Real Estate

Coronavirus: Should Young Adults Move Back in With Mom and Dad?

Daily Real Estate News - April 19, 2020 - 1:04pm

(TNS)—Andres Vidaurre’s story is a lot like those of the many young adults who make their way to Los Angeles in search of work and a vibrant, diverse city to call home.

The 27-year-old Houston native moved here two years ago after attending Notre Dame University and settled down in a five-bedroom home in northeast Los Angeles that he found on Craigslist. He has roommates—22 to be exact. Each tenant pays $580 a month and each room has several bunk beds.

Vidaurre loved the vibe, and so when the house manager moved out, he took over the role, which allowed him to live there for free. The additional work came with a new set of headaches, but his duties never included “pandemic response”—until last month.

On March 14, one of his roommates texted to say he had tested positive for the novel coronavirus and had moved back with his family in Fresno.

Vidaurre delivered the news to his roommates. Almost everyone handled it calmly, he said. But there were a few exceptions, including one who started packing and left that night on a 13-hour drive back to his parents’ home in Oregon.

But moving back in with his parents isn’t an option for Vidaurre, the way it might be for others in their mid-20s. His mom has an autoimmune disorder.

“Going to Houston and coming into contact with them is really not a desire I have right now,” he said. “I just really hope they stay inside.”

In the last month, as the headlines about the pandemic have become grimmer, young people in cities across the country have contemplated the possibility of moving home to live with their parents or extended family.

Some of them can’t afford it. Others, like Vidaurre, worry that they might be asymptomatic and put their medically frail relatives at risk, as some reports suggest that infection is more likely to happen in clusters, such as with a family living under one roof.

But many others are returning to their childhood bedrooms and setting up workstations in the dining room of homes where food—and support—are in ample supply. The trade-off is often living in a household where siblings are sleeping nearby and families are trying to figure out who will do a video-conference from what room.

Decisions to stay or go have been made under pressure, sometimes in haste. For those who have moved home, it’s not clear how long they’ll be there. It’s highly unlikely that anyone was thinking about their emotional or financial independence, but their decisions could very well influence the way they and their parents navigate the world for the rest of their lives.

Young people who are hunkered down far from their immediate families may be confronted with parents whose separation anxiety is growing. Subtle cues may be missed; estrangements may be amplified.

But no one can think about any of that right now. The future will have to wait.

Cole Gilbert, 26, says the seriousness of this pandemic sneaked up on him. As California schools closed and Gov. Gavin Newsom told people over age 65 to stay home, Gilbert said, he continued to live a “normal” life, going out for drinks March 14 at a packed bar in Venice, where he lives.

Then, days later, Newsom asked restaurants to close to dine-in guests.

Gilbert thought about his routine and started to worry about washing his clothes at the laundromat. “I didn’t want to go to the grocery store,” anticipating a long shut-in.

“I feel like in a time of crisis, the places I retreat to are my comfort zones,” Gilbert said.

So he grabbed his dirty clothes, his two dogs and headed to his parents’ place in Long Beach.

Gilbert works as a production manager for his family’s aerospace finishing company. The Friday before he returned home, the company had furloughed half its staff as business dropped off. Gilbert wondered whether his move home might be permanent.

After business started to pick up again, the company was able to bring employees back on and Gilbert surveyed the landscape.

Living at home hasn’t been so bad.

“I’m more of a grown-up now about everything,” he said. “Going home and realizing I have responsibilities at the house. Now that I’m their guest, I’m not treating it like my home. I’m trying to do my part,” running errands and buying groceries.

Gilbert has given up his place in Venice and plans on being a Long Beach resident for the foreseeable future. But he swears it won’t be forever.

As the novel coronavirus continues its assault, how should families deal with the return of adult children who considered themselves launched?

Julie Lythcott-Haims is a former college administrator with two college-aged children who have returned to their Palo Alto home. Her 81-year-old mother lives in a small house on the back of the property and her 20-year-old son just came out of a 14-day quarantine after returning from Portland, where he lives and works.

The author of “How to Raise an Adult,” Lythcott-Haims said there’s a fine balance that parents need to strike between communicating the seriousness of following rules and young people’s desire for the independence they had when they were living on their own.

“Everybody is accustomed to greater autonomy and freedom, and now we’re in an environment where everyone is supposed to be locked down,” she said. “We kind of want to be sure everybody is abiding by the rules, and yet we’re all adults here. So I think there’s a lot of walking on eggshells about serious issues.”

