Expanded Dining Options to Remain Throughout 2021

As a concession to restaurants during COVID-19 restrictions, they were given access to expanded outdoor dining space and the option to provide alcohol as part of takeout orders. Indoor capacity restrictions have recently been removed, but in California, these options are staying throughout the rest of the year.

City officials agree that outdoor dining has brought something to the cities that they were lacking. Even though many of these new spaces are not zoned for eating areas, San Francisco mayor London Breed says they brought new life to the city even during a pandemic. In fact, she wants them to stay permanently, not just through 2021. There’s also a bill to extend to-go alcohol indefinitely.

Photo by Gabriella Clare Marino on Unsplash

More: https://lbpost.com/news/california-to-allow-sale-of-to-go-cocktails-through-2021

California Affordability Continues to Slip

Data from 2021’s Quarter 1 Housing Affordability Index is now available, and while the numbers haven’t changed much from last quarter, the continuing downward trend is apparent. Affordability is equal to or slightly lower than the Q4 2020 numbers in all major categories, including overall US affordability.

Only seven counties experienced an increase in affordability: Kings, Merced, Butte, Plumas, Siskiyou, Tehama, and Humboldt. The already lowest affordability rating of Mono County took an enormous nosedive, dropping from 11 to 3. Lassen County remains the most affordable county at 62, despite being down from 67, but the top spot may be up for grabs as Kings County went up one point to 58.

Photo by Sasun Bughdaryan on Unsplash

More: https://www.car.org/marketdata/data/haitraditional

Beware of Editing Tricks When Buying Sight Unseen

Buying sight unseen has increased in popularity recently, as walkthrough technology has improved and the pandemic has forced fewer in-person interactions. But take care — improved technology means online walkthroughs don’t necessarily reflect reality. If you must buy sight unseen, it’s best to make sure you trust whoever is creating the images or videos for you.

Most everyone is aware of image editing software, even if it’s only Photoshop. A bad Photoshop job can be obvious, but professional photographers know how to use their camera’s inherent features to even better effect. These can include lighting modes, image enhancement, recoloring, and even splicing multiple images. Savvy buyers may instead look for video walkthroughs, which provide a better view how the various spaces interrelate. Don’t be fooled, though. Videos are almost as easy to edit as images.

Photo by Julius Drost on Unsplash

Weakening of Lending Standards Aimed at Helping First-Time Homebuyers

The Mortgage Credit Availability Index (MCAI) is a measurement of how easy it is to acquire a mortgage tax credit, which allows buyers with lower incomes to acquire mortgages without worrying so much about the tax payments. The MCAI went up by 0.6% in April, indicating loosening standards for getting a mortgage credit. First-time homebuyers, presently a large homebuying cohort, are especially helped by this since they often have lower incomes, lower credit scores, and outstanding debt.

This move is not without risks, though. One of the differences between the current recession and the recession of 2007 is that our lending standards are tighter now. Tighter lending standards are part of what helped the real estate industry avoid the brunt of the current recession. However, first-time homebuyers are seeing far more competition than they would have ever expected. In many cases they’re losing out to more established buyers with better credit or higher incomes. Loosening standards is a risk, but it may pay off if we can help lower income homebuyers get their foot in the door.

Photo by Tekton on Unsplash

More: https://www.housingwire.com/articles/looser-mortgage-credit-may-give-first-time-buyers-a-chance/

Confidence Gap Widens Between Real Estate and Stock Investments

Real estate has consistently been considered a strong long-term investment, stronger than either stocks or gold, which take the second and third spot. In the current economic climate, real estate is continuing to prove itself a highly resilient industry, able to bounce back from a recession and become highly active and competitive even while the recession is still going on. The confidence in real estate as the best long-term investment is now the highest it has ever been in Gallup’s 11 years of reporting the statistic, at 41%. Stocks are now a long way behind at only 26%. Just a year ago, the confidence in real estate was 35%.

