Like many other investors, J.D. and I are fans of taking the slow, sure path to wealth. We invest much of our money in index funds. An index fund is a low-maintenance, low-cost mutual fund designed to follow the price fluctuations of a broader index, such as the S&P 500 or the Wilshire 5000. They’re boring investments, but they work. (If you’re investing for the excitement, you’re doing it for the wrong reason.)
Because of their low costs, index funds have been shown over and over to dominate the majority of their competition. Yet many investors shy away from index funds with the reasoning that “the stock market is too risky for me.”
People seem to think that index funds are simply mutual funds that track the U.S. stock market. And that’s not particularly surprising given that S&P 500 index funds are:
the largest index funds,
the index funds mentioned most frequently by the media, and
the index funds most likely to show up as an choice in your 401(k).
But there are all kinds of index funds aside from those that track the S&P 500. There are bond index funds, real estate index funds, commodities index funds, international stock index funds, and so on.
In other words, you can create a thoroughly diversified portfolio using nothing but index funds.
In fact, I’d suggest doing exactly that. By created a diversified, all-index fund portfolio, you’ll achieve a list of benefits relative to other types of portfolios.
Lower Risk Which sounds safer: Having the stock portion of your portfolio invested in 10 different companies, or having the stock portion of your portfolio invested in several thousand companies from more than 10 different countries? I know some people disagree, but to me it’s a no-brainer.
By constructing your portfolio from index funds, you’ll achieve far greater diversification (and therefore be exposed to less risk) than you would if you constructed your portfolio from individual stocks and bonds.
Lower Costs Both common sense and historical data tell us that one of the best ways to improve investment returns is to reduce costs. Conveniently, index funds carry significantly lower costs than actively managed mutual funds. For example:
Vanguard’s Total Bond Market Index Fund has an expense ratio of 0.22%. That’s less than one-fourth of the average expense ratio among bond funds (1.04%, according to Morningstar’s Fund Screener tool).
Vanguard’s REIT Index Fund has an expense ratio of 0.26%, or less than one-fifth that of the average real estate fund (1.45%).
It’s quite possible that you could cut your total costs by 1% or more. And while 1% per year may not sound like much, it can really add up over an extended period.
Lower Taxes Index funds have much lower portfolio turnover than other mutual funds. (That is, they buy and sell investments within their portfolios far less frequently than actively managed funds do.) This makes them more tax efficient than other mutual funds for two reasons:
The capital gains they distribute are primarily long-term in nature (and thereby taxed at a lower rate than short-term capital gains), and
Their capital gains distributions are minimized, meaning that you get to defer a significant portion of taxes until you sell the fund.
Added Bonus: You’ll understand what you own. With an actively managed mutual fund, you never know exactly what the fund manager is investing in. With index funds, it’s all out in the open.
Do you (like both me and J.D.) have a portfolio made up primarily of index funds? If not, why? Is there a particular concern that’s holding you back?
We had a few times in the previous cycle where the 10-year yield was below 1.60% and above 3%. Regarding 4% plus mortgage rates, I can make a case for higher yields, but this would require the world economies functioning all together in a world with no pandemic. For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.
The backstory
The lifeblood of my economic work depends greatly on the ebbs and flows of the 10-year yield, even more than mortgage rate targeting, which is unusual for a housing analyst.
When I first dipped into 10-year yield and mortgage rate forecasting in 2015, during the previous expansion, I said the 10-year yield will remain in a channel between 1.60%-3%. I’ve stuck to that channel forecast every year since — and for the most part that 10-year yield channel stuck. That range dictated that mortgage rates would roughly stay between 3.5%-4.75%.
When COVID-19 was about to hit our economy, I forecasted that the 10-year yield recessionary yields should be in a range between -0.21%-0.62%. We got to as low as 0.32% on that Monday morning in March when the crisis was hitting the markets the hardest. About a month later, I published my AB (America is Back) recovery model, which said that the 10-year yield should get back toward 1%. We got there in December of 2020 so I was able to retire my America is Back recovery model.
I said that when the economy was beginning the new expansion, the 10-year yield would create a range between 1.33%-1.60%. This couldn’t happen in 2020 but should happen in 2021. Even with the hot economic growth, the hottest inflation data in decades, and the Fed rate hike discussion picking up, this range of 1.33%-1.60% has held up nicely for most of 2021, meaning mortgage rates were going to be low in 2021.
My forecast for the 10-year yield range in 2021 was 0.62%-1.94% which translates to a bottom-end range in mortgage rates of 2.375%-2.5%, and an upper-end of 3.375%-3.625%. Single mortgage rate target forecasts have not fared well over the decades because these forecasters did not respect the downtrend in bond yields since 1981.
The X factor
Can there be a bond market sell out short term, sending yields above 1.94%, like what we saw early in the COVID-19 crisis? Yes, but if the markets do overreact for any reason, typically bond yields would fall back. Why do I not believe bond yields will push higher aggressively? The economic rate of growth peaked in 2021. The economy was on fire this year, and inflation data was super-hot. Even so, the highest the 10-year yield got was 1.75%. The economic disaster relief that boosted the recovery in 2020 and 2021 has been drawn down.
Government spending plans have also been watered down and new legislation might not even pass at all. Economic growth peaked in 2021 and some of the hotter inflation data has the potential to fall next year. The Federal Reserve wants to hike rates to cool the economy. Typically what happens before the first Fed rate hike is that the U.S. dollar has its biggest percent move higher ,which tends to hurt commodity prices and world growth. This is something to watch for next year as it could slow down world growth.
