Vía Sana in Cleveland’s Clark-Fulton neighborhood will feature 72 affordable, high-quality ... [+]..The NRP Group
Affordable housing development has never been without hurdles. The 3.8 million affordable homes deficit currently confronting the U.S. is ample proof.But some affordable housing sector veterans are labeling this current environment one of the toughest they have ever witnessed.
It’s not hard to understand why. Ongoing inflation and the highest interest rates in decades, combined with lingering supply chain problems left over from the pandemic years, are fueling what some term a crisis gripping affordable housing development. That’s made it more daunting to provide the kind of new supply needed to even modestly begin to address the supply shortfall.
“This crisis and its far-reaching complexities are unlike anything I have experienced in my career,” says Aaron Pechota, executive vice president of development at The NRP Group, one of the three largest affordable housing developers in the nation.
“The challenges hindering affordable housing development across America need to be addressed immediately to avoid prolonging the situation. When affordable housing projects are put on hold and remain suspended, the shortage worsens substantially, as these developments typically take two to three years to complete.”
Financing gaps
The NRP Group has faced problems related to macroeconomic trends across its portfolio, in markets like New York, New Jersey, Washington, D.C., North Carolina, Texas and Ohio. Soaring prices of steel, concrete, electrical, cabinetry and labor, among others, have added several million dollars to the costs of each development.
Moreover, aggressive interest rate increases have dramatically hiked the cost of construction loans. The typical financing gaps with which affordable housing developers are all too familiar have been widened into chasms by the high cost of loans and the soaring costs of everything else. The NRP Group has witnessed project financing gaps leap from $2 to $3 million to $5 to $10 million on average, and far more in some markets. In affordable housing, extra costs of this kind can’t be offset by raising rents.
Federal funding provided by the Low-Income Housing Tax Credit (LIHTC) has been highly valuable in spurring affordable housing development benefitting those earning far below Area Median Incomes (AMI).
There have been calls by dozens of members of Congress to expand the LIHTC program. But since the onset of Covid, there have been no substantive changes made to the program to offset the new development challenges.
Scaling back
Although the need for more affordable housing continues to grow, developers nationwide have been compelled to cut back or even entirely halt projects. At the start of last year, The NRP Group planned to launch development of almost 1,900 affordable housing units. But the need to line up additional financing forced the company to delay the start of at least 200 of those residences.
The delays came in one of the regions where hard-pressed renters could least afford them, Upstate New York. There, the company had to put in a holding pattern two planned affordable communities, the 135-unit Overlook Terrace in Cortlandt, and the 72-unit Selkirk Reserve community in Albany County.
Those who will suffer the brunt of the crisis will of course be the homeless. In 2020, almost 580,500 Americans were unhoused, and of those more than 110,500 were counted among the chronically homeless, according to the National Alliance to End Homelessness. The assortment of post-pandemic macroeconomic pressures on development of new affordable housing can’t help but make the problem worse.
“The states and cities embracing public-private partnerships and successfully implementing processes for affordable housing developers to access gap funds will keep these much-needed units in production,” Pechota says. “The localities that do not are going to see a significant drop in new units produced going forward, creating a domino effect that will impact underserved communities for years to come.”
Perhaps one of the most sweeping outcomes of the 2020 pandemic has been its effect on the global ... [+]getty
Perhaps one of the most sweeping outcomes of the 2020 pandemic has been its effect on the global supply chain. From consumer goods to raw materials, products are either unavailable for purchase or take excessively long to reach their destinations. Even common grocery items like baby formula are becoming hard to find, as reported by CBS in an April 2022 report.
Analysts predict that the major supply and demand crunches will have less impact in the future, per CNBC. However, businesses and buyers aren’t content to wait until early 2023 to feel less of a pinch. They want answers now, and they’re getting them in the form of innovative uses of data and technology.
As it turns out, data—when utilized thoughtfully—has value in smoothing out supply chain hiccups. Below are several examples of how data is being tapped to tackle post-pandemic procurement and delivery issues.
