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Washington, DC
CNN
 — 

Even as rents continue to climb across the country, renting is still cheaper than monthly payments for a purchased home in 45 of the 50 largest US cities in December, according to a report from Realtor.com. Renting costs nearly $800 less per month than buying, on average.

But there are five cities where, despite stubbornly high prices, rising mortgage rates and some of the least affordable home buying conditions in decades, it is still cheaper to buy than to rent.

Rent is still going up, but steadily slowed its pace of growth throughout 2022. The national median rent jumped 3.2% in December from a year ago, marking the eleventh month of slowing rent growth from January’s peak of 17.4% growth, according to the report, released on Thursday.

Following four months of declines, median asking rent flattened out in December at $1,712 per month. That’s down by $69 per month from the peak in July 2022, but is still $308 higher than December 2019. It also represents an increase of 21.9% from pre-pandemic levels.

A year ago, as rents were spiking but mortgage rates had not surged, it was more affordable to buy in many cities than to rent.

But with mortgage rates double where they were a year ago, monthly costs to own a home have created a widening gap between rents and payments made by first-time homebuyers. Homeownership costs grew 37.4% in December 2022 from the year before. That was more than 10 times faster than rents, which were up 3.2% during the same period.

During the first half of 2022, as mortgage rates surged, several cities flipped from being favorable to buyers to being more favorable to renters, including Atlanta; Baltimore; Charlotte, North Carolina; Cleveland; Hartford, Connecticut; Indianapolis; Philadelphia; Miami; and Orlando, Jacksonville and Tampa, Florida.

Baltimore is the only city that flipped back to being a place where it is more favorable to buy in December 2022.

Now, just five markets of the top 50 cities favor homeownership over renting in December.

Memphis, Tennessee, had the biggest savings to homebuyers over renters, with the monthly cost of homeownership 32.7% less than renting. It was followed by Pittsburgh; Birmingham, Alabama; St. Louis and Baltimore. Monthly buying costs assume a 7% down payment with a mortgage rate of 6.36%, and include taxes, insurance and homeowners association fees.

The amount saved by purchasing a home in these cities has decreased from last year, as stubbornly high prices and elevated mortgage rates eat away at the financial payoff to buying.

Deciding whether to rent or buy ultimately depends on personal circumstances, including location, financial situation and how long one plans to live in the home. Generally, it is not in your financial interest to buy if you plan to live in your home less than a few years, and a common rule of thumb is to not spend more than 30% of your income on housing costs.

Plus, buying a home is a lot easier said than done in many markets, as the inventory of homes to buy is historically low.

Austin, Texas, offered the biggest discount for renting compared to buying, with renting 121% or $2,013 cheaper per month. It was followed by San Francisco, where renting was 97% less and Seattle was 86% cheaper.

These rent-favoring metros are cities with a higher concentration of tech workers and high earners, where both the average rent-cost and buy-cost are higher than the national average, the report showed.

The advantage of renting is growing in Sun Belt cities, where rents continued to cool faster than other parts of the United States in December, according to Realtor.com.

Just because rents have surged in some cities, doesn’t mean that housing costs haven’t gone up even more. Even in Florida cities like Miami, Tampa and Orlando, which have seen some of the highest rent growth and rent costs in the past year, renting is still more affordable than buying a starter home.

Although renting will likely be cheaper than buying for most people in 2023, rental affordability remains a key issue as prices are expected to hit new highs, said Danielle Hale, Realtor.com’s chief economist.

“We expect rents will keep hitting new highs, driven by factors including still-low vacancy rates, lagging new construction and demand from would-be first-time buyers,” Hale said.

New York
CNN
 — 

Southwest Airlines reported a loss for the fourth quarter because of the company’s service meltdown over the holiday travel season, and it warned the costs from those problems will result in another loss in the first quarter.

The airline was forced to cancel more than 16,700 flights between December 21 and 29, roughly half its schedule during that period. Thursday, Southwest said the meltdown cost the airline about $800 million, resulting in an adjusted net loss in the quarter of $226 million. Still, it managed to report an adjusted annual profit of $723 million, a turnaround from $1.3 billion it lost in 2021 amid the pandemic.

It said it expects another loss in the first quarter due to the continued impact and costs associated with meltdown. The first quarter is typically the slowest and least profitable period for US air travel. However, Southwest said it is encouraged by strong bookings for March.