The economy won’t be as hot in 2022 as it was in 2021, but it will remain in expansionary mode. This type of backdrop will make it challenging for rates to rise in a big way and stay higher. The key with all my 10-year yield channel work is how long the 10-year stays in that channel during the calendar year. I have always believed this type of forecast is more useful than targeting a mortgage rate.
Existing-home sales
The forecast
For 2022, I am forecasting the same sales trend range as 2021 of about 5.74 million to 6.16 million. If monthly sales prints are above 6.16 million for existing homes, then I would consider the market more robust than expected. If sales trend toward 5.3 million then we will be back to 2019 levels. This would still be healthy sales considering the post-1996 trend, but it will mean housing demand has gotten softer.
This has happened before when higher rates have impacted demand. This is why since the summer of 2020 I have written about how if the 10-year yield can get above 1.94%, then things should cool down. However, as you can see it’s been hard to bond yields over that level and thus mortgage rates above 3.75%.
The backstory
If the last two reports of the year on existing home sales are above 6.2 million, I will admit that sales have slightly outperformed what I predicted for 2021. Early in 2021, I wrote that home sales would moderate after the peaks caused by the COVID-19 shutdown make-up demand and that readers should not overreact to this slowing. I wrote that sales would range between 5.84 million and 6.2 million, and that we could anticipate a few prints under 5.84 million — but sales would consistently be above the closing level of 2020 of 5.64 million. We got one print below 5.84 million and a few recent prints over 6.2 million, with two more reports. Mortgage demand was solid all year long and has picked up in the last 15 weeks.
One of my longer-term forecasts in the previous expansion was that the MBA Index would not reach 300 until 2020-2024. We got there in the early part of 2020, then the Index got hit by the COVID-19 delays in home buying to only have a V-shaped recovery that led to the make-up demand surge, moderation down and back to 300.
As you can see, it’s been like Mr. Toad’s wild ride here. We will still have some COVID-19 year-over-year comps to deal with up until mid February and then we can get back to normal. However, one thing is for sure: demand has been solid and stable in 2020 and 2021. Also, the market we have today doesn’t look like the credit boom we saw from 2002-2005.
I didn’t believe total home sales could get to 6.2 million in the years 2008-2019, this is new and existing home sales combined. We simply didn’t have the type of demographics in the previous expansion. We are in different times.
New home sales and housing starts
The forecast
My long-term call from the previous expansion has been that we won’t start a year at 1.5 million total housing starts until the years 2020-2024 and we have finally gotten here much like the 300 level in the MBA index. My rule of thumb has always been to follow the monthly supply data for new homes, and as long as monthly supply is below 6.5 months on a three-month average, they will build.
The backstory
Housing starts, permits and builders confidence are ending the year on a good note. Even though new home sales aren’t booming this year, it’s good enough to keep the builders building more homes even with all the drama of labor shortages, material cost and delays in finishing homes.
As you can see below, the uptrend has been intact even with the slowdown in 2018 and the brief pause from COVID-19.
The new home sales sector gets impacted by rates much more than the existing home sales marketplace. The last time this sector saw some stress from mortgage rates was in 2018 when rates were at 5%. Today’s 3% mortgage rates are good enough to keep things going. We should see slow growth in new home sales and housing starts as long as the monthly supply of new homes is below 6.5 months on a 3-month average. This sector has legs to walk forward slowly. I have never believed in the housing construction boom premise as mature economies don’t have construction booms with slowing population growth. More on that here.
The X factor
The one concern I have for this sector in 2022 is if the builders keep pushing the limits of home price growth to make their margins look better. When rates are low, they have the pricing power to do this. This is why the sector has done so well in 2021. If I am wrong about mortgage rates staying low in 2022, and rates go above 3.75% with duration, then demand for new homes should get hit. The longer-term concern for this sector is price growth because if demand slows down, this means a slowdown in construction and the builders really maximized their pricing power in 2020 and 2021.
Home prices
The forecast
I am looking for total home-price growth to be between 5.2% and 6.7% for 2022. This would be a meaningful cool down in price growth but would still be a third year straight of too much price growth for my taste.
The backstory
My biggest fear for the housing market during the years 2020 to 2024 was that real home-price growth can be unhealthy. When you have the best housing demographic patch ever recorded in history occurring at the same time as the lowest mortgage rates ever, with housing tenure doubling as it has in the last 12 years, it’s the perfect storm for unhealthy price growth.
Housing inventory has been falling since 2014 and mortgage purchase applications have been rising since then. As you can see below, 2021 wasn’t looking good for me regarding my fear for home prices rising too much.
The X factor
When I talk about real home-price growth being too hot, I mean that nominal home price growth is above 4.6% each year during the five-year period of 2020 to 2024, for a cumulative 23% growth. This would not be a positive for the housing market. If we end 2021 with 13% home price growth, (and it looks like we will do that or higher), then we have already achieved 23% of the price growth that I am comfortable with in just two years.
While I do believe home-price growth is cooling from the extreme high rate of growth we had earlier in the year, I would very much like to see prices get back in line with my model for a healthy market. In order for this to happen, we would need to have no increase in home prices for the next three years. Because inventory levels are falling again, and we are at risk of starting the 2022 spring season at fresh new all-time lows, this outcome is very unlikely.
Early in 2021, I had raised concerns that prices overheating should be the main concern, not forbearance crashing the market. When demand is stable, it’s extremely rare for inventory to skyrocket and American homeowners have never looked better on paper. In fact, a few months ago I talked about inventory falling again should be the concern going out.
