Marketplace - Hotel, motel, affordable home?

Episode Date: August 22, 2024

For many old hotels and motels, the most reliable guests may be ghosts in the attic. Unfortunately, they’re not paying the nightly rate. Worse, many hotels with empty rooms are surrounded by communities suffering housing shortages. Instead of closing their doors, they’re being converted into transitional housing for low-income people with the help of nonprofit organizations. In this episode, we visit one. Plus, retirees feel financially stable while working Americans don’t, Fortune 500 firms fear AI and rural parents struggle with living in “child care deserts.”

Okay, what about this trickle down but for interest rates from American public media. This is Market Class. In Los Angeles, I'm Kyle Rizdall. It is Thursday today, the 22nd of August. Good as always to have you along everybody. With the understanding that our professional interests here at Marketplace skew toward the economic, we are all kind of on pins and needles for the big speech. Oh, Chicago tonight? No, no, no, no. Jackson Hole tomorrow? Why, yes. Jay Powell at that big central bank annual conference. And we are not the only ones who are going to be watching. Economists, bankers, various people in business and technology are going to be parsing Powell's

words looking for any hint at all about the Fed's plans. But look, if and when a rate cut happens, how quickly and where are we all going to feel it? Marketplace's Samantha Fields starts us off. Some interest rates have already started coming down, even though the Fed hasn't announced a cut yet, just in anticipation. The one that we've already seen the biggest move on is mortgage rates. Ted Rossman at Bankrate says average rates on a 30-year fixed mortgage have already dropped from around 8% last fall to around 6.5% now.

That's a meaningful change. If you're waiting for them to come down a lot more, David Beckworth at the Mercatus Center at George Mason University says don't hold your breath. At best we'll have some minor rate cuts, but we'll definitely never return to the low rates of 2021 when many people got 3% mortgages. At least not anytime soon. You may have also noticed interest rates starting to come down slightly on savings, interest you can earn on certificates of deposit or CDs and high yield savings accounts. And Sandy Breger at the wealth management firm, Experient, says after the Fed announces

a cut. The change in interest rates should impact those in a pretty quick manner for any sort of savings account or money market account. Unfortunately, you are going to see some decreases in interest rates there. Likely within a month or so, she says. Other places you may notice a rate cut within a month or two, the interest you pay on your credit card debt, and the rate you can get on a car loan or a home equity loan. But Ted Rossman at Bankrate says in all of those cases, a quarter or even a half point cut won't make that big a difference. The Fed pushed rates higher by quite a bit, five and a quarter points, and they did so aggressively.

The ride down is likely to be slower. And he says that's why borrowing costs and interest you can get on savings are likely to stay high for a while. I'm Samantha Fields for Marketplace. On Wall Street today, high was not a word that was in the lexicon. We will have the details when we do the numbers. The National Association of Realtors said today existing home sales rose 1.3% in July, down though 2.5% from a year ago. The inventory of unsold homes did edge up a bit, but supply and affordability are still

problems. Affordability in the rental market is a problem too, but solutions are out there. And here's one. Converting outdated and run-down or obsolete hotels and motels into apartment buildings. According to Rent Cafe, repurposed hotels, that's the phrasing, repurposed hotels,

added more than 4,500 new apartments to the national inventory last year, an all-time high and most of them affordable to low-income renters. Marketplace's Amy Scott took a drive down to southern Maryland to get a seat for herself. On the side of busy Route 301 in Newburgh, Maryland, about an hour south of D.C., Sandy Washington opens the door to a newly renovated corner apartment. Welcome to Southern Crossing. This is one of the first models.

Washington is CEO of Lifestyles of Maryland, a nonprofit housing provider, and Southern Crossing is the new name of what had been a classic 50s motel. This two-bedroom apartment used to be three separate motel rooms. It's brightly painted with a big kitchen full of donated furniture and supplies. Our idea about this is that when families move in these places are fully furnished from the dishes, pots and pans, everything

is here. When it opens this fall, Southern Crossing will offer transitional housing up to two years for low-income people experiencing homelessness, domestic violence or other crises. And so hopefully when they move out they can take all of those things with them and start off with the tools they need to stabilize their household. The White House Motel was something in its day, with a three-story main structure reminiscent of its more famous namesake flanked by low brick buildings with white columns.