Southwest

(LUV)’s quarterly loss of 38 cents a share was far worse than Wall Street analysts’ forecast. Shares of Southwest

(LUV) lost 4% in mid-afternoon trading because of that miss and especially its sour outlook.

The airline said it expected a first-quarter loss because of an increase in passengers canceling reservations and a lower level of bookings for January and February, which the airline said “are assumed to be associated with the operational disruptions in December.” Those lost bookings in the current quarter are expected to cost it between $300 million to $350 million.

To repair customer relations, Southwest has given affected passengers 25,000 bonus points in frequent flier accounts, as well as travel vouchers. And in addition to refunding fares for canceled flights, it is reimbursing those passengers who bought tickets on other airlines or incurred other unexpected travel costs.

Even with the meltdown, which cost Southwest $410 million in lost revenue when it had to refund tickets to passengers on canceled flights, it still reported record fourth quarter sales of $6.2 billion, up 7% from the same quarter of 2019, just before the pandemic.

Southwest brought in that record revenue even though the number of seats it was able to fly in the quarter was down 6% from the same period of 2019, before the pandemic, when adjusted for miles flown.

The strong demand meant that Southwest passengers paid 10.6% more for every mile they flew than they were paying in late 2019.

A massive winter storm started the service problems, but Southwest had a much tougher time recovering from the weather than other airlines because of an antiquated crew scheduling system that was quickly overwhelmed, leaving the airline unable to get the staffing it needed to locations to fly flights. Nearly half of its schedule was canceled during the December 20 to 29 period. Some days, as many as 75% of its scheduled flights were grounded.

The airline said that it is “conducting a third-party review of the December events and … reexamining the priority of technology and other investments planned in 2023.”

In an interview on CNBC Thursday CEO Bob Jordan defended Southwest’s investment in technology, saying the company had been spending about $1 billion a year on upgrading its technology and would spend closer to $1.3 billion this year.

“The idea we don’t invest in technology just isn’t correct,” he said. “Now there’s always things to work on, and we have things to work on in the crew scheduling area, for example, and we’ll do that.”

He said that GE Digital has already come up with a fix that is being tested for some of the problems the crew scheduling system had during the meltdown. And he said that having more crew scheduling staff in place is also part of the solution.

“It’s not one thing [that caused the meltdown.] This was a very complicated series of events,” he told CNBC.

In a call with analysts and journalists later Thursday, Southwest officials said they weren’t sure that the computer system used in crew scheduling needs to be replaced, and that the current fixes from GE now being tested could take care of the shortfalls discovered during the meltdown.

“Based on what we know at this point, our processes and technology generally worked as designed,” said Jordan. “We were hit by an overwhelming volume of close-end cancellations, which put us behind in creating crew solutions.”

Part of what created worse problems at Southwest than at other airlines is that crew members had to call in to the airline, rather than notify it electronically, to let them know of their availability.

“That was a problem,” said Andrew Watterston, Southwest’s chief operating officer. “It wasn’t the problem for the situation. It was a symptom of the problem.”

Switching to electronic notification would require a change in the labor contracts with pilot and flight attendants, said Jordan. Negotiations are now taking place on replacing the existing contracts covering all issues, including pay and benefits.

Jordan said that so far Southwest has been No. 1 in on-time performance among US airlines in January.

“So, of course, we’re applying what we’ve learned and we’re actually performing very very well.”

He again apologized to both customers and Southwest employees but said the bookings for March and beyond suggest that the airline is not losing its customers base.

“There’s a lot of evidence our loyal customers are sticking with us,” he said on CNBC. He told investors that 25% of the customers who received the bonus frequent flier points had already booked future travel on Southwest, some using those points, others paying cash.

Southwest has traditionally been the most profitable US airline by a large margin. Many of its rivals were in and out of bankruptcy in recent decades due to losses brought on by recessions and events like the 9/11 attack, but Southwest had put together a string of 47 consecutive profitable years before the pandemic. In 2020, Southwest and all other airlines to reported a loss.

All other airlines lost money again in 2021, excluding special items such as financial support from the federal government, and most airlines reported another quarterly loss in the first three months of 2022 as the surge in Covid cases caused by the Omicron variant limited demand for travel.

