Month: July 2020

Tips for seniors to find a housemate

More and more seniors are looking for a financially viable way to retain their independence as long as possible. Co-living is a promising solution, which means finding the right housemate for you. Here are a few tips to help, taken from an article in the July/August 2020 edition of NAR’s senior newsletter.

Don’t limit yourself to only looking for other seniors to be your housemate. College students are often looking for co-living situations as well, so such an arrangement could be mutually beneficial. You may look for other types of individuals that are not usually home, such as business professionals or frequent travellers. It’s okay if you and your housemate have differences. Learn to appreciate those differences and enjoy your time together.

Make sure they aren’t too different, though. Take the usual precautions to determine whether you and your housemate are compatible, such as shared interests, lifestyle, and privacy expectations. You and your housemate should complement each other’s strengths and weaknesses. Your safety is also important — meet first in a public place, have friends with you, get references and maybe even a background check or credit check.

Photo by LOGAN WEAVER on Unsplash

The barriers to homeownership for Black and Latinx buyers

Throughout the country, Black homeowners pay an average of 13% higher property taxes than White homeowners. This is because of assessed values, which are on average 10% higher in Black and Latinx neighborhoods relative to the sale price. Local governments use higher property tax rates to push for gentrification, which they know new white owners can pay but the minority families already living there cannot. White buyers are also more easily able to appeal their property tax assessment.

The problem is worse in California, where Prop 13 is limiting property tax rates on unsold homes by basing property tax assessments on the value at time of sale. The proposition is designed to protect older residents who are on a fixed income and could otherwise lose their homes. But there are some negative consequences for low-income buyers. As soon as the home is sold, the new buyer is potentially facing significantly higher property taxes than the previous owner was, which prices out some people who are otherwise able to afford the purchase itself. And in the meantime, local government has less revenue from property taxes, so they have to make up the difference elsewhere. This often comes in the form of sales tax, which, because the rate is identical regardless of the buyer’s income, is proportionally a larger burden for Black and Latinx indivduals who tend to be lower-income earners.

Taxes aren’t the only issue Black and Latinx people face, though. When the economy crashed in 2007-2009, minorities were disproportionately affected because of discriminatory lending practices. Lenders would statistically charge higher fees to minorities with equal qualification as whites, or steer minorities towards subprime loans regardless of credit history. This meant they were less likely to be able to pay their mortgages after the crash. With all these barriers to homeownership, Black and Latinx individuals lose out on one of the largest sources of wealth, owning a home.

Photo by Masaaki Komori on Unsplash

More: https://journal.firsttuesday.us/the-unequal-property-tax-burden-on-black-and-latinx-households/72464/

New LEED guidelines established for COVID-19

In order to help combat COVID-19, the U.S. Green Building Council has established new LEED safety guidelines. The new recommendations cover layout, materials, air quality, and smart technology, and are focused on senior care facilities.

The guidelines suggest that facilities renovate to create more single-occupancy rooms. Flexible layouts and multipurpose rooms can help to address both current and future concerns without needing additional space. Uncoated copper alloys are best for knobs and rails, as the copper alloys have an antimicrobial factor. Curtains should be replaced with glass or plexiglass. Countertops and floors should use nonporous or less porous materials such as quartz and Corian for countertops and porcelain, vinyl, or wood for floors. Ventilation is of utmost importance, particularly in bathrooms, and should be maintained regularly. Touchless features go a long way, such as automatic doors, touchless faucets, and voice activated lights.

Photo by CDC on Unsplash

More: https://magazine.realtor/home-and-design/feature/article/2020/07/elder-care-updates-to-counter-viral-spread

Microunits may be permitted in some multi-family areas

California bill AB 3173, introduced in February, would require some cities and counties to permit microunits in areas zoned for multifamily residences. The city or county must have a population of 400,000 or more to qualify for this requirement. Because of the way zoning laws operate, the bill would not apply on city land in a city with a population under 400,000 even if the county has a population over 400,000. The bill also establishes size and affordability requirements for the microunits.

