0:00

It's Wednesday, December seven. I'm

0:02

Oscar Ramirez in Los Angeles and this

0:04

is the Daily Dive. One

0:10

of the biggest components of inflation is starting

0:12

to ease. Housing costs are coming

0:15

down, but it could take some time before

0:17

it shows up in official inflation numbers. The

0:19

economys say that increases in rents and home

0:21

prices will remain low as

0:23

the economy has slowed, and mortgage rates

0:25

remain elevated. Shelter inflation

0:28

is one of those things that tend to be sticky,

0:30

which means that once it starts moving in any direction,

0:32

it is slow to change back. Gwen

0:34

Guildford, economics reporter at The Wall

0:36

Street Journal, joins us for what to know next?

0:40

What do you do with an iconic Los Angeles landmark

0:42

that became too old to operating normally and

0:45

too much of a treasure to tear down? Elle

0:47

County would like to turn the old General Hospital

0:49

building into affordable and homeless

0:52

housing, but to do that, there's a ton

0:54

of work to be done. The county has already

0:56

committed two d and fifty million dollars

0:58

to removing hazardous material reals, upgrading

1:00

electrical and water systems, installing

1:03

air conditioning, fire sprinklers, and

1:05

so much more. The eventual goal

1:07

will be to have a healthy village with as

1:09

many as four units with bets for housing

1:12

and medical and mental health care. Doug

1:14

Smith, senior writer at The l A Times,

1:17

joined us for the future of l A's General

1:19

Hospital. It's news without the noise.

1:22

Let's dive in housing

1:25

services. Inflation will probably keep rising

1:28

well into next year, but if inflation

1:30

on new leases continues to fall, we

1:32

will likely see housing services inflation

1:35

begin to fall later next year. Joining us now is Gwynn

1:37

Guilford, economics reporter

1:39

at The Wall Street Journal. Thanks for joining us,

1:41

Quinn, thanks for having me. Let's

1:44

talk inflation. Obviously,

1:46

we're still seeing some high numbers with inflation.

1:48

We're starting to get a lot of indicators that it could be

1:50

easing up a little bit, but still there's

1:53

fears of a recession going on. But one

1:55

of the biggest components of inflation has always

1:58

been housing costs, and we're

2:00

seeing that in particular starting

2:02

to soften right now. We're starting to see new rents

2:04

go down just a little bit. One of the

2:07

problems with this is that a lot of

2:09

the key indicators, a lot of the way that we

2:11

measure this stuff is always kind of delayed,

2:13

so it takes a little bit of time to really see

2:15

if things are dropping. But we're starting

2:18

to feel like the housing costs are

2:20

going down and it could be easing up

2:22

on inflation. So Gwen, tell us a little bit more about

2:24

it. Yeah, and that's right. You

2:27

captured it well after vaccines

2:29

came out and you had that huge economic boom

2:32

that was buoyed by governments stimulus

2:34

and people getting hired like crazy,

2:36

and you know, we just started really taking off. And

2:39

then people moved out of there, you

2:41

know, family homes or situations

2:43

with roommates to get their own place or to

2:46

you know, they upgraded, and so there

2:48

was a lot of rental demand and rents

2:50

just really took off. And um,

2:53

the measure of new rents, which

2:55

is what you know, if you look at Zillo or Apartment

2:58

List, what those are all tracking, Those

3:00

were, you know, rising at a three month annualized

3:03

rate of like in the

3:05

in the summer of which is just

3:08

in the insane pace. And

3:11

and then you know that's snapped back and

3:13

now the Zillo index

3:15

it's barely increasing on a month to

3:18

month level, and it might even start to decline

3:20

soon. But you

3:22

know, right now we're in the sea.

3:24

In the CPI, the consumer Price Index, we're

3:26

seeing inflation being still

3:29

really pretty dangerously hot. And

3:31

a big reason why is housing costs, and

3:33

those are growing at a really fast

3:35

clip. And the reason why is exactly

3:38

what you you mentioned is there's that year

3:40

long delay. There's that lag,

3:43

and so what you know, what you saw

3:45

on the market for new rents,

3:47

the last summer has been feeding

3:50

in to um. You know, the summer

3:53

has been feeding into the inflation that we're

3:55

seeing in the numbers now. But the good news

3:57

is that's going to start

3:59

feeding, that's going to continue to feed through, and

4:01

it's going to help bring down

4:04

measured inflation over the next year.

