by Hurricane Ian in September.
Meanwhile, inland California, Utah and Arizona have seen their populations swell as the risk of wildfires has only grown, Redfin found.
Recently, prominent insurance companies have exited some of these areas. Farmers Insurance announced earlier this month that it will cease providing coverage in Florida, while State Farm and Allstate are pulling back on types of coverage in California. All the exiting companies have cited climate risk in explaining these decisions.
Investing is a way to increase your wealth based on your risk tolerance and time horizon
The best investments for low-risk investors looking for moderate returns are index funds, government bonds, and high-yield savings accounts
The best investments for high-risk investors that want high returns are individual stocks, real estate, and cryptocurrencies
Investing is one of the best ways to grow your wealth and improve your financial future. One of the keys to finding the best investments is to recognize the power of compound interest. The credit bureau Experian® describes compound interest as “when interest gets added to the principal amount invested or borrowed, and then the interest rate applies to the new (larger) principal.”
There are many ways you can invest, and some investments earn more than others, and some investments are riskier than others. Today, you’re going to learn about the nine best investments in 2023 based on average returns as well as your personal risk tolerance.
The investing information provided is for educational purposes only. We recommend consulting a financial professional before investing.
The best investments
The best investments right now to grow your wealth include:
High-yield Savings Accounts
Short-term Certificates of Deposit (CDs)
Government Bonds
Corporate Bonds
Real Estate and REITs
Individual Stocks
Index Funds
Exchange-traded Funds (ETFs)
Cryptocurrency
1. High-yield Savings Accounts
High-yield savings accounts are similar to a regular savings account, but you’ll often earn more interest by keeping your money in one of these accounts. You can sign up for a high-yield savings account through many banks and credit unions, and some accounts can earn you anywhere from three to four percent annually.
If you have or plan on making an emergency fund, Javier Simon from SmartAsset recommends using one of these accounts. “Anyone looking to open a rainy day or emergency fund that provides a higher-than-average interest rate and high liquidity should consider a high-yield savings account,” writes Simon. You’re saving anyway, so why not make money from storing your funds?
Best investment for: People with lower risk tolerance and who are good at saving. This is one of the safest investments with high returns because many banks are FDIC insured, so even if the economy has a downturn, your money is backed by the government.
Risk level: Very low
How to invest: Banks, credit unions, and online banks
Potential returns: Moderate
2. Short-term Certificates of Deposit (CDs)
When looking for where to invest money, many people turn to certificates of deposit, which are also known as CDs. Like high-yield savings accounts, CDs are another type of account. CDs work by allowing you to deposit your money with the caveat that you don’t withdraw the money for a certain amount of time. Once that time frame expires, you’ll receive your money back as well as the interest.
Best investment for: People willing to store their money for one, three, or five years, which are the average predetermined time frames. Just remember, unlike a savings account, there’s a fee for withdrawing your money early.
Risk level: Very low
How to invest: Banks and credit unions
Potential returns: Moderate returns that sometimes exceed those of high-yield savings accounts
3. Government Bonds
Sometimes, the government needs to borrow money, so they offer people the option to loan them money via government bonds. Like CDs, these bonds are for a specified period, but they provide regular payments. Peoples sometimes use bonds as one of the best passive income investments due to these payments.
One caveat to note is the return on government bonds varies depending on how the economy is doing.
Best investment for: People with a low risk tolerance often buy government bonds. Unless the government fails, there’s not much that will prevent getting your return from this investment. Unlike other investments, government bonds can last for up to 30 years.
Risk level: Very low
How to invest: The United States Treasury or through a stock broker
Potential returns: Low
4. Corporate Bonds
Like government bonds, corporate bonds are loans, but you’re providing that loan to a company. This investment helps companies that need money to invest in new products and expand their business. Since these aren’t backed by the government, they can be riskier because the company may go out of business. Although these have a higher risk, they also have a higher return than government bonds.