Using 2019 population estimates for cities and the 2010 Census data for counties, the bill would apply in 8 cities and 21 counties. Eligible cities are Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, and Oakland. It’s possible that Bakersfield, with an estimated population of 384,145 last year, has now passed the 400,000 mark. Eligible counties are Los Angeles County, San Diego County, Orange County, Riverside County, San Bernardino County, Santa Clara County, Alameda County, Sacramento County, Contra Costa County, Fresno County, Kern County, San Francisco County, Ventura County, San Mateo County, San Joaquin County, Stanislaus County, Sonoma County, Tulare County, Solano County, Santa Barbara County, and Monterey County. It’s very likely that Placer County, with a population of 398,329 at the 2010 census, has now surpassed the requirement.

Photo by Lachlan Gowen on Unsplash

Read the full bill: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB3173

2020 — The First Six Months in South Bay

Faced with the Covid-19 pandemic, a particularly contentious national election, and weeks of nation-wide civil rights protests, It looked like there was no way 2020 could ever be called a normal year. Then we learned about a growing recession. So halfway through the year, what do we see?

Prices – Up and Down

The South Bay is a nice place to live. Here, the real estate market is frequently shielded from the vagaries of the nation at large. And it’s no different this year. In this chart we compare the average sales prices during the first six months of 2019 versus 2020, by zip code. In nearly all cases the average property price is still going up. Torrance was very nearly flat and 90274 actually dropped slightly. (If your zip code or city is not included here, and you would like statistics, give us a call.)

Volume – Mostly down

With prices are still climbing, albeit slower than they were, what about sales volume. Here we see some negative impact. Hermosa Beach is the only local city not experiencing a drop off in sales. In Manhattan Beach, for example, sales are off by 38% for the first six months of this year. South Redondo is off by 35%. Torrance and the peninsula cities are all down by roughly 5-10% from the number of homes sold in the same period of 2019.

My Crystal Ball

Our Market Trend chart is designed to show whether market conditions generally favorable for sellers or buyers. The year started as a buyers’ market and moved even further toward buyers in February. Since then we have been seeing a slow, but steady movement toward a sellers’ market. Things could change dramatically before the year is out, but right now the red trend line indicates the probability the South Bay will be in a sellers’ market before the end of 2020.

Recent changes to California UBI bill

California proposed a Universal Basic Income bill in February, which would be administered by the State Department of Social Services, called AB-2712. This May, AB-2712 was amended, establishing new requirements for eligibility as well as shifting administration to the Franchise Tax Board.

Under the amended UBI bill, the CalUBI Program would be an opt-in program that granted $1000 per month to eligible California residents over the age of 18. The amount is unchanged from the February version, but the amended bill establishes new requirements. The new requirements are:

-Currently reside in California
-Lived in California for the past 3 consecutive years
-Not currently incarcerated in a county jail or state prison
-Income no greater than 200% of the median per capita income in the county of residence

In addition, the amendments make this income non-taxable under state tax law, and won’t affect income eligibility for state programs. Rather than a flat value-added tax of 10% proposed by the original bill, the amended bill gives the California Department of Tax and Fee Administration until July 1, 2024 to report on the feasibility of a value-added tax.

Photo by Tingey Injury Law Firm on Unsplash

See the full bill: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB2712

Recession hits commercial real estate

In May of this year, commercial property sales were at their lowest level in a decade, and commercial renters are struggling to pay rent. Retail and hotel tenants, who were hit the hardest, are current on leases at rates of only 41% and 37% respectively as of June. This also affects the income of the landlords and investors.

Currently, California’s state of emergency is protecting commercial tenants from eviction. However, tenants don’t presently have protection for any length of time after the state of emergency is over. There is a bill proposed, Senate Bill 939, which would protect tenants for 90 more days, and allow 12 months for repayment.

One sector of commercial real estate is notably resilient: industrial. With so many people forced to move to online shopping, industrial properties suitable for e-commerce aren’t struggling nearly as much. Nevertheless, commercial real estate is still not going to be a great investment for the time being. We can expect this trend to continue for a couple more years, as 2022 is the earliest expected year of recovery.