4:07

Yeah. I mean, to the point of those crazy high

4:09

home prices and rents and all that, I

4:12

was looking for a home throughout the pandemic,

4:14

and man, we were getting shot down with crazy

4:16

bidding wars and all that stuff. It was just you

4:18

really felt like you couldn't compete in a lot of

4:21

areas. UM. So yeah, it was a tough

4:23

time. And so now that things are starting to cool

4:25

that, I mean, we have all sorts of other things going on right,

4:27

we have higher interest rates. The

4:30

supply of homes is kind of still in the same

4:32

boat. But how do we calculate

4:35

this as far as white lags

4:37

so long? What are the measurements that we're looking at

4:39

that makes this lag so long? When

4:41

the BLS the Leeward Department surveys,

4:44

they do a survey of rents from all

4:47

over the country and um,

4:49

kind of alternating different

4:51

groups of cities and

4:54

um, you know, but most people aren't

4:56

getting you know, negotiating a new rent

4:59

every year there. Um,

5:01

you know you do that when you move to a new place. But

5:04

you know most people have, um,

5:06

most renters are you know,

5:09

staying in a place more than one year and you

5:11

know kind of work things out with their landlord

5:13

and aren't seeing like, you know, colossally

5:16

huge rent increases the way you might

5:18

have experienced if you move to a new

5:20

place, if you had to move to a new place during the pandemic.

5:23

And so it takes longer for that

5:26

market pressure to filter through, where you

5:28

know, the landlord starts to realize, oh, hey, I

5:30

could be getting a lot more for this place, and

5:33

you know, really started jacking up the rates.

5:35

You know, well that only happens when you renegotiate

5:37

your lease, which is usually once

5:39

a year, you know, sometimes maybe every six months

5:42

UM. So that's one of the reasons

5:44

it takes a while for it to

5:47

for the market rate to filter through

5:50

UM. It's just that, you know, there's

5:52

the delay that comes

5:54

from when people negotiate. And

5:56

then the other thing is just how the labor

5:59

department average. They do a six month trailing

6:01

average, and so that creates an additional

6:03

methodological lack, so we might

6:05

be seeing they are feeling the effects a little bit

6:08

sooner than the actual numbers are actually going

6:10

to let us know. There and when we're looking at

6:12

overall inflation, how big

6:14

of a portion is that is housing

6:17

in shelter costs, it's like close

6:20

to a third of UM

6:22

the consumer price index. And then when you're talking

6:24

about the core index, which strips out you

6:26

know, kind of volatile food and energy prices

6:29

and is what you know, economists and the FED

6:31

are concerned with UM, it's

6:34

it's close to UM two fifths

6:36

of CORE. So it's a really big deal.

6:39

And so when it's like it doesn't take a very big

6:41

movement to have a big impact. And

6:43

so when we're talking about the FED, and you know they've

6:45

been raising rates. Obviously this is part

6:47

of it, right to raise those interest

6:49

rates enough to cool things down. When

6:52

we're talking about you know, them continuing to

6:54

raise the rates, and what's their goal, like

6:56

what's their target for inflation? Like obviously

6:59

they want to bring it down as much as possible, but what percentage

7:01

are we looking at that they really want to hit where they're feeling

7:03

comfortable. So they

7:06

target two percent was

7:08

a little bit of a band around that UM.

7:10

But and they also are targeting this was getting into

7:13

some pretty arcane inflation

7:15

stuff, but they target a different indicator

7:17

which is from the Commerce Department and it

7:19

comes up two weeks generally after the

7:22

consumer price index comes out UM.