Best investment for: Individuals with a higher risk tolerance and are looking for higher returns may want to invest in corporate bonds. These bonds pay out regularly, and they’re a safer investment when buying bonds from large, stable companies that have been around for a while.
Risk level: Moderate to high
How to invest: Stock brokerages
Potential returns: High
5. Real Estate and REITs
One of the investment ideas many people turn to is real estate because it can provide extremely high returns when the housing market is good. The downside is that when the housing market has a downturn, as we saw in 2008, people experience big losses.
Rather than investing in real estate, you can invest in real estate stocks, which are called real estate investment trusts (REITs). These stocks are for companies that own properties like malls, office buildings, and other forms of real estate that generate revenue. These can be slightly less risky but still have some risk due to the nature of real estate.
Best investment for: Those who are looking for high returns or have a diversified portfolio already and can weather some higher-risk investments.
Risk level: High
How to invest: Mortgage broker for real estate and stock brokerages for REITs
Potential returns: High
6. Individual Stocks
Individual stocks are available to everyone, and when the average person buys these types of stocks, they’re known as “retail investors.” You may have heard of retail investors investing in individual stocks during the GameStop stock hype of 2021, which also showed how risky individual stocks can be.
Individual stocks come with a high risk and high reward. Basically, you’re buying a portion of a single company, also known as a share of the company. Numerous factors dictate the price of a stock including the profits or losses of the company as well as speculation of the future of the company.
Best investment for: People who are looking for higher returns and don’t mind the risk may want to invest in individual stocks. These stocks can involve doing a lot of research into a company in order to make a quality decision. It’s possible for single stocks have the potential for large returns and losses. For example, investing in Amazon (AMZN) in 2018 and selling in 2021 would have over a 100 percent return, but buying in 2021 and selling in 2022 would have a 50 percent loss.
Risk level: High
How to invest: Stock brokerage
Potential returns: Low to high
7. Index Funds
Index funds are a type of stock, but rather than owning one stock, you’ll own multiple stocks. These stocks track a specific market, like the S&P 500 or the Dow Jones. When purchasing an index fund, there are often low fees and steady returns. The famous investor and founder of The Vanguard Group, John C. Bogel, popularized investing in index funds. This type of investing is popular because indexes like S&P 500 index funds track the 500 largest companies in the United States.
Best investment for: People who are new to investing as you don’t need to regularly check in and research different companies because index funds track the top companies in the U.S.
Risk level: Low
How to invest: Stock brokerage companies
Potential returns: Moderate
8. Exchange-traded Funds (ETFs)
Exchange-traded funds (ETFs) are similar to index funds because your single stock has shares of multiple companies, but ETFs are usually for specific industries or categories. For example, ARK Invest is a well-known ETF that often invests in technology companies, and there are other ETFs that have an assortment of bonds, like Vanguard’s Bond Market Index Fund (BND).
Best investment for: People with a moderate level of risk tolerance. ETFs can be thought of as a mix between index funds and individual stocks since they’re riskier than index funds, but they’re less risky than individual stocks because you’re more diversified.
Risk level: Moderate
How to invest: Stock brokerage
Potential returns: Low to high
9. Alternative Investments
Cryptocurrency trading is a hot topic, but many people don’t fully understand how it works. Cryptocurrencies are a digital form of currency that’s traded on a network known as the blockchain. The first cryptocurrency was Bitcoin, and now, there’s an endless number of cryptocurrencies. Many people have become millionaires or billionaires from investing in crypto, but it’s an extremely volatile market, and many more have also lost their life savings.
Currently, there is very little to no regulation around cryptocurrency, and much of the investing involves speculation. Notable investors like Warren Buffett and his business partner Charlie Munger have been highly critical of crypto investing, calling it, “worthless, artificial gold.”
Best investment for: People with a high risk tolerance and can tolerate losing their investment may find high returns with crypto investing.
Risk level: Very high
How to invest: Crypto exchanges
Potential returns: Very high
How to Choose the Best Investments
There’s no single right way to choose the best investments because it’s dependent on your unique situation. To make the best choice for yourself, you’ll need to assess your personal risk tolerance and when you’re hoping to cash out on your investments.