Lythcott-Haims says this all fundamentally comes down to trust—whether the person has returned home or not.

For young adults who are far away from family, it’s also a fraught time. When twentysomethings are separated in moments like this, she says, they become more like peers with their parents. Trust comes when parents and adult children are able to have honest conversations about the risks they are facing and the precautions they are taking.

“I think they’re both worried about each other and they’re both having compassion for each other and wanting to check up and check in,” Lythcott-Haims says. “But inherently, each is required to look after oneself, which I think develops agency and resilience in those young adults who did not return home.”

Lucy Putnam, 23, didn’t have to travel far to get home. Still, it was a decision that gave her pause as she wrestled with the implications of getting her parents or siblings sick.

Putnam’s roommates at her apartment near Beverly Grove had been on the go, not paying much attention to social distancing before it was mandated. “I had been interacting with my roommates,” she said, so she asked her parents, “Would you prefer (for) me to stay in my apartment? I’m young and it won’t affect me.'”

No, her mother said, please come home.

Putnam, who works in film and TV development and can work from home, is grateful to have the means and the ability to ride this out in her childhood bedroom in West L.A. There was, however, the challenge of having a boyfriend, who had been coming and going from the house, which worried her parents. He eventually returned to his family’s home on the East Coast.

Three weeks into the stay-at-home order in Los Angeles, Vidaurre’s circle of roommates continues to shrink and his anxiety growing.

It turned out the housemate who returned to Fresno had not been infected with the coronavirus. He had influenza.

There are still about 15 people living in the house in northeast L.A.

With that many people in close quarters, Vidaurre feels like he constantly needs to clean dishes in the communal kitchen. When someone else begins cleaning, he wonders if the cutlery he just left to dry has been contaminated.

“It just increases the paranoia so much,” he said. “If it were possible to transition to living alone and creating an environment that can be clean and safe, I would do that.”

Vidaurre plans to be out of the house by the end of the month.

He and one of his roommates, Oko Carter, 30, share a box of disposable masks.

As with Vidaurre, Carter returning to his family isn’t an option. Both his grandparents are over 70 and not in great health. And his dad is a truck driver transporting medical equipment in Florida.

Carter’s dog-walking and dog-sitting business has dried up, but he has lived in Los Angeles for a decade, and he says that if he’s going to ride this out somewhere, it’s going to be here.

For now, he shares a room with two other people—one of whom works at a local 7-Eleven. Some of his housemates have lost their jobs or are struggling in the gig economy.

“The bedroom normally holds five people, but only three are here right now,” Carter says, sounding almost relieved. “It’s just been this feeling for those who have remained —it’s been a little sad seeing people who had work just have nothing.”

Still, Carter remains optimistic. He notes what’s been written on the dry-erase board in the communal kitchen.

“Keep your head up.”

©2020 Los Angeles Times
Distributed by Tribune Content Agency, LLC

The post Coronavirus: Should Young Adults Move Back in With Mom and Dad? appeared first on RISMedia.

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7 Ways to Help Recession-Proof Your Finances

Daily Real Estate News - April 16, 2020 - 4:45pm

(TNS)—It’s not often that almost every American knows in real-time that an expansion has ended and a recession has begun—but the novel coronavirus is proving to be historic for more reasons than one.

Americans were in the middle of the longest economic expansion on record, a slow-but-steady recovery that took nearly a decade for wage growth and employment to catch back up after the Great Recession. But in a matter of days, confirmed cases of the deadly, contagious pathogen skyrocketed across the globe, forcing states to impose stay-at-home restrictions that have ultimately led to millions of layoffs and shuttered businesses.

More than 10 million Americans filed for unemployment in March, with virtually every industry seeing job loss, according to Department of Labor data. Meanwhile, estimates from Federal Reserve economists predict that joblessness could soar to 32.1 percent—higher than even during the Great Depression.

“This is so unprecedented in its sudden-stop nature,” says Nick Bunker, economic research director at the Indeed Hiring Lab. “It’s directly impacting industries that are not usually the front line of recessions.”

Expert Tips to Help Make Your Finances Recession Proof
Americans won’t know for sure that they’re living in a recession until the National Bureau of Economic Research’s Business Cycle Dating Committee says so. This private, non-profit group of economists is the sole arbiter of declaring when a recession starts and ends.