7:24

It's called the PC the personal

7:27

consumption expenditure price index

7:29

UM. And that's interesting since you

7:31

know, we're getting into the wonkery UM

7:34

because the rent component,

7:36

the shelter component is much smaller UM

7:39

and in the PC price index,

7:41

but medical care is much bigger

7:44

UM. So that like that

7:47

that creates it means that there there

7:49

was less it increased less UM

7:52

because the rent impact was

7:54

was less and but it's also going to

7:56

come down less UM than

7:59

a lot of economists expect CPI to come

8:01

down in the next year year and a half. All

8:03

right, well, we'll keep an eye out on what's going on

8:05

with this. Hopefully, as these housing costs

8:08

you go down, we get to see that reflection

8:10

in the overall inflation numbers, and then obviously

8:13

people start feeling the rest of that go

8:15

down. I know, all of this that we talked about sticky

8:17

prices a lot of times to these housing

8:19

costs, that shelter costs tend to be sticky,

8:22

right once they start moving a little bit, it gets

8:24

really slow to change back. Yeah,

8:26

and that's a couple of a couple of reasons for that. One is

8:28

just that methodological stuff that we're talking

8:30

about, but the other is also just the

8:33

nature of It's sort of like wages, like you don't

8:35

um, you know, food prices that can go You're gonna

8:38

buy milk for you know, four

8:40

dollars a gallon one month,

8:43

and then a couple of months later it's five dollars, and then it

8:45

goes down the leg two fifty, you know, like

8:47

they go up and they go down. But that

8:50

does not really happen with rent, Like,

8:52

you know, no landlord's gonna be like, oh,

8:55

well, I'm just gonna reduce my rent a whole

8:57

bunch Like they there's generally

8:59

a floor of past experience, so

9:02

you know, it's really hard for once

9:04

prices go up, they don't tend to come down.

9:06

There doesn't increase might slow, but

9:08

yeah, they're sticky. All right, Well, we'll keep

9:11

an eye out for all of these inflation news

9:13

as it comes up. Gwen Guildford,

9:15

economics reporter at the Wall Street Journal,

9:17

Thank you very much for joining us. Yeah,

9:20

great to join you. Old

9:29

l A County hospital has been vacant

9:31

now for well over a decade.

9:35

You have one point one million. You can't make

9:37

this at one point one bigan. They

9:39

can square feet. The opportunity

9:41

to get over eight hund units

9:44

thousands of people in the housing

9:46

off the streets presents itself. Joining

9:49

us now is Doug Smith, senior writer at

9:51

The l A Times. Thanks for joining us, Dad,

9:53

You're welcome, glad to be here. Well, let's

9:55

talk about what's going on with a

9:58

Los Angeles landmark, the General

10:00

Hospital. It closed down fourteen

10:02

years ago and really nothing has been done

10:04

with it over all that time. The idea

10:07

now is as homelessness is such a huge

10:09

issue in l A and all parts

10:11

of the country really, but it's very pronounced. In Los Angeles.

10:13

They're planning on changing the General

10:16

hospital there into a

10:19

homeless and affordable housing, a

10:21

healthy village. They want to college. It's gonna

10:23

have bets for housing, it's gonna have spaces where

10:25

social services, community activities, all

10:27

sorts of stuff. It seems like a huge

10:30

undertaking, So Doug tell us a little bit about

10:32

what's going on here. Sure, it is

10:34

a huge undertaking. And since a

10:37

general hospital closed in

10:39

two thousand and eight for various reasons. It

10:41

was almost it was by then eighty

10:43

something years old, ninety almost

10:45

ninety years old, and it didn't have the

10:48

systems at modern hospitals made. It didn't

10:50

have air conditioning, it didn't have the

10:52

electrical system, couldn't support

10:54

the modern medical technology.

10:56

And then after the north Ridge earthquake,

10:59

the side mixed standards for hospitals

11:01

were upgraded and it didn't meet those standards.

11:04

So a new hospital was built right next

11:06

to it, and general hospital just kind of

11:08

closed. Some of the ground floors

11:10

were still used for wellness, community

11:13

and research training, but

11:16

most of its nineteen floors were just left

11:18

empty. And they've deteriorated. The ceiling

11:20

pot tiles are falling, and there's dust everywhere.