1. Data is revealing where companies should focus their resources to satisfy customers.
Nothing is as frustrating for shoppers as being unable to get what they want. To better allocate resources and anticipate needs, some brands are leveraging real-time data analytics. Understanding in-the-moment demands enables teams to pivot and respond.
An example of this type of process is Chipotle’s use of Semarchy’s data management tool. After “The Great Carnitas Shortage of 2015,” the company realized that it needed to make adjustments to its supply chain. By aligning operations, communications channels, and ordering platforms, Chipotle found it could more easily stay ahead of supply chain issues. This has helped the company meet customer experience assumptions and avoid snags.
2. Data is reducing friction from delays in service industries.
Many services that followed more traditional in-person models were forced to embrace digitization during Covid. Many found that their internal processes weren’t ready for the challenges or consumer expectations of online transactions, though. For instance, some small to mid-sized financial lenders realized that they didn’t have the workflows or tools to streamline application processing. As a result, they risked falling behind their bigger competitors.
Data-driven software solutions from entities like publicly traded MeridianLink have helped fill this gap. MeridianLink, valued at over $2 billion, designed a data-rich platform to gather and process loans rapidly. Their platform has enabled nearly 2,000 financial institutions to swiftly turn around consumer loan applications without causing friction. Due to the improvement in efficiency backed by data, banks, credit unions, and mortgage lending houses can keep pace. In today’s strong real estate market, that’s a huge supply and demand advantage.
3. Data is freeing employees to concentrate more fully on supply chain management.
Overcoming major supply chain hurdles can only happen when thought leaders have the bandwidth to brainstorm. Regrettably, far too many of them are bogged down by repetitive tasks. If those tasks can be automated, they can take up far less time. The result is teams who can concentrate on solving high-level concerns.
For instance, consider digital pioneering company IBML and its Cloud Capture software. The software captures, identifies, and classifies information from any source such as a complex invoice or a standard customer return form. Once appropriately logged, the information becomes available to authorized users. This type of consistent data capture facilitates a less clunky document processing. It also frees executives, managers, and supervisors to divert attention toward pressing supply chain concerns.
The supply chain conundrum won’t be fixed overnight or even in a few months. Yet fresh, data-driven solutions can help companies undergo fewer stressors as a result of supply and demand interruptions.
Plants protect themselves from environmental hazards like insects, drought and heat by producing salicylic acid, also known as aspirin. A new understanding of this process may help plants survive increasing stress caused by climate change.
UC Riverside scientists recently published a seminal paper in the journal Science Advances reporting how plants regulate the production of salicylic acid. The researchers studied a model plant called Arabidopsis, but they hope to apply their understanding of stress responses in the cells of this plant to many other kinds of plants, including those grown for food.
“We’d like to be able to use the gained knowledge to improve crop resistance,” said Jin-Zheng Wang, UCR plant geneticist and co-first author on the new study. “That will be crucial for the food supply in our increasingly hot, bright world.”
Environmental stresses result in the formation of reactive oxygen species or ROS in all living organisms. Without sunscreen on a sunny day, human skin produces ROS, which causes freckles and burns. High levels of ROS in plants are lethal.
As with many substances, the poison is in the amount. At low levels, ROS have an important function in plant cells. “At non-lethal levels, ROS are like an emergency call to action, enabling the production of protective hormones such as salicylic acid,” Wang said. “ROS are a double-edged sword.”
The research team discovered that heat, unabated sunshine, or drought cause the sugar-making apparatus in plant cells to generate an initial alarm molecule known as MEcPP.
Going forward, the researchers want to learn more about MEcPP, which is also produced in organisms such as bacteria and malaria parasites. Accumulation of MEcPP in plants triggers the production of salicylic acid, which in turn begins a chain of protective actions in the cells.
“It’s like plants use a painkiller for aches and pains, just like we do,” said Wilhelmina van de Ven, UCR plant biologist and co-first study author.
The acid protects plants’ chloroplasts, which are the site of photosynthesis, a process of using light to convert water and carbon dioxide into sugars for energy.
“Because salicylic acid helps plants withstand stresses becoming more prevalent with climate change, being able to increase plants’ ability to produce it represents a step forward in challenging the impacts of climate change on everyday life,” said Katayoon Dehesh, senior paper author and UCR distinguished professor of molecular biochemistry.
