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Quibi CEO: Shutting Down Was Most Honorable Choice

Quibi CEO: Shutting Down Was Most Honorable Choice

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Quibi CEO

CNBC Exclusive: CNBC Transcript: Quibi’s Jeffrey Katzenberg and Meg Whitman speak With CNBC’s “Squawk Alley” today on shutting down operations.

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WHEN: Today, Thursday, October 22nd

WHERE: CNBC’s “Squawk Alley”

Following is the unofficial transcript of a CNBC TV EXCLUSIVE interview with Quibi’s Founder Jeffrey Katzenberg and CEO Meg Whitman on CNBC’s “Squawk Alley” (M-F, 11AM-12PM ET). Following is a link to video on CNBC.com:

Quibi CEO: Shutting down operations was most honorable choice for shareholders

 

JULIA BOORSTIN: Thanks, Carl. Well Quibi is shutting down six months after launching its short form streaming service, Quibi founder and chairman Jeffrey Katzenberg and CEO Meg Whitman and join us now in the historic bed on a new type of content, and its shuttering just six months after launch is a dramatic failure for this Jeffrey and Meg, you did come on CNBC to announce the company's launch and we appreciate you joining us now to talk about this decision, Meg, I want to start with you Why did you decide shutting down Quibi now, rather than at the first times have problems with adoption or rather than waiting continue to try for longer.

MEG WHITMAN: Well, first of all we're glad to be back we did the launch Quibi with you. Julia and we're glad to be back today. So we are over the summer, we had a very successful launch and over the summer we started to see a slowdown in our momentum, and we tried many different things, many different products and packaging models we changed our marketing we changed this, the app around many different times, but it was clear that, for whatever reason, this was not going to be as successful as Jeffrey and I had hoped, and so we took stock of where we were and we said the best thing to do. The honorable thing to do is to return money to shareholders. When we knew this was not going to have a path forward as a viable standalone business. So we feel like we've made the right decision a very difficult decision but the right one for shareholders.

BOORSTIN: Certainly, that's just been very hard for both of you you both put your own money in. You also have personal relationships with many of the people that you went to to invest in Quibi Jeffrey Of course, you have long standing relationships with all of the media giants that you brought on as an investor in Quibi, how are you handling this Jeffrey in terms of the bet that you've got all these companies that you've known for so long to make on your on your startup.

JEFFREY KATZENBERG:  Well thanks Julie I you know in the end I think we can do what we can do is, own it. You know we are so appreciative of the opportunity to go pursue this really, really big idea. For sure, you know there was risk involved in it but I think all of us expected a much better outcome a much bigger outcome from this and, you know, to our investors who are studio partners, you know, we are grateful thankful for them, giving us opportunity and letting us do it and in the end I think what you know as Meg said, at this point, when we have seen that it does not have a good future forward on the best thing we can do is return as much money to them as we can and take care of our employees in the best way possible.

BOORSTIN: Now I want to get in into this idea of returning money to investors later but first I really want to understand what you think went wrong here Meg You said you had a very strong launch, but the reality is is even though many people downloaded the app when it came to converting those people to being paying subscribers. That was much more challenging. I've seen some reports that less than 10% of people who did a free trial converted to paying and I'm wondering if you can help me identify what you think really went wrong here because we have really seen other short form mobile content thrive. During COVID whether it's snap that reported a 50% increase in time spent watching shows or TikTok growing rapidly. Jeffrey Do you think it was the subscription model that was really so problematic.

KATZENBERG: Listen, I think it's a convergence of a number of things Julia So, yes, we had a new, a new product. We asked people to pay for it before they actually understood what it was. I think we thought there would be easier adoption by people to it. I think that the environment that we found ourselves in as you've heard us say many times this was designed for on the go in between at a moment of time in which no one was on the go, they're still not on the go and so our product market fit was wrong and been somewhere between the idea being less than perfect, which we, we own and the environment we found ourselves in is where the fail has come, how much is you know what, when each of those are in that equation. I'm not sure any of us are ever going to know but it didn't work. Now, having said that, I got a content that was made is something you know that we're quite proud of and I think has been actually really, really well received. I'm sorry.

CARL QUINTANILLA: No, no Jeffrey I actually was going to reference something you now famously told the times, back in the spring and that was I attribute everything that's gone wrong to coronavirus everything. Would you temper that statement now.

