Current Events in May 2019

Tesla has launched a cheaper Model 3 in order to allow the vehicles to be eligible for Canada’s $5,000 incentive to purchase an electric vehicle, which recently took effect.

Previously, the electric automaker’s Model 3s were ineligible for the rebate because they didn’t meet the criteria of having a base price of less than $45,000 and a max cost of no more than $55,000 with options.

“To be eligible for incentives, a vehicle must have a base-model manufacturer’s suggested retail price of less than $45,000 for passenger vehicles with six or fewer seats, and less than $55,000 for vehicles with seven or more seats,” the Canadian government explained. “For eligible vehicles with six or fewer seats, higher priced versions (trims) are eligible as long as the final manufacturer’s suggested retail price is $55,000 or less.”

Tesla’s base Model 3 starts at $47,000, but it lowered the price to $44,999 in Canada to make it eligible -- albeit just barely -- for the EV incentive. At the same time, the automaker reduced the range of the vehicle to a software-limited 93 miles (150 km) -- a range reduction of about half.

In an interview with the Financial Post, John Zhang, an analyst with research firm IDC, suggested that the shortened range on Tesla’s cheaper base model is a way to steer customers toward buying the higher-priced version.

“The 150 km range is really just a deterrence that Tesla is trying to create in order to minimize the number of customers purchasing these 150 km range Model 3s. Because there needs to be a base model that’s under the $45k mark in order for the higher priced variant to qualify for the rebate as well, that’s essentially what Tesla did,” Zhang said.

Instagram on Tuesday announced that it’s begun testing the concept of hiding the number of likes its Canadian users receive on their photo and video posts. The move is meant to encourage users to focus on the content they share rather than the number of likes a post gets.

"We are testing this because we want your followers to focus on the photos and videos you share, not how many likes they get,'' Facebook said in a blog post ahead of the company’s F-8 developer conference. "During this test, only you will be able to see the total number of likes on your posts."

The change was rumored to be on the horizon a few weeks ago when it was spotted by web developer Jane Manchun Wong, who is known for finding these types of changes before they go public. Last month, she wrote on Twitter that she noticed Instagram running a test in which likes would not appear to anyone except the account holder.

While the removal of likes is intended to encourage users to express themselves more authentically, some have pointed out that Instagram “influencers” may not be happy about the change.

“The move, if rolled out more broadly, could also cause some confusion for the influencer marketing industry. Social media stars working with brands on partnerships are often paid based on engagement on their posts, and part of that involves likes,” CNN noted.

The Facebook-owned platform acknowledged this potential problem in a statement to TechCrunch. It said that it’s “thinking through ways for [creators] to communicate value to their brand partners” while the test is in the exploratory stages.

For some, the foreclosure crisis of a decade ago is only a distant, unpleasant memory. But an analysis from Zillow suggests it remains a troubling reality for some minority homeowners.

Home prices now exceed their housing bubble highs in most parts of the country, but home values have been much slower to recover in neighborhoods that suffered massive foreclosures.

In predominantly black and Hispanic neighborhoods, home values plunged as much as 50 percent before the market began to recover. Foreclosed homes in black and Hispanic communities have more than doubled in value since then. Even so, they remain as much as 9.5 percent below their peaks.

Loss of wealth

Many minority homeowners, who had been saddled with subprime mortgages during the housing bubble, lost their homes to foreclosure when the market plunged and their interest rates skyrocketed. Even those who managed to hang onto their homes haven’t always benefited from the housing recovery.

"The housing bust and foreclosure crisis that followed resulted in a disproportionate number of people of color losing not only the roof over their heads but the wealth -- and the opportunity to potentially build more -- that came with it," said Zillow Senior Economist Sarah Mikhitarian.

Mikhitarian says black and Hispanic homeowners were hit hard financially by the foreclosure crisis because their homes made up a large share of their net worth. With fewer liquid assets at their disposal, they often had no choice but to let their homes go when they fell underwater.

“For people who ultimately succumbed to foreclosure, they missed out on the opportunity to see their home's equity -- and therefore their wealth -- climb back up," Mikhitarian said.

In 2007, when home values had inflated the bubble to the breaking point, a home accounted for 73.1 percent of a typical Hispanic consumer’s net worth. It made up 61.8 percent of the typical black homeowner’s total wealth. When the housing market crashed, that wealth crashed with it.

In black communities, foreclosures hit 36.3 percent in Philadelphia, 38 percent in St. Louis and Baltimore, 40 percent in Cleveland, and 50 percent in Atlanta. Not surprisingly, these housing markets have lagged behind the rest of the nation in housing market recovery.

In Hispanic communities, foreclosures reached nearly 60 percent in the Los Angeles market and 55 percent in San Antonio.

Smartphones affect nearly every facet of our day-to-day lives, and researchers from the University of Washington say there are consistent trends that govern why we pick up and put down our devices.

“For a couple of years I’ve been looking at people’s experiences with smartphones and listening to them talk about their frustration with the way they engage with their phones,” said researcher Alexis Hiniker. “But on the flip side, when we ask people what they find meaningful about their phone use, nobody says, ‘Oh, nothing.’ Everyone can point to experiences with their phones that have personal and persistent meaning.”

According to Hiniker, her project hinged on one important question: “How do we support that value without bringing along all the baggage?”

Understanding smartphone use

The researchers began by interviewing participants from three different age groups -- high school students, college students, and adults -- to determine what prompted them to either pick up or put down their smartphones.

The researchers found that the reasons for beginning or ending smartphone use was the same across all age groups. Participants were likely to use their phones when: in a socially awkward situation, in an unoccupied moment, they were waiting for a message, or when beginning a boring or repetitive task.

