Category: BeachChatter

The original BeachChatter discusses the housing market in the coastal communities south of the city of Los Angeles. Some articles are peculiar to a single city. Some discuss the region as a whole. The focus is on privately owned housing.

When Can A Contractor Place A Lien On A Property?

When people think of a lien, what most people think of is a mortgage lien, whereby the mortgage lender retakes possession of a property in the event of missed mortgage payments. Most don’t realize that the lien is actually created as soon as you get the mortgage loan; it merely doesn’t have any effect unless the contract is breached. Lien is a rather general term that applies to any situation in which one party has the right to possess another’s property until a debt is paid or waived. One type of lien is a mechanic’s lien, which is the type a contractor can place to use your property as collateral for their work.

There are two broad categories of liens, consensual and nonconsensual. Mortgage liens are consensual because they are initiated by the property owner when they get a loan. On the other hand, mechanic’s liens are nonconsensual, and can’t be placed unless the contractor is legally able to. This means that while a mortgage loan is always in effect in case of a breach of contract, a mechanic’s lien that occurs as a result of the breach of contract can’t be placed until the breach occurs. Breach of contract is only one reason for a mechanic’s lien, though. It can also be placed in the event of nonpayment, unpaid property taxes or fees, deceptive practices by the property owner, or disputes over the work performed.

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How To Identify And Take Advantage Of A Seller’s Market

Real estate agents and experts will frequently declare that the market is either a seller’s market or a buyer’s market. There isn’t some esoteric industry secret formula, though. Figuring out whether it’s a buyer’s or seller’s market is actually fairly straightforward, as long as you have access to relevant data. There are three indicators of a seller’s market: low inventory, high demand, and low construction.

Of course, these statistics are interrelated. If construction has been consistently low, there will be fewer homes on the market. If inventory is low, buyers will be more competitive, driving up demand. But it’s actually low demand and high inventory that reduces construction rates in the first place, resulting in a cyclical effect. Moreover, each of them are affected differently by factors external to the cycle. So, in order for there to be a seller’s market, all three factors are probably true.

So what should you do if you find yourself under the conditions of a seller’s market? Well, if you’re a seller, everything is great — you’ll probably find a buyer, and be able to sell at a high price, as well. However, even if you’re a buyer, you can work the seller’s market to your advantage. Be aware that prices will be higher in a seller’s market, so a home that looks overpriced may actually be perfectly priced in a seller’s market. If you see something that fits the criteria you’re looking for, be ready to make an offer. It’s likely that multiple buyers are looking at the same thing you are. Make sure to get a pre-approval so that sellers know your offer is serious. In a high demand climate, sellers may get so many offers that they won’t even look at offers that don’t seem genuine.

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Buying A Fixer? Here’s A Good Loan Option

For people who don’t necessarily have a lot of cash on hand but are willing to invest over longer periods, buying a home in need of repairs is often what they look to. This may be in to live in or to resell the home later, but in either case, you may need to finance the repairs, the purchase itself, or even both if you’re low on ready cash. Fortunately, there are loans that are designed specifically for this situation. One such loan is the FHA 203(k) rehab loan.

The FHA 203(k) rehab loan can be used to finance both a purchase and repairs simultaneously, preventing the need for multiple loans, credit usage, or a line of credit. This can definitely save you money in the long run, especially if you are able to qualify for a low interest rate. There are two types of FHA 203(k) rehab loans: a standard loan and a streamline loan. The standard loan is designed for long-term, larger projects, such as renovating entire rooms. This type has no limit on the portion of the loan used for repairs, unlike the streamline loan, which has a limit of $35,000. It’s quicker and easier to access funds from a streamline loan, which makes it more suitable for smaller projects, like installing an HVAC or repairing plumbing.

