Marketplace - A new spin on the yard sale

Episode Date: April 22, 2024

Many states are making it easier for homeowners to subdivide their single-family lots. But those with space to spare may not know how to develop it. Now, new companies are offering cash for the land. Also: Profits are up, but probably not because of “greedflation,” and federal grants aim to get solar panels on low-income families’ roofs.

It's peak earnings season, so get out your green eyeshades. We're doing some accounting. From American Public Media, this is Marketplace. In Baltimore, I'm Amy Scott in Purkeye, Rizdal. It's Monday, April 22nd. Good to have you with us. Okay, so I was kidding about the accounting, but we are going to be hearing from a lot of companies this week about how they fared during the most recent quarter. Verizon reported

earnings this morning. Google's parent company Alphabet follows tomorrow. Microsoft and Tesla are reporting this week as well. Investors will be paying close attention to the usual data points, sales, cash flow, and of course, profits. And regarding that last one, a survey of business owners, economists, and industry leaders out this morning from the National Association for Business Economics found that profit margins are at their highest level since October of 2021. Marketplace's Justin Ho has more. This time last year, more survey respondents said profits were falling, not rising.

But Michael Urick, chief economist at Seventh Point Analytic Consulting and a survey analyst for the National Association for Business Economics says the trend of increasing profits isn't exactly new. It goes back to the last few surveys and we've had pretty strong economic health reflected in the survey for a while now. One reason is that a lot of companies' input costs have eased up. Shannon Grine, senior economist at Wells Fargo,

says that includes the cost of labor, raw goods, and other inputs. And just given as supply chains have normalized, I think the cost environment has also normalized. But Grind says this is a very different environment from 2021 and 22 when corporate profits were surging and so were prices. Labor was in short supply,

supply chains were out of balance. There were inputs that you just simply couldn't get your hands on and I think it was easier to explain why a firm was raising prices. And that kind of behavior, call it capitalism, call it opportunism, call it greed, flation, just isn't as easy to justify. George Perks is macro strategist at Bespoke Investment Group.

We're not seeing the sort of over the top consumer demand that underpinned very, very strong price increases where people would just pay whatever would be charged. Overall, Perk says companies will still raise prices to protect profits where they can. But there's just no reason to think that the Greek inflation story is relevant for the 2024 economy like it was for the 2021-2022 economy. Instead, price increases in this economy right now are looking more like they did before the pandemic. I'm Justin Ho for Marketplace.

On this Earth Day, the Biden administration announced it's awarding $7 billion in federal grants for residential solar projects. The money from the Inflation Reduction Act is meant to help more than 900,000 low-income and disadvantaged households benefit from solar energy through lower electric bills and to make a decades-old technology more widespread. Marketplace's Stephanie Hughes looks at the past, present, and future of solar. The first practical use of solar cells was during the space race in the 1950s. John Perlin, author of the book Let It Shine, the 6,000-year story of solar energy, says the cells became widespread in powering satellites, but not in homes.

The government at the time was promoting nuclear power as the panacea for future energy needs and solar was put on the back burner for a very long time. Now it's on the front burner. But as of 2020, only 4% of single family homes in the US had solar panels installed. Danel Baird, CEO of the clean energy company Block Power, says cost is a big reason. He estimates installation can run between $5,000 and $25,000, which can include updating your house. Do you need a new roof? Because you don't want to put new solar panels on an old roof.

He says solar panels have had their early adopters. But then there's this like valley of death before you get to the mass market. And that's kind of where we are. Barrett says solar is on the way out of that valley, but there are still challenges, even with a big investment like the one announced today. One is technical know-how.

We are missing a generation of skilled construction workers in America and in Europe. Another issue is trust, especially in low income neighborhoods, says Anya Schoolman, who leads the nonprofit Solar United Neighbors. She also advised some of the Biden administration's solar grantees on their applications. You're working in communities who've been ripped off for years. Most people are inclined not to believe, you know, hey, I have a free solar system and you can save money for the next 25 years. She says building that kind of trust takes time.

And a lot of people want to know someone who's gotten solar panels before they get them too. I'm Stephanie Hughes from Marketplace. The sun was shining on Wall Street today. We'll have the details when we do the numbers. Kirsten Khire, Host, The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times

The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times The New York Times And for the past several years, cities and states have been changing laws to allow for more housing in some single-family neighborhoods. Since 2018, Minneapolis, Minnesota, Austin, Texas, and Oregon, and Washington states have all moved to allow two or more homes on lots that used to just house one.