Housing demand
The forecast
Everyone is talking about rates going higher and no one, it seems, is talking about the possibility that mortgage rates could go under 3% in 2022, except me. This is front and center in my mind. I want to see a B&B housing market: boring and balanced. In a B&B market, buyers have choices, sales move at a reasonable pace without bidding wars, and the whole home-buying experience is less stressful and more sane. I would like to see inventory get toward 1.52 – 1.93 million, (which is still historically low). However, this will be a more stable housing market.
The backstory
Millions of people buy homes each year. The only thing that cooled demand for housing in the previous expansion was mortgage rates going over 4% with duration. The increase in rates didn’t crash the market or even facilitated negative year-over-year home price declines; but it did increase the number of days homes stayed on the market.
Currently the biggest demographic patch ever recorded in U.S. history are ages 28-34, the first-time homebuyer median age is 33. When you add move-up, move-down, cash and investor demand together, demand will be stable and hard to break under the post-1996 trend of 4 million plus total sales every year in the years 2020-2024.
The X factor
Frankly, I’m getting tired of calling this market the unhealthiest since 2010. This is not due to a massive credit boom or exotic loan products contaminating the market with excess risk — it’s the lack of choice for buyers. If mortgage rates go under 3%, which I believe they can, it just keeps the low inventory story going on. The Federal Reserves wants to cool down the economy, the government is no longer providing disaster relief anymore and the world economies should get hit if the U.S. dollar gets too strong. So, my concern is about rates falling in year three of my 2020-2024 period. This is also a first-world problem to have and we aren’t dealing with the housing market of 2005-2008 when sales were declining and the U.S. consumer was already filing for bankruptcy and having foreclosures before the great recession started in 2008. This is to give you some perspectives here with my thinking.
The economy
The forecast
I expect the rate of change to slow in 2022 but the economy will still be expansionary. Retail sales have been off the charts, and this data line, which I expected to moderate, still hasn’t. The rate of growth will cool. Replicating the growth we saw in 2021 will be nearly impossible. As the excess savings have been drawn down and the additional checks that people got are no longer coming, this data line will find a more suitable and sustainable trend in 2022. Still I am shocked that moderation hasn’t happened already and I was the year 2020-2024 household formation spending guy, too.
The backstory
The U.S. economy has been on fire this year. Even with the excess savings, good demographics, and low rates, not even I thought we would see economic growth like we did in 2021. However, like all things in life, despite the peaks and valleys, the overall trend will prevail.
The X factor
I recently raised one of my six recession red flags after the most recent jobs report as the unemployment rate got to a key level for myself. These red flags are more of a progress checklist in the economic expansion, and when all six of my flags are raised, I go into recession watch. The economy is in a more mature phase of expansion since the recovery was so fast. Like everything with me, it’s a process to show you the path of this expansion to the next recession.
For housing, a strong labor market means more people are getting off forbearance, which is already under 1 million, much smaller than the nearly 5 million we had early in the crisis. I want to wish a Merry Christmas to all my forbearance crash bros who promised a housing crash in 2020 and 2021. You guys are the best trolling grifters ever!
More jobs and more robust wage growth mean the need for shelter will grow. The housing market is already dealing with too much rent inflation, but as wage growth picks up on the lower end, this means landlords will charge more rent. Again, this the problem you want to have, a tighter labor market means wage growth will pick up and we have 11 million job openings currently.
So, look for the rent inflation story to be part of the 2022 storyline, as well as the rate of growth of home prices cooling down.
There is nothing like a fifth wave of COVID-19 and a new highly transmissible variant to crank up the personal stress meter. While the continuing COVID crisis can cause havoc on some short-term data lines for the economy, we will, as we have done, get through this and move forward. Our reality is that, as a nation, we have learned to consume goods and services with an active virus infecting and killing us every day.
The St. Louis Financial Stress Index, which was a key data line to track for the America Is Back recovery model, has still been in a calm zone for the entire year, currently at -0.8564. When we break over zero — which is considered normal stress — then we have some market drama. However, that wasn’t the storyline in 2021 and we didn’t have a single day where the S&P 500 was in correction mode. It’s not normal to not have a stock correction, so a stock market correction in 2022 is in the works and this can lead more money into bonds and drive rates lower.
For more discussion on this index and the America is Back recovery model, this podcast goes over everything that has happened in 2020-2021.
Conclusion
What a ride it has been for all of us since April 7, 2020 when I wrote the America Is Back economic recovery model for HousingWire. We end 2021 with one of the greatest economic recovery stories ever in the history of the United States of America, and a terrible, dark, two-year period of failure for the extreme housing bears. Now we are well into a recovery and looking forward to a new year with its new challenges.
The job of the analyst is to forecast the positive or negative impacts that a whole slew of variables have on the economy based on carefully formulated economic models. The variables, such as demographics, the unemployment rate, what the Federal Reserve is doing, commodity prices and so many others, are constantly in flux and feed off of and influence one another. Additionally, new economic variables pop up all the time. My job, with every podcast and article, is to show you how the changes in these variables light the path to where the economy and the housing market is heading.
Take a deep breath — in through the nose and out through the mouth. The last two years have been crazy, but I am glad you are here to read this. This is our country, our world and our universe, and everyone is part of team Life on Earth. Merry Christmas, Happy Holidays and have a wonderful Happy New Year. We will get through 2022 one data line at a time.