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High Interest Rates May Be Contributing To Low Inventory

With how much discussions of real estate tend to pit buyers and sellers against each other, it’s easy to forget they’re often actually the same people. Many sellers are also buyers, either planning to buy to replace the home they’re selling, or already bought another home. This isn’t always the case, of course — it’s entirely possible that someone could have never purchased anything, inherited two homes, and sold one of them. But this isn’t most sellers. What this means is that market conditions that are generally considered to primarily affect buyers will also affect sellers.

Such as right now, where it appears that the high interest rates that are holding buyers back are also making sellers hesitate. The majority of homeowners now have an interest rate lower than the current rates, especially if they took advantage of ultra-low rates such as the rates during the pandemic. If these homeowners were to sell and buy a new home, they would be losing their low interest rate and gaining a high interest rate. For 82% of them, that may not be worth it. Over half of those considering selling right now are deciding to wait until interest rates drop.

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More: https://news.move.com/2023-04-17-Realtor-com-R-Survey-82-of-Those-Looking-to-Buy-and-Sell-a-Home-Feel-Locked-In-by-Low-Mortgage-Rate

Be Sure Early Lease Terminations Are Legally Proper

Transitioning from renting to buying a home can be exciting. However, make sure not to get too excited too early before you’ve terminated the lease. It’s not at all uncommon for a renter to not want to deal with their landlord any longer than they have to, and simply leave. But that could actually be costing you money or leaving you open for a lawsuit.

Lease agreements will always have an early termination policy. It may look like ignoring the policy and ditching is just a way to skip the fees, but it’s actually not. You’re still on the hook for rent payments until the lease is actually terminated, and the early termination fee could be significantly lower. There may not even be a termination fee — the rules vary widely by region and by property manager. Don’t be afraid to talk to your landlord, either. They’re much more likely to be sympathetic to your situation if they’re aware of it. If you tell your landlord you’re terminating the lease early, the worst they can legally do is charge a termination fee.

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Revised Building Codes Are Bringing Mini-Apartments To Long Beach

There was a time that smaller homes and multi-family living were common in Long Beach. Over the decades, that has transitioned to condos and then to single-family residences. But in 2020, Long Beach municipal codes were revised, reducing the minimum square footage requirement to just 220 square feet. The original aim was probably not co-living, which wasn’t on the radar given that it occurred around the start of the pandemic. Nevertheless, builders now are seeing the opportunity to build apartment buildings consisting of small units with shared common area.

Derek Burnham is a former Long Beach city planner and now works at a development firm, and is excited about the idea. Burnham has already planned about 48 units, which are going to be roughly the same size as hotel rooms, around 350 to 500 square feet. The target audience for this project is people who want to be near jobs and transportation, but can’t afford the typical apartment or condo unit. But builders don’t yet know how receptive people will be to it — after all, the transition away from shared living towards single-family residences was cultural and not pragmatic. Because of this, the plans are flexible, allowing anything from private units to shared units to miniature family units.

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More: https://lbpost.com/news/micro-apartments-are-coming-to-long-beach-will-renters-rush-to-squeeze-into-them

Transfer Taxes Increased For Ultra-High-End Homes In LA And Santa Monica

Two measures went into effect this spring, Measure GS in Santa Monica on March 1st and Measure ULA in Los Angeles on April 1st, both of which enact an additional transfer tax on the sale of very expensive homes, dubbed the Mansion Tax. Measure GS affects properties sold at over $8 million and Measure ULA has two tiers, one affecting properties sold at over $5 million and another affecting properties sold at over $10 million.

Prior to these measures, the transfer tax in both cities was a small dollar value per $1000 of purchase price regardless of property value. Including county taxes, this value is $5.60 in Los Angeles, and Santa Monica has two tiers, one at $4.10 per $1000 and another at $7.10 per $1000. Measure GS added a third tier to the Santa Monica system, which is a significantly higher $56 per $1000 value for homes over $8 million. Los Angeles still only has one base value of $5.60 per $1000, but with an additional tax of 4% for homes between $5 million and $10 million, and 5.5% for homes over $10 million.

