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Southern California home prices slipped in July. More drops may be coming

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Southern California home prices slipped in July. More drops may be coming

In latest months, rising mortgage rates of interest have put the brakes on a once-hot housing market in Southern California and throughout the nation.

With would-be consumers selecting to sit down on the sidelines, gross sales are plunging and householders are slashing their asking costs to shut a deal.

Now, there are indicators general dwelling values could also be headed down as effectively.

“It’s turning right into a purchaser’s market,” mentioned Keith Hernandez, an actual property agent with Realty One Group Synergy in Whittier.

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Few, if any, economists predict a crash in values much like 2008, however a rising variety of specialists say general dwelling values are prone to decline within the close to future.

The newest signal got here Wednesday when actual property agency DQNews reported that the Southern California median gross sales worth fell 1.3% in July from a month earlier.

Though the median can fluctuate month to month, July’s numbers mark the third straight month through which costs failed to extend. The median — now $740,000 — is $20,000, or 2.6%, lower than the all-time peak this spring.

Given robust demand earlier than mortgage charges jumped, the median gross sales worth in July stays 8.8% greater than a 12 months earlier. However these year-over-year features are getting smaller.

In April, the median was up almost 17% from a 12 months earlier.

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Jordan Levine, chief economist with the California Assn. of Realtors, mentioned the median’s shrinking year-over-year features point out latest month-to-month declines mirror a drop in values moderately than seasonal flukes. He mentioned they’re in keeping with a state of affairs through which the median gross sales worth falls round 7% in 2023 in contrast with this 12 months.

Potential first-time dwelling consumers may not wish to get too excited.

The median is the purpose at which half of houses offered for extra and half for much less. Though Levine expects values for all houses to say no subsequent 12 months, he mentioned the 7% determine considerably overstates the anticipated drop because it displays a sharper decline in luxurious dwelling gross sales.

Different economists nonetheless suppose dwelling costs will maintain rising in 2023, simply at a smaller price than they’ve through the pandemic. Even specialists who count on a drop aren’t predicting declines anyplace close to these seen through the Nice Recession, when costs fell 50% over two years.

That’s as a result of many owners don’t prefer to promote in a slowing market in the event that they don’t need to. In the mean time, new listings are down sharply throughout Southern California, basically placing a cap on how far stock can climb.

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What tanked values through the Nice Recession was a wave of compelled promoting at a loss — by way of foreclosures and quick gross sales.

This time, there’s concern that the Federal Reserve’s actions to struggle inflation may tip the financial system right into a recession. However most economists count on any downturn to be comparatively delicate and imagine that in the present day’s tighter lending requirements ought to restrict foreclosures.

Dwelling costs and gross sales in six Southern California

In July, dwelling costs and gross sales declined in every of Southern California’s six counties.

Los Angeles County: The median worth was $840,000, down 2.3% from June and up 5.7% from final 12 months. Gross sales dropped 33% from July 2021.

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Orange County: The median worth was $1,000,000, down 2.4% from June and up 10.5% from final 12 months. Gross sales dropped 38% from July 2021.

Riverside County: The median worth was $579,500, down 2.5% from June and up 10.4% from final 12 months. Gross sales dropped 32.5% from July 2021.

San Bernardino County: The median worth was $515,000, down 1% from June and up 13.2% from final 12 months. Gross sales dropped 31.5% from July 2021.

Ventura County: The median worth was $805,000, down 0.6% from June and up 10% from final 12 months. Gross sales dropped 35.5% from July 2021.

San Diego County: The median worth was $800,000, down 2.9% from June and up 9.5% from final 12 months. Gross sales dropped 39.8% from July 2021.

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Though there should not but indicators of a 2008-magnitude collapse in values, any shift in favor of consumers will probably be welcomed by many Californians struggling to personal in among the nation’s most costly housing markets.

Actual property brokers mentioned sellers are extra keen to increase the size of contingencies, pay for repairs and even entrance cash to cowl a purchaser’s closing prices.

There’s additionally much less urgency, with out the necessity for consumers to make snap choices on affords in simply days, hours and even minutes.

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“When my consumers have a look at houses, they’ve a while to consider it now,” mentioned Carl Izbicki, an actual property agent at RE/Max Property Properties in Los Angeles. “It’s a traditional market.”