“We have always held to the hope, the belief, the conviction that there is a better life, a better world, beyond the horizon.” Franklin D. Roosevelt
Martin Lewis has issued new advice on whether or not you should fix your mortgage after rates saw an increase. New figures this week showed a two-year fixed-rate mortgage deal is now £35 more expensive than it was a few weeks ago.
It follows a 0.3% increase in interest charges and predictions that the Bank of England could raise rates to 5% or higher despite previous forecasts that it would not rise above its current rate of 4.5%. The changes come as data shows inflation – which was 8.7% in the 12 months to April 2023 – is not falling by as much as expected.
A number of lenders have pulled mortgage deals off the market in recent weeks as well as making changes to their current deals, putting further financial pressure on cash-strapped households. To get all the latest money-saving news straight to your inbox twice a week sign up here.
Financial journalist Martin Lewis has now given his opinion on what customers whose mortgage deals are ending soon should do with many uncertain about whether to fix their rates or not.
Speaking on his BBC Martin Lewis Podcast the money guru explained the current situation, saying he was getting queries from people whose mortgage deals were coming to an end and were unsure of what to do next. He said this was a “tricky scenario” as the Bank of England base rate – against which tracker mortgage rates are set – was initially expected to peak at 4.5%, the level they are currently at.
But Mr Lewis said the bank now expects that to peak at 5% or 5.5% due to general inflation not falling by as much as expected. He said the rise in some fixed rates had come based on The City of London financial district’s long-term predictions for interest rates.
“The reason the fixed rate has gone up since the inflation period is because The City’s view is interest rates in the UK are going to rise further,” he said. “If I look at the cheapest fixes for a 75% loan-to-value mortgage right now, and I contrast where we are now to where we were three and a half weeks ago, the cheapest two-year fix that most people get with various criteria was 4.27% and is now 4.54%, so it’s gone up just under 0.3%.
“The cheapest five-year fix was 4.06% and is now 4.29%, so fix year fixes are now cheaper than two year fixes. The cheapest ten-year fix was 4.15% and has gone up to 4.39%, a rise of about 0.24%.”
Mr Lewis explained that this meant the period which the financial sector believed interest rates rises were most likely was in the next two years, which was the reason two-year fixes were more expensive than their alternatives.
“This says that they think the much longer-term view of interest rates is still relatively stable. The issue of interest rates going up by more than they thought is more about the short term, more than the longer term. It still affects the longer-term, but not as much as it affects the short term.”
Mr Lewis later heard from a caller asking for advice on whether she should move to a new rate when her current mortgage deal ends soon. He responded that this would come down to the financial situation of each customer and the length of the mortgage they wanted.
“The question is how much could you afford to miss the boat? How close are you on the new rates to not being able to pay your mortgage? The first question is ‘can I afford the gamble?’ Lots of people listening won’t be able to and will have to look to fix. If things then got better, they would feel very frustrated.”
But he urged customers who did opt for a fix not to “look back in hindsight. If you make the decision to fix, remember you made it because it gave you certainty, not because you thought it was going to be cheaper.” He added that five- and ten- year fixes looked “relatively” cheap compared to two-year fixes right now, but that it would depend on how long the customer wanted.
Mr Lewis said he would not put off buying a property if would-be buyers found one suitable to their needs given the current uncertainty. He said: “There are many people who say to me ‘when interest rates go back down’ – that is wrong. It is ‘if’ interest go back down. A 4% mortgage, historically, is a very cheap mortgage. We’ve just lived in this 17-year anomaly of hyper-low interest rates. The idea that things will go back is a very difficult concept.
“My view tends to be the more you want certainty, the more you want to know that you can afford to pay the mortgage, the more you should hedge towards a fix and the more you should hedge towards fixing for longer.
“Right now, the cheapest ten-year fixes are cheaper than the cheapest two-year fixes. So if you’re buying a property you know you’re going to be in for ten years, you might want to look at getting a ten year fix.
“Certainty is really difficult to come by. The one bit of certainty at the moment is that it will be uncertain. You have to hope for the best, plan for the worst and make a decision not assuming things are going to move in your favour or against you.”
Halifax have reported that UK house prices have dropped 1% compared to a year ago – the first drop like this since 2012. Mr Lewis said this drop had not particularly benefited first-time buyers, while mortgage rates had “gone up phenomenally.
“You combine the two and we’re sort of in the worst of both worlds at the moment.”
Today we have a little holiday miracle to share with you – a pretty little package tied up with a perfect bow – no tape, cuts or twisted knots required. Ok – so I didn’t say it was a big miracle but I get such joy out of these little details.
Did you know you can tie a ribbon without having to use tape? Without it having to have a bump or twits on the back? Call me crazy, but that always drives me nuts when my gifts won’t lay flat. Thankfully, there is a secret ribbon tying technique that will leave discerning gift wrappers saying, how did you do that??
Step 1: Measure out your ribbon to make sure it’ll go around your box twice. Lay your cut piece of ribbon out on a flat surface
Step 2: Set your box on top of the ribbon. Make sure there’s plenty of ribbon sticking out on both ends. Make a loop on the left end no need to tie anything, just make a little circle – the end of the ribbon will be point back toward your body
Step 3: Slip your loop over the left corner of the box furtherest from your body. It’ll just rest there – don’t worry it might fall off – you might have to hold it in place
Step 4: The tail of your loop will stretch across the underside of the box back towards you, making a flat! cross
Step 5: Bring the ribbon from the right side and pull it under your corner loop
Step 6: Bring the second tail up from the underside
Step 7: Tie the two pieces in your first knot
Step 8: Tie your bow. Big, small or over-the-top huge – let your creativity be your guide!