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Don’t Skimp On Preparing Your Home For Sale This Spring

Spring is already halfway over, so if you’re planning to sell your home this season, you should get on it quickly. Especially since you may need to do some sprucing up to get a good deal. If you bought your home during or shortly before the pandemic, this may be your last chance to benefit from the spike in prices. But buyers aren’t simply snatching up any home they see, like they were during the pandemic. They’re being more deliberate, so you need your home to be appealing.

This means all the standard procedures for increasing your home’s appeal apply. These include things such as repairs, upgrades, repainting, curb appeal, and staging. In some markets, you can get away with not doing these things, or only doing some of them, because the buyers are happy to purchase a cheaper home and perform the upgrades themselves. Not the case this spring. The seller will have to make the investment, which hopefully translates to a higher price as well.

Photo by Marta Bibi on Unsplash

More: https://www.realtor.com/advice/sell/what-first-time-home-sellers-need-to-know-to-be-successful-this-spring/

When You Should And Shouldn’t Put 20% Down

Having a 20% down payment used to be a requirement for nearly all loans. That hasn’t been the case for quite some time, but it’s still touted as the conventional wisdom. In many cases, that may be true, but it’s not always the best idea. There are both advantages and disadvantages to putting 20% down.

If you have the money available already, it’s quite likely that the benefits heavily outweigh the drawbacks. Even though 20% down is no longer a requirement to get a loan, it is still a requirement to avoid mortgage insurance fees. Putting 19% down, for example, simply makes no financial sense at all, regardless of your financial situation. It’s also good to put down as much as you feasibly can in order to reduce the loan amount, thereby reducing your payments. The 20% mark is important if you can reach it.

If you still need to save money in order to achieve a 20% down payment, you’re going to need to crunch some numbers and also make some predictions in order to arrive at the correct solution. If you’re close to being able to put down 20%, it may be in your best interest to continue saving up to avoid mortgage insurance fees. But if you aren’t close, it may be best to simply forget about it. Even if you are definitely able to save money, by the time you get to the point that you can put down whatever 20% is now, home prices are likely to be significantly higher. In that case, it may be better not to wait. You also need to consider other costs and where you’re getting the money. If you need to take out a loan or draw on investments to reach 20%, this is probably not a good investment, unless it’s the only way you can viably make a home purchase.

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Cash-Out Refinancing A Solid Option For Home Renovations

If you’re planning to renovate your home, whether you intend to continue to live in it or to sell it at a profit, you need to think about how to pay for the renovations. Of course, it’s possible you have the cash on hand, which is great. But if not, there are a few financing options you can look into. It’s common to get a home equity line of credit (HELOC) or simply take out an additional loan. However, another option you may not be aware of is cash-out refinancing. It works by refinancing to a loan amount higher than your current loan balance, and taking the difference as cash.

The most important thing to consider when determining if you should get a cash-out refinance loan is the interest rate. It very likely won’t be the same as your current interest rate. If the rate is higher or even the same, it’s probably financially negative in the long run unless you can increase your home’s value significantly with the renovations. That’s why it’s a good option specifically for renovations. On the other hand, it’s entirely possible the rate is lower, or simply lower than traditional loans or HELOCs, in which case it’s a good financing option for any purpose. However, you may not want to use cash-out refinancing for large projects. Since you don’t receive the entire value of the new loan, but only the difference between the new loan balance and old loan balance, you’d need to increase the principal significantly to finance large projects. This could increase your interest payments by quite a bit even if the rate is lower.

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The Bills That The Business Lobby Doesn’t Want Passing

The business lobby in California, and in particular the California Chamber of Commerce, has had quite a lot of success taking down bills that they deem “job killers.” Many of these bills are not at all designed to kill jobs, but rather to improve conditions for employees. To the business lobby, these are the same thing, but these are often the types of bills that the majority of the populace in California would tend to support.

