Monday Morning Quarterback

Federal Immigration Raids Disrupting California’s Economy. President Trump promised a new “golden age” for America, but it’s been anything but that for Los Angeles, with its dependence on trade and immigrant labor — two backbones of the region’s economy. First, the president’s tariffs cut deeply into traffic at the ports of Los Angeles and Long Beach, and now his push to arrest undocumented immigrants at work sites, which has spurred massive protests (as Trump deploys the National Guard), threatens a one-two punch to our region just starting its recovery from January’s firestorms. “The reality is that the U.S. economy is largely today dependent upon foreign born labor — and in California more so,” said Nicholas Eberstadt, a political economist at the American Enterprise Institute, a right-leaning think tank in Washington. “For the country as a whole, we’re getting towards 1 out of 5 jobs being filled currently by somebody who was born abroad. In California, it’s more like 1 in 3.” The crackdown, depending on its scope and scale, could come at a price for industries across Los Angeles and California that have become increasingly dependent on immigrants, here legally or not, economists say. In fact, the surge in international migration in the last two decades (both by legal and undocumented workers) has been key to the growth of California’s economy. A number of industries such as construction, leisure and hospitality, health care and agriculture rely heavily on immigrant workers. Some of the most obvious effects will hit the construction industry, given that the protests began after Immigration and Customs Enforcement agents targeted a Home Depot in Paramount, where casual day laborers seek employment. Dean Baker, a senior economist at the Center for Economic and Policy Research, a left-leaning think tank in Washington, said the raids are scaring off casual workers from congregating in public places, making it more difficult for small contractors to find employees. When will the Administration learn that these people are not criminals. Criminals don't stand out front Home Depot looking for work, or cut our grass, or wash dishes in the back of our restaurants. They are doing the menial jobs we won't do. In truth, our economy is dependent on these immigrants. We need them - we shouldn't be arresting them. “Immigration in general is good for economic growth,” said Eberstadt, who is a co-author of the paper. “This idea that immigrants take away Americans’ jobs is just not correct.” In other real estate related news, let’s get under the hood…

Elderly Man Builds Tree House To Prevent Eviction From State-Owned Home. Before the sun rose last Tuesday, Benito Flores fortified the front door of his one-bedroom duplex on a narrow street in El Sereno. Flores, a 70-year-old retired welder, had illegally seized a home five years ago after its owner, the California Department of Transportation, had left it vacant for years. He’d been allowed to stay for a few months, then was directed to this nearby home owned by the agency. But now it’s time to go. Later in the morning, deputies with the Los Angeles County Sheriff’s Department were scheduled to lock him out. Flores clearly had other plans. Over months, he’d sawed wooden two-by-fours to use as a brace between the front door and an interior wall to make it harder to breach. He bolted shut the metal screen door. Once Flores was satisfied he’d secured the entrance Tuesday, he retreated to a wooden structure he built 28 feet high in an ash tree in the backyard. If the police wanted him to leave, they’d have to come get him in his tree house. “I plan to resist as long as I can,” Flores said. The homemade structure, 6 feet tall and 3 feet wide, represents the last stand for Flores and a larger protest that captured national attention in March 2020. Flores and a dozen others occupied empty homes owned by Caltrans, acquired by the hundreds a half-century ago for a freeway expansion that never happened. They said they wanted to call attention to the homelessness crisis in Los Angeles. The issue, Flores said, remains no less urgent today. Political leaders, he argued, have failed to provide housing for all who need it. For the public agencies involved, the resistance represents an intransigence that belies the assistance and leniency they’ve offered to Flores and fellow protesters who call their group “Reclaiming Our Homes.” The state allowed group members (or “Reclaimers”) to remain legally and paying rents far below market rates for two years. Since then, the agencies have continued to offer referrals for permanent housing and financial settlements of up to $20,000 if group members left voluntarily. Two have accepted settlements and are expected to leave within weeks. The final Reclaimer also has a court-ordered eviction against him, but plans to leave without incident. Caltrans wants to sell Flores’s home and the other empty hourses in El Sereno to public or nonprofit housing providers, which would make them available to low-income residents for rent or purchase.