Et voila!
Even if you’re the only one to appreciate the thoughtfulness that goes into your gift wrapping skills, there’s something so satisfying about tying your packages up in perfectly wrapped string!
original photography for apartment 34 by Emily Scott // custome 34 paper c/o Zazzle.com
There was a viral tweet going around from YouTube housing influencer Nick Gerli. You’ve probably seen it. Gerli cites data from a company called AllTheRooms to make the case that the Airbnb/short-term rental market is “crashing” and it will have a big impact on inventory.
Indeed, the chart he shared is alarming.
A nearly 50% drop in revenue in some markets!
But the data looks dubious. I interviewed Jamie Lane, the chief economist and head of analytics at AirDNA. He looked at the AllTheRooms data and ran a mirror analysis with AirDNA’s data and, well, just look.
Revenue per listing is down, but it’s not down by a third or more in those markets, according to AirDNA.
AllTheRooms didn’t respond to my requests for comment, but Gerli, who runs Reventure Consulting, said he was aware of the discrepancies in the data and had reached out to Airbnb “to provide their own data for these cities so we can get the most accurate figures.” (Airbnb itself said in a statement that the data was “not consistent with its own” and added that “more guests are traveling on Airbnb than ever before.”)
Gerli, however, did offer high level thoughts on the situation. His outlook remains bearish.
“Both data sources agree that the Airbnb supply in America has surged over the last 2-3 years since the pandemic started, particularly in cities like Phoenix. In some markets there are now 2-3x more homes listed on Airbnb than for sale, a situation that has robbed the housing market for inventory,” Gerli wrote in an email. “However, now that the Airbnb correction has started, we will likely see struggling Airbnb owners look to sell their properties. Look for the downturn to be worse in cities where 1) the revenues declined the most and 2) there’s the highest surplus of Airbnb inventory relative to homes for sale.”
Lane at AirDNA doesn’t see a ‘crash’ happening, even though revenue is trending down from last year and it is a relatively saturated marketplace in some metros (the number of listings was up 18% over the same period last year).
“I see that as an entirely false narrative,” he said. “The short-term rental industry has very healthy performance right now. If you look at overall occupancies for 2023, the industry is going to run 57%. That compares to a pre-COVID [level] of 55%. So we’re well above pre COVID occupancy levels. We are down from the 2021 highs, but that was a COVID anomaly in terms of industry performance.”
AirDNA expects modest Airbnb revenue declines throughout the rest of the year – a 1% drop for the rest of the year and no growth in 2024.
Let’s dive in a little further. Lane maintains that the fundamentals in STR remain strong – we see lower churn today than we saw pre-pandemic, the travel desire is absolutely real, a large segment of the population is more mobile than ever (thanks, remote work!), and about 20% of listings are private or shared rooms, not entire houses.
More importantly, revenue for most hosts across the country is still strong nationally, reducing the likelihood of forced sellers, Lane said.
“If you look at revenue today, average revenue per listing compared to pre-pandemic, we are 30% higher, and that has barely come down off the highs in 2022. The earnings of short term rental operators have not collapsed by any means.”
But let’s say demand nosedives due to a recession and the numbers no longer pencil out for some operators. What impact would that have on the market?
It’s hard to say, but an STR crash like the one Gerli describes already did happen, back in 2020.
“In 2020, listings fell by 25%, we saw many markets essentially decline by half, with no disruption to the broader housing market,” Lane said.
Inventory, as ever, is key to all this. Currently, there are about 1.4 million short-term rental listings in the U.S. While there are about 600,000 active for-sale listings. Even if all the 1.4 million STR listings hit the market at the same time, I don’t think that would crash the market.
“Active listings in a normal period would be between 2 to 2.5 million,” said HousingWire’s Lead Analyst Logan Mohtashami. “Even if all those homes came to market overnight, they would need to not get a bid over 60 days to allow the active inventory to return to historical norms.”
Added Lane: “When you look at major cities, let’s say the 50 largest metros, most of that [Airbnb] inventory is not available full time. Over 50% was available for rent less than 180 days over the previous year. So it’s not full time short term rental investments.”
Lane argued that a flood of Airbnb’s wouldn’t crash heavily saturated markets either.
“So you look at a market like Phoenix and how many new homes are being built any given year, that’s larger than the entire short term rental industry,” Lane said.
The broader housing market needs more inventory any which way it can get it, but I don’t see much coming from non-viable Airbnbs. What do you think? Share your thoughts with me at [email protected].
In our weekly DataDigest newsletter, HW Media Managing Editor James Kleimann breaks down the biggest stories in housing through a data lens. Sign up here! Have a subject in mind? Email him at [email protected]
There was a viral tweet going around from YouTube housing influencer Nick Gerli. You’ve probably seen it. Gerli cites data from a company called AllTheRooms to make the case that the Airbnb/short-term rental market is “crashing” and it will have a big impact on inventory.
Indeed, the chart he shared is alarming.
A nearly 50% drop in revenue in some markets!
But the data looks dubious. I interviewed Jamie Lane, the chief economist and head of analytics at AirDNA. He looked at the AllTheRooms data and ran a mirror analysis with AirDNA’s data and, well, just look.
Revenue per listing is down, but it’s not down by a third or more in those markets, according to AirDNA.
AllTheRooms didn’t respond to my requests for comment, but Gerli, who runs Reventure Consulting, said he was aware of the discrepancies in the data and had reached out to Airbnb “to provide their own data for these cities so we can get the most accurate figures.” (Airbnb itself said in a statement that the data was “not consistent with its own” and added that “more guests are traveling on Airbnb than ever before.”)