Photo by Adeolu Eletu on Unsplash

More: https://www.simplifyingthemarket.com/en/2021/05/18/americans-see-real-estate-as-a-better-investment-than-stocks-or-gold/

How to Paint Your House to Sell

Sellers will frequently repaint their home before selling, since it can give a good first impression to buyers. As important as it is, if done wrong, it could actually actually make a worse impression. In addition, it could be a waste of money if you’re planning to sell to a developer, who isn’t going to care what the house looks like.

The first thing to remember is that neutral colors are most likely to sell. Even if the buyer is going to repaint anyway, keeping it neutral helps buyers to envision their options. Neutral doesn’t necessarily mean only whites and browns, either. It could include blues or yellows. Another thing to watch for is the Pantone colors of the year. These are based on existing or expected trends, and will be popular. It’s important to note that for trending colors, a little can go a long way. An extra benefit of choosing neutral colors for most of your home is that it allows you to use most any accent colors, regardless of what they may be.

Photo by Aidana Khabdesh on Unsplash

Not All Recessions Are Created Equal

The real estate climate is currently in a state of rapidly rising prices, while in the midst of a recession. Some people are having flashbacks to the Great Recession of 2007 and fearing a housing bubble and imminent crash. But there are some important factors that make this nightmare not a likely reality.

Leading up to 2007, there was an overabundance of supply due to high rates of construction. Loose lending practices were the trigger, as they resulted in mass foreclosures and subsequent drop in demand, making sellers who were liable for foreclosure unable to find buyers to get them out of their hole. This is the opposite of what’s happening now. Supply is incredibly low due to a lack of construction, and buyers are facing cutthroat competition. There are no foreclosures happening right now because of the foreclosure moratorium. Even when the moratorium ends, the number at risk of foreclosure is much lower.

In some ways the real estate market is actually a strong point of the current economy, despite the recession. So a housing bubble isn’t to be expected. But that doesn’t mean we’re out of the water; the recession still exists. And it’s not going away until job recovery happens, which isn’t expected until 2024-2025.

Photo by M. B. M. on Unsplash

More: https://journal.firsttuesday.us/pricing-crash-or-near-miss-the-factors-different-from-the-last-recession/77815/

Current Hot Market May Not Be Sustainable

After lockdowns ended, the real estate market was inundated with prospective buyers who seemed to be itching to take advantage of low interest rates. Interest rates have started to climb back up, yet demand currently shows no signs of slowing, despite continuously rising prices. So what’s the actual reason demand is high, and perhaps more importantly, is it a good reason?

The stimulus packages are a likely culprit. A government stimulus is always going to effect short-term change, but its goal is also long-term change. This is done by a multiplier effect — when people have more money to spend, they spend more, which causes the money to recirculate and improve GDP. However, it’s important to realize what the money is being spent on. Between a quarter and 40% of stimulus money was spent on food, household goods, and debt, and much of the remainder was saved. The stimulus certainly helped people to get through the recession, but it didn’t actually do much to improve the economy as a whole.

From the outside, the real estate market looks like it’s recovering, since it’s becoming more competitive when there isn’t much reason for it to be any longer. In reality, most of the people who can afford to buy right now could already afford to buy before the pandemic, and the rest are perhaps falsely optimistic. The primary factor that can result in long term recovery hasn’t happened yet, and that’s job recovery. The job market isn’t expected to recover until 2025, long after the eviction and foreclosure moratoriums end.

Photo by Maria Lin Kim on Unsplash

More: https://journal.firsttuesday.us/riding-the-stimulus-wave-when-will-it-end-for-real-estate/77854/

Gen X Jumps on Hot Market

Currently, Millennials are the largest group of homebuyers. The second largest is Gen X, who have a fair number of similarities with Millennials despite being in the workforce much longer. Gen X, like Millennials in 2007, also experienced a major recession in 1980 — and a fair number even lost their homes in 2007 that they had only recently been able to purchase. All in all, Gen X hasn’t had much luck with homebuying. They haven’t lost hope, though — the current hot market appears to be attractive to Gen X prospective homebuyers.