KATZENBERG: 100%. It's not fair to me it was a little bit of a, you know, you know just the clippy answer. You know a flippant answer at the time it but you know other companies have faced the challenge of COVID and they have managed to find a path forward and so. But in, so, you know, I think Megan I believe in you know owning our miss, and simply blaming it on COVID. You know I don't think is is fair and not something that either of us want to do. We're proud of the content that we made. You know, Emmy Award winning content in a very short period of time we're proud of the product and the engineering team and what they built, but in the end we did not get the acceptance of consumers and customers in a way in which we had to in order for this to be a successful business.

JON FORTT: Meg, I want to ask about cost of entry and the length of time that you got to play. Were you playing bad poker or is the ante just so high in content today that you had to fold earlier, Apple can afford to burn billions on original content and marketing so can Amazon and Netflix, Disney has a library, how much of a factor is that?

WHITMAN: Well, listen there's no question being a startup has challenges that that big companies don't have. But, and there's no question that we had to launch in a big way everyone understood the business case for Quibi and that it was going to take a lot of capital upfront because we had to make this very high quality content. We had to build an entirely new platform remember all the content was original because it was designed to be on the go and mobile. So we are we actually went right along with the business plan that we laid out at the beginning, but over the summer we saw that there were real challenges, you know as Julia said about acquiring and retaining those subscribers, and so that led us to look very carefully at the business and say Did we really see a future here. And, and we didn't but as Jeffrey said, Listen, we pioneered a whole new form of storytelling. The content is well loved. We've gotten great reviews from the app and maybe in a different time in a different place. This would have worked better. But Jeffrey and I are realists and we're mature executives and we really felt that this was the right thing to do for our investors the right thing to actually for our partners and folks that had really helped us build this business and we had a lot of believers, and we're grateful to all of them.

BOORSTIN: But Meg, you just made the point that you said the content had to be so expensive, had to be so high quality, and I remember getting the explanation for you about the opportunity and having really expensive content, as expensive as a show on HBO but designed for mobile devices. When you look at the success of lower cost content on Snap, or user-generated content on TikTok, and you think back at the premise, do you think that people maybe don't want as expensive content when it's on something as intimate as their phones?

WHITMAN: Well, that was the bet, Julia, that there was a white space which was this very high-quality content in its short-form for mobile. And whenever you try to create an entirely new category, which is what we did, sometimes it works and sometimes in this case it did not work, but we have a lot of confidence that that this was the right formula that we thought that there was an open white space in the marketplace, and we gave it our very best shot.

BOORSTIN: And now, if you were to be able to do things differently, would you have delayed the launch until after COVID, would you have maybe done an ad-supported non-subscription version, or would you have done less expensive content, you know, a permanent cost per content, half or a quarter of what you were spending? You had big stars, big name producers.

KATZENBERG: We do the sum of all of that, Julia.

BOORSTIN: Yeah, maybe a little of all of it.

KATZENBERG: All good ideas. Some of all of that.

WHITMAN: Well, we did test an AVOD version, we did test an AVOD version in Australia which had better results but not good enough for the results, not good enough results to keep on going. We, you know, I don't know that we would have done user-generated content because that marketplace is well-filled by some very strong and excellent competitors. So, lots of things we might have done differently with 2020, 2020 hindsight, but we gave it our all and as I said, we're incredibly proud of the employees and the creators who worked with us, and we accomplished a lot even though the business didn't actually succeed.

QUINTANILLA: Jeffrey, I'm curious your thoughts I mean, you guys have gotten so many, so much input from basically unwanted critics over the last six months but one of the things was the ability to screenshot, or essentially ride the coattails of social media, free media, in essence, and I wonder if you think that was a miscalculation and but more importantly, I wonder if you think those who are in the game, from here on out, need to think more about being maybe just a tad less proprietary on the things you're obviously spending a lot of money on.

KATZENBERG: Yeah listen, it’s a great question, and I think there's a lot of complexity around it that maybe people don't fully understand but you know, there's no screenshots on any premium content, not on Netflix, not on HBO, not on Hulu, not on Amazon. And the reason is because of if you can screenshot, share something and screen shoot it, you open up the copywrite of it. You don't have protection for that content and so, yeah, in the social media world where you've got user-generated content and all these wonderful things that are viral and go out there into the world that you are able to screenshot. So we actually ultimately did get to a place where you could do that, but it actually does have a lot of complexities around it, including ownership of the IP itself. But listen, it was a criticism we heard, it was one we pivoted quickly to try and tackle and, as I said, a lot of issues around it. It's not a simple yes or no.

