Up First from NPR - Hurricane Hilary, Mortgage Rates, Summit Reaction

Episode Date: August 19, 2023

Hurricane Hilary is expected to reach Southern California as a tropical storm with damaging winds and rain. A spike in mortgage rates means home shoppers may need to adjust their searches. In Seoul, reaction to the Camp David meeting of leaders from the U.S., South Korean, and Japan.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

It could be the first tropical storm to hit California in more than 80 years. Now called Hurricane Hillary, it's threatening high winds and dangerous flooding when it comes ashore later this weekend. I'm Scott Simon. I'm Aisha Roscoe, and this is Up First from NPR News. The storm is expected to weaken as it moves toward Mexico's Baja Peninsula, but still drench Southern California, southwestern Arizona and southern Nevada. We have the details. The rate for a 30-year fixed mortgage is at its highest level in 21 years. What that might mean for homeowners and hopefuls in a minute.

And a gathering at Camp David, what the U.S., Japan, and South Korea discussed at the presidential retreat. So please stay with us. We've got the news you need to start your weekend. Now, Our Change will honor 100 years of the Royal Canadian Air Force and their dedicated service to communities at home and abroad. From the skies to Our Change, this $2 commemorative circulation coin marks their storied past and promising future. Find the limited edition Royal Canadian Air Force $2 coin today. A tropical storm watch has been issued for Southern California, the first ever. Hurricane Hillary is making its way up towards Mexico's Baja Peninsula and is expected to pass into the U.S. on Sunday evening as a tropical storm.

The National Weather Service says, quote, life-threatening flooding is likely, and scientists say human-caused global warming can make intense storms like Hillary more common. NPR Climate Desk's Julia Simon joins us now. Julia, thank you for being with us. Thank you, Aisha. So we can't yet officially say this storm is the result of climate change, but we can look at the link between humanity and severe weather, which seems to be happening a lot lately, right? We know that humans burning fossil fuels means that the whole earth is heating up and the ocean stores a lot of that heat. When ocean water is

extra hot, it's easier for these big hurricanes to form. That hot water is sort of a fuel and energy source for hurricanes. So it makes it more likely that an intense storm like Hurricane Hillary will form. So how hot are ocean waters right now? The ocean is a lot warmer than usual this summer. 40% of the world's oceans are experiencing heat waves right now, according to federal researchers. That's because of a natural climate pattern called El Nino and human-caused climate change. Part of the ocean that this storm formed over is around Baja, California, Mexico, in the Pacific. Temperature anomalies there are part of what's been fueling this storm, says UCLA climate scientist Daniel Swain.

The ocean temperatures off the coast of Baja, California, are much warmer than usual right now, as much as 2 to 4 centigrade or 3 to 6 Fahrenheit. That's a pretty significant increment of additional hurricane fuel. Now, scientists can't immediately say this storm is fueled by climate change as a storm is forming. But we do know that a really hot ocean can cause more intense storms that produce a lot of rain, and we're likely to see intense rain in the coming days in Southern California and the Southwest region.

So big storms do sometimes happen on the West Coast, but again, this is the first time a tropical storm watch has been issued for Southern California. Is the area, which is your area, you're there right now, is everyone prepared? Forecasters have said that this storm could dump a year's worth of rain for the Southwest over a couple of days. Los Angeles officials had a press conference yesterday about storm preparations. They said they're working to help the unhoused community that live in vulnerable places like riverbeds. Here's Los Angeles County Sheriff Robert Luna.

Our department's personnel are also working to deploy personnel in the riverbeds to contact our unhoused population, our unhoused community, our unhoused community, and connect them with interim housing resources. Luna also noted some additional precautions for communities at risk of landslides, like an area called Palos Verdes, which was already seeing landslides this summer. The big issue might be that a lot of southwestern communities aren't built for big storms like Hillary.