1. Assess Your Risk Tolerance
When it comes to investing, the higher the risk, the higher the reward, but it can also mean bigger losses due to unforeseen circumstances. While looking at the top nine best investments, consider how risky they are and whether or not they’re right for you. If you’re concerned about losing money and simply want steady, average returns from your investments, you may want to choose investments that are lower risk.
2. Gauge Your Time Horizon
An important aspect of investing is when you plan on needing the returns from your investment. Many people invest as a way to save for retirement, but some people invest in order to make money to pursue another goal, like purchasing a new home or going on a big trip. For those with a longer time frame of 10 or more years, you can tolerate making low-risk investments with steady returns. If you need the returns sooner, you may want to look into taking more risks.
A simple way to invest based on your time horizon is to use target date funds. The United States Securities and Exchange Commission describes target date funds as being “designed to be long-term investments for individuals with particular retirement dates in mind.” With this type of fund, you set the date you plan on retiring or selling your investments, and it will automatically adjust for risk.
3. Recognize Your Personal Investment Knowledge
Investing does come along with some risks, and these risks vary depending on which type of investing you do. For example, investing in a high-yield savings account is much less of a risk than investing in individual stocks. As a way to minimize your risk and be fully aware of the risks you’re taking, it’s helpful to educate yourself further on each investment and gauge your personal knowledge.
There’s always room to grow your investing and personal finance knowledge. Even the greatest investors in the world continue to learn as much as they can about investment strategies.
4. Assess How Much You Can Budget for Investing
When getting started on your investment journey, it’s often a good idea to minimize your debts as much as possible before creating a budget. For example, if you have a high amount of credit card debt, the interest you’re paying will counteract the money you’re putting into different investment opportunities.
Once you have minimal debt, you can create a budget to see how much you can invest each month. With many of the investments covered here, you can set up automatic investments to make the process a little easier as well.
Best Investments: FAQ
Now, you know about various investments as well as the risk associated with each one. The following are some additional frequently asked questions to help you get started with investing.
What Is Compound Interest?
Compound interest is when the money you make from interest starts making you additional money as well. For example, with a 10 percent interest rate, $1,000 would make you $100. The following year, you’d earn 10 percent interest on $1,100 because that extra $100 you earned will earn interest as well.
Without investing anything else, your original $1,000 investment will be more than double your original investment in 10 years.
Which Investment Gives the Highest Returns?
Investments that have the highest return opportunities include real estate, individual stocks, and alternative investments like cryptocurrencies. Just be sure to keep in mind that these investments also come with the most risk.
Is It OK to Invest During Times of Uncertainty?
Investing during uncertain times can bring better-than-average returns later on. Marcus by Goldman Sachs recommends taking the long view when making your investments. Even during a bad economy, historical data shows that it eventually recovers. You’ll just need to assess your risk and decide if you can weather the storm until it rebounds.
Should You Invest with Bad Credit?
Investing is a way to save for your retirement or future purchases, and it can increase your overall net worth. If you have bad credit or a lot of debt, it may be best to wait on investing because that money could go to paying off debt, improving your credit, and increasing your financial security.
If you need help improving or repairing your credit score, allow Credit.com to help. We have services like ExtraCredit, and we can also provide you with a free credit report card. We’ll be there to help you learn how to improve your credit as well as other ways to increase your wealth, so sign up today!
Termite damage can cost homeowners thousands of dollars — and home insurance doesn’t typically cover it. Here’s why termite damage isn’t covered by home insurance and how you can protect your home from this wood-eating insect.
Does homeowners insurance cover termite damage?
Home insurance typically doesn’t cover termite damage. That’s because insurers consider termite damage to be preventable, not a sudden, accidental event like a fire or storm. It’s the homeowner’s responsibility to keep up with maintenance and deal with termite infestations immediately.