For his vendor purchasers, that new regular would possibly imply taking lower than they might have when charges have been decrease.

Living proof: Izbicki mentioned he’s about to listing a three-bedroom townhome in North Hollywood for $645,000. That’s 14%, or $105,000, lower than what he offered an similar unit for in the identical complicated final 12 months.

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ChatGPT's new voice mode is giving 'Her' vibes

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ChatGPT's new voice mode is giving 'Her' vibes

The days of an interactive, almost-human virtual assistant could be coming sooner than you think.

Tech company OpenAI has unveiled the latest update to ChatGPT, which now includes a voice mode that allows users to communicate more conversationally with the AI system. In a video posted Monday on X by OpenAI Chief Executive Sam Altman, company officials ask ChatGPT to tell them a bedtime story involving robots and romance.

“Ooh, a bedtime story about robots and love?” ChatGPT responds in a cheerful female voice. “I’ve got you covered!”

The system proceeds to tell a story about a curious robot “in a world not too different from ours,” and then pivots to different voices when company officials periodically interrupt to ask it to speak more dramatically, in a robot-like voice or in a sing-song way.

The new update, known as GPT-4o, quickly received comparisons to the 2013 Spike Jonze movie “Her,” starring Joaquin Phoenix, in which a lonely man falls in love with his virtual assistant Samantha, voiced by Scarlett Johansson. Even Altman appeared to refer back to the film, saying in a blog post that it “feels like AI from the movies; and it’s still a bit surprising to me that it’s real.”

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(But that movie isn’t entirely rosy about AI taking on the role of a human companion, cautioned Wired Executive Editor Brian Barrett in a column titled “I Am Once Again Asking Our Tech Overlords to Watch the Whole Movie.” In the column, Barrett notes that at least one OpenAI employee heeded that advice. He quoted a tweet in which the employee said that re-watching “Her” “felt a lot like rewatching Contagion in Feb 2020.” )

“Getting to human-level response times and expressiveness turns out to be a big change,” Altman wrote.

Previous versions of ChatGPT were text-based, with users typing questions to the system and receiving written responses instantly. Past attempts to make the system give more human-like responses, beyond simple fact regurgitation or rudimentary stories, were largely rebuffed by ChatGPT.

Though bedtime tales about robots and love seem benign, AI and its potential effect on jobs is a pressure point in Hollywood and played a major role in last summer’s dual strikes led by the Writers Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists.

OpenAI, in particular, has not been shy about courting the entertainment industry and has met with studio and talent agency executives to discuss another of its products, Sora, an AI tool that uses text-based prompts and turns them into visuals that can be cinematic in quality.

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Recently, indie pop artist Washed Out used Sora, which is not yet publicly available, to create a four-minute music video for the song “The Hardest Part.” The music video zooms through scenes from a couple’s life that are completely AI-generated.

Beyond Hollywood, other industries are also flirting with AI, such as fast food operators. Those businesses are now looking to AI to run drive-through orders or walk-up self-service kiosks to reduce the financial effect of California’s new $20 minimum wage for restaurant workers in certain establishments.

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Pro-Palestinian activists protest at Google developer conference amid Israel-Hamas war

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Pro-Palestinian activists protest at Google developer conference amid Israel-Hamas war

Dozens of protesters blocked the entrance of Google’s developer conference in Mountain View, Calif., for roughly 90 minutes on Tuesday, demanding that the tech giant drop its work with the Israeli government amid the country’s war with Hamas in the Gaza Strip.

The protest group, which accuses Israel of committing genocide against Palestinians in Gaza, held two events on Tuesday that it said involved hundreds of participants.

A group chanted “Shame on Google” and “Google Cloud rains blood” in the front of the entrance to the conference at Shoreline Amphitheatre, where the tech giant was expected to announce updates to business including its Android and Gemini AI systems. Separately, the protesters held a rally at a nearby park.

The protesters, who call themselves No Tech for Genocide, have been demanding that Google end its cloud computing contract with the Israeli government, known as Project Nimbus.

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The latest Israel-Hamas war began when Hamas militants attacked southern Israel on Oct. 7, killing about 1,200 people and taking an additional 250 hostage, according to the Israeli government. Palestinian militants still hold about 100 captives, and Israel’s military has killed more than 35,000 people in Gaza, according to Gaza’s Health Ministry, which doesn’t distinguish between civilians and combatants.