FORTT: Jeffrey, we've talked quite a bit about the demand side and how COVID affected that, how perhaps the model affected that. We haven't talked about supply and I wonder your thoughts in this environment about the oversupply perhaps of content, how that might have affected the willingness of some of the big players to buy Quibi, or the assets that you have available that you did have full rights to. Is there an oversupply of digital content? Is that something that investors should be aware of?

KATZENBERG: I don't, actually, I don't believe so, if anything, there's a shortage of supply right now because our industry has been shut down, you know, for eight months and is going to be continued to, you know, have to, you know, slowly regain into, you know, well into next year so there is a content supply challenge right now. I think, the only thing we have attempted to do today was actually to sell the entire company. And that is something that we did not have takers for. What we did have is real interest in our content, and our library, which is actually quite attractive, and that will be the next pivot, for, for us, which is to wind the company down, and to see if there is somebody who will value that, that library which is actually quite deep and quite rich and very unique and very valuable in the marketplace right now today.

BOORSTIN: But, so Jeffrey, when it comes to selling those assets and looking at the value of the library, Quibi is in a little bit of an unusual position because you actually licensed your shows for a certain number of years so tell me how you expect to be able to monetize those shows. Will you be returning them to the companies you licensed them from earlier? Would you be licensing them for the period of time that you had them? Seems a little bit more complicated than a typical owned asset.

KATZENBERG: Not really, Julia. If you think about, you know, today and anything of these companies that go out to a license content, it's no different. We have a seven-year license, which in the world we live in today is about one or two lifetimes in this. So, it's a very deep, very rich library. There's 28 movies. There's a pipeline of things that are coming, our alternative shows. And our expectation is that the offering of the Quibi content itself is actually going to find some interest and some buyers. Seven years is a long time.

BOORSTIN: And so, Jeffrey, as you look at the value of licensing those shows over the next several years and also potentially selling the technology – though you are in litigation right now over some of that underlying technology – how much money do you think you're going to be able to return to investors? You did raise nearly $2 billion. How much of that will you be able to return?

KATZENBERG: I’m going to punt that to Meg.

WHITMAN: So, you're right, we've raised $1.75 billion. And we know it's been reported that we'll have at least 350 million of cash at the end of wind down. But more importantly than that is in fact the monetization of the content assets that Jeffrey just described, and also, savings we think we can get on the wind down and sale of the other assets like the technology platform. So, we don't know what that will be worth it's really, you know, we'll see what the marketplace will bear, but we think there will be much more to return to shareholders than just the cash that has been reported.

BOORSTIN: And Meg, is the value of the underlying technology limited or mitigated by the fact that you're in this ongoing litigation with Echo, which is backed by Elliott?

WHITMAN: Yeah, we don't think so actually. We do think that we are on very firm ground with the IP and the patent that we have on what we call Turnstyle, which was the, you know, most innovative part about our mobile platform. And we think, honestly, that we have prevailed in court on a number of different motions to date and we think we will prevail in the end. And people will take a look at that. They'll get their own IP lawyers and I think they'll come out saying this is not a not a big deal. This is something that Quibi will win.

BOORSTIN: And Meg, I just want to get a final question to both you and Jeffrey about what's next for you after this very big and important chapter. You both have run various businesses. Meg, you've been CEO of different public companies. What is next for you? What's your next chapter? Does it include a cabinet position?

WHITMAN: Well, first of all we're going to be consumed for the next several months at least on shutting down Quibi in the best way we can, making sure we take care of all the employees and help them find jobs because they are an incredibly talented group of individuals. And then we've, you know, got to sell the content library and wind down as I said. So, we'll see what happens after that. I'm not sure I know what's up next.

BOORSTIN: And Jeffrey, this was a real passion project of yours, possibly your biggest disappointment in your very long and varied career. What's next for you? Will you continue investing at WndrCo, which is Quibi’s parent company? Can you imagine taking on investors again?