Similarly, the recognition of having spent too much time on the phone, coming across content they’d seen already, or being occupied by other things was what pushed participants to put their phones down.

“This doesn’t mean that teens use their phones the same way adults do,” said Hiniker. “But I think this compulsive itch to turn back to your phone plays out the same way across all age groups.”

Tailoring smartphone use

While many studies about smartphone use look for ways to curb the technology addiction, the researchers of this study were curious to gauge participants’ feelings towards their smartphone use.

They started this practice by asking the participants to come up with ways to moderate their smartphone use. While many participants offered solutions that would lock users out, effectively barring them from using their devices, many didn’t feel that using their phones was something to be ashamed of, or that it should be prevented.

“If the phone weren’t valuable at all, then sure, the lockout mechanism would work great,” Hiniker said. “We could just stop having phones, and the problem would be solved. But that’s not really the case.”

Because a number of participants felt they were using their phones to enhance their connection to the world, Hiniker encourages future software updates to allow consumers to interact with their technology in the best way they see fit.

“People have a pretty good sense of what matters to them,” she said. “They can try to tailor what’s on their phone to support the things that they find meaningful.”

Staying connected

Smartphone use has been targeted in recent years, especially when a study revealed that the devices were being charged with the increase in traffic deaths and injuries.

Despite that, consumers chose smartphones as their preferred device, and researchers continue to explore how using them is affecting our day-to-day lives. A recent study found that social connection is at the heart of why consumers are so attached to their smartphones.

"There is a lot of panic surrounding this topic," says Professor Samuel Veissière. "We're trying to offer some good news and show that it is our desire for human interaction that is addictive -- and there are fairly simple solutions to deal with this."

A recent study suggests that having a good support system is better for your health, but only if you have a certain outlook on life.

Researchers from Ohio State University recently found that consumers can see positive health benefits when they know they have a solid support system in family and friends; however, when it came it to inflammation, people with low self-esteem were immune to these benefits.

“People with high self-esteem already have advantages compared to those with low self-esteem, and social support only helps them more,” said researcher David Lee. “It’s a case of the rich getting richer.”

Preventing serious health concerns

To see how a support system affected health, the researchers evaluated over 1,000 responses to the United States’ Survey of Midlife Development. The survey was designed to have participants rate their own self-esteem and also answer questions about how supported they felt by the people in their lives who were the most important to them.

The goal of the study was to see if social support affected participants’ likelihood of developing chronic inflammation, which has been known to lead to heart disease and cancer.

To determine how participants’ health was affected by their self-esteem and support system, the researchers took blood samples two years after the survey was administered and measured how much C-Reactive Protein (CRP) was in the blood. CRP is an indicator of inflammation, and having too much of it can be dangerous to the body.

The study revealed that CRP levels were lower when participants felt they were supported by friends and family. However, this was a trend unique to those with high self-esteem; those with lower self-esteem were at a greater risk of increased CRP levels.

The researchers suggest that stress could be a link here, as those with low self-esteem may be more stressed out than those with higher self-esteem, which can increase the likelihood of inflammation.

“People with a negative self-view may actually feel more stress when people try to help them,” said researcher Baldwin Way. “They may feel they don’t deserve the help or they worry that they’re asking for too much from their friends and family. The result is that they may not get the benefits of social support.”

After a slow start, the spring homebuying season is gaining momentum -- and so are home prices.

The National Association of Realtors (NAR) reports pending home sales rose 3.8 percent in March from February. Pending home sales measure contracts that were signed but not yet closed.

At the same time, the S&P CoreLogic Case-Shiller Indices showed home prices increased year-over-year in February, but the rate of increase continues to slow down.

The spring homebuying season is off to a rather slow start and higher home prices may be one reason. Last week, NAR reported that sales of existing homes in March plunged 4.9 percent from the month before and were down 5.4 percent from March 2018.

Rising rates and prices

Sales have fallen sharply in the last two years as mortgage rates have risen and the prices of homes have continued to go up, making for higher monthly payments for buyers. The pending home sales report suggests that could be turning around.

"We are seeing a positive sentiment from consumers about home buying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable,” said Lawrence Yun, NAR’s chief economist.

The increase in pending home sales could lead to an increase in final home sales for April and May, as those signed contracts make their way toward closing.

Meanwhile, the prices buyers are paying for homes continue to rise. The Case-Shiller report showed a 4.0 percent year-over-year rise in home prices, However, that was down 4.2 percent from the previous month.

Where prices are rising the fastest

Home prices rose the most in Las Vegas, Phoenix, and Tampa out of 20 markets in the survey. Las Vegas led the way with a 9.7 percent year-over-year price increase, followed by Phoenix with a 6.7 percent increase and Tampa with a 5.4 percent increase.

While rising home prices can make things difficult for first-time buyers, David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, says the latest report contains an element of encouraging news.

"The pace of increases for home prices continues to slow," Blitzer said. "Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits. Subsequently, increases slowed until now when the National Index is up 4 percent in the last 12 months.”

Competition for existing homes appears to be tapering off in some markets, while mortgage rates are down one-half to three-quarters of a percentage point since late 2018.

Gulf States Toyota (GST) is recalling 3,634 model year 2019 C-HRs, 4Runners, Avalons, Avalon Hybrids, Camrys, Camry Hybrids, Highlanders, Land Cruisers, Prius vehicles, RAV4s, Sequoias, Tacomas, Siennas, Tundras and Yaris vehicles.

The text on the load capacity label may become illegible. If drivers cannot read the label, they may unknowingly overload the vehicle, increasing the risk of a crash.

What to do

GST will notify owners, and dealers will provide corrected load carrying capacity modification labels free of charge.

The recall is expected to begin on May 13, 2019.

Owners may contact GST customer service at (800) 444-1074. GST's number for this recall is 19R1.