Think duplexes and those backyard accessory dwelling units or ADUs. In California, a similar law has yet to produce a lot more housing. Many homeowners don't have the resources or the know-how to become home builders. But for those with space to spare, some new companies have emerged with an offer. Cash for your backyard. KQED's Erin Baldessari explains. Gail Tremaine walks up a short, steep slope in her backyard, stopping where the hill plateaus. So this is a big space. It's big space. And then turn around and look at your view. Isn't that gorgeous? The Silicon Valley city of San Jose spreads out in front of us with its downtown skyline rising in the distance. You see the whole valley and in the fall when the leaves change it's

just beautiful. Gail and her husband Brian Tremaine are planning to give up this view though. Both are mostly retired. Gail from real estate and Brian from the tech industry. Now that they're in their 70s, Brian says we're getting to the age where we want less land. So right now it's just become an area we need to do the weed control and the county gets after us if the weeds get too high. So they decided to sell this portion of their backyard. They're able to do that thanks to a California law that went into effect in 2022.

It allows for the lot split and for developers to build two homes on each new lot. But despite a major housing shortage across the state, the law hasn't produced much in the way of new housing. These types of projects are really costly and complicated for a homeowner to take on. They're basically asking the homeowner to be a developer. Ben Baer is the CEO of Build Casa, the company that bought the Tremaine's lot. He wants to make it easier for homeowners to benefit from the law without having to do all the work themselves. Homeowners can get anywhere from $50,000 to

$400,000 in cash while keeping their existing home and mortgage. Baer says his clients make, on average, just over $100,000. In exchange, they get a closer neighbor and smaller backyard and potentially lose up to 10% in their existing property's value. That's according to Bayer and another company that does these deals. So there's a major sort of positive benefit when you compare those two numbers. A growing number of companies are specializing in particular aspects of the new law or offering similar services. Typical clients tend to fall into two camps, retirees looking to downsize like the Tremains

in San Jose and younger homeowners hoping to upsize like Jamal Mason. The 34-year-old is a former track athlete who made his career in real estate. He bought his home in Los Angeles a little more than four years ago. He was looking for ways to pull equity out of his house without taking on more debt. I put everything I had into purchasing this house. So when I found out that I could pull the money out, I was like, wow, that's actually a really cool way to leverage what I have. He says he'll receive a six figure payment for his backyard from a company called Yardsworth, where he's since taken a job as a sales manager.

He plans to use that money to buy an investment property in Texas. I'm forward thinking, what's the best way for me to set myself up so that I can retire or just be somewhat comfortable in the later half of my life? As for the duplex that'll rise behind his small two bedroom home, he says he's bracing for it, along with the construction zone that will come with. That is also a sacrifice, but, you know, a short term sacrifice for a long time gain is not a bad idea to me. And that's what these companies are banking on, that they can entice more homeowners to sell their backyards and make a dent in the state's housing crisis. In San Jose, I'm Erin Baldessari for Marketplace. Stephanie Hughes talked earlier about federal dollars for residential solar projects. Tackling climate change is also going to require significant investment in the electrical grid,

including transformers. Those are the metal canisters you see attached to utility poles. They convert high-voltage electricity from power plants to lower level electricity that's safe for homes and businesses. There are some 60 million transformers nationwide and we're going to need a lot more of them as the US continues to electrify everything from cars to homes. One of the metals that makes up those transformers is steel and the kind of steel matters. The Allegheny Front's Julie Grant reports.

If the Biden administration is going to meet its climate goals, it needs to look for energy savings everywhere possible, including those electrical transformers that are so critical to the grid. Last year, the Department of Energy proposed using a different kind of metal inside of transformers. It would have moved the U.S. to adopt world-leading technology called amorphous steel. Andrew Dulaski is director of the Appliance Standards Awareness Project, which advocates for energy efficiency. We thought the proposed rule was really headed in the right direction.

But some in the steel industry disagreed. Here's the back story. For some 75 years, transformers have been made from something called grain-oriented electrical steel. Amorphous steel is comparatively new. The efficiency of amorphous is just simply better, much better than green-oriented electric steel. Jun Kuo is a material scientist at the Ames National Laboratory. He explains that the metal inside a transformer is rolled into super thin sheets or ribbons and the thinner it is the more efficiently it conducts electricity. And amorphous material is naturally thin.

