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Homeownership

SF man’s $1800 rent jacked to $8000: Three things you can do to help

(RENTER NEWS) When a landlord raises rent more than 400% explanation, a clear exploitation is taking place, and our industry has the power to stand up and do the right thing.

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We’ve all heard of rent increases. In fact, for our clients that are buying investment properties, it’s part of the plan, but when a landlord jacks rent up 444%, our attention is captured. In San Francisco, a renter says his landlord has increased his rent from $1,800 to $8,000 a month. There’s no better way to say “get the hell out” than an irrationally unfair rent increase.

Neil Hutchinson tells ABC that he’s lived there for “a long time,” asserting that he pays his rent on time, and is confused by one of the city’s highest rent increases in history that was sent to him without explanation.

Hutchinson has filed an appeal with the San Francisco Rent Board, but with a decision being made in August, help won’t likely come in time. Since ABC began covering this story, the landlord has served an eviction notice giving the tenant until July 21 to leave. His lawyer says they’ll be filing a response to the eviction.

So this is where you come in, readers

The first and most pressing way our industry can collectively contend that we care about tenants (often the middle class, which is being squeezed) and not just landlords is to speak up.

Reach out to the San Francisco Rent Board and urge them to make a decision in this case quickly, preferably by July 8th. This will show the world that real estate professionals care about all consumers, not just people that currently want to transact with you.

Secondly, you can (and should) blog about this case and why you stand with Hutchinson. Or why you don’t. Either way, you have a megaphone – use it to impress upon consumers in your area that you care.

Lastly, when working with investors, tell them that you care about your local renters, that you’re part of a bigger picture, not just the financial benefits of transactions. Make sure your clients are doing the right thing by locals, and that you will never stand by anyone who is willing to jack up rent as dramatically as Hutchinson’s landlord has.

#ActNowSFRB

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Homeownership

If homeownership protections die under tax reform, real estate pros also pay a price

(REAL ESTATE NEWS) The heat is rising on tax reforms, and NAR activates their members to speak up and protect homeownership.

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congress tax reform

Treasury Secretary, Steven Mnuchin yesterday offered an “absolute guarantee” that tax reform would be signed into law by the end of the year and warns Congress, “You could blow up the stock market if you fail to cut taxes.”

With these and other statements from the Administration, it is clear that the process is speeding up – supporters and critics are bracing themselves.

That includes the Realtor population.

The National Association of Realtors (NAR) put out a Call for Action to members on this topic today, the first of this year.

Taxes are a convoluted topic, but NAR’s analysis is that since homeowners pay 83 percent of all federal income taxes, and the reforms being debated could result of a 10 percent decrease in home values, middle class homeowners are not being protected.

NAR’s analysis concludes that for homeowners with incomes between $50,000 and $200,000, the average tax hike would be $815.

Our sources note that the current framework being debated keeps the MID (mortgage interest deduction) “in name only,” and a larger number of homeowners will see tax increases with this as well as state and local tax deductions being nixed.

NAR argues the current tax reform framework threatens homeownership as tax incentives are diminished and real estate professional also pay a price (literally).

People on both sides of the political aisle feel disappointed in the threat to homeownership incentives, particularly given that President Trump had drawn a line in the sand at the mortgage interest deductions just six months ago.

According to Doug Yearly, CEO of Toll Brothers, “making changes to the MID would be very bad policy.” He goes on to state,” this country has prided itself on encouraging homeownership, and MID has been around for decades. It’s worked very well.”

Agree with them or not, NAR is urging their members to “Tell Congress – Do not raise taxes on middle class homeowners in order to cut taxes for corporations,” and offers a pre-written letter that can be sent to their Representatives within seconds.

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Homeownership

American marriage is happening later and it’s not why you think

(HOMEOWNERSHIP) Marriage is happening later and later with Americans and economists believe it’s not just about the changing face of relationships; it’s also about money and wanting to wait for financial stability.

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marriage move in

As we know, homeownership is a cornerstone of American family life. Homes provide long-term financial stability as a major investment for homeowners. Furthermore, they also provide a strong environment in which to raise a family; so many of us have fond memories of running around our backyards, or cozying up in the family room.