Gerli, however, did offer high level thoughts on the situation. His outlook remains bearish.
“Both data sources agree that the Airbnb supply in America has surged over the last 2-3 years since the pandemic started, particularly in cities like Phoenix. In some markets there are now 2-3x more homes listed on Airbnb than for sale, a situation that has robbed the housing market for inventory,” Gerli wrote in an email. “However, now that the Airbnb correction has started, we will likely see struggling Airbnb owners look to sell their properties. Look for the downturn to be worse in cities where 1) the revenues declined the most and 2) there’s the highest surplus of Airbnb inventory relative to homes for sale.”
Lane at AirDNA doesn’t see a ‘crash’ happening, even though revenue is trending down from last year and it is a relatively saturated marketplace in some metros (the number of listings was up 18% over the same period last year).
“I see that as an entirely false narrative,” he said. “The short-term rental industry has very healthy performance right now. If you look at overall occupancies for 2023, the industry is going to run 57%. That compares to a pre-COVID [level] of 55%. So we’re well above pre COVID occupancy levels. We are down from the 2021 highs, but that was a COVID anomaly in terms of industry performance.”
AirDNA expects modest Airbnb revenue declines throughout the rest of the year – a 1% drop for the rest of the year and no growth in 2024.
Let’s dive in a little further. Lane maintains that the fundamentals in STR remain strong – we see lower churn today than we saw pre-pandemic, the travel desire is absolutely real, a large segment of the population is more mobile than ever (thanks, remote work!), and about 20% of listings are private or shared rooms, not entire houses.
More importantly, revenue for most hosts across the country is still strong nationally, reducing the likelihood of forced sellers, Lane said.
“If you look at revenue today, average revenue per listing compared to pre-pandemic, we are 30% higher, and that has barely come down off the highs in 2022. The earnings of short term rental operators have not collapsed by any means.”
But let’s say demand nosedives due to a recession and the numbers no longer pencil out for some operators. What impact would that have on the market?
It’s hard to say, but an STR crash like the one Gerli describes already did happen, back in 2020.
“In 2020, listings fell by 25%, we saw many markets essentially decline by half, with no disruption to the broader housing market,” Lane said.
Inventory, as ever, is key to all this. Currently, there are about 1.4 million short-term rental listings in the U.S. While there are about 600,000 active for-sale listings. Even if all the 1.4 million STR listings hit the market at the same time, I don’t think that would crash the market.
“Active listings in a normal period would be between 2 to 2.5 million,” said HousingWire’s Lead Analyst Logan Mohtashami. “Even if all those homes came to market overnight, they would need to not get a bid over 60 days to allow the active inventory to return to historical norms.”
Added Lane: “When you look at major cities, let’s say the 50 largest metros, most of that [Airbnb] inventory is not available full time. Over 50% was available for rent less than 180 days over the previous year. So it’s not full time short term rental investments.”
Lane argued that a flood of Airbnb’s wouldn’t crash heavily saturated markets either.
“So you look at a market like Phoenix and how many new homes are being built any given year, that’s larger than the entire short term rental industry,” Lane said.
The broader housing market needs more inventory any which way it can get it, but I don’t see much coming from non-viable Airbnbs. What do you think? Share your thoughts with me at [email protected].
In our weekly DataDigest newsletter, HW Media Managing Editor James Kleimann breaks down the biggest stories in housing through a data lens. Sign up here! Have a subject in mind? Email him at [email protected]
The core of the GEM is serving founders. Beyond being in the know about industry developments, a big part of founders’ lives is fundraising. We help on that front in three primary ways:
Practice Pitches: Usually a 5-7 minute pitch and 20-30 minutes of Q&A/feedback with 8-12 peers (Rabbu was the most recent “hot seat” participant)
Office Hours: Discussion about raising seed / Series A capital among peers.
Investor-Founder Connections: We put investment opportunities in front of the 30+ VCs and angel investors in the GEM (and, sometimes, to relevant investors outside of the community).
We’re holding our next early-stage fundraising office hours next week (Tuesday, December 8th) and have room for a few non-GEM members to join. In addition to founders in the VC/angel trenches, Jonathan Bednarsh and Mark Hurst will be attending to lend their experience and perspective to the conversation.
Logistics:
Google Meeting. Note this is NOT a webinar.
Tuesday December 8th at 11 AM PST / 2 PM EST.
Limited to 15 participants.
Are you a founder actively raising a pre-seed, seed, or Series A interested in attending? Email me your pitch deck (drew at geekestatelabs dot com) and I’ll provide a calendar invite. We have room for about 5 more.
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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With competition fiercer than ever, new agents need all the help they can get. On today’s podcast, we ask five real estate rockstars to share their top tips for brand-new agents. Tune in and find out what these successful Realtors wish they knew when they first started selling homes.
Listen to today’s show and learn:
Why adaptability is essential right now [1:00]
Where to turn for the knowledge you need to succeed [1:51]
How to get started with video marketing [2:39]
Why frugality isn’t always good for business [4:58]
How to niche down for more deals [6:56]
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
We often paint celebrities as larger-than-life personas. The reality is that stars are like the rest of us: they get just as frustrated or cranky when things don’t go their way. From being grilled by paparazzi to getting overwhelmed by enthusiastic admirers, many famous people have become notorious for exhibiting signs of annoyance toward dedicated supporters who fail to recognize boundaries. We’ve put together a list of 12 major celebrities who appear seriously ticked off in various fan encounters.