It's about 30% or 40% thinner than the thinnest electric steel we've ever seen. And that means less energy lost when electricity moves through the transformer. That's why many new transformers sold in Canada contain amorphous steel. But there was a problem with the DOE's proposed rule. Amorphous is produced at just one plant in the U.S., Metglas in South Carolina. Sourcing a new transformer of any kind can already take a couple of years or more

and could take even longer if all new transformers had to be built with amorphous material. Plus, the domestic producer of the old steel said the rule could lead to the closure of its plants. This is ridiculous. Daniel Vicente is regional director for the UAW Union, which represents 1,500 steel workers at Cleveland Cliffs in Pennsylvania and Ohio.

He points out that while amorphous steel is produced in South Carolina, some of the raw materials are imported from China and other countries. Vicente says rather than switching all transformers to this newer metal, the U.S. should ensure there's enough business to keep traditional steel plants open. Vicente Why would we seed the last domestic manufacturer of electrical steel. The Energy Department ultimately walked back the efficiency mandates when it finalized

its transformer rule this spring. Now amorphous steel will be required in only 25% of new transformers. The DOE's final rule will reduce CO2 emissions by nearly 85 million metric tons over 30 years. But efficiency expert Andrew Dulaski says that's just a third of the CO2 that would have been saved by the proposed rule. The risk here is that we're doubling down on old technology. And since transformers can last up to 50 years, he says it's locking in inefficiencies for decades to come.

I'm Julie Grant for Marketplace. Coming up... I incorporate people and sometimes pets. Art for sale. But first let's do the numbers. The Dow Jones Industrial Average rose 253 points, nearly 7 tenths percent to close at 38,239. The Nasdaq added 169 points, 1.1% to finish at 15,451 and the S&P 500 packed on 43 points, about 9 tenths percent to end at 50.10. As I said, busy earnings week, so here's one to kick us off.

Verizon saw revenue rise a bit in its last quarter. The company says it benefited from higher prices for its voice and data plans. Still Verizon fell short of earnings expectations. Shares dropped 4.6%. Bonds fell. The yield on the 10-year T-note rose to 4.61%. You're listening to Marketplace. This is Marketplace. I'm Amy Scott. We talked earlier about the perennial housing shortage. The obvious knock-on effect is rising homelessness. The number of unsheltered people in the U.S. was up by 12 percent last year, according to a count from the federal government, to more than 650,000 people, the highest total on record. And communities are struggling

to figure out how to respond, as we're seeing in a current case before the Supreme Court. The court heard oral arguments today over whether efforts to enforce a public camping ban in Grants Pass, Oregon violated the Eighth Amendment's protections against cruel and unusual punishment. Abby Van Sickle is Supreme Court correspondent with the New York Times and joins me now. Abby, welcome to the program. Abby Van Sickle Thanks so much for having me. SONIA DARA So you listened to oral arguments in court this morning. What was that like

after having actually reported in this community, Grants Pass? Abby Van Sickle I thought it was just a fascinating argument, especially after having gone to Grants Pass and spent time in the encampments and speaking with local officials about this case. And the justices were wrestling with a lot of the same issues that local officials and on housed people in Grants Pass think about, which I thought was pretty fascinating. Yeah. So talk about this community and what you saw when you reported there, because I think sometimes this argument gets a little academic, right?

Yeah. So Grants Pass is a town of about 40,000 people. It's in the foothills of southern Oregon, and it's a former timber hub. And the town has been sort of struggling with what to do as residents began to complain that there were more and more people who were homeless and in the downtown area and also camping and sleeping in some of the city's parks. And so local officials stepped up enforcement of a series of local ordinances that basically make it so people cannot sleep with bedding in any public space in the town.

And a group of homeless people filed a lawsuit challenging that, saying that the city was violating their Eighth Amendment rights, that it was unconstitutional, cruel and unusual punishment. Nicole Soule Now, what did you hear in the courtroom to give you any indication of how the justices might lean? Yeah. So I would say that the liberal group of justices had a pretty impassioned back and forth with the lawyer for the city of Grants Pass about the implications of making

it so people could not sleep, they argued this is essential human function, people must sleep. And so, if you cannot sleep outside anywhere and you don't have a place to go, you don't have a shelter bed or a house, what are you supposed to do? And many of the conservative justices seem to be wrestling with the practicalities of enforcement. How does a city decide whether there are enough shelter beds or not on a particular night? How do police actually make these individual determinations? Those are the major threads that I heard in the argument today.