KATZENBERG: Well here's the thing, Julia, which is, you've known me for a very, very long time. Decades. And, you know, I have a bottomless well of need to win. This marks and hurts a lot. I'm very disappointed that, you know, we have disappointed our investors and our employees. And, you know, so for me, I’ve got to go get back up on that horse and, you know, go find the next mountain to charge up to. And it's the only thing I know how to do and I have a lot to prove.

BOORSTIN: Well, Jeffrey and Meg, we really appreciate you being so frank with us about what is obviously a very challenging moment in shutting down Quibi. Jeffrey Katzenberg, Meg Whitman, thank you both so much for joining us today.

The post Quibi CEO: Shutting Down Was Most Honorable Choice appeared first on ValueWalk.

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Tight inventory and frustrated buyers challenge agents in Virginia

With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.

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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.

“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”

Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.

“When rates and prices were lower, people were more willing to compromise,” Newcomb said.

Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.

“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”

Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.

Virginia-Inventory-Line-Chart-Virginia-90-day-Single-Family

In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.

Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.

“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”

According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.

For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.

“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”

According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.

Virginia-Beach-Metro-Area-Market-Action-Index-Line-Chart-Virginia-Beach-Norfolk-Newport-News-VA-NC-90-day-Single-Family

Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.

“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.

“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”

While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.

“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.

Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.

Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.

“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”

With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.

In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.

Median-Price-D.C.-vs.-Charlottesville-Line-Chart-90-day-Single-Family

“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.

For local buyers, Newcomb said this means they are frequently being outbid or outpriced.

“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.

As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.

“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”

But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.

“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”

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‘Excess Mortality Skyrocketed’: Tucker Carlson and Dr. Pierre Kory Unpack ‘Criminal’ COVID Response

‘Excess Mortality Skyrocketed’: Tucker Carlson and Dr. Pierre Kory Unpack ‘Criminal’ COVID Response

As the global pandemic unfolded, government-funded…

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'Excess Mortality Skyrocketed': Tucker Carlson and Dr. Pierre Kory Unpack 'Criminal' COVID Response

As the global pandemic unfolded, government-funded experimental vaccines were hastily developed for a virus which primarily killed the old and fat (and those with other obvious comorbidities), and an aggressive, global campaign to coerce billions into injecting them ensued.

Then there were the lockdowns - with some countries (New Zealand, for example) building internment camps for those who tested positive for Covid-19, and others such as China welding entire apartment buildings shut to trap people inside.

It was an egregious and unnecessary response to a virus that, while highly virulent, was survivable by the vast majority of the general population.

Oh, and the vaccines, which governments are still pushing, didn't work as advertised to the point where health officials changed the definition of "vaccine" multiple times.

Tucker Carlson recently sat down with Dr. Pierre Kory, a critical care specialist and vocal critic of vaccines. The two had a wide-ranging discussion, which included vaccine safety and efficacy, excess mortality, demographic impacts of the virus, big pharma, and the professional price Kory has paid for speaking out.

Keep reading below, or if you have roughly 50 minutes, watch it in its entirety for free on X:

"Do we have any real sense of what the cost, the physical cost to the country and world has been of those vaccines?" Carlson asked, kicking off the interview.

"I do think we have some understanding of the cost. I mean, I think, you know, you're aware of the work of of Ed Dowd, who's put together a team and looked, analytically at a lot of the epidemiologic data," Kory replied. "I mean, time with that vaccination rollout is when all of the numbers started going sideways, the excess mortality started to skyrocket."

When asked "what kind of death toll are we looking at?", Kory responded "...in 2023 alone, in the first nine months, we had what's called an excess mortality of 158,000 Americans," adding "But this is in 2023. I mean, we've  had Omicron now for two years, which is a mild variant. Not that many go to the hospital."

'Safe and Effective'

Tucker also asked Kory why the people who claimed the vaccine were "safe and effective" aren't being held criminally liable for abetting the "killing of all these Americans," to which Kory replied: "It’s my kind of belief, looking back, that [safe and effective] was a predetermined conclusion. There was no data to support that, but it was agreed upon that it would be presented as safe and effective."

Carlson and Kory then discussed the different segments of the population that experienced vaccine side effects, with Kory noting an "explosion in dying in the youngest and healthiest sectors of society," adding "And why did the employed fare far worse than those that weren't? And this particularly white collar, white collar, more than gray collar, more than blue collar."