Protesters at the Google event said they believe the company’s technology is being used by the Israeli military for surveillance of people in Gaza through facial recognition, leading to the arrest and detention of Palestinians.

Google did not immediately respond to a request for comment.

The company has said that its technology is used to support numerous governments around the world, including Israel’s, and that the Nimbus contract is for work running on its commercial cloud network, with the Israeli government ministries agreeing to comply with Google’s terms of service and acceptable use policy.

“This work is not directed at highly sensitive, classified, or military workloads relevant to weapons or intelligence services,” Google said in an April statement.

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One of the protesters at the Tuesday conference was Ariel Koren, a former Google employee who alleges the company retaliated against her in 2021 after she raised concerns about the contract. Google said at the time that it had investigated the case and found no evidence of retaliation.

“We want to make sure that every single person who comes here and who might think that today’s a day about celebrating technological advancements — every single one of those people needs to understand that the reality is much darker than what Google has painted,” Koren said.

Organizers estimated that 50 people participated in the demonstration in front of the conference. The rally at the park drew a bigger crowd.

One of the participants objected to Google holding its conference the day before Palestinians commemorate 76 years since their mass expulsion from what is now Israel. Palestinians refer to their displacement during the 1948 Israeli-Arab war as the Nakba, which is Arabic for catastrophe.

The protest in front of the Google I/O conference began at around 9:30 a.m., with protesters moving toward a bag checkpoint. Conference attendees had been asked to take out their laptops and have their bags searched.

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The event’s security closed the entrance as protesters moved to stand in front, leaving a large line of attendees who were later directed to another area to proceed to the conference. A line of protesters held a red sign that proclaimed “Google Stop Fueling Genocide.” The demonstration ended at about 11 a.m.

Google’s developer conference draws thousands of people each year, many of whom are developers eager to learn about the company’s latest technology.

After witnessing the protest, several attendees said they planned to do more research on Project Nimbus.

“I feel that it is worth a shot to listen to others when they have a point of view,” said Andres Haro, a 30-year-old software security engineer from Utah, as he waited in a long redirected line into Google I/O’s entrance.

The protest comes after more than 50 Google employees were fired following sit-ins and protests that took place at Google office locations last month protesting Project Nimbus. Google said it terminated those workers after an investigation determined they were involved in disruptive activity that violated its policies governing employee conduct.

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A spokesperson for the group behind the sit-ins, called No Tech for Apartheid, said they were not involved with Tuesday’s protest.

“We’re asking more questions about what role we and our employers are playing in the world,” said Roni Zeiger, a product developer who participated in the rally on Tuesday at Charleston Park, near the Google event. “World events have continued to evolve and … people, including employees, are asking harder questions and wanting to work at places that are consistent with their values.”

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Red Lobster offered customers all-you-can-eat shrimp. That was a mistake

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Red Lobster offered customers all-you-can-eat shrimp.  That was a mistake

Red Lobster promised customers an endless supply of shrimp for $20 — a gamble the struggling restaurant chain hoped would help pull it out of its pandemic doldrums.

But Americans, and their appetites, had other plans.

The beloved yet beleaguered pillar of casual dining abruptly shuttered dozens of locations this week, heightening speculation that the chain is careening toward bankruptcy.

Although its dire financial situation isn’t the result of a single misstep, executives at the company that owns a large stake in the chain, as well as industry experts, said that miscalculations over the popularity of the all-you-can-eat shrimp special accelerated the company’s downward spiral.

The closures, including at least five locations in California, were announced in a LinkedIn post Monday by Neal Sherman, the chief executive of a liquidation firm called TAGeX Brands, which is auctioning off surplus restaurant equipment from the shuttered locations.

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Representatives for Red Lobster did not respond to a request for comment about the closures, which were listed on its website as temporary, or whether it planned to file for bankruptcy.

But company executives have been vocal about the misguided gamble with shrimp and how they misjudged just how hungry Americans would be for a deal on the crustaceans.

In an effort to boost foot traffic and ease the sales slump that swept through the restaurant industry during the pandemic, Red Lobster executives last year decided to relaunch a popular marketing ploy from years past to lure customers: For $20 they could eat as much shrimp as they wanted.