Termite damage happens over time as termites eat away at the wood in your home. The damage caused by termites can cost homeowners, on average, $3,000 to repair. It’s important to quickly deal with termite infestations before they cause significant damage. Most insurers won’t cover damage caused by a lack of maintenance.
When does home insurance cover termite damage?
Most homeowners policies specifically state that termites and other infestations aren’t covered. That said, there are rare cases when homeowners insurance maycover termite damage. Let’s take a look at two scenarios:
House fire
Suppose termites gnaw through your electrical wiring and start a house fire. Home insurance almost always covers accidental fires, so you may have coverage even if termites were the cause.
Abrupt roof collapse due to hidden termite damage
Say your roof abruptly caves in, due to termite damage. If you can prove the damage was hidden and not visible from the outside, your insurance company may cover it. However, if there were signs of termite damage before the collapse and you didn’t address it, the damage would not be covered.
Home insurance policies are incredibly detailed about what they include and exclude. If you don’t see something about termite damage spelled out in your specific policy, assume it’s not covered.
How to identify termite damage
Termites can significantly damage your home’s foundation, ceilings and walls. Termites like to eat cellulose, a type of plant fiber found in wood. As they feed on cellulose, they create tunnels through wooden structures.
To identify if you have termite damage, look for the following signs:
Mud tubes. These are small, tube-shaped structures made of dirt and wood. They’re often found along walls or foundations.
Swollen floors. Termite-infested floors can look swollen or warped and feel bouncy when you walk across them.
Hollow-sounding wood. Tap on wooden surfaces to see if they sound hollow, as this may indicate termite tunnels.
Cracks and holes. Check for tiny cracks and holes in wood and your home’s structure, which could be signs of termites.
Types of termites
Three main types of termites can cause extensive damage to your home. Here’s how to distinguish the different types.
Drywood termites infest dry wood and can be found in furniture, flooring and walls.
Dampwood termites prefer moist wood and can be found in areas with high humidity, such as basements and crawl spaces.
Subterranean termites live in soil and build mud tubes to access above-ground wood.
How to prevent termite damage
Because home insurance doesn’t cover termite damage, taking preventive measures is key to reducing your out-of-pocket costs. These tips can help you avoid termite damage.
Keep gutters clean and divert water away from your home’s foundation to avoid damp environments that termites thrive in.
Fix leaky faucets and water damage promptly to avoid attracting dampwood and subterranean termites.
Regularly inspect wooden areas for signs of infestation, like termite tunnels or swollen wood.
Keep plants and firewood away from your home to reduce the risk of attracting termites.
Use gravel or shells instead of wood-based mulches.
Seal cracks in your home’s foundation and walls to obstruct termite entry points.
Schedule an annual inspection with a reputable pest control company to detect any termite activity before it becomes a significant issue.
JPMorgan Chase has tightened mortgage terms on jumbo loans for co-operatives and condominiums in Manhattan amid shrinking buyer demand, Bloomberg reported on Friday.
Chase announced that, beginning this week, it would limit jumbo loans to 70% of the sale price. The new standards apply to loans of more than $765,600 not guaranteed by Fannie Mae and Freddie Mac — which account for 95% of the Manhattan market, according to the report.
JPMorgan’s new loan-to-value restrictions will apply to all Manhattan apartments, including re-sales and co-ops, many of which are relatively affordable, older units that price sensitive buyers turn to first.
A JPMorgan spokesperson confirmed the new loan terms are due to “current economic conditions.”
Jonathan Miller, real estate appraiser and consultant with Miller Samuel Inc., told HousingWire it’s “unusual” for one of the New York boroughs to be singled out.
Untying business growth from the housing market cycle
Lenders need to be able to grow their business in a way that is not linear and is not tied to the market cycles – leveraging automation technology can help.
Presented by: Indecomm Global
“Manhattan is one of the highest-cost housing markets in the United States, and a large chunk of the mortgage loans are jumbo,” he said. “But the Manhattan market has been the slowest to recover because its residents have the most wealth and mobility in the city. Large numbers were able to leave with COVID lockdown occurred.”