Old postcards show a big neon sign out front and a grand lobby with a plush red carpet and chandelier. In the 1950s and 60s, this area was known as Maryland's Little Vegas. Nothing but motels and gambling down this whole 301 strip. What happened? Gambling got outlawed. That was in 1968. Then new interstate highways diverted travelers from what had been the main route south from Baltimore to Virginia. — And so those places start to become obsolete.

— The motel has been vacant since 2010. Washington says when her group took over, the beds were still made. We thought, we'll just take that motel and put some paint on it and, you know, shampoo the stuff that's there and move people right on in. Boy, were we so wrong. They filled many dumpsters with rotting carpet and bedding and had to install a brand new septic system and water tower, seven years and four million dollars later, they're hoping to finish the first units by the end of next month and start moving people in shortly after.

They'll pay subsidized rents of $900 to $1800 a month. Altogether, when this project is done, we'll be able to house 77 people at a time. A small dent in a huge problem. The National Low Income Housing Coalition estimates the country is short more than 7 million rental homes for people with extremely low incomes. In Albuquerque, New Mexico, John Bloomfield, with New Life Homes, has converted two old motels along historic Route 66 into permanent affordable housing. John Bloomfield, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New

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New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life Homes, New Life H and, not in my backyard, pushback. Neighbors typically don't like affordable housing. It's a problem everywhere. And part of our work is to show that our projects add value to neighborhoods and property values improve. So, what's it like to live in a converted motel? Cheryl Edenfield moved into Albuquerque's historic Luna Lodge

a little more than a decade ago after years of homelessness. It was nice and retro looking, but the insides were beautiful. They redid everything because it was a pretty ratty hotel before that. Now she's at the Sundowner, another new life property, with a community garden and food donations from local grocery stores. People look out for each other a lot, whether it's good or bad, you know, and everybody knows everybody.

At the former White House Motel in Maryland, Sandy Washington is looking forward to the day when children play on the planned playgrounds and residents gather in the former restaurant and cocktail lounge. So we will have training rooms, we will have a library, there's a chapel. A community where once people were just passing through, then passing by. In Newburgh, Maryland, I'm Amy Scott for Marketplace. Speaking of housing and bringing new life to an old form, this week on our series Adventures in Housing, we're opening up the history books on homestyles.

And for today's installment, we're heading south. My name is Fallon Samuels-Adu. I'm an assistant professor of real estate and historic preservation at Tulane University School of Architecture. Many believe that the origins of the shotgun house is the narrow lot sizes that were common in the 19th century of New Orleans development. And there's some truth to that, that does lend itself to a house that's framed more narrow and long with a gabled roof. But there's other influences, not germane to New Orleans or Louisiana

or even the United States. The other origin stories for the Shotgun House extend all the way to West Africa and down into Haiti, where French explorers and colonialists brought back those influences and people who were familiar with building in that way to New Orleans, which was a major port city in the slave trade, but also elsewhere. One of the reasons why the Shotgun House took off is that you had so many craftsmen who

were familiar with building in the simplest way possible. Two walls with a gable roof over top is pretty much how every elementary school or preschooler draws a house. Many states were not authorizing people of color to be registered as architects. And so it has also served as a building type for those who do not have access to capital and for those who don't have access to professionally registered architects. Because shotgun houses are so endemic to the landscape of New Orleans, meaning that they're in every neighborhood, both the wealthy and the working class, they're a part of how the city sees itself as a place that is for everyone.

The big challenge now is that this architecture that was for everyone is now becoming an architecture for those who can afford to renovate them into a home for modern contemporary living. So the identity of the Shotgun House as a house for anyone and everyone in New Orleans is starting to fray. For me, Shotgun Houses are a resource for understanding historic preservation's big tent of people who are invested in the past becoming a part of our future. Fallon Samuels I do at Tulane University. Hey is there a homestyle you would like to hear the history of? We can take care of that for you. Ask us at marketplace.org. All right, true story.

I had a listener write in the other day, tell me I should think about retiring. Actually happened like two weeks ago. So there's that. Overall, though, Americans who have already retired are feeling pretty good about their finances. That's according to new data out today from Gallup. 74% of retirees said they've got enough income to live comfortably. And that is something of a pleasant surprise, actually, because Gallup's been asking working

Americans about their retirement outlook and retirees about their actual financial security for almost 25 years now. And as Marketplace's Savannah Ma reports, there has been a persistent gap between our expectations and our reality. When you're still planning for a distant retirement, you're probably thinking about whether you'll be able to sustain your current lifestyle. But by the time people actually leave the workforce, they kind of just don't sweat some of the stuff that maybe younger people do. Angie Chen is senior economist at Boston College's Center for Retirement Research.