“Those impacts go beyond our food. Plants clean our air by sequestering carbon dioxide, offer us shade, and provide habitat for numerous animals. The benefits of boosting their survival are exponential,” she said.
Prices for meats, poultry, fish and eggs rose 2.2 percent in September from the month before. (Justin Sullivan/Getty Images)
Like a guest who overstays his welcome, inflation is getting on our nerves. For people with enough income or savings, rising prices are just an annoyance. If you’re living paycheck to paycheck, inflation means a much harder time paying for food, gas and other items. It could mean skipped meals or late rental payments.
The latest inflation data, released by the Bureau of Labor Statistics, showed prices increasing 9.1 percent over the same period a year ago. Increases in prices for housing and energy — fuel, oil, gasoline, and electricity — were the largest contributors to the uptick. The higher cost of food also drove inflation.
“Inflation has been a surprising and unwelcome guest seeming to persist at an elevated level at a time when we’re all hoping to put the devastating economic impacts of the pandemic behind,” said Mark Hamrick, senior economic analyst for Bankrate. “Like the pandemic-caused downturn itself, it exacerbates wealth and income inequality. The wealthy can adjust. Those on lower incomes, not so much. It is as if some people just can’t catch a much-needed break.”
Predictions last year that rising prices might be temporary were wrong. So, until things stabilize, here’s how to handle increases in consumer prices.
What changes should I make to my budget to beat inflation?
Coping with inflation comes down to reviewing how you spend your money. Even if you’ve cut until it hurts, you’re going to have to look for additional trims.For instance, could you take in a roommate or move in with someone to reduce your housing costs?
Obvious places to cut are eating out, streaming services and unnecessary car trips. When was the last time you looked at your mobile plan?Use apps and the Internet to find lower prices, including for gasoline.
“When prices aren’t changing all that much, people may be inclined to invest less of their time shopping, thinking that it might not make all that much of a difference,” Hamrick said. “Think of shopping right now as investing time to find better deals.”
Supply-chain disruptions continue to push consumer prices up. One way to cope is to put off unnecessary purchases until supply issues are resolved and prices go down. “Whether it’s an updated iPhone or another piece of clothing to mostly hang in the closet, most Americans simply consume more than they need to,” Hamrick said.
Is there anything I can do to reduce my food costs?
In an inflationary environment, substitutions can be your financial friend.
Food prices have been rising largely because of weather-related shortages, transportation issues and lack of staffing. Meat and fish prices are going up fasterthan vegetable prices, so take that into consideration in your at-home meal planning.Hamrick said he went shopping to make crab cakes and saw that the price for crabmeat was up 50 percent.
“I bought chicken thighs and cooked them at a fraction of the price,” he said. “Now’s the time to try to spend time when possible preparing meals at home, using lower-cost items as much as possible.”
Inflation doesn’t really change what you should have been doing all along, which is diversifying, said Carolyn McClanahan, a certified financial planner who founded the fee-only Life Planning Partners, based in Jacksonville, Fla.
“Through thick and thin, the best way to prepare for any economic environment is to have a diversified portfolio,” McClanahan said. “If you aren’t already practicing diversification, now is the time to make that change.”
If you’re an ultraconservative saver who has shied away from stocks because you’re scared of the stock market, you might want to consider that inflation is also a risk. If you don’t at least keep pace with inflation, you’re losing the purchasing power of your money.
“Where interest rates are right now, investors need to take on slightly more risk to get a return that may beat inflation,” said Ben Bakkum, quantitative investing associate at the digital adviser firm Betterment.
Is there anything I can do to take advantage of inflation?
If you have some cash that you don’t think you’ll need for a while, consider purchasing bonds, McClanahan recommends.Inflation-indexed Series I savings bonds, which are issued by the Treasury Department, allow investors to earn a combination of a fixed interest rate and the rate of inflation, adjusted semiannually.