Miller added that the lack of a vaccine has discouraged many who initially left from returning to Manhattan.
“That’s weakening the market as prices have softened,” he said. “Unlike conforming lenders, many jumbo loans are held in portfolio, and future economic conditions are awash in uncertainty at the moment.”
Melissa Cohn, a mortgage lender and broker with William Raveis Mortgage, added that an influx of condominium inventory in New York City created “a perfect storm.”
“Prices have fallen by a greater percentage in New York City than anywhere else in the country,” Cohn said. “Chase and other lenders have chosen to restrict loan values in order to protect themselves.”
Cohn added that many lenders are following similar paths during the pandemic: raising maximum credit score requirements, lowering maximum loan amounts, requiring more cash reserves, and even limiting or eliminating home equity loans
In March, HousingWire asked the question “Did non-QM just disappear from the market?” as many of the biggest lenders specializing in lending to borrowers outside the Qualified Mortgage lending box were pausing their activities due to uncertainty in the market. The two main holdouts were Angel Oak Mortgage Solutions and Citadel Servicing, which remained in the non-QM lending business as long as possible before eventually bowing out.
But non-QM lending staged a comeback in May, as several companies that halted non-QM lending in March went back on the market, including Sprout Mortgage, GreenBox Loans, and Angel Oak.
More named storms: With peak hurricane season now underway, another group of forecasters is now saying the Atlantic is in for more storms than first thought. Scientists with the National Oceanic and Atmospheric Administration announced today they anticipate above-normal storm activity this season. They had predicted in May that activity would be near-normal. Their new forecast for this season predicts between 14 to 21 named storms. Read the full story from Louisiana Illuminator.
Climbing: The average long-term U.S. mortgage rate rose this week to just under 7%, the latest setback for would-be homebuyers already facing a shortage of homes for sale. Mortgage buyer Freddie Mac said this morning that the average rate on the benchmark 30-year home loan rose to 6.96% from 6.90% last week. A year ago, the rate averaged 5.22%. Read more.
Cost of living increase: The forecast for next year’s Social Security cost of living adjustment stayed flat at 3% today even after the government reported that inflation ticked up in July for the first time since June 2022. The predicted adjustment is less than half of the four-decade high 8.7% COLA in 2023. Read the full story from USA Today.
Reader robblat asked about rain barrels: Are they useful? How much do they cost? Where do you get one? My wife just installed a rain barrel last year, so I asked her to explain how they work.
For my birthday last year, I asked my parents for a rain barrel. After doing some research online, I went to our local nursery and paid $100 for a complete barrel set up. While it will mean a small savings on our future water bills, the upfront cost is really too high to justify it from a purely financial standpoint. Instead, I wanted to collect rainwater for several other reasons.
Collecting a Renewable Resource For Our Own Use
Rainwater belongs to everyone, right? But for the most part, we are dependent on a vast infrastructure to collect, purify and deliver this most basic of life’s requirements to our doors (er, faucets). I like the idea of harnessing a bit of that rain before it makes it through the whole human system. My plants don’t need chlorinated water, anyway! Plus, anecdotal evidence on gardening websites suggests that plants do better with lukewarm rainwater than cold tap water.
Minimal Money Savings
If you are serious about reducing your irrigation water use from the municipal water supply (and thus your bills), you can rig up a system of multiple rain barrels. One or more is attached to the house’s downspout; the rest of the barrels are linked to the first ones to collect their overflow when it’s really raining.
Get this: if you have 1,000 square feet of roof surface area, then one inch of rainfall will produce over 600 gallons of rainwater. How big is your roof? I have my rain barrel hooked up to our detached garage (an old carriage house), and its roof is about 300 square feet. If you cut that in half (I’m only getting the rain from half the roof) and do the math, my 60-gallon rain barrel will be filled by just two-thirds of an inch of rainfall. In Oregon, that’s easy! The overflow drains through a tube that I have draped under the boxwood hedge, or I could collect it in a secondary container.