For older folks, she says driving a new model car or going on vacation is just a lower priority. What they maybe care more about is their social circle and whether they can see their grandkids. That shift accounts for some of the persistent gap between workers' gloomy expectations and retirees' rosy reports in the annual survey. But that gap has widened in recent years. And Jeffrey Jones, senior editor with Gallup,

says retirees' responses aren't budging. It's more the non-retirees, which are more sensitive to how the economy is doing. And the data shows maybe more pessimistic because of headlines about a looming social security crisis. People's anxiety about social security is understandable. But probably overblown, according to economist Teresa Ghilarducci with The New School. Worst case, unlikely scenario, she says benefits get up to a 20% cut after 2035. Meanwhile, Gallup's polling finds only about half of workers expect to get anything out of the program.

If you underestimate Social Security, you tend to compensate by overestimating other sources of income. And sometimes make risky investments. But Jeffrey Jones with Gallup says that pessimism might encourage some of us to squirrel away more in our retirement accounts, which is part of how we wind up comfier than expected. I'm Savannah Marher for Marketplace. Coming up. You're sick a lot because, well, kids just germs, germs, germs, germs. I mean, love them, but yeah.

First though, let's do the numbers. Down dust shows off 177 points today, 4 tenths percent, 40,712. The Nasdaq down 299, 1.7%, 17,619. The S&P 500 shed 50 points, 9.10%, 55.70. We heard from Svante Mar that retirees are feeling more financially secure, so let's look at some stocks related to financial advising and retirement. NerdWallet down 1.8% today. Charles Schwab down about a half percent. Fidelity National Financial unchanged. The Food and Drug Administration has approved COVID-19 vaccines that target a new variant related to Omicron. The shots are from Moderna and Pfizer as well as its partner,

BeyondTech. Moderna down six and a half percent today. Pfizer down nine tenths of one percent. And you are listening to Marketplace. of 1% and you are listening to Marketplace. This is Marketplace. I'm Kai Rizdal. If you're having some agita about the speed with which artificial intelligence is developing, it's not just you and me. Turns out corporate America is worried too. Publicly traded companies are required, as you might know, to tell investors about material risks that could affect their profitability.

Usually that's just stuff like the possibility of a weakened economy or supply chain issues. According to a new analysis by the company, Arise AI, though, more than half of Fortune 500 companies have now listed AI as one of those risk factors in their filings with the Securities and Exchange Commission. Now, what exactly those risks are and which companies are worried? Well, they might not be what you'd expect. Marketplace and Matt Levin has that one. Netflix is the undisputed king of streaming, but it does face risks, how inflation will

impact consumers, lingering labor issues, running out of unsolved crimes to make documentaries about. And if you flip to item 1A, page 5 of Netflix's annual SEC filing, you'll see a new source of worry, generative AI. Jamie Lumley is with the investment research firm Third Bridge. It can lower costs of creating content that makes it easier for other players to enter the space and potentially increase the competitiveness of user-generated content on platforms like TikTok or YouTube. Soterios Johnson According to that Arise report, 92% of media and entertainment companies in the Fortune 500 mentioned AI as a material risk, the highest percentage for any industry. But it's not just media that's worried. Constellation Brands, which makes Corona beer and Kim Crawford wines, has also listed AI as a risk factor in their SEC filings.

Joe Lazzarotti is an attorney with the law firm Jackson Lewis. He says for plenty of companies, AI is less of a direct competitive threat and more a security problem, like employees giving sensitive information to chat GPT. There could be customer lists that could be compromised. There could be confidential information about a business opportunity that winds up getting disclosed. The AI risk companies are worried about aren't always external.

For tech companies, the risk is coming from inside the house. Legal, regulatory, and reputational threats that come with deploying their own AI. But Arise AI CEO Jason Lopatecki says there's a bigger risk behind the SEC disclosures. AI is going to eat a lot of industries. And if you don't invest here, you are at risk. And I think that's the tension you're feeling. For many companies, not investing in AI could be the riskiest path to take. I'm Matt Levin for Marketplace. There's a nonprofit organization called Child Care Aware, so you can guess where their sensibilities lie. But in their annual report a couple of years ago, they estimated that between December 2019

and March of 2021, so the earliest and worst days of the pandemic, 16,000 childcare centers across the country closed their doors. And that trend has continued in both urban and rural parts of this country, but the smaller a town in which it happens, the bigger the ripple effects on the local economy.

