Monday, June 12, 2017

Will Houston outgrow Chicago and claim the number three spot?

Chicago, the Windy city has not been witnessing favorable winds recently. 

Chicago is one of the top twenty largest cities in America that has been posting a decline in its population. Families packing their belongings and loading them onto vehicles of movers and packers, is a common sight around the city. The people of the city are going to the winds never to return back.

Houston on the other hand, has been rejoicing with the surging population numbers. More people are moving to the city in search of better opportunities.

Why people are leaving Chicago?

Multiple factors have been behind the continuous decline in the city’s population. Chicago is one of the most expensive cities to live in due to its high taxes and costly housing. The city is still reeling and hasn’t fully recovered from the recession. 

The unemployment rate in the city is also rising leading to economic difficulties for people. The public schools are hampered by the lack of funds and are on the verge of financial crisis. People are leaving the city in search of brighter future for themselves and their children. The African-American population is one of the most prominent in moving away from the city.

Violence in the city has been another factor for driving people away. The crime rate in the city is escalating with the year 2016 witnessing 58 percent more homicides than the previous year of 2015. The month of August in 2016 had the highest number of violent crimes within the last two decades. The same can be attributed to the city’s gang culture which is rampant with over 100,000 gang members belonging to more than 60 gangs. Corruption is also said to be widespread in the city’s public departments.

The number of immigrants in the city is also declining gradually. Which formed a huge chunk of the population increase especially those from Mexico. With the government making the immigration norms more stringent, the number of people coming into the state and the country is declining.

What Are the Factors Driving the Growth Of Houston?

The state of Texas has an increasing number of oil and gas industries that are driving its economy to Houston. Which is generating more employment options for the people and giving them a better chance at sustainability. The housing in the city is much more affordable and generally comes with more land. The city has a lower population density with less crowded housing. The number of immigrants from Latin American countries and the Hispanic population in the city is also increasing with the availability of jobs. Frank Medina, owner of a Houston auto insurance agency says, "A lot of my clients that call me for quotes have an out of state license."

The Statistical Scenario and the Closing Gap

The city of Houston has been witnessing an increasing trend in its population over the past seven years consecutively. As per the US Census Bureau the population of the city was at 2,319,603 as of January 1, 2017 as compared to the 2,100,263 people the city housed in 2010.

US Census Bureau stated that the population of Chicago is estimated to have declined from 2,722,389 in 2014 to 2,720,546 in 2015. Although no numbers are out yet for 2016, the number of people leaving the city is expected to rise steeply. In 2010, Chicago was a home to 2,697,000 people approximately.

Comparing the stats of 2010 with today, Houston has already covered up almost half of the gap between these two in the last six years. With Houston having the second largest population increase across the country, and just being about 400,000 odd residents short than Chicago, the continuation of this trend could overtake Chicago and claim the number three spot in matters of population within the next decade or so.

The question of Houston overtaking Chicago and claiming the number three spot is no longer a question of ‘if’ but ‘when’. If the trend continues and there is no major reform implemented by the state of Chicago, Houston is going to be the clear winner.

Monday, June 5, 2017

Homeowners Insurance: The Difference between Actual Cash Value, Replacement Cost & Market Value.

Homeowners insurance helps to protect you as a homeowner, and it covers various aspects of your home. This includes the building, your personal property inside the home and medical expenses for injuries sustained by anyone on your property. 
Policies vary, but most of them include a standard policy coverage which provides a general protection of the home and property. There are also optional policies which you may select to protect specific items that are important to you.

Although most homeowners have the right insurance, they do not fully understand how it works or what to expect in the event of a claim. The first thing to understand is that home insurance companies have different ways of calculating the value of something, and hence, the amount to be paid out.

Generally speaking, homeowner’s insurance is designed to help replace damaged, stolen, or destroyed personal property but different coverages and methods of calculations means amounts paid for the same items will vary. Here are the most frequently used methods:

Actual cash value vs. replacement cost 
Actual cash value is the amount you would pay for a similar item at today’s cost minus depreciation. Depreciation refers to a decrease in value of an item due to age or wear and tear. Replacement cost on the other hand, is the amount you would pay for the same item at today’s cost. Here’s an example to of how it works:
Two years ago, you bought a piano worth $3,000. Unfortunately, your home and some property, including your piano, were damaged by a wild fire last week. You file a claim with your insurance company with the intention of replacing the damaged items, especially your piano, which you found out now costs $3100. So the insurance company ought to cut you a check for $3100, right? Well no, not really. The amount of money you will receive will depend on the type of coverage you have.