Typically, it takes months, if not a year, for the group to announce that exact timeline. The committee, for example, declared in December 2008 that the Great Recession began in December 2007.

A recession isn’t always characterized by a sudden plunge in business activity. Textbooks typically define the starting point of a downturn as the point when things just aren’t as good as they were.

But even though the economic outlook is looking grim right now, it’s never too soon to ensure that your finances are well-equipped to weather any storm. Here are seven tips to help recession-proof your finances, as recommended by experts.

Pay Down Debt
It’s crucial that you pay down any outstanding debt—more specifically, high-cost debt, such as your credit card balance—to create some breathing room in your budget.

As the coronavirus has demonstrated, economic downturns can often lead to job loss. If you’re worried about job security, paying off your obligations might bring you more peace of mind.

Prioritize credit card debt, then turn to other types of loans, such as mortgages or auto loans. Student loans, however, have more favorable provisions, which makes paying them off less of an urgency, says Greg McBride, Bankrate chief financial analyst.

Even if you’re not worried about losing your job in a downturn, it’s still good financial practice. A March 2019 Bankrate survey found that 13 percent of Americans aren’t saving more because of the amount of debt that they owe.

“Regardless of where we are in a market cycle, prioritize eliminating high-interest rate debt no matter what,” says Lauren Anastasio, CFP, a wealth adviser at SoFi, a personal finance company. “Being in a position where you’ve eliminated those types of high-cost obligations allows you to better prepare for other things financially. The more you’re able to put aside for saving and the less debt you have, it’s going to be available to you in case of an emergency.”

Use Bankrate’s tools to calculate a debt-payoff plan or take advantage of balance-transfer credit cards with zero percent intro APRs. These offers disappeared in 2008, Anastasio says, so they’re likely not going to be around when the next downturn comes.

Boost Emergency Savings
Job loss can also make it difficult for Americans to pay their day-to-day expenses.

Beefing up your emergency fund—that is, the pool of cash that you reserve specifically for events like downturns—can make it possible for you to still afford your necessities while you search for a new position.

Even if you’re paying down debt, it’s important that you prioritize saving. Focus first on loading up your emergency fund with one month’s worth of living expenses. After that, pay off your debt, and then focus on building up a reserve of three-to-six month’s worth of funds, Anastasio says.

“Everyone needs to have a cash cushion, even while they’re attempting to pay off high-interest rate debt,” Anastasio says. “It’s imperative because, if an emergency arises and you’re putting every dollar toward eliminating debt, you have no choice but to go back to credit cards to cover the expense.”

A high-yield savings account can help you earn more on the money you stash away. Shop around for the best account that suits your needs and lifestyle.

Identify Ways to Cut Back
It’s always a good idea to go through your monthly expenses and identify which items are discretionary—services or items you don’t need—and which items are a necessity. The discretionary items are most likely ones that you can either eliminate now or in the future, McBride says.

“Certainly, your starting point would be the discretionary items—subscription services or even just spending patterns,” McBride says. “Dinners out or nights out at the bar with friends can seriously add up over time.”

Live Within Your Means
Experts typically recommend spending no more than 30 percent of your net income (that is, earnings after taxes) on discretionary items. It’s a good idea to create a monthly budget to ensure that you’re living within your means and not overspending.

“You have to pay your rent; you have to pay your car insurance; you have to eat to live. Your groceries, your utilities—those are all going to be essential expenses,” Anastasio says.

“But dining out, vacations, cable—anything that you would potentially consider a luxury or a lifestyle expense—that’s discretionary spending.”

Focus on the Long Haul
After addressing your emergency savings and paying off your debt, your next worry when thinking about a downturn might be about your investments. The thought of the markets plummeting might make you fearful that you’ve lost all of your earnings after years of hard work.

Changing your strategy, however, would be the worst thing you could do, McBride says.

“It will take a tough stomach, because in a recession a stock market will easily fall 30 to 40 percent, peak to trough, but making regular contributions and reinvesting all of the distributions will make those market gyrations work to your benefit,” McBride says. “A recession is a tremendous buying opportunity.”

That goes for all individuals, whether you’re 20 or two years away from retiring, he says. If you’re planning to retire in the next few years, when a recession looks like it could be coming, it might be a good idea to have your first few years of withdrawals already in cash. But don’t shy away from equities in your portfolio. Those are often where you’ll get the most returns that provide inflation protection, he says.