Last spring, the small town of Dubois, Wyoming, lost its one and only daycare center, and that has forced parents there to make some hard choices. Wyoming Public Radio's Melody Edwards has more. On a recent workday, Casey Sedlak is keeping her three kids busy with chores. Seven-year-old Levi waters the flowers. Five-year-old Charlie collects eggs from the chicken coop. Three-year-old Tilly is in charge of scooping up pet waste. I was supposed to do dog poop, but I hate dog poop.

Sedlak would rather have them all in daycare. She's self-employed as a life coach and as a consultant to small businesses. Plus, she helps run the family cattle ranch. But instead, she's here at home trying to juggle work and kids. 2020. Sorry. Hey, hey, hey. That's not okay. There's no hitting. Just help out. Just... Mom, you're not going to scare me. Okay, Levi, please don't do that.

Sedlak says it's stressful and exhausting and almost impossible. Figuring it out when you have kids and how you're going to make money when your kids are not in school and there's not an option for them to be cared for, it's tricky. Even trickier now that there's no daycare option in town. Her kids were on the wait list for Tiny Tots, the child care center that closed last spring. The former daycare owner, Jess Unger, says she could care for a maximum of 21 kids, but even at that number, she couldn't make a living. There's just no feasible way that, in Wyoming at least, in these smaller areas, that you'll

ever have enough enrollment to make it work. Not to mention how exhausting care for so many children can be. You're sick a lot because, oh well, kids just germs, germs, germs, germs. Caregiver burnout and staff turnover is a major reason so many rural daycares are shutting down nationwide. In Wyoming alone, 285 daycares have shuttered

in the past 15 years, and there were only about 850 to begin with. The long-term impact of that is between $142 billion to $217 billion in economic loss. Brittany Walsh is a researcher with the Bipartisan Policy Center who has studied Wyoming's childcare needs. She found that 10,000 Wyomingites are out of work due to a lack of childcare. That's a lot in a state with only about 580,000 people. There's a direct correlation between folks' ability to enter and remain in the workforce and the economic impact that it has on your local community, your state. But now, some Du Bois parents are trying something new.

They plan to open their own daycare center called Little Lambs. Sarah Domek is one of the parents figuring out the logistics. We've got the bathrooms and two rooms that can be used for napping, for nap times. Domek says Little Lambs will be a non-profit. That way they can get grants to help them ride the constant highs and lows of enrollment that often come with doing business in a rural area. It seemed to be the most sustainable model

because you could tap into other granting sources and that's what we want. We want sustainability. The town recently gave Little Lambs a couple grants worth $20,000, and a local fundraiser brought in $12,000 more. For Domek, it's urgent this new daycare gets up and running. Her five-year-old is in pre-K, but she recently gave birth to a baby boy, and will need to go back to working full-time in a few months. If they can't figure out childcare, they might have to go to the other side of the mountains three hours away.

We've even looked like, well, do we move to Pinedale for a few years and closer to my folks and they could help? And with just 911 residents here, losing even one family leaves behind a hole in this small mountain town. In Dubois, Wyoming, behind a hole in this small mountain town. In Dubois, Wyoming, I'm Melody Edwards for Marketplace. This final note on the way out today, ticker symbol PTON had quite the session. Peloton, the fancy interactive bike company, yes I know they do more than just that, don't at me, up better than 35% during trading today after reporting its first increase in sales in more than just that, don't at me. Up better than 35% during trade eat today after reporting its first increase in sales in more than two years. Sales up just a bit, two tenths percent, but progress is progress, right?

Narrowed its losses too, Peloton did. John Buckley, John Gordon, Noya Carr, Danth Parkar, Amanda Peacher, and Stephanie Sieck are the Marketplace Editing staff. Amir Bivawi is the Managing Editor. And I'm Kai Rizdal. We will see you tomorrow everybody. This is APM. Understanding personal finance can feel like an impossible task, but it doesn't have to be that way. I'm Janelia Espinall, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future.

Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.