1. Doja Cat
One Redditor said, “I feel like Doja Cat seems constantly annoyed by her stans or fans, or at the very least her followers on Twitter. Honestly as a fan of her music (I don’t follow her too closely on soc med anymore because she constantly seems on the verge of breaking and I feel bad for her) I would dislike my fans too if I were her… Do you know of any other celebrities who seem annoyed by their fans? Whether the irritation is deserved or not (because, let’s be honest, some stans are incredibly entitled), I want to read some stuffff.”
2. Ana de Armas
One user posted, “Ana de Armas blocked Ana de Armas Updates on Twitter…”
Another user commented, “Sorry to burst your bubble, but the blue check Ana is just another fan account. The profile says ‘not impersonating, not Ana; this is a fan account.’”
One user shared, “Yeah, tbf, a lot of the fan-run accounts on social media are borderline unhinged. The way they take ownership of a person they idolize and drag down anyone who even hints at negativity towards them is just crazy.”
Another commenter said, “Totally. I have a tiny YouTube channel (6k subscribers) that I haven’t updated in 2 years, but I’m already weirded out by the parasocial relationships that occur at even that level. People being vehemently mean or terrifyingly obsessed and thinking they get me on a level no one else does (offer to fly me out to his country and take me to an event I’ve never expressed interest in). I can’t comprehend extrapolating that to the level of stardom someone like Doja, Ana de Armas, etc. has. And if I were a more conventionally attractive person like they are, I’m sure the lascivious, obsessive fans would f*ck my image of the world a bit. I eye-roll at woe-is-me privileged… celebrities as much as anyone but I think, while most right-minded people manage to be kind or at least civil to strangers, waiters, annoying colleagues etc., that energy would quickly wear down given the chance to be a celebrity for a week.”
3. Phoebe Bridgers
One user shared, “Phoebe Bridgers has publicly spoken about being frustrated with her fans, and I think she has some song lyrics about being annoyed or not really knowing how to interact with fans, which I get. Parasocial relationships are weird, and in that position, I wouldn’t be able to cope with being approached by crying people who think they know me or worship me, but they’re literal strangers to me.”
Another user validated the singer’s decision, “She’s so valid for that. I’m so glad she spoke up about it because her fans were being absolutely unhinged. There’s caring about a celebrity and there’s being a nut who needs to get a grip. If you’re posting hate and harassing your ‘fave’ for days on end (when [she was] on the way to her fathers funeral, mind you) because the man she was with isn’t the one you prefer, you need to get professional help. I think if that happened to me as a celebrity, I would completely stop interacting with my fans outside of releasing my art. and that seems to be what Phoebe has done. she used to post a lot on twitter and she’s clearly done engaging on that level anymore.”
4. Frank Ocean
One Redditor shared, “Can’t believe no one’s mentioned Frank Ocean.”
“The obvious answer.” replied another user.
One user added, “He was in a bad record deal and dropped a lot of music in a short time frame to get out of it. Since then he hasn’t really dropped anything at all… When he does drop new Frank Ocean merch, it takes months to ship or doesn’t ship out at all. He very rarely tours and when he does he’s notorious for canceling at the last minute. I think the last thing he did before Coachella was Primavera in 2017, and he dropped out the day of.
…
Cut to now, Frank Ocean is headlining Coachella. Hundreds, if not thousands, of people bought $600+ wristbands and flew across the country to see Frank. He shows up to his set over an hour late. He hardly sings, at all (but when he did my god did he sound amazing). Then, he does like a 30 min DJ interlude in the middle of his set, where he’s just jumping around mouthing (not even lip syncing) the words to his most popular songs. He then runs into curfew and ends the set by basically saying ‘That’s it, bye’.
He was supposed to perform again on weekend 2. Allegedly ‘hurt his foot’ and had to pull out, screwing over all the fans weekend 2. A lot of fans (myself included) speculate he had no intentions on ever performing the 2nd weekend. He apparently had some huge elaborate stage design that was going to be super cool, but pulled it at the very last minute and basically spiraled from there.”
One user shared, “Strangely he has a lot of fans who still seem to worship him regardless and make excuses for his extremely flaky behaviour. I’ve attended Primavera Sound in Barcelona a number of times, and remember in 2017 when he was a headline act (he was the absolute top billing that day and on the first line of the weekend poster for context). He cancelled on the day of his performance at incredibly short notice and cited ‘production issues’ (clearly not the case). He was a huge draw for many people (not me personally, but I might have watched his set)—arguably some travelled to the festival for his appearance alone, many from outside Spain.
“His fans rather rabidly attacked the festival organisers on social media in the immediate aftermath of the cancellation, and for several weeks after, with many vowing to boycott the festival and never attend again, even though it was entirely Ocean’s own doing. It was bizarre.
“That year was also one of the best and most eclectic editions PS in memory even without him….”
5. Justin Bieber
One user posted, “Justin Bieber—he doesn’t like it when fans take videos or pictures of him, but would rather have a real conversation with them without a fan or paparazzi shoving a camera in his face. His frustration and annoyance is understandable, especially when fans/paparazzi yell rude things about his wife Hailey or ask ridiculous questions about Selena Gomez.”
Another Redditor replied, “He was also heavily [‘admired’] by his adult fans when he was just a tween.”
One user commented, “Yikes, this too. I was around eight or nine when he first got popular and I remember hearing 20 to 30 year olds thirsting over him. Back then I thought it was normal to have adults talk about him this way because he was famous and seemed so ‘grown up’ to me because I was still a kid. Now that I’m a lot older, remembering this makes me cringe.”