The infrastructure was built for storms of the past. Climate change means we're seeing many new risks. Julia, right now, what should people be looking out for, especially in areas that don't normally get rain totals like the ones forecasters say may happen later this weekend and into the next week? Flooding is the number one killer in hurricanes. So thing to remember, don't drive into standing water. Turn around, don't drown is the message. There's a high probability of flash flooding on Sunday and Monday in Southern California. So people here should pay attention to flood alerts, evacuation orders, also a risk of landslides, especially in places with burn scars from wildfires. There's still a lot of uncertainty about the exact course of the storm, but generally make

sure you have these alerts set up in your phone, charge your devices, get gas now. LA County officials said people can get sandbags at local fire stations. Make sure you have water, food, are checking in with loved ones and neighbors, and have your bags packed for your family and pets if you need to evacuate. Yeah, a lot of people think with these storms it's the winds, but it's really the flooding that's the most dangerous. It's so dangerous, yes. If big storms like this are what we expect in the future, then what options are there to better protect people, especially for places that aren't built for this sort of weather?

Yeah, humans have agency here. It's really important that as we build new infrastructure, we think about the possibility of intense storms like this one hitting places that might not have hit before. If humans stop emitting greenhouse gases today, there will still be some warming into mid-century baked in. But by cutting climate pollution now, we can avoid worse outcomes in the future. That's Julia Simon of NPR's Climate Desk. Julia, thank you so much. Thank you.

Are you scanning real estate ads or heading out to an open house this weekend? You may be in for a rude awakening. This week, mortgage rates climbed to their highest level in more than two decades. And that's pressing some would-be buyers out of the market and forcing others to rethink what kind of house they can afford. NPR Chief Economics Correspondent Scott Horsley joins us. Scott, thanks so much for being with us. Good morning, Scott. How much have mortgage rates gone up? The mortgage giant Freddie Mac says the average rate on a 30-year fixed home loan this week is just over 7%. That's the highest it's been since 2002. A year ago, the average rate was just over 5%, and two years ago, it was less than 3%.

What this means for a homebuyer is the same monthly payment that would have bought a $400,000 house last summer will only stretch to a $325,000 house today. So that's a big adjustment for a lot of would-be buyers to wrap their heads around. Just ask realtor Lee Brown, who works with a lot of first-time buyers around Charlotte, North Carolina. The first thing they have to get over is the sense of regret for not having purchased while interest rates were low. There's a lot of people who, man, I just should have done it a couple of years ago. And so that regret can get in the way of making good decisions. And so I have to remind buyers that what feels expensive today is probably going to feel like a bargain 10 years from now.

That's assuming home prices continue to climb. Brown tries to reassure clients to just keep looking at a lower price point. Maybe that'll mean settling for less house, more of a fixer-upper. It's also an opportunity, she says, to get more creative on the financing side. What is creative financing? I mean, how does that work? Well, maybe it means putting less money down and using some of the money you'd save for a down payment to instead buy a lower interest rate. Depending on how long you plan to stay in a house, that might make financial sense. Also, if you're buying from someone who has a VA loan, you can assume that loan,

even if you weren't in the military, and that would probably carry a lower interest rate. Scott, what's pushed up mortgage rates so much? Mortgage rates tend to rise and fall with the yield on 10-year treasuries, and that yield was up this week. This is indirectly tied to the Federal Reserve's efforts to curb inflation. The bond market now thinks to do that, the Fed's going to have to leave its own interest rates higher for longer. So bondholders are demanding a higher return, and that's feeding over into mortgage rates. And can you forecast what the overall effect of this might be on the housing market? Yeah, this is going to weigh on the market. Home sales are already down. Sales in June were down

almost 19% from a year ago. Not only are a lot of buyers sitting on the sidelines, but so are a lot of sellers. Steve Jolly, who's a realtor in Nashville, says anybody who bought or refinanced their home in the last few years probably has a really low interest rate that they don't want to give up. These low interest rates are almost like golden handcuffs. People don't want to get rid of that because if they want to buy up and buy a nicer home, what they're going to have to pay is going to be thousands of more dollars per month in mortgage. So the housing market is definitely less frenzied now than it was a couple of years ago. Now, that's not all bad. Buyers and sellers have a bit more time now to catch their breath, maybe get an inspection, negotiate a little bit more. Fewer home sales does have ripple

effects elsewhere in the economy, though. It usually means people are buying less furniture, for example, and fewer appliances as well. And what are the implications for people who had intended at least to build new houses? Home builders are busy right now. More people are looking at newly built houses because there are so few existing homes on the market. There are also more than a million apartments under construction right now, which is the most we've seen in decades. And as those come online, that should put downward pressure on rents,

which is at least a little good news for people who are priced out of the housing market. And Pierre Scott Horsley, thanks so much. You're welcome. And finally, today we take you to Camp David in Maryland by way of Seoul, South Korea. President Biden met with the leaders of South Korea and Japan yesterday at the presidential retreat. The goal was to form a partnership that would be a new force in the Asia-Pacific region. Japan and South Korea have some longstanding animosities. And the hope on the part of the U.S. is they can put some of those aside in the face of threats from North Korea, China, and Russia. And President Anthony Kuhn is in Seoul. Thanks so much for being with us, Anthony.