So, it stands to reason that homeownership and marriage are tied together; many couples will buy a home soon before or soon after they get hitched.

With all that said, some of the following statistics may be alarming, as it points to a trend that may play into the delay of homeownership.

Lots of data gathered over the past few years shows Americans are marrying later and later, if at all, according to a report from The Guardian. Today, Half of American adults are married, compared to 75 percent in 1960. The disparities are mostly consistent with class divisions.

Per the Guardian article, “26 percent of poor adults are married, compared with 51 percent in 1990.” That same study found 39 percent of the modern working class of adults are married, but that number was 57 percent in the 90s.

Education is closely tied with financial status, so an education disparity is also present. Today, 50 percent of adults with a high school are married; that rate was over 60 percent 25 years ago.

As the Guardian puts it, “Young people are increasingly seeing marriage as a “capstone” rather than a “cornerstone” event, a crowning achievement once other goals have been reached, rather than a launchpad for adulthood.”

That achievement is financial stability, and many more Americans are feeling a financial crunch.

There’s data to back this up, too. For example, a poll found “nearly half of never-married adults with incomes under 30k say being financially insecure is a major reason” behind their lack of marital commitment to a partner.

Part of steady income is a steady job, and past Pew Research found 78 of never-married women wanted a future partner to have a steady job.

A decline in manufacturing jobs is contributing to this as well, per some economic research on the subject, which may help to explain how the steepest drops in marriage rates come from the lower and middle class.

It’s not unreasonable to speculate that major living costs factor into that decision as well. For example, with real estate prices going up around the country, especially in major cities with strong job markets, the capstone that is owning a home is pushed farther away from the average American.

If marriage and homeownership are so closely tied together, the delay of one may also contribute to a delay in the other.

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Homeownership

Why a $1,490 home is a complicated purchase

(HOMEOWNERSHIP) Homeownership is still out of reach for some buyers given the down payments and fees, but what if you could buy a place for less than it costs to rent?

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It’s no secret that the housing market is a roller coaster ride of highs and lows. When you hear that a house is listed for sale at $1,490 (really!), your first thought might be, “that price is missing a few zeros;” I thought the same thing as well. It seems like such a ridiculously low price for a home, there must be an error, right? Wrong. There really is a house listed for $1,490.

The 580 square foot home is located in Washington D. C. It has one bedroom, one bathroom, and does indeed cost a mere $1,490 to own. It does, however, come with a few strings attached, according to Realtor.com®.

One major string is that the home is a limited-equity co-op or LEC. Realtor.com® describes this opportunity in a couple of steps with the help of Eva Seidelman, an attorney with the Neighborhood Legal Services Program in Washington, D.C.

First, the tenant of the building were originally renting. They decided to form a cooperative association in 2010 and purchase the building from the landlord by using a low-interest loan from the District of Columbia Department of Housing and Community Development.

This gave the tenants the ability to transform the building from the existing rental units into more affordable co-ops.

This brings us to our next step. In order to live in the building, the person must fall below the co-op’s maximum income limit of $60,839 for an individual, or $69,530 for a two-person household.

Since the medium income in Washington D.C. is around $75,628, a good portion of residents would qualify for this LEC.

Once you’ve paid your $1,490, plus taxes, transaction and broker fees, it doesn’t matter if you get a raise that’s puts you above the income limit, or lose your job completely, as you own the co-op.

Included in that price, in maintenance and repairs for as long as you live there. If you consider the average price to rent is approximately $1900/month and the average home sells for around $570,000, this LEC is a bargain.

As with anything else, it depends on whom you ask.

If you’re looking to build home equity, LECs are probably not for you. The appreciation on LECs remains fairly low, often because they are so affordable to begin with (less money invested, less to appreciate). However, of you’re looking for an affordable home in a less than affordable area, LECs can be amazing opportunities for homeownership.

LECs are a solid option for recent college graduates, people recovering from foreclosure, senior citizens, anyone re-entering the workforces or relocating for work or personal reasons, or anyone on a budget who would rather own than rent.

While LECs are not the spacious mansions of Hollywood Hills, they are a viable option for people looking to own, and given maintenance and repairs are often included, you cannot find a better option for a tight budget.

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