Another user added,”Not only that, but there was also PLENTY of 20-30 even 40+ year old men publicly and constantly calling for violence and… threats against him. Like, dude even if you genuinely disliked him, he was a child?…”
6. Adam Driver
One user also shared, “Adam Driver but that is because so many of them do not know how boundaries work. One of them climbed onto the stage and tried to follow him backstage after a performance of Burn This. A bunch of them say horrible things about his wife and/or wish he was with Daisy Ridley.”
Another user replied, “I saw him on the subway, sunglasses on. He noticed that I noticed him for a brief second, and then I looked away and minded my business. It’s weird in NY. Celebrities can blend in a lot easier.”
7. Leonardo DiCaprio
One Redditor commented, “Leonardo DiCaprio. I don’t think he is annoyed/irritated by his fans but he does seem to be over the media part of it and has been for a long time. I think he gave an interview about the craziness of Titanic and he realized that he didn’t want to be THAT famous, where everyone is following you around. He still wears a mask in public and I know celebrities don’t care about COVID that much lol. He takes his acting and his acting career seriously and I noticed he rarely gives interviews anymore. He seems to be aiming for an ‘old school’ actor legacy.”
Another user replied, “He didn’t seem okay with all the attention back in the 90s either.”
One commenter added, “He appears very closed off to the public and media and despite his millions seems down to earth, shy and funny in the interviews and snippets we have seen and is also very talented and seemingly professional at his job; of course we don’t know him personally but his co stars seem to sing his praises. His dating life overshadows everything else atm. We don’t know anything about the relationship itself, there’s barely any photos. All we know is there’s a pattern of dating someone for 5 years from 20-25 which is weird… But there is an air of mystery around Leo and he’s unproblematic otherwise so I can still enjoy him as an actor for now; his PR team are amazing tbh.”
8. Mitski
One user commented, “Mitski. I wouldn’t say she hates her fans but I think she’s annoyed with a particular group of them. She’s very disappointed about the ‘sad girl’ label they stamp on her music. On Twitter, she expressed frustrations about people recording her concerts the whole time instead of being engaged in the performance. In true Twitter fashion, she got a lot backlash for that…smh…”
Another user added, “The recording epidemic is so real, it’s one thing to record your fave parts, it’s another to literally watch the entire show through your phone screen in the first row. I grew up going to punk shows where people didn’t rly record like that because they were too busy moshing and crowdsurfing (and pre TikTok which might make a difference I guess) and now I’m into indie/indie pop and it’s crazyyy the difference.”
9. Joseph Quinn
One Redditor posted, “Joseph Quinn. He definitely has to be irritated by them.”
Another commenter said, “I’ll never understand why people became just so unhinged around him, it must have been wild to go from largely unknown to so famous you need security.”
One user asked, “PLEASE. THIS. I asked it in another thread and I never really got an answer. HOW did he get such an unhinged fanbase? He had a side role on one season of Stranger Things, but the dedication he’s inspired is like Supernatural cast level.”
One Redditor answered, “I think part of it is when TikTok chooses their Boy Of The Month they all hype each other up/one up each other. Look at how much Bo Burnham or Pedro Pascal blew up once TikTok got into them. It builds off its own attention.”
Another user also added, “Stranger things fandom is majority teens/kids/young adults whose brains aren’t fully developed yet and are extremely parasocial with the cast and always have been since the show began. Unfortunately Joseph and the other new cast members are just their latest victims. With Joseph he’s obviously really impressing executives and producers lately with all the recent castings for him so at least he’ll be free of that overall fandom soon. I feel bad for the rest of the cast that are still in the show for another season and have to still deal with the fans, because every year it just seems to get worse.”
10. Robert Pattinson
One user shared, “Robert Pattinson regards Twilight and its fandom with a delicious mixture of disdain and bewilderment.”
Another user added, “As do I.”
One user commented, “I was a huge twihard from 2009-2012 and I remember the fandom trying to make ANY excuse to prove to ourselves that he didn’t hate the movies lmao.”
11. Ian Somerhalder
One Redditor posted, “Ian Somerhalder went through a phase of yelling at fans lol. And I’m pretty sure he never completed things like virtual chats/ video greetings/and autographs he owed fans who paid for a package during some convention.”
One user replied, “True I remember reading on Twitter about fans who bought greetings and he never did them and they still have not gotten refunds and he just kept on making up excuses. Also back in the days I think he canceled an irl fan event last minute and said he had other plans that came up last minute, but it was a lie because he had known for weeks that he couldn’t go and decided to tell the fans last minute and people had already booked flights, hotels etc so that must have sucked for them. He seems to be a bit messy.”
12 Paramore
One Redditor commented, “Paramore. They don’t hate/dislike their fans, but they explore the parasocial relationship in After Laughter. The song ‘Idle Worship’ is about Hayley seeing a fan with a shirt on her face and the immediate disconnect she felt. To have a perfected version of her plastered on shirts I think made her uncomfortable because she doesn’t feel like she can be the person everyone wants her to be. She’s just a normal person. The next song on the album is ‘No Friend’ which is the outro to Idle Worship and features mewithoutYou’s Aaron Weiss. Weiss chronicles the band’s very public hardships and also reads a long email Hayley sent him about Idle Worship. ‘You see a flood-lit form / I see a shirt design / I’m no savior of yours and you’re no friend of mine.’ Chills. Every. Single. Time.”
Do you agree with the list above? Share us your thoughts and leave a comment!
Source: this Reddit thread.
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