Nicole Soule Of course, the ruling will have implications for so many communities that are grappling with this issue. Can you talk about how what you saw in grants pass reflects the housing situation throughout many parts of the country, especially in the West? Of course. I think this is one of the most important things to understand about the case is that this is not just a case about a small town in Oregon. This is a case that has drawn the attention of cities, especially on the West Coast and in the Western states, but throughout the country about how

cities can deal with and what the boundaries are for regulating homelessness at a time when homelessness has increased. And when the case was coming before the court, we've seen front of the court briefs by leaders across the political spectrum who are asking the court for clarity on what can cities and states do, what can they not do, and how are they supposed to wrestle with this question? Yeah. I mean, there are obviously no easy answers, but advocates for the unhoused say the cure to homelessness is housing. Are you hearing that in the arguments that communities really need to provide housing

for these folks if they're going to clear them out of these encampments? You know, that was not a big part of the oral argument today. It was definitely something that came out in some of the briefs to the court about affordable housing that it is certainly something that came up in interviews in grants past where they have seen increasing rents, increasing housing costs, and very limited options for people on low or no income. So it's certainly looming in the background of the case, but it wasn't, you know, it wasn't that sort of at the heart of the legal argument today.

Abby Van Sickle covers the Supreme Court for the New York Times. Thanks so much for sharing your reporting. Thank you so much for having me. At the top of the program, Justin Ho talked about higher profit margins among businesses. That's the macro story. To check on how things are going on a more micro level, here's the latest in our series, My Economy. My name is Julia McGuigan and I am the owner of Julia M. Illustrates in Omaha, Nebraska. I would describe my work to someone who has never seen it before as being detailed architecture in my community.

Sometimes landmarks, buildings. I incorporate people and sometimes pets. All of that I sell at markets and online and also in my shop. I started business paying taxes on my business and everything in 2017. It was official. But my brick and mortar didn't open until 2022. Business has been a little bit stagnant. Through the winter it was difficult, but I am hopeful about the summer because my business thrives mainly on being at in-person events. A lot of the farmers markets happen seasonally, so May through October is our season, and there's tourists that come to those types of events

out of towners. Having my own business, the biggest challenge has been not knowing what I'm going to make month to month. Having a family, our goal is to someday buy a house. And with my income as a freelance illustrator and all the expenses that go into a product-based business, it doesn't show that I make a lot of money. I've made the decision to go back to teaching next fall. I'm hoping that it will work well with my artist schedule because with the teacher's schedule you get summers off and that's when the market season is. I feel very good about the decision because it will be, it's like a weight off my shoulder knowing that I have a salary.

Like I can't say how huge that is. That's how I'm feeling right now is just like, I can breathe. I can breathe. Julia McGuigan, illustrator, business owner, and soon to be teacher in Omaha, Nebraska. You know, we can't do this series without you. Tell us about what's happening in your economy at marketplace.org slash my economy. This final note on the way out today, as I said up top, Tesla is among the many companies reporting its quarterly earnings this week. Tomorrow, in fact. Ahead of that release, Bloomberg is reporting that Tesla has cut its new marketing team as part of a wave of layoffs. release Bloomberg is reporting that Tesla has cut its new marketing team as

part of a wave of layoffs. Citing unnamed sources, the story says the entire US growth content team of about 40 people has been let go, though some marketing staff remains in Europe. For years, Tesla has avoided advertising, but last year CEO Elon Musk said the company would try it and see how it goes. Apparently it didn't go well. In response to Bloomberg's story, Musk said on X, quote, the ads were far too generic. Could have been any car. Our daily production team includes Andy Corbin, Elise Hassan, Maria Hollenhorst, Sarah Leeson,

Sean McHenry, and Sophia Terenzio. I'm Amy Scott. We will be back tomorrow. This is APM. All over the country, we need to improve reading in Wisconsin. Schools are changing the way they teach reading. I'm calling for a renewed focus on literacy. We have gotten this wrong in New York and all across the nation. And it's happening because of a podcast.

I think your podcast has changed my life. And I'm going to share this podcast with everyone I meet. Sold a Story investigates how teaching kids to read went wrong. New episodes of Sold a Story are available now.