One of the bills the California Chamber of Commerce is targeting is a bill to tax total wealth on individuals with a net worth of $50 million or more. Introduced by Milpitas Democratic Assemblymember Alex Lee, the bill would be the first of its kind if it passes. Obviously, there have been taxes on income, but so far, none on net worth. Lee’s argument is that the stocks and properties owned by the ultra-wealthy allow them to legally borrow and transfer funds in a way that avoids a significant percentage of income taxes. According to the chamber, this would simply convince the ultra-wealthy to leave California, rather than increase tax revenues.

The second bill was proposed by Los Angeles Democratic Senator María Elena Durazo. The bill would increase the minimum wage for health care workers to $25 per hour. According to Durazo, health care workers — especially whose who are women or people of color — frequently take home poverty wages, despite working multiple shifts due to being understaffed. The chamber argues that increased payroll costs for health care facilities would simply be passed onto patients, reducing health care affordability.

The chamber has a similar argument against the proposal to increase the required minimum paid sick days offered per year from three to seven, claiming that either the costs will be passed to consumers or the employers will cut benefits or lay off workers. Long Beach Democratic Senator Lena Gonzalez, who introduced the bill, says that the current sick leave is not adequate and forces employees to either forego pay to stay home or risk infecting coworkers.

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More: https://calmatters.org/newsletters/whatmatters/2023/03/california-business-job-killer-bills/

Sharp Divide Between East And West US Market Direction

For the past couple of years, house prices had been rising dramatically across the country. Here in California, we’re now starting to see prices drop since the start of this year. Prices are now falling in all 12 major housing regions west of Texas, as well as in Austin, TX. The same can’t be said everywhere, though. In the 37 largest metros east of Colorado, excluding Austin, TX, prices are still rising. Of course, markets can differ drastically by state, but such a clear divide between eastern and western US may be unprecedented.

Falling home prices was the expected result of the federal benchmark rate hikes. It seems to be working in the western US, as prices become too unsustainable to continue to increase. The regions with the most significant price drops are the ones that were rather expensive. But there are still other factors at play in the eastern US, driving prices still upward. Some areas, such as Hartford, CT and Buffalo, NY, never reached unsustainable home prices and remain rather affordable. They also have rather low inventory. These factors combined are keeping prices from dropping, leading to an 8% increase in prices in January. Florida is attracting many new employees with multiple financial companies relocating to Miami in 2021 and 2022. Prices are expected to eventually start falling even in the east, but don’t expect anything drastic. Low inventory across the country is preventing any sudden market collapse.

Photo by Will Francis on Unsplash

More: https://www.foxbusiness.com/real-estate/tale-two-housing-markets-prices-fall-in-west-while-east-booms

How To Prepare To Buy A Home In A Short Sale

Short sale is the term for the sale of a property when the seller owes more on their mortgage than the listing price. The extra regulations that apply to a short sale typically apply to the seller, but that doesn’t mean the buyer doesn’t need to do their research as well. Much of the homework that goes into buying a short sale property is best done ahead of time, so these types of transactions work most smoothly when the buyer is specifically looking for short sale properties.

If you know you’re looking for a short sale property to buy, make sure to find an agent that specializes in short sales, or at least has a large amount of experience with them. Expert short sale agents will have the best idea of a reasonable purchase price and what types of offers will be most attractive to the seller. You may have heard the common advice to get a pre-approval for your mortgage. In the case of a short sale, it’s best to go a step further and get a full approval. Nearly everyone who offers on a short sale will be pre-approved, so that alone won’t make you stand out, but a full approval will. And whether you’ve planned on purchasing a short sale property ahead of time or not, it’s important to be patient. Short sales typically take longer than traditional home sales. In fact, buyers often drop out of short sale negotiations because they simply don’t have the time, leaving you with less competition if you’re patient.