Kory also said that Big Pharma is 'terrified' of Vitamin D because it "threatens the disease model." As journalist The Vigilant Fox notes on X, "Vitamin D showed about a 60% effectiveness against the incidence of COVID-19 in randomized control trials," and "showed about 40-50% effectiveness in reducing the incidence of COVID-19 in observational studies."

Professional costs

Kory - while risking professional suicide by speaking out, has undoubtedly helped save countless lives by advocating for alternate treatments such as Ivermectin.

Kory shared his own experiences of job loss and censorship, highlighting the challenges of advocating for a more nuanced understanding of vaccine safety in an environment often resistant to dissenting voices.

"I wrote a book called The War on Ivermectin and the the genesis of that book," he said, adding "Not only is my expertise on Ivermectin and my vast clinical experience, but and I tell the story before, but I got an email, during this journey from a guy named William B Grant, who's a professor out in California, and he wrote to me this email just one day, my life was going totally sideways because our protocols focused on Ivermectin. I was using a lot in my practice, as were tens of thousands of doctors around the world, to really good benefits. And I was getting attacked, hit jobs in the media, and he wrote me this email on and he said, Dear Dr. Kory, what they're doing to Ivermectin, they've been doing to vitamin D for decades..."

"And it's got five tactics. And these are the five tactics that all industries employ when science emerges, that's inconvenient to their interests. And so I'm just going to give you an example. Ivermectin science was extremely inconvenient to the interests of the pharmaceutical industrial complex. I mean, it threatened the vaccine campaign. It threatened vaccine hesitancy, which was public enemy number one. We know that, that everything, all the propaganda censorship was literally going after something called vaccine hesitancy."

Money makes the world go 'round

Carlson then hit on perhaps the most devious aspect of the relationship between drug companies and the medical establishment, and how special interests completely taint science to the point where public distrust of institutions has spiked in recent years.

"I think all of it starts at the level the medical journals," said Kory. "Because once you have something established in the medical journals as a, let's say, a proven fact or a generally accepted consensus, consensus comes out of the journals."

"I have dozens of rejection letters from investigators around the world who did good trials on ivermectin, tried to publish it. No thank you, no thank you, no thank you. And then the ones that do get in all purportedly prove that ivermectin didn't work," Kory continued.

"So and then when you look at the ones that actually got in and this is where like probably my biggest estrangement and why I don't recognize science and don't trust it anymore, is the trials that flew to publication in the top journals in the world were so brazenly manipulated and corrupted in the design and conduct in, many of us wrote about it. But they flew to publication, and then every time they were published, you saw these huge PR campaigns in the media. New York Times, Boston Globe, L.A. times, ivermectin doesn't work. Latest high quality, rigorous study says. I'm sitting here in my office watching these lies just ripple throughout the media sphere based on fraudulent studies published in the top journals. And that's that's that has changed. Now that's why I say I'm estranged and I don't know what to trust anymore."

Vaccine Injuries

Carlson asked Kory about his clinical experience with vaccine injuries.

"So how this is how I divide, this is just kind of my perception of vaccine injury is that when I use the term vaccine injury, I'm usually referring to what I call a single organ problem, like pericarditis, myocarditis, stroke, something like that. An autoimmune disease," he replied.

"What I specialize in my practice, is I treat patients with what we call a long Covid long vaxx. It's the same disease, just different triggers, right? One is triggered by Covid, the other one is triggered by the spike protein from the vaccine. Much more common is long vax. The only real differences between the two conditions is that the vaccinated are, on average, sicker and more disabled than the long Covids, with some pretty prominent exceptions to that."

Watch the entire interview above, and you can support Tucker Carlson's endeavors by joining the Tucker Carlson Network here...

Tyler Durden Thu, 03/14/2024 - 16:20

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These Cities Have The Highest (And Lowest) Share Of Unaffordable Neighborhoods In 2024

These Cities Have The Highest (And Lowest) Share Of Unaffordable Neighborhoods In 2024

Authored by Sam Bourgi via CreditNews.com,

Homeownership…

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These Cities Have The Highest (And Lowest) Share Of Unaffordable Neighborhoods In 2024

Authored by Sam Bourgi via CreditNews.com,

Homeownership is one of the key pillars of the American dream. But for many families, the idyllic fantasy of a picket fence and backyard barbecues remains just that—a fantasy.