Convenience
Our 3/5-acre lot has a grand total of one outside spigot, right by the house. Watering the far reaches of the gardens (vegetable, fruit, and flower) requires lugging hoses across the lawn and around trees. With the rain barrel at the garage, I can easily fill a watering can or bucket for the flower beds for some quick spot watering. While the gravity-fed flow of the rain barrel isn’t typically enough pressure to power a sprinkler, it would be enough for a short soaker hose. A rain barrel by the patio would be ideal for watering potted flowers and container plants near the house.
A Few More Considerations
Rain barrels come in many sizes and designs. Some are made to be pretty; others, not so much. Some are made from recycled or reused materials. A few have a flat side so they can sit flush against the wall, or have built-in storage for hoses and such. There’s plenty to choose from, but this is a bulky item, so avoid shipping costs and find a local store that stocks them. You may think a big plastic barrel isn’t your idea of garden décor, but what’s more fashionable than not wasting water?
You can certainly make your own if you are handy and have a source for a large food-grade barrel. It must be food grade so you aren’t having plastics leach into the water that you’re using to water your carrots. And be sure to have a screen to close it off. This will prevent mosquitoes from breeding in the barrel and keep leaves, mischievous animals, and small meteorites out.
Like any irrigation supply dependent on rainfall, sometimes you’ll have too much and sometimes not enough. July, August and September are pretty dry here (I kid you not), so my barrel did run dry last summer. But it doesn’t take much rain to fill it back up. I tend to do most of my flower garden-watering in the spring when I’ve just planted seeds and seedlings and they’re not fully established yet. The rain barrel is perfect for those dry, beautiful 75-degree days between our Spring rainstorms.
Watch the overflow location: you may need to extend the overflow hose to prevent drainage near your home’s foundation. Portland actually gives residents a one-time credit if the house gutters are disconnected from the storm sewer system. Rain barrels have been popping up like wild flowers in certain neighborhoods!
Today rain barrels — maybe in a decade or two, solar panels so we can go off the grid?
The average mortgage rate for a 30-year fixed loan rose 5 basis points last week to 3.02%, marking the first time since July that the industry has seen rates break above 3%, according to Freddie Mac’s Primary Mortgage Market Survey.
Since reaching a low point in January, mortgage rates have risen by more than 30 basis points as the economy works to recover, and according to Sam Khater, Freddie Mac’s chief economist, the impact on purchase demand has been noticeable.
“While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March, prior to the pandemic,” Khater said. “However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
After an arctic storm left purchase applications sluggish, mortgage activity bounced back last week almost immediately despite rising rates.
“The housing market is entering the busy spring buying season with strong demand,” Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting, said. “Purchase applications increased, with a rise in government applications – likely first-time buyers – pulling down the average loan size for the first time in six weeks.”
Increasing Lending and Servicing Capacity – Regardless of Mortgage Rates
Business process outsourcing and digital transformation are proven solutions that more companies in the mortgage industry are turning to. This white paper will explore the benefits and use cases for these opportunities as they relate to lenders and servicers.
Presented by: Sutherland
Throughout the pandemic-induced recession, now a year old, the Federal Reserve has stated that the housing market has been one of the only persistent bright spots. However, much of that strength has piggybacked on the industry’s historically low interest rates, and left some economists worried that the rapid rise in Treasury yields in the last several weeks risk choking off that activity.
The 10-year U.S. Treasury note, a heavy-hitter in the swing of mortgage rates, has risen by half a percentage point since January, now teetering near 1.4%.
However, Logan Mohtashami, HousingWire’s lead analyst, sees this as push in the right direction.
“Last year I talked about how the 10-year yield should stay at a range between 1.33% and 1.60% in 2021,” Mohtashami said. “If we couldn’t do this, something terrible happened with the vaccination process. After we closed above 1.33%, the yield rocketed toward 1.60%; we are in a range between these two levels right now. We are no longer in a recession; this is where the 10-year yield should be.”