“Do not make changes that jeopardize your long-term financial security based on short-term economic events,” McBride says. “Even for someone who is on the cusp of retirement, retirement is going to last 25 to 30 years. A recession is going to last a year.”

Identify Your Risk Tolerance
Still, it might not be a bad idea to work with a financial adviser on identifying your risk profile, Anastasio says. That includes identifying your risk tolerance—or how much risk you can afford to withstand—and your risk appetite—or the amount of risk you’re willing to take on.

Risk suitability is also another important factor, Anastasio says, a component that’s based on when someone plans on cashing out their investments. If you’re going to change your investing strategy at all, let it be based on this, she says.

“The sooner we expect someone to use the money, that’s where they’re going to need to be more conservative with their options: high-yield savings accounts, CDs,” Anastasio says. “On the other end of the spectrum, when we’re looking to invest for eight to 10 years or longer, that’s when it tends to be more appropriate to be invested in equities or stocks as a whole.”

Continue Your Education and Build Up Skills
But to recession-proof your life, one of the best investments you can make is pursuing an education, says Tara Sinclair, an economics professor at George Washington University and a senior fellow at Indeed’s Hiring Lab. During recessions, the unemployment rate for those with a bachelor’s degree or higher is much lower than for those who have a high school education or less.

“Economists are always emphasizing the importance of education,” Sinclair says. “That’s something, even if you can’t build up a financial buffer, focusing on making sure that you have some training and skills that are broadly going to be employable is really crucial.”

Why Predicting Recessions Is Difficult
The novel coronavirus underscores just how difficult it is to predict what will cause that turning point. At the beginning of 2020, a rapidly spreading contagion wasn’t on anyone’s radar

Even worse, information is often revised, updated and corrected. It’s released with a lag. Even so, developments shift rapidly. Fed officials, for example, pledged to keep interest rates steady through all of 2020. But they ended up slashing rates to near-zero at two emergency meetings, as the coronavirus devastated financial markets and the U.S. economy.

“Some people say economists exist to make weather forecasters look good,” Sinclair says. “The complexity of the macro economy is such that we haven’t yet figured out a clear, causal model of how things work. We can’t predict with any kind of confidence what’s going to happen, particularly when things are changing dramatically.”

Plan for the Unexpected When It Comes to the Economy
Recessions are typically defined as a drop in output or a slowdown in growth. Though most economists would lump the two causes of recessions into supply shocks or demand shocks, each of the past 33 recessions (as tracked by the NBER Business Cycle Dating Committee) have been caused by something a little different, Sinclair says.

“Obviously, if recessions were easily predictable and preventable, we’d expect policymakers to be doing just that,” Sinclair says. “If we think back to 2007, many people asked, ‘How did we not see it coming?’ But that’s the nature of recessions. They are these terrible things that we can’t predict.”

Even so, economies don’t always react to shocks in the same way. Markets panicked after the Fed in December hiked rates for the fourth time in 2018, fearing that too much monetary policy tightening would spur a downturn. The markets, however, bounced back in 2019, flirting with new highs.

If officials make progress containing the virus, investors will likely calm down.

Bottom Line
It’s hard to predict the future when you’re using the past as a guide, Sinclair says.

“Our economy is changing so dramatically,” according to Sinclair. “There’s many different sources that can lead to a recession, and it tends to be that when we look out for the next one, we’re looking for the same things that caused the recession rather than recognizing that there’s a new source.”

But you can take solace in the fact that economists are generally much better at knowing whether the U.S. economy is in a recession, Sinclair says. Even though predicting them is close to impossible, you won’t have to wait long before knowing that the U.S. economy is in one. That’s the case with what’s happening right now.

Downturns never come at a good time, but that was even more so with the coronavirus. Many Americans were already living paycheck-to-paycheck, while an October 2019 Bankrate survey found that 2 out of 5 Americans (or 40 percent) aren’t prepared for the next recession.

Regardless of whether the storm is on the horizon, it’s always a good time to make sure your financial portfolio is prepared, Anastasio says.

“I don’t think there’s ever a bad time to evaluate their finances and check in with themselves,” Anastasio says. “If someone personally feels nervous that there’s change on the horizon, it’s always a good time to say, ‘What can I do personally to put myself in a stronger financial position, so I can sleep better at night when the time comes.’ ”

©2020 Bankrate.com
Distributed by Tribune Content Agency, LLC

The post 7 Ways to Help Recession-Proof Your Finances appeared first on RISMedia.

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