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Huntington Beach Adamant About Anti-ADU Stance

SB 9, also called the HOME Act of 2021, is a California law requiring cities to allow homeowners to subdivide lots into potentially up to 4 units. This law makes it significantly easier to built accessory dwelling units (ADUs). Huntington Beach has decided it doesn’t like this, and is willfully ignoring the law, stating that they won’t process ADU applications. The City Council has even gone as far as to enact an ordinance declaring that they are exempt from some of the requirements of the Housing Accountability Act (HAA). The HAA streamlines the approval process for low- and moderate-income housing. Huntington Beach is not compliant with HAA requirements, and so the city is attempting to declare that the regulations simply don’t apply to them.

This is entirely illegal on the part of Huntington Beach, and so naturally, it hasn’t gone over well. The city has received letters from the Department of Housing and Community Development (HCD) and has been sued by the California Office of the Attorney General (OAG). Knowing that the state does have authority in this regard, the Huntington Beach City Council is starting to backpedal. But this probably isn’t the end, nor was it the beginning. Huntington Beach has already been sued previously by the state for housing law violations, settling in 2020 and losing millions of dollars in state funding.

Photo by Tetiana SHYSHKINA on Unsplash

More: https://journal.firsttuesday.us/california-attorney-general-clashes-with-nimbys-in-huntington-beach/89592/

Most Recent Buyers Underestimated Costs Beyond Purchase Price

Most buyers are aware that homeownership has some extra costs associated with it. You can’t just pay the purchase price and be done. But it seems the vast majority aren’t prepared for just how high those costs can be. A whopping 90% of homebuyers in the past three years underestimated the hidden costs of homeownership, and 73% regretted some aspect of their purchase.

For a third of them, the culprit was property taxes. Even if you have purchased before, buying a new home in a high-priced market will probably drastically change your property tax values. A quarter or slightly over a quarter of respondents didn’t think roof work, renovations, or utilities would be so expensive. Annual expenses among respondents average $17,459 on top of mortgage payments. In hindsight, 57% of buyers know what they would have done differently. Among this subgroup, 42% would have purchased a home that didn’t require quite so much maintenance. It may cost more up front, but the annual costs could be significantly lower. 33% think they just needed to negotiate a lower price, and 29% would have gone for a lower-priced home to begin with. 27% believe it was simply the wrong time to buy, and they would have waited for a better deal.

Photo by Антон Дмитриев on Unsplash

More: https://www.cnbc.com/2023/03/17/90-percent-of-homeowners-underestimated-costs.html

You May Be Eligible For California’s New Dream For All Shared Appreciation Loan

The California Housing Finance Agency (CalHFA) recently launched the Dream For All Shared Appreciation Loan, a secondary loan to be used in conjunction with CalHFA’s Dream For All Conventional first mortgage. This secondary loan carries its own set of requirements, which may or may not differ from the initial Dream For All Conventional first mortgage. The requirements of the secondary loan are provided here, but you should consult with CalHFA to be sure that you meet all requirements. The requirements are provided for two categories, both for the borrower and for the property.

The borrower must be a first-time homebuyer, which CalHFA defines as not having owned and occupied a home in the past three years. The borrower must also occupy the property as their primary residence and meet income limits for the program. In addition, the borrower, or at least one of the co-borrowers if there is more than one, for any CalHFA first-time homebuyer loan must take a CalHFA approved Homebuyer Education and Counseling course. This course does have a fee, which varies by method and agency, and can be done online or in-person. The Dream For All program also has its own additional course. Fortunately, this course is free, but it is only accessible online.

The property requirements are simple for single-family residences and manufactured homes, which are both allowed, but may be more complex for other types of properties. Condominiums must also meet the guidelines for whichever initial mortgage you choose. Guest houses, granny units, and in-law quarters may be eligible, but would not be eligible in addition to the main residence, since the property must be only one unit.

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More information about the Dream For All Shared Appreciation Loan here: https://www.calhfa.ca.gov/dream/index.htm

What Is A Wrap-Around Mortgage?