11:23

The electrical outlets are open and

11:26

nobody can go there. So it's been very

11:28

hard to find out what to do with it because it's a

11:30

gigantic building. You know, when you walk

11:33

inside, you feel like you're entering an Egyptian

11:35

pyramid, it's that big, and

11:38

so it couldn't be reused as a

11:40

hospital. There was had been replaced,

11:42

and what to do with it, well, the idea

11:45

of housing became more tenable

11:47

as a homeless crisis and what's really

11:49

an affordable housing crisis in Los Angeles

11:52

became more severe, and so

11:54

first Supervisor Gloria Molina

11:57

and then Supervisor Heeless Release started

11:59

to pursue the idea of using it for housing

12:01

in a health and community related context.

12:04

So the plans are finally now

12:07

taking shape. There will be a RFP, a

12:09

request for Proposals, will be developed

12:12

and offered in January for a developer

12:14

to come and figure out how to

12:16

convert basically operating

12:19

rooms, wards and laboratories

12:21

into housing and

12:23

um we don't know exactly how

12:26

that will play out, but it could be anywhere

12:28

from three fifty to seven hundred units

12:30

of housing, depending on whether how many

12:32

of them are single units or how many

12:34

of them are multi bedroom units for families.

12:37

Yeah, and that's part of it, the huge

12:39

undertaking of how to convert what was once

12:41

a hospital into a space for

12:44

housing, a space for all these other services

12:46

and whatnot. And so you

12:48

mentioned the article to the prep work, just

12:50

just the prep work is expected to start next

12:52

year, after the county committed

12:54

two fifty million dollars to take the first step.

12:56

But it was to some of that stuff you had mentioned, removing

12:59

us as those other hasnudous materials,

13:02

installing air conditioning. I mean, you can't

13:04

have anything built now without air conditioning

13:06

and fire sprinklers. So all of that stuff

13:08

is barely going to get started. And then, as you mentioned,

13:11

then there's the proposals and all that to really figure

13:13

out exactly what's going to be going on there. Yeah, the

13:15

county's approach on this is that it is kind

13:17

of unusual. They decided to

13:19

first prepare the building just sort

13:21

of quite empty it out and create

13:23

an empty structure that

13:26

a developer, an imaginative

13:28

developer could look at and say, we

13:30

could do this with it, We could use the operating rooms

13:32

for this purpose and come up with

13:34

the individual plans. But

13:37

even just that prep work and which also

13:39

includes a significant seismic upgrade,

13:41

it's going to cost two hundred million.

13:44

You mentioned it as well too. Some of the

13:46

you know, when you walk in it seems

13:49

like an Egyptian pyramid or something that it is one

13:51

of the best city's best examples of Art deco

13:53

architecture. Tell me a little bit about the

13:55

art there, because that's also some one

13:57

of the reasons why they haven't torn it all down to before

14:00

hand is they want to preserve some of that stuff. As

14:02

you mentioned, it's such been such a landmark for Los

14:05

Angeles. There's statutory

14:07

on the outside. It's all of medical theme.

14:09

The Hypocritus and the Galen

14:11

and the sort of the big figures in

14:14

the history of medicine are represented

14:16

in statues. And then there's a in

14:19

the entry. There is a

14:21

mural on the ceiling that you

14:24

know, it makes you feel like you're looking at the Sistine

14:26

Chapel. It's obviously not by

14:28

Michelangelo, but it but it just has that feeling

14:30

of awe that you're looking up at this vast

14:33

ceiling eural as you walk into

14:35

the hospital what used to be the main floor

14:37

of the hospital. It's it's so huge

14:39

that there's a color stripe

14:42

in the middle of band. It's about five feet

14:44

wide. It has different colored stripes as

14:47

you walk through. Some of them go right, some of them

14:49

go left, and you're told at the beginning,

14:51

when they know where you need to go, you're told to follow

14:54

a certain color to get you there. It's

14:56

sort of how big and complex the building

14:58

is. Tell me a little bit more. Were

15:00

about the history of General Hospital.

15:03

You made mention in the article about you know, some

15:05

of the pretty nasty stuff there that

15:07

was done under an old eugenics law.

15:09

A lot of things for that happened to the Latino

15:12

community as well. You know, even when the

15:14

new hospital was built, you know a lot of people

15:16

were displaced because construction had to

15:18

be done. Tell me a little bit about some of that. Sure,

15:21

the hospital has been a huge

15:23

presence in Boil Heights since it

15:25

was built in nineteen in the late

15:27

nineteen twenties and open in nineteen three,

15:30

and it's it's always been a

15:32

place where people in that community could go

15:35

and if they had they couldn't afford that, they would

15:37

get free medical care, but it also had

15:39

this other element of its history.