Foreclosures Slight Increase in May 2025. ATTOM real estate analytics released its May 2025 “U.S. Foreclosure Market Report,” which shows there were a total of 35,498 U.S. properties with foreclosure filings (i.e. default notices, scheduled auctions or bank repossessions) up 9 percent from a year ago. “Foreclosure activity in May reflected a mixed picture with fewer starts but a continued rise in completed foreclosures,” said Rob Barber, CEO at ATTOM. “This suggests that while fewer new defaults are being initiated, lenders may still be working through a backlog of existing cases. We’ll be watching closely in the months ahead to see how these trends evolve.” Nationwide one in every 4,009 housing units had a foreclosure filing in May 2025. States with the worst foreclosure rates were Delaware (one in every 2,313 housing units with a foreclosure filing); Florida (one in every 2,536 housing units); Illinois (one in every 2,668 housing units); Nevada (one in every 2,747 housing units); and Indiana (one in every 2,983 housing units). Among the 110 metropolitan statistical areas with a population of at least 500,000, those with the worst foreclosure rates in May 2025 were Lakeland, FL (one in every 1,506 housing units with a foreclosure filing); Cape Coral, FL (one in every 1,674 housing units); Jacksonville, FL (one in every 1,888 housing units); Bakersfield, CA (one in every 1,990 housing units); and Riverside, CA (one in every 2,031 housing units). Those metropolitan areas with a population greater than 1 million with the worst foreclosure rates in May 2025 including Jacksonville, FL and Riverside, CA were: Cleveland, OH (one in every 2,064 housing units); San Antonio, TX (one in every 2,202 housing units); and Chicago, IL (one in every 2,203 housing units).

The Housing Market Was Supposed to Recover This Year. As 2025 began, the stars were aligning for a housing market rebound. Inflation was easing, the economy looked strong and mortgage rates were drifting downward. By April, there were more available homes to buy than at any time since January 2020, according to the Federal Reserve of St. Louis. The conditions were ripe for buyers to re-emerge, checkbooks in hands, and sellers to negotiate. Then on April 2, everything came crashing down. President Trump rolled out his expansive global trade tariffs, shocking the stock and bond markets and sparking fears of a recession. Mortgage rates jumped again, hitting 6.89 percent for a 30-year fixed rate loan on May 29, their highest level since early February. The extreme volatility threw cold water on a fragile market. Buyers bailed out. “There isn’t any urgency to buying right now — if anything it feels more risky to put a down payment into a home when you might not have a job six months from now,” said Daryl Fairweather, the chief economist of Redfin. Real estate agents across the country report a chilled environment, with sellers unwilling to lower their prices and buyers reluctant to make a big purchase as our economy flounders and the costs for a mortgage, insurance and property taxes rise. Even in markets where prices have fallen and inventory is piling up, like Austin, Texas, homes are sitting on the market for months. In fiercely competitive areas, like the New York City suburbs, where prices are still rising and homes sell fast, properties that would have gotten a dozen offers a year ago now get two or three. In 2024, there were fewer home sales than in any year since 1995. This year is looking worse. In April, the number of sales of existing homes dropped 2 percent from April 2024, while the median sale price rose 1.8 percent, marking 22 straight months of year-over-year price growth, according to the National Association of Realtors. The trade group also reports that pending sales are down from a year ago in every region of the country except the Midwest.

Los Angeles Federal Courthouse Listed For Quick Sale. The federal government is offering real estate investors an unusual opportunity — the chance to buy a historic courthouse and office building in the heart of downtown Los Angeles. The landmark U.S. Courthouse built in the 1930s on Spring Street near City Hall has been slated for “accelerated disposition” by the General Services Administration as part of a plan to sell off obsolete and underutilized federal properties. The Trump administration has launched a major push to shrink the size of the federal government. In 2016, a replacement U.S. courthouse opened nearby on First Street. It houses federal courts and federal law-enforcement departments such as the U.S. Marshalls Service and the U.S. Attorney’s office for the Central District of California. Occupants of the older Spring Street building include the National Labor Relations Board, Small Business Administration and the U.S. attorney’s office for the Southern District of California the GSA said. The former federal courtrooms are occupied by the Superior Court of Los Angeles County. The building comes to market in a down period for commercial property sales downtown. Many office towers lost tenants earlier in the pandemic and have yet to recover. Buildings that have changed hands in the last year have sold for far below the cost to build new structures — the Gas Company Tower office skyscraper was sold to Los Angeles County for $200 million, far below its appraised value of $632 million in 2020. The GSA didn’t list a price for the courthouse, but commercial property broker Mike Condon Jr. of Cushman & Wakefield estimated that it could sell for about $60 million. The “thin buyer pool” potentially includes wealthy individuals or family offices willing to wait years for demand for space to return to the market before starting renovations, which could include converting it to apartments, Condon says. The U.S. Courthouse at 312 N. Spring St. was the third federal building constructed in Los Angeles to serve its rapidly growing population in the early 20th century. The 14-story building also housed downtown’s main post office and other federal agencies. The building was designed in Art Moderne style by Gilbert Stanley Underwood, a Los Angeles architect best known for designing National Park lodges including the famous Ahwahnee Hotel in Yosemite. The courthouse is on the National Register of Historic Places.