Photo by Wonderlane on Unsplash

More: https://journal.firsttuesday.us/commercial-real-estate-is-reeling/72262/

Homes are selling fast — for now

Even though number of sales is down from last year, the homes that are being sold are actually selling faster. There is plenty of demand and fierce competition, due to low interest rates. High demand and low supply is also keeping home prices up. The average days on market is now 22 nationwide, down from 25 this time last year. Some cities in California are seeing significant decreases, such as San Diego with a whopping 10-day decline, from 25 days last year to 15 days.

It’s not going to stay that way for long, though. New listings are trending upward, which may feel like the beginnings of a recovery, but it’s more complicated than that. If supply starts to outpace demand, high house prices are not going to be sustainable. Sellers will be forced to either accept a lower price or wait for a better time. With many buyers still not having recovered from the economic chaos of COVID-19, it will be some time before demand can catch up to increasing supply. Recovery won’t truly start until California reaches the bottom, projected to be in 2022.

Photo by chuttersnap on Unsplash

More: https://journal.firsttuesday.us/despite-historically-low-sales-volume-homes-are-flying-off-the-market/72266/

Mortgage application rejection on the rise

I’ve previously mentioned that COVID-19 and the current economic downturn have resulted in an increase in mortgage forbearance requests. But what about mortgage applications? Interestingly, even as fewer people are able to pay their mortgages, people are still applying for mortgages, looking to take advantage of the current low interest rates on mortgage loans. And getting rejected at a much higher rate.

Lenders will always want to ensure that people are able to pay back the money they borrow. Obviously if the borrower has a mortgage in forbearance, well, that borrower doesn’t stand a great chance of being able to pay back a new mortgage. But even beyond that, lenders have been tightening restrictions in the wake of lessened economic stability. They are requiring higher credit scores, larger down payments, and more savings. Someone who was largely unaffected by the economic downturn may think they have a good chance at getting their mortgage loan approved. Not necessarily, if they were basing their expectations on old lender restrictions. Lenders are going to need to find the right balance between encouraging borrowers — since that’s how they make their money — and avoiding risky lending practices.

Photo by Cytonn Photography on Unsplash

More: https://journal.firsttuesday.us/forbearance-requests-rise-while-mortgage-credit-availability-falls/72172/

A look at the housing future of Gen Z

I recently wrote regarding the influx of young adults living with their parents and grandparents during the past few months. These young adults belong to Generation Z. Though economic factors were not the only thing at play in this trend, they’re still a big part of it. So the current situation of this group can help us to understand the implications for housing for the entire generation.

We don’t yet know exactly how long this economic slump will last, but we have some guesses. The optimistic analysis is that the economy will begin to recover as soon as the general population has access to a COVID-19 vaccine, which will allow them to resume their normal lives as both producers and consumers. But housing is expensive, perhaps prohibitively so for low-income workers, and it’s still going to take some time to be able to save enough money for a house. This is especially true when we recognize that a downturn was already coming before COVID-19 hit — the pandemic exacerbated the problem, not created it, so eliminating the pandemic won’t fully eliminate the problem. We may be into the next decade before Gen Z is back on track for home ownership.

Photo by Maria Ziegler on Unsplash

More: https://journal.firsttuesday.us/young-adults-flock-back-to-the-nest-how-long-will-they-stay/72174/

Living with parents is the norm for young adults

During the months of March, April, and May, approximately 2.9 million adults in the US moved in with parents or grandparents. Many of these were college students whose classes were cancelled due to the COVID-19 epidemic, but the enormous spike during those months is also a result of the economic downturn. Young adults aren’t able to justify the expense of living on their own during these times, even if they are able to afford it, which many aren’t.

An adult living with their parents has been stigmatized in the US, seen as the mark of a lazy or irresponsible person. Current events are demonstrating that this isn’t necessarily the case. And the numbers also disagree — in fact, it first became the most common living arrangement for young adults all the way back in 2014. This isn’t a new trend, and it’s not a bad thing. The upward trend may have started with economic imbalances, likely the Great Recession in the late 2000s, but this serves only to obscure the fact that non-economic factors are also at play. More people are going to college and graduate school. Couples are marrying later and having their first child later. The timeline of a young adult’s life has been shifting for nearly 15 years. Of course they would be buying homes later as well.

Photo by Nikola Saliba on Unsplash

More: https://www.theatlantic.com/family/archive/2020/07/pandemic-young-adults-living-with-parents/613723/