15:42

Racial attitudes were sort

15:44

of became a part of its

15:46

service. And so sometimes Latino women

15:48

came to deliver babies,

15:50

and there was a doctor there who thought

15:52

that they were bringing too many babies

15:55

into the world, weren't educated, didn't have a

15:57

chance, and so they steralyzed a

15:59

couple of women there with their

16:01

consent, but it wasn't clear if they

16:03

actually gave their consent knowingly. They signed

16:05

forms and there, you know, they were given a forms

16:08

had signed this, and it was a consent to

16:10

sterilize them, and this became a

16:12

practice in the hospital in the seventies and

16:14

sixties and seventies under California

16:16

had a eugenics law under which thousands

16:19

of women across the state were sterilized.

16:22

The state finally provided a fund

16:24

to compensate them, but it didn't apply to the women

16:26

who were sterilized at County General because

16:29

the hospital was locally funded. And

16:31

all of this you spoke to a number of people,

16:33

though you know, this is some of the worst

16:36

parts of that history, but you spoke to a lot of

16:38

people too who where General Hospital

16:40

was, where they were born, where

16:43

they went and then they had a broken arm where their

16:45

family members were saved from having you

16:47

know, after recovering and after

16:49

having heart attacks and whatnot. And it was just a

16:51

central place there where people got

16:54

their healthcare done. It was

16:56

and we spoke to Monica Alcoroz,

16:58

who has been the president of the

17:00

Highland Park Neighborhood Council, and

17:03

she was born there and her siblings were born there.

17:05

Her mother went there when she had a heart attack, and so

17:07

the hospital is it's hard to

17:09

believe. It's this gigantic structure that

17:12

you can see from many parts

17:14

of Los Angeles. It's sort of present everywhere,

17:16

but it's also an intimate part of people's

17:18

lives, including my own. My own

17:21

father went there when he had a heart attack

17:23

in and they saved his

17:25

life there. And in all of this, what

17:27

has been the community

17:29

reaction to, at least some of this plan,

17:32

you know, changing it into a homeless

17:34

and affordable housing because that's a touchy

17:37

subject a lot of times when you're bringing

17:39

certain elements into the community

17:41

and all that. So what I know, there's a lot of

17:43

homeless encampments that have been seen around the

17:45

area as well. So how is the community

17:48

reacted to a lot of this, So Hilda Solely

17:50

did a smart thing. Boil Heights

17:53

and and Lincoln Heights on the north are

17:55

communities that are really guarded their

17:58

heritage carefully, and you could

18:00

take a misstep and get the community against

18:02

you, as the owner of the former Series

18:05

building did by proposing to

18:07

make it a home for ten thousand homeless people.

18:09

But Homeless Solely built a community

18:11

organization that has been looking

18:14

at this for years and has

18:16

been involved in the planning of it. And

18:19

my colleague Andrew spoke to all

18:21

the major people in the community and and there's

18:23

generally support for this project. Also

18:25

because the project will not be just

18:28

the hospital, but it will be twelve acres to

18:30

the west that will be used for

18:32

housing for community spaces,

18:34

and there's a childcare center that's being

18:36

built that will open there in

18:38

December, and the restorative

18:41

Care Village, which is a part of the larger

18:43

property. They've already completed

18:46

sixty four units of mental

18:48

health residential care and

18:50

d twenty unit units of recuperative

18:53

care for people leaving the hospital who

18:55

aren't ready to go home, and and that there's

18:57

twice as much space in their recuperative care list.

19:00

It's going to be developed for more services

19:02

like that, including workforce development.

19:05

So the community at this point

19:07

is very much behind the project. Of course, it's

19:09

one more big step when the developer

19:11

makes a proposal, and that could be a

19:14

moment when there could be tension. Doug

19:16

Smith, Senior writer at The l A Times,

19:19

thank you very much for joining us. Thank you

19:21

appreciate it. That's

19:29

it for today. Join us on social media

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19:48

Oscar Ramirez and this was your

19:51

Daily Dive.