   If your coverage is for actual cash value:  the company will pay you $ 2500. The actual cash value of the piano today is $3,100 but the insurance company will pay you less because a depreciation of $600 is subtracted from today’s cash value of the item.

    If your coverage is for replacement cost: the company will pay you $ 3100 because that is what it would cost you to buy a similar piano today. Replacement cost coverage replaces the item at exactly the current cost without factoring in depreciation.

Most insurance companies prefer to give a down payment equivalent to the actual cash value of item and require you to submit the receipt for the bought item before paying you the balance. From the above example of the piano, the insurance company will pay you $2500, which is the actual cash value of the item. 

However, with replacement cost coverage, you will be paid $ 2500 first, which is the actual cash value of the item today, and when you submit the receipt showing the actual amount you paid, you will be paid the difference of $600.
Market value
Yet another method homeowners should know about is the market value. This is refers to the prevailing price that buyers are willing to pay to own your house, regardless of how much it cost to build it. The market value of an item is largely affected by external factors such as state of the economy, demand and location, among others. 

The replacement cost of your house on the other hand, is what it would cost to rebuild a house of the same size, on the same spot and with same quality of construction at today’s prices. Again, both of these methods can give two different numbers. 

For example, a home located in a depressed city suburb may have a market value of $130,000. The same house, located in an upmarket part of the city, may have a market price of $310,000, even though it would cost the same to rebuild the house after a loss in either location.

In doing their valuation, insurance companies generally use replacement cost, not market value.

Tuesday, May 30, 2017

How Will Lyft Affect Business For Uber in Houston Now That Lyft is Back in the Market.

Lyft and Uber both are companies that have managed to revolutionize the entire horizon of the taxi industry. 

Both of these companies in addition to a few others have made it very easy for commuters to travel locally without going through any hassle or trouble. With more drivers using this form of transportation, will it reduce the number of individuals who need auto insurance? Uber was undoubtedly the pioneer company behind this idea for an exceptional model way of transportation. But with the passage of time, other companies also entered the market and Lyft is one of the major competitors. 

Frankly speaking Lyft has managed to cause a lot of trouble for Uber as some passengers say Lyft is better with the quality of the service, rates and the professionalism of the staff. A few months back, there were problems being faced by Lyft when they tried to relaunch in Houston, Texas. But fortunately, they have managed to resolve their issues with the administration and now it appears Lyft will be operating in the city of Houston soon.

Lyft has been giving Uber a tough time in dominating the entire taxi market as discussed in the above paragraph. In case of rideshare in Houston, it will pretty much be the same. Now that Lyft is in business along side Uber. Uber appears to be very concerned about its monopoly in the city. When Lyft re-enters the Houston market, they will probably launch travels at incredibly low rates and this will cause a lot of road bumps for Uber as they were also compelled to bring the rates down in order to stay more competitive. So keeping in view what’s already happening, it appears like both the companies are in it for the long haul and Uber is going to get a serious blow in terms of its revenues not only in Houston but everywhere Lyft follows.

There might be many reasons behind the potential downfall of Uber but the biggest one among the others is the fact that it has diverted its attentions to other parts of the world rather than staying focused in the United States. Uber recently launched its services in India, China, Latin America and different parts of the Eastern Asia. So may be Uber seems to be more concerned about the new market where there is little to no competition to beat its monopoly. But regardless of whatever the reason is behind Uber’s lack of interest, Lyft is developing its business at a very fast and consistent rate and it is soon going to be a massive transit company in the country. This holds true not only for Houston but the rest of the country as well.

The above argument is evident from the fact that while Uber has diverted its attention to the rest of the world, Lyft is furiously going after its share in the entire US market. After re-launching their services in Houston, several incentives were given by Lyft to its commuters. These included several different kinds of coupons as well as discount codes to serve as promotional schemes in order to attract the attentions of the maximum amount of people. As a matter of fact, Lyft ended up spending a large amount of almost $50 million in just a month on account of these coupons and discount codes throughout the different parts of the United States. I wonder how much they spend on their business insurance?

Looking at the overall US market, Uber appears to be at the verge of declination while Lyft is moving upwards and forwards constantly. So it may be concluded that Uber would have to put in a lot of effort if they want to sustain the blow that is being faced by them in the form of Lyft. This holds true for Houston, as well as the rest of the United States.