The composite rate for I bonds issued fromMay through the end of Oct.is now 9.62 percent, a portion of which is indexed to inflation every six months. To buy and own an electronic I bond, you must establish a TreasuryDirect account. Go to treasurydirect.gov.
If you receive Social Security or Supplemental Security Income benefits, you’ll see your payments go up because of rising consumer prices. The Social Security Administration announced a 5.9 percent benefit increase for 2022.
And, if inflation relents next year, which some believe is possible as supply chains normalize, Social Security recipients will continue to get the higher payments anyway, Hamrick said.
Additionally, one of the few potentially beneficial effects of inflation will be that the Federal Reserve may well lift benchmark rates sooner rather than later, and more than previously believed, he said. That’s welcome news for savers. “Previously miserly returns on savings should begin to rise,” Hamrick said.
It’s hard not to panic about inflation when your paycheck doesn’t go as far as you need. Still, keep things in perspective. It’s not the 1970s, when prices skyrocketed. “Recent headlines about increasing inflation have been alarming, but inflation itself is not abnormal if it’s not out of control,” Bakkum said.
As the government has been focused on crude oil and gasoline, diesel gas supplies have drastically fallen to dangerously low levels.
With diesel prices going up, it will cost more to transport consumer goods, which means that inflation won’t taper off anytime soon.
See list below for sectors and stocks most impacted by the shortage.
While a lot of attention has been directed toward the prices of crude oil, diesel gas suddenly appears scarce as we head into the winter months. The Energy Information Administration (EIA) has stated that the U.S. now only has 25 days’ worth of diesel supply left, which is a dangerously low level. The Russian invasion of Ukraine has drastically impacted global energy supplies as refinery closures and disruptions in the U.S. have recently caused issues with the supply of diesel gas at a time when demand is surging due to the changing seasons.
With diesel fuel and heating oil inventories running low, inflation will remain high for the foreseeable future. Since diesel is the primary fuel source for trucks, rails and vessels that transport most consumer goods, it’s looking like the prices of these transported goods will also increase.
What’s happening with Diesel right now?
Bloomberg reported that the U.S. diesel crisis is here and will spread across the East Coast, where there are transportation delays. Diesel inventories are at the lowest seasonal level ever, heading into winter. The Energy Information Administration (EIA) announced that U.S. distillate inventory (including heating oil and diesel fuel) had 106.2 million barrels in the week ending October 14, which is about 20% below the 5-year average and a 25-day supply.
There are colossal supply and demand issues with diesel fuel right now. Since diesel fuel is similar to heating oil, the demand will skyrocket as the northern hemisphere enters the winter months where people will need oil to heat their homes. Some speculate that if reserves aren’t built up by the end of November, there could be severe consequences — similar to the European energy crisis. The supply issues are being caused partly due to the embargo on Russian oil and because the refining capacity in the U.S. has dropped over the past few years.
The price of diesel hit a record high of $5.816 per gallon in June, and there’s a chance that it could go higher if we have a cold winter or if the European energy crisis gets worse — both of which are still undetermined as of the time of this writing.
Policymakers have been focusing on crude oil prices to fight inflation, but it appears that the diesel gas shortage could offset this. Goldman Sachs has warned that the government’s focus on fighting higher energy prices has only been on crude prices, even though that has little impact on what customers have to pay for. It’s also believed that refinery closures and disruptions are leading to this shortage of refined products like diesel gas.
What stocks are impacted by a diesel gas shortage?
A diesel gas shortage impacts many companies since the fuel is needed to transport goods across the country.
These are the industries most impacted by a diesel gas shortage:
Trucking and transportation. Since most of our goods are transported by diesel fuel, any company in this industry is facing the potential of low diesel supplies that could drive prices up.
Construction. Many power trucks and excavators use diesel, the increased cost of transporting raw materials, will drive home construction prices even higher when people already have to deal with soaring loan rates. This would also impact the mortgage industry since consumers will think twice about borrowing money, making everything more expensive.
Fresh produce. The prices of fresh produce will continue to increase as it’s becoming more costly to transport the goods promptly.
Other consumer goods. With all of our goods being transported by freight or truck, there could be issues with getting items into stores in time for the holiday season as we reach dangerously low levels of diesel.