But demand to fly had been very strong starting with the Spring Break travel season, and air fares soared as passengers paid top dollar to take long-delayed trips. Southwest and most other US airlines reported profits in the second and third quarters, and most have either reported profitable fourth quarters or are forecast to do so – as Southwest had been before the meltdown.

Three other US airlines – American

(AAL), JetBlue

(JBLU) and Alaska

(ALK) all reported fourth quarter profits near forecasts Thursday, although JetBlue

(JBLU) warned of a much bigger than expected loss in the current quarter.

CNN
 — 

Five former Memphis police officers who were fired for their actions during the arrest of Tyre Nichols earlier this month were indicted on charges including murder and kidnapping, Shelby County District Attorney Steve Mulroy announced Thursday.

The former officers, Tadarrius Bean, Demetrius Haley, Justin Smith, Emmitt Martin and Desmond Mills Jr., have each been charged with second-degree murder, aggravated assault, two charges of aggravated kidnapping, two charges of official misconduct and one charge of official oppression, Mulroy said.

Second-degree murder is defined in Tennessee as a “knowing killing of another” and is considered a Class A felony punishable by between 15 to 60 years in prison.

The criminal charges come about three weeks after Nichols, a 29-year-old Black man, was hospitalized after a traffic stop and “confrontation” with Memphis police that family attorneys have called a savage beating. Nichols died from his injuries on January 10, three days after the arrest, authorities said.

Police nationwide have been under scrutiny for how they treat Black people, particularly since the Minneapolis police murder of George Floyd in May 2020 and the mass protest movement known as Black Lives Matter.

President Joe Biden said Thursday the killing is a “painful reminder that we must do more to ensure that our criminal justice system lives up to the promise of fair and impartial justice, equal treatment, and dignity for all.”

Officials in Memphis have braced for potential civil unrest and have called for peaceful protests ahead of video of the fatal police encounter that’s expected to be publicly released Friday. The local school district also canceled all after-school activities Friday in the “interest of public safety.”

Police departments across the country – including in Los Angeles, Atlanta, Minneapolis, Nashville and New York – told CNN they were either monitoring events or already had plans in place in case of protests.

Nichols’ family and attorneys, who were shown the video Monday, said it shows officers severely beating Nichols and compared it to the Los Angeles police beating of Rodney King in 1991. Family attorney Antonio Romanucci told CNN the public should be “prepared” for a disturbing scene, saying it was like an “MMA fight” while Nichols was “helpless, he was defenseless, he was restrained.”

Nichols’ mother Ravaughn Wells, who said she hasn’t been able to watch it, said the video release will be “horrific” but urged protesters to remain peaceful.

“I don’t want us burning up our cities, tearing up the streets, because that’s not what my son stood for,” said Wells.

Three of the officers remained in custody at the Shelby County Jail Thursday night. Bond was set at $350,000 for Haley, 30, and Martin, 30, and $250,000 for Bean, 24, according to the Tennessee Bureau of Investigation.

Mills, 32, and Smith, 28, posted $250,000 bond Thursday evening and were released, according to jail records.

In a joint news conference Thursday afternoon, Blake Ballin, an attorney for Mills, and William Massey, Martin’s attorney, said they have not yet watched the video of the police encounter, which is expected to be released to the public Friday.

Ballin described Mills as a “respectful father,” who was “devastated” to be accused in the killing. Mills, previously a jailer in Mississippi and Tennessee. Ballin said he had not spoken to Mills specifically about Nichols.

Martin also intended to post bond and will also plead not guilty, his attorney said. “No one out there that night intended for Tyre Nichols to die,” Massey said.

Other officers’ attorneys did not immediately respond to requests for comment.

Live updates on the Tyre Nichols case

Video of the fatal police encounter, a mix of body-camera and pole-cam video, is expected to be released publicly after 6 p.m. Friday, Mulroy said.

Speaking to CNN’s Erin Burnett on Thursday night, Mulroy said that while he can’t definitively say what caused the encounter to escalate, the video shows that the officers were “already highly charged up” from the start of the video and “it just escalated further from there.”

The video doesn’t capture the beginning of the altercation between the officers and Nichols but rather “cuts in as the first encounter is in progress,” Mulroy said.

“What struck me (about the video) is how many different incidents of unwarranted force occurred sporadically by different individuals over a long period of time,” the district attorney added.