Eager for a deal during an era of stubbornly high inflation, many consumers eagerly embraced the offer as a challenge. People took to TikTok to brag about how many of the pink morsels they could put down in a single sitting — one woman boasted she’d consumed 108 shrimp over the course of a 4-hour meal.

“In the current environment, consumers are looking to find value and stretch budgets where they can,” said Jim Salera, a research analyst at Stephens, who tracks the restaurant industry. “At $20, it’s very possible for a consumer to eat well past the very thin profit margin.”

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During a presentation about sales from the third quarter of last year, Ludovic Garnier, the chief financial officer of Thai Union Group, a seafood conglomerate that has been Red Lobster’s largest shareholder since 2020, cited the endless shrimp deal as a key reason the chain had an operating loss of about $11 million during that time frame.

“The price point was $20,” Garnier said.

He paused.

“Twenty dollars,” he repeated with a tinge of regret in his voice. “And you can eat as much as you want.”

Although the promotion boosted traffic by a few percentage points, Garnier said, the number of people taking advantage of the all-you-can-eat offer far exceeded the company’s projections. In response, they adjusted the price to $22 and then $25.

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All-you-can-eat offers can be effective marketing strategies to get people in the door in the competitive world of casual dining — Applebee’s offers $1 margaritas dubbed the Dollarita, buffet chains such as Golden Corral and Sizzler promise abundance at a flat rate, and Olive Garden, one of Red Lobster’s main competitors, has long lured customers with unlimited salad and bread sticks.

But Red Lobster made a few crucial missteps with the shrimp deal, said Eric Chiang, an economics professor at University of Nevada, Las Vegas, and a self-proclaimed buffet aficionado.

The company not only started with a low price point, but offered a prized and pricey menu item that can serve as an entire meal — not many customers at Olive Garden, he noted, are going to stock up on bread sticks and salad alone.

“Most people will also order the Taste of Italy,” he said, “or something that gives you meat and pasta.”

Chiang said the most effective loss leaders, a term for products that aren’t profitable but bring in enough new customers or lead to the sale of enough other items to make the offer worthwhile, use cheap ingredients. A good example is 7-Eleven’s Free Slurpee Day, he said, as the company gives away about 15 cents of ice and syrup to customers who then pay to fill up their gas tanks.

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Consumers are especially drawn to all-you-can-eat deals and buffets during tighter economic times, Chiang said.

“This is a story of inflation,” he said. “All you can eat for $15? That gives customers a sense of control. Like we’re not being gouged, not being nickel and dimed for every dessert.”

Red Lobster, it turns out, has been in trouble for a while.

In 2003, the chain, which at the time was owned by Darden Restaurants, the company that owns Olive Garden, offered a similarly disastrous all-you-eat crab special for around $23.

So many people came back for seconds, thirds and even fourths, executives said at the time, that it cut into profit margins. Before long, the company’s then-president stepped down.

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In 2014, after a period of disappointing sales and less foot traffic, Darden sold Red Lobster to San Francisco private equity firm Golden Gate Capital for more than $2 billion, a stake that was eventually taken over by Thai Union.

Despite the turmoil, the company, which until this week touted about 700 locations, remained a brand so beloved that it earned a reference in Beyonce’s song “Formation,” in which she describes post-coital trips to Red Lobster.

After the song’s release, the company said it saw a 33% jump in sales, but that glow was short lived and had faded long before the ill-fated shrimp deal was brought back last year.

“You have to be pretty close to the edge for one promotion to tip you over the edge,” said Sara Senatore, a senior analyst at Bank of America, who follows the restaurant industry.

In January, Thai Union Group — citing a combination of financial struggles it pinned to the pandemic, high labor and material costs and the oft-cited buzzword of industry “headwinds” — announced plans to dump its stake in the company, which was founded in 1968 in Lakeland, Fla. The closures this week hit at least five California locations — Redding, Rohnert Park, Sacramento, San Diego and Torrance — according to the website of the liquidation company, which posted images of available items, including a lobster tank, seating booths, refrigerators and a coffee maker.

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During a presentation to investors in February, Thiraphong Chansiri, the chief executive of Thai Union, expressed frustration with the situation surrounding Red Lobster, saying it had left a “big scar” on him.

“Other people stop eating beef,” he said. “I’m going to stop eating lobster.”

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