Nice to join you, Scott. And what has reaction been there to the summit? The main reaction in Asia seems to be that the summit is unprecedented, but it's also largely symbolic. And the symbolism the three countries want to convey is that they are united in countries such as North Korea, China, and Russia will not be able to exploit the differences between them. Now, one of the outcomes is what the U.S. is calling a commitment to consult among the three nations about potential threats. So in the event of, for example, a North Korean nuclear test or a disruption to supply chains, the three will consult and coordinate their responses. There will also be annual three-way leadership summits and military drills. I think everyone is clear that this is not a three-way alliance under discussion.

It's still two bilateral alliances between the U.S. and Japan and between the U.S. and Korea, and that's because there is still not enough trust between Japan and Korea to support a bilateral alliance with each other or a three-way alliance with the U.S. With that lack of trust, how did the summit come about? Well, the mistrust is left over from Japan's colonial occupation of Korea from 1910 to 1945. During World War II, for example, Japan's military forced Korean and other women into sexual slavery. Thousands of Koreans were conscripted as forced laborers. And South Korea's president, Yoon Sung-yeol, essentially said that if Japan is not going to compensate these forced laborers, then South Korea will. Japan insisted laid the matter to rest when the two countries normalized

relations in the 1960s. But this remains a major sticking point between the two, and most South Koreans want Japan, not South Korea, to compensate Koreans. Despite this, the two countries held their first summit meetings in 12 years in March, and Washington, which had been nudging them to do it, is delighted. Deals Richard Camp David are supposed to survive any subsequent changes in political administrations and public opinion that occur in democracies. Can they really do that? Anything could happen, but the Biden administration is trying to lock in the progress that's been made by institutionalizing it. And here's how National Security Advisor Jake Sullivan put it to reporters. Every leader is going to have to make decisions. But the architecture, the framework, the structure

that's being put in place now, from our perspective, has a tailwind behind it that will propel it forward and be very difficult to knock off course. Now, of course, there is concern in Japan and South Korea about another Trump administration or someone like him who has questioned the value of alliances. And it's also rare that you get this alignment of leaders in Japan and South Korea that are so friendly to each other. Anthony, how might this agreement affect ties among North Korea, China, and Russia? Yes, well, the Camp David Summit documents call out Russia over its war on Ukraine, North Korea for its nuclear weapons, and China for its activities around Taiwan and the South China Sea. Pyongyang, Beijing, and Moscow are of course not happy about the summit.

They're tightening their cooperation. The U.S. claims that North Korea is already supplying Russia with arms for use in Ukraine. Russia and China, meanwhile, occasionally stage joint military drills around South Korea and Japan, probing the allies' defenses so the summit could strengthen these rival blocs. And Paris Anthony Kuhn in Seoul, thanks so much for being with us. Thank you. And that's Up First for August 19th, 2023. I'm Ayesha Roscoe. And I'm Scott Simon. Ayesha, what's on tomorrow's episode of Up First? It's the story of the first visit to the edge of the widest glacier in the world. And it's not just

the edge of a glacier, it's a calving edge, as in it's breaking off. The glacier is in Antarctica and we'll tell you why it's under threat. Today's episode of Up First was edited by Neela Banerjee, Rafael Nam, Peter Granitz, and Ed McNulty. It was produced by Michael Radcliffe and directed by Danny Hensel with engineering support from Hannah Glovna. Evie Stone is our senior supervising editor. Our executive producer is Sarah Lucy Oliver. Our deputy managing editor is Jim Kane. And for more news and interviews, books and music, you know, go ahead, turn on that radio. I mean, how can you resist? Weekend Edition from NPR News on the air every Saturday and Sunday morning. You can find your NPR station at stations.npr.org.