Tennessee Bureau of Investigation Director David Rausch said the fatal encounter was not proper policing.

“I’m sickened by what I saw and what we’ve learned from our extensive and thorough investigation,” he said. “I’ve seen the video, and as DA Mulroy stated, you will too. In a word, it’s absolutely appalling.”

On Thursday, family attorneys Ben Crump and Romanucci said, “The news today from Memphis officials that these five officers are being held criminally accountable for their deadly and brutal actions gives us hope as we continue to push for justice for Tyre.”

The five Memphis police officers, who are also Black, were fired last week for violating policies on excessive use of force, duty to intervene and duty to render aid, the department said.

In a YouTube video released late Wednesday, Memphis Police Chief Cerelyn Davis condemned the officers’ actions and called for peaceful protests when the arrest video is released.

“This is not just a professional failing. This is a failing of basic humanity toward another individual,” Davis said in the video, her first on-camera comments about the arrest. “This incident was heinous, reckless and inhumane.”

The five terminated officers all joined the department in the last six years, according to police. Other Memphis police officers are still under investigation for department policy violations related to the incident, the chief said.

In a statement posted Thursday, Memphis Mayor Jim Strickland said the city had initiated an “outside, independent review” of the training, policies and operations of the police department’s specialized units. At least two of the officers belonged to one of those special units, according to their attorneys.

Two members of the city’s fire department who were part of Nichols’ “initial patient care” also were relieved of duty, a fire spokesperson said. The Tennessee Bureau of Investigation announced an investigation into Nichols’ death and the US Department of Justice and FBI have opened a civil rights investigation.

Mulroy said the investigation is ongoing and there could be further charges going forward.

Nichols, the father of a 4-year-old, had worked with his stepfather at FedEx for about nine months, his family said. He was fond of skateboarding in Shelby Farms Park, hanging out with friends at Starbucks and photographing sunsets, the family said.

His mother said he had her name tattooed on his arm. He also had the digestive issue known as Crohn’s disease and so was a slim 140 to 145 pounds despite his 6-foot-3-inch height, she said.

On January 7, he was pulled over by Memphis officers on suspicion of reckless driving, police said in their initial statement on the incident. As officers approached the vehicle, a “confrontation” occurred and Nichols fled on foot, police said. The officers pursued him and they had another “confrontation” before he was taken into custody, police said.

Nichols then complained of shortness of breath, was taken to a local hospital in critical condition and died three days later, police said.

In Memphis police scanner audio, a person says there was “one male Black running” and called to “set up a perimeter.” Another message says “he’s fighting at this time.”

On Thursday, Mulroy offered a few further details, saying the serious injuries occurred at the second confrontation. He also said Nichols was taken away in an ambulance after “some period of time of waiting around.”

Attorneys for Nichols’ family who watched video of the arrest on Monday described it as a heinous police beating that lasted three long minutes. Crump said Nichols was tased, pepper-sprayed and restrained, and Romanucci said he was kicked.

“He was defenseless the entire time. He was a human piñata for those police officers. It was an unadulterated, unabashed, nonstop beating of this young boy for three minutes. That is what we saw in that video,” Romanucci said. “Not only was it violent, it was savage.”

Nichols had “extensive bleeding caused by a severe beating,” according to the attorneys, citing preliminary results of an autopsy they commissioned.

Among the charges, the officers were indicted on two counts of aggravated kidnapping: one for possession of a weapon and one for bodily injury.

“At a certain point in the sequence of events, it is our view that this, if it was a legal detention to begin with, it certainly became illegal at a certain point, and it was an unlawful detention,” Mulroy said.

Less than a month after the murder of Floyd, the Memphis Police Department amended its duty to intervene policy, according to a copy of the policy sent to CNN by the MPD.

“Any member who directly observes another member engaged in dangerous or criminal conduct or abuse of a subject shall take reasonable action to intervene,” the policy, sent out on June 9, 2020, said.

“A member shall immediately report to the Department any violation of policies and regulations or any other improper conduct which is contrary to the policy, order, or directives of the Department.”

The policy went on to say “this reporting requirement also applies to allegations of uses of force not yet reported.”

Correction: A previous version of this story gave the wrong spelling for the name of one of the arrested officers. According to the indictment, it is Tadarrius Bean.

Previous versions of this story spelled Emmitt Martin’s name incorrectly.