Thanks to elevated mortgage rates, sky-high house prices, and scarce inventory, millions of American families have been locked out of the opportunity to buy a home in many cities.

To shed light on America’s housing affordability crisis, Creditnews Research ranked the 50 most populous cities by the percentage of neighborhoods within reach for the typical married-couple household to buy a home in.

The study reveals a stark reality, with many cities completely out of reach for the most affluent household type. Not only that, the unaffordability has radically worsened in recent years.

Comparing how affordability has changed since Covid, Creditnews Research discovered an alarming pattern—indicating consistently more unaffordable housing in all but three cities.

Fortunately, there’s still hope for households seeking to put down roots in more affordable cities—especially for those looking beyond Los Angeles, New York, Boston, San Jone, and Miami.

The typical American family has a hard time putting down roots in many parts of the country. In 11 of the top 50 cities, at least 50% of neighborhoods are out of reach for the average married-couple household. The affordability gap has widened significantly since Covid; in fact, no major city has reported an improvement in affordability post-pandemic.

Sam Bourgi, Senior Analyst at Creditnews

Key findings

  • The most unaffordable cities are Los Angeles, Boston, St. Louis, and San Jose; in each city, 100% of neighborhoods are out of reach for for married-couple households earning a median income;

  • The most affordable cities are Cleveland, Hartford, and Memphis—in these cities, the typical family can afford all neighborhoods;

  • None of the top 50 cities by population saw an improvement in affordable neighborhoods post-pandemic;

  • California recorded the biggest spike in unaffordable neighborhoods since pre-Covid;

  • The share of unaffordable neighborhoods has increased the most since pre-Covid in San Jose (70 percentage points), San Diego (from 57.8 percentage points), and Riverside-San Bernardino (51.9 percentage points);

  • Only three cities have seen no change in housing affordability since pre-Covid: Cleveland, Memphis, and Hartford. They’re also the only cities that had 0% of unaffordable neighborhoods before Covid.

Cities with the highest share of unaffordable neighborhoods

With few exceptions, the most unaffordable cities for married-couple households tend to be located in some of the nation’s most expensive housing markets.

Four cities in the ranking have an unaffordability percentage of 100%—indicating that the median married-couple household couldn’t qualify for an average home in any neighborhood.

The following are the cities ranked from the least affordable to the most:

  • Los Angeles, CA: Housing affordability in Los Angeles has deteriorated over the last five years, as average incomes have failed to keep pace with rising property values and elevated mortgage rates. The median household income of married-couple families in LA is $117,056, but even at that rate, 100% of the city’s neighborhoods are unaffordable.

  • St. Louis, MO: It may be surprising to see St. Louis ranking among the most unaffordable housing markets for married-couple households. But a closer look reveals that the Mound City was unaffordable even before Covid. In 2019, 98% of the city’s neighborhoods were unaffordable—way worse than Los Angeles, Boston, or San Jose.

  • Boston, MA: Boston’s housing affordability challenges began long before Covid but accelerated after the pandemic. Before Covid, married couples earning a median income were priced out of 90.7% of Boston’s neighborhoods. But that figure has since jumped to 100%, despite a comfortable median household income of $172,223.

  • San Jose, CA: Nestled in Silicon Valley, San Jose has long been one of the most expensive cities for housing in America. But things have gotten far worse since Covid, as 100% of its neighborhoods are now out of reach for the average family. Perhaps the most shocking part is that the median household income for married-couple families is $188,403—much higher than the national average.

  • San Diego, CA: Another California city, San Diego, is among the most unaffordable places in the country. Despite boasting a median married-couple household income of $136,297, 95.6% of the city’s neighborhoods are unaffordable.

  • San Francisco, CA: San Francisco is another California city with a high married-couple median income ($211,585) but low affordability. The percentage of unaffordable neighborhoods for these homebuyers stands at 89.2%.

  • New York, NY: As one of the most expensive cities in America, New York is a difficult housing market for married couples with dual income. New York City’s share of unaffordable neighborhoods is 85.9%, marking a 33.4% rise from pre-Covid times.

  • Miami, FL: Partly due to a population boom post-Covid, Miami is now one of the most unaffordable cities for homebuyers. Roughly four out of five (79.4%) of Miami’s neighborhoods are out of reach price-wise for married-couple families. That’s a 34.7% increase from 2019.