In A State With A Dire Affordable Housing Shortage, Does The Coachella Valley Offer Hope? Sure, its impossibly hot, but there are opportunities in the Coachella Valley for investors. For example, along the main thoroughfare of Palm Springs, just a block from a vibey, adults-only hotel and a gastropub serving boozy brunches, a new apartment building with a butterfly-wing roof inspired by Midcentury Modern design is nearing completion. The property, called “Aloe Palm Canyon,” features 71 one-bedroom units with tall windows offering natural light and sweeping views of Mt. San Jacinto, plus a fitness room and laundry facilities. When it opens this summer, serving lower-income seniors over age 55, the complex will become the latest addition to the Coachella Valley’s growing stock of affordable housing. A decade ago, this desert region known for its winter resorts, lush golf courses and annual music festivals produced just 38 units of affordable housing a year, while the low-wage workers powering the valley’s lavish service industry faced soaring housing costs and food insecurity. Fast-forward to this year, and affordable housing units are planned or under construction in all nine Coachella Valley cities, including the most exclusive, and in many unincorporated areas. At least some of that momentum can be credited to a Palm Desert-based nonprofit organization that in 2018 set an ambitious 10-year goal to reduce rent burden (or the number of people spending more than 30% of their income on housing costs) by nearly a third. “Lift to Rise” aims to do this by adding nearly 10,000 units of affordable housing in the Coachella Valley by 2028. Some seven years into its decade-long push, Lift to Rise appears well on its way to that goal. It counts 9,300 affordable housing units in the pipeline as of April. That figure includes those in the early planning stages, as well as 940 units starting construction soon, 990 under construction and 1,405 affordable housing units completed. It is notable progress in a state where the dire shortage of low-income housing can seem an intractable problem. Now, some officials and elected leaders say Lift to Rise may offer a path forward that could be replicated in other regions.

Five Fishermen Who Survived 55 Days Adrift By Drinking Rain And Parboiling Fish. Five fishermen who spent 55 days adrift at sea arrived last week at a port in the Galapagos Islands after being rescued by a tuna boat, the Ecuadorian navy said on X. The three Peruvians and two Colombians had been missing since mid-March and were found on May 7 by an Ecuadorian boat called Aldo. The fishermen had reported damage to the boat’s alternator two days after setting sail from Pucusana Bay, to the south of Peru’s capital Lima, the navy said in a separate post on Friday. The failure caused communication and navigation tools to malfunction, Ecuadorian navy Frigate Capt. Maria Fares told The Associated Press, adding that they had no power on the boat. “They had no starter, lights or anything that a battery generates,” she said. To survive, they had to “take rusted water out of the engine (and) when a fish passed by, they caught it and parboiled it to eat.” Fares added that they also drank rain and sea water to survive. The men are in stable condition and the navy said it is coordinating with local and foreign authorities to ensure their safe return to their respective countries. In this government photo below a soldier checks the vitals of one of five shipwrecked fishermen, who were rescued after being adrift for more than 50 days, at the San Cristobal Naval Base, Galapagos Islands.

“An Evening with Jennifer Greene.” On Thursday night, July 10, 2025, we will have the honor to host the renown real estate investor, Jennifer Greene. Jennifer has developed a unique approach to real estate investing by creating strong value-added relationships with referral partners across several professions. Jennifer is a marketing wiz and turns the real estate market upside down. Don’t miss her presentation! Thursday, July 10th, 6:30 to 9:30 pm. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Culver City CA. FREE Admission. Please RSVP at our website, LARealEstateInvestors.com.

Vendors Expo Returns! Our world-famous "Vendors Expo" returns in 2025, on Thursday night, July 10, 2025. The Vendor Expo opens starting at 6:30 pm. We'll have 30+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Culver City CA. FREE Admission. Please RSVP at our website, LARealEstateInvestors.com.

This Week. Investors will continue looking for additional information about tariff policies and monitor the situation in the Middle East. The next Fed meeting will take place on Wednesday. No change in the federal funds rate is expected, but investors will be looking for additional guidance about potential rate reductions later in the year. For economic reports, Retail Sales and Import Prices will be released on Tuesday. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key measure of the health of our economy. Housing Starts will come out on Wednesday. Markets will be closed Thursday for Juneteenth.

Weekly Changes:

10-Year Treasuries: Fell 010 bps

Dow Jones average: Fell 300 points

NASDAQ: Fell 050 points

Calendar:

Tuesday (6/17): Retail Sales

Wednesday (6/18): Fed meeting

Wednesday (6/18): Housing Starts

For further information, comments, and questions:

Lloyd Segal

President

Los Angeles County Real Estate Investors Association

Lloyd@LARealEstateInvestors.com

310-792-6404