Wrap-around mortgages are not very common, but it’s still a good concept to know in case you find it difficult to get a more traditional mortgage loan. A sale with a wrap-around mortgage has two important components distinguishing it from a regular sale: First, the seller retains the current mortgage on the property being sold. This differs from standard sales in which the seller normally pays off the remaining mortgage as part of the sale process. Second, the loan is not issued by a lender but rather by the seller. In this way, the seller is most likely planning to pay their mortgage using the money gained from payments the buyer makes to the seller on their new mortgage.

Wrap-around mortgages have both advantages and disadvantages. The primary reason to get a wrap-around mortgage is that they don’t have any standardized qualification requirements. This mostly benefits the buyer, but can also be useful to the seller if they’re having difficulty finding buyers. The primary drawback is that the buyer and seller must write up the contract themselves, since there is no lender involved. That means both parties need to be legally and financially savvy. It’s also impossible to wrap around a mortgage that doesn’t exist, so the seller needs to have a mortgage. There are also cons specific to the seller and buyer. The seller in this instance incurs the same financial risk that a lender would normally. The buyer is very likely paying a higher interest rate, since the arrangement is not worth the risk to the seller unless they are profiting.

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How To Baby-Proof Your New Home

A common reason to purchase a new home is needing more space because you are expecting kids. But just having more space isn’t going to prepare your home for all the trouble a baby can get into. By the time your kid is able to crawl, you’ll want to have finished baby-proofing your home.

Some things are probably pretty obvious, like using baby gates, locking drawers, keeping hazardous substances away, and covering up sharp edges. But some safety precautions are things you may not think about. While it’s true that babies often like soft and fluffy blankets, leaving them around loose can be a suffocation risk. When you’re in the kitchen, you’re probably used to having pot and pan handles turned towards you for ease of access. But once your kid can walk, there’s a good chance they can reach up there. Make sure to turn the handles inward. You should also acquire a latch for the oven. Bathrooms can be dangerous for both kids and adults, so you may already have taken precautions such as non-slip mats for your bathroom. But if not, make sure to get some. You may also want to get soft covers for the knobs and spouts.

Photo by Henley Design Studio on Unsplash

Honesty Is The Best Policy On Mortgage Applications

Some of the questions on a mortgage application may seem unnecessary, but they’re all there for a reason. Certain omissions can lower your interest rate and make your offer seem more appealing. But even if you haven’t done anything wrong — especially if you haven’t done anything wrong — you should always disclose all relevant information.

Money changes hands all the time, and the transfer doesn’t always leave a paper trail. But lenders will still find it odd for you to suddenly have additional money or fewer debts. It’s perfectly legal to ask a friend or family member for some cash to help you buy a home or pay off a debt. That money came from somewhere, though, and if you don’t list it, your lender could assume you are hiding something and deny your application.

A common lie that seems more innocuous but can actually have even more drastic consequences is stating that you plan to live in the home when you actually don’t. People do this because interest rate is lower on loans for primary residences, and they figure it’s fine because of course they can always change their mind. However, this is actually a crime. It’s considered a form of mortgage fraud.

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Songwriter’s Showcase

This coming Tuesday night will feature some of LA’s best songwriters! Ted Russell Kamp, Abby Posner, Mary Scholz and me~

With guest host with the most John Antich….

It’s gonna be a great night and we are expecting a pretty big crowd, so arrive early enough to get a table…for more information on the performers:

Ted Russell Kamp: https://tedrussellkamp.com/

Abby Posner: https://www.abbyposner.com/

Mary Scholz: https://www.maryscholz.com/

Jodi Siegel: https://jodisiegel.com/

Project Barley serves excellent Food (Gourmet Pizza, gluten free/vegan options, wings, sandwiches, salads), wine, and award winning beer. Food served till 8:30pm. No reservations so arrive early to get a table. 2308 E Pacific Coast Hwy, Lomita, CA 90717 https://projectbarley.com/