It’s fair to say that stocks in any of these industries could be impacted by the diesel gas shortage if they can’t get the goods out on time or if they have to raise prices. Higher prices would only hurt consumer confidence as the threat of a recession looms large.
When we looked at stock market winners, we discovered that many oil companies were doing exceptionally well in 2022. We will be watching to see if limits are imposed on the export of U.S. oil and natural gas, as this would impact earnings.
What stocks are impacted by the diesel gas shortage?
Suncor Energy (SU)
Suncor produces synthetic crude from oil sands, a method that’s unlike conventional oil production. With diesel gas prices going up, Suncor stands to benefit as the stock is up almost 40% for 2022. Suncor has hiked up its dividend recently, making this an attractive stock for investors.
Valero Energy (VLO)
Valero is one of the top oil refineries as they manufacture and market transportation fuels. The company is also the second largest producer of renewable fuels, which means it will stay profitable if the world turns to renewable energy sources. Valero beat the earnings estimate for the third quarter, and the stock is up about 67% for 2022.
PBF Energy Inc. (PBF).
PBF is a petroleum refiner and supplier of transportation fuels, heating oils and other petroleum products. The company is working on producing renewable diesel by 2023 which would be a major game changer in this space. This stock is also up over 200% for the year while the rest of the market has continued to struggle.
Even though there’s a growing concern about switching over to cleaner energy sources, it’s important to note this transition won’t be quick.
What’s the impact of a diesel gas shortage?
While there has been plenty of buzz about the European energy crisis and the growth prospects of electric vehicles, we can’t ignore that diesel is the primary fuel source for power trucks, rails and vessels transporting consumer goods. If diesel prices skyrocket, then the prices of the goods transported will also increase accordingly. With the holiday season approaching, this would mean that we could expect further increases in prices.
Experts also worry that diesel prices could tip the economy into a recession. As the Fed continues to fight inflation by raising interest rates, other factors are causing diesel prices to go up, which would then impact the costs of everything that’s transported. This would mean prices would still go up and cause inflation to soar despite the aggressive rate hikes.
Diesel prices are going up right now due to simple supply and demand issues. There are also disruptions to the global markets being caused by the Russia-Ukraine conflict and the current lockdowns in China.
What’s next for diesel prices?
As the supply of diesel gas dwindles and the demand continues to surge, actions must be taken promptly. The Biden Administration has considered limiting fuel export to help with the supply and prices. President Biden recently announced that they would be releasing 15 million barrels of oil from the strategic reserve in December to increase the supply. However, there’s no clear indication this would solve, or substantively help, us with the diesel gas shortage.
It’s important to note that this fuel is used for heating and trucking, which is generally required to keep the economy going, especially in winter. Diesel keeps commerce and freight going because trucks, excavators, ships and freight trains need the energy source. If there’s a shortage of diesel, we would see higher costs for everything in the economy, from transportation to construction, at a time when the Fed continues its aggressive rate hike campaign.
What does this mean for investors?
With the stubborn inflation numbers causing stock market sell-offs as the Fed continues to raise rates to attempt to cool down the economy, it isn’t clear where to invest your money. With additional concerns of prices going up even higher due to a diesel gas shortage, there’s even more risk involved with investing in individual companies.
Many experts agree that soaring inflation will invariably worsen if fuel prices continue to rise. Although there has been a lot of attention on crude oil, diesel gas issues could hurt us as much or more. With Q.ai’s Inflation Kit, you could turn those inflation fears around with an Investment Kit that helps you profit from higher inflation. With our unique Portfolio Protection feature, you can protect yourself further against continued volatility and unforgiving downturns.
The bottom line
The diesel gas shortage could pose many challenges if the refineries don’t increase capacity or if we don’t find ways to replenish supplies. If diesel gas prices continue to go up, consumers will feel this impact as the prices of everything will continue to increase. We will continue to monitor the situation with diesel gas as it’s an urgent matter at this time.
Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.
Vía Sana in Cleveland’s Clark-Fulton neighborhood will feature 72 affordable, high-quality ... [+]..The NRP Group