  • Nashville, TN: With Nashville’s population growth rebounding to pre-pandemic levels, the city has also seen greater affordability challenges. In the Music City, 73.7% of neighborhoods are considered unaffordable for married-couple households—an increase of 11.9% from pre-Covid levels.

  • Richmond, VA: Rounding out the bottom 10 is Richmond, where 55.9% of the city’s 161 neighborhoods are unaffordable for married-couple households. That’s an 11.9% increase from pre-Covid levels.

Cities with the lowest share of unaffordable neighborhoods

All the cities in our top-10 ranking have less than 10% unaffordable neighborhoods—meaning the average family can qualify for a home in at least 90% of the city.

Interestingly, these cities are also outside the top 15 cities by population, and eight are in the bottom half.

The following are the cities ranked from the most affordable to the least:

  • Hartford, CT: Hartford ranks first with the percentage of unaffordable neighborhoods at 0%, unchanged since pre-Covid times. Married couples earning a median income of $135,612 can afford to live in any of the city’s 16 neighborhoods. Interestingly, Hartford is the smallest city to rank in the top 10.

  • Memphis, TN: Like Hartford, Memphis has 0% unaffordable neighborhoods, meaning any married couple earning a median income of $101,734 can afford an average homes in any of the city’s 12 neighborhoods. The percentage of unaffordable neighborhoods also stood at 0% before Covid.

  • Cleveland, OH: The Midwestern city of Cleveland is also tied for first, with the percentage of unaffordable neighborhoods at 0%. That means households with a median-couple income of $89,066 can qualify for an average home in all of the city’s neighborhoods. Cleveland is also among the three cities that have seen no change in unaffordability compared to 2019.

  • Minneapolis, MN: The largest city in the top 10, Minneapolis’ share of unaffordable neighborhoods stood at 2.41%, up slightly from 2019. Married couples earning the median income ($149,214) have access to the vast majority of the city’s 83 neighborhoods.

  • Baltimore, MD: Married-couple households in Baltimore earn a median income of $141,634. At that rate, they can afford to live in 97.3% of the city’s 222 neighborhoods, making only 2.7% of neighborhoods unaffordable. That’s up from 0% pre-Covid.

  • Louisville, KY: Louisville is a highly competitive market for married households. For married-couple households earning a median wage, only 3.6% of neighborhoods are unaffordable, up 11.9% from pre-Covid times.

  • Cincinnati, OH: The second Ohio city in the top 10 ranks close to Cleveland in population but has a much higher median married-couple household income of $129,324. Only 3.6% of the city’s neighborhoods are unaffordable, up slightly from pre-pandemic levels.

  • Indianapolis, IN: Another competitive Midwestern market, only 4.4% of Indianapolis is unaffordable, making the vast majority of the city’s 92 neighborhoods accessible to the average married couple. Still, the percentage of unaffordable neighborhoods before Covid was less than 1%.

  • Oklahoma City, OK: Before Covid, Oklahoma City had 0% neighborhoods unaffordable for married-couple households earning the median wage. It has since increased to 4.69%, which is still tiny compared to the national average.

  • Kansas City, MO: Kansas City has one of the largest numbers of neighborhoods in the top 50 cities. Its married-couple residents can afford to live in nearly 95% of them, making only 5.6% of neighborhoods out of reach. Like Indiana, Kansas City’s share of unaffordable neighborhoods was less than 1% before Covid.

The biggest COVID losers

What's particularly astonishing about the current housing market is just how quickly affordability has declined since Covid.

Even factoring in the market correction after the 2022 peak, the price of existing homes is still nearly one-third higher than before Covid. Mortgage rates have also more than doubled since early 2022.

Combined, the rising home prices and interest rates led to the worst mortgage affordability in more than 40 years.

Against this backdrop, it’s hardly surprising that unaffordability increased in 47 of the 50 cities studied and remained flat in the other three. No city reported improved affordability in 2024 compared to 2019.

The biggest increases are led by San Jose (70 percentage points), San Diego (57.8 percentage points), Riverside-San Bernardino (51.9 percentage points), Sacramento (43 percentage points), Orlando (37.4 percentage points), Miami (34.7 percentage points), and New York City (33.4 percentage points).

The following cities in our study are ranked by the largest percentage point change in unaffordable neighborhoods since pre-Covid:

Tyler Durden Thu, 03/14/2024 - 14:00

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