The effect is clearer in some cities than others. The most popular metros for Gen X to move to are in the southeast. This includes several metros in Florida, as well as Memphis, Atlanta, New Orleans, Raleigh, D.C., and Baltimore. By contrast, the least popular metros are primarily not in this region, with the exception of Nashville. The others are San Jose, Seattle, Pittsburgh, Austin, Buffalo, Boston, Minneapolis, Denver, and Salt Lake City.

Photo by N. on Unsplash

More: https://www.housingwire.com/articles/generation-x-is-looking-to-move-to-these-metros/

How the Pandemic Has Affected Nonprofits

When discussing economic sectors, nonprofits are often lumped in with for-profit businesses, or simply ignored. But ignoring them doesn’t paint a full picture, and they aren’t impacted by economic crises in the same way as businesses. In fact, depending on the type of nonprofit, they aren’t affected the same way among each other, either. One may expect nonprofits to struggle more than businesses that are able to utilize profits as an emergency fund. During this pandemic, that was true for arts and culture based nonprofits, but the opposite was true of basic needs nonprofits.

During an economic and health crisis, food services, support programs, and health education programs are in high demand. Nonprofits focused on these types of projects flourished. Food Finders, which partners with nonprofits to provide food to those in need, acquired 400 new volunteers in 2020 and supplied 6 million more pounds of food than the prior year. Charitable donations in the US are way up, with an estimated 4.1% increase.

The arts, on the other hand, took an enormous nosedive. International City Theatre had a great year in 2019, but 2020 was shocking. Revenue went down a whopping 90% in 2020. The majority of their revenue is one-time subscriptions and ticket sales. No one is going to purchase a subscription while under lockdown, and even though they tried implementing virtual programs, they weren’t in high demand. Fortunately, smaller arts nonprofits weren’t hit as hard, since they have lower overhead costs.

Photo by stefano stacchini on Unsplash

More: https://lbbusinessjournal.com/the-pandemic-has-dealt-a-blow-to-arts-and-culture-nonprofits-while-basic-needs-providers-have-flourished

Discrimination Is a Major Barrier to LGBTQ+ Homeownership

Though it’s been six years since same-sex marriages were legalized in the US, that didn’t mean an end to discrimination. It was only this year that LGBTQ+ discrimination was banned at a federal level. The LGBTQ+ homeownership rate is only 49%, compared to the overall number of 65%. The rate is particularly low for transgender individuals, at a mere 25%.

Part of the lower homeownership rate for the LGBTQ+ community can be attributed to secondary factors, but not all of it. Many of these people live in urban areas, where they are more likely to rent as opposed to buy. But even that has discrimination as an underlying factor, since a major reason they tend to live in urban areas is that these areas are usually more welcoming to the LGBTQ+ community. Moreover, the estimated purchasing power of the community as a whole is $1 trillion. It’s certainly the case that more than 49% of them have the income to purchase a home.

The fact is that LGBTQ+ people face discrimination not only from their communities, but also from real estate professionals and lenders. Less than a quarter report no discrimination at all. 13.8% say they signed documents that misrepresented themselves in order to get their documents in order. 10.6% report discrimination from real estate professionals and 5.2% from sellers. It’s not just prospective homeowners, either; 5.3% of LGBTQ+ members attempting to rent a home were denied by the landlord. Fortunately, with the anti-discrimination order being signed this year, things are looking up.

Photo by Maurice Williams on Unsplash

More: https://www.realtor.com/news/trends/lgbtq-americans-less-likely-to-become-homeowners/

Work From Home Jumpstarts Resort Town Real Estate

Prior to the increasing popularity of work from home models, most people only travelled on vacation when, well, on vacation. While they were working, they needed to live close enough to work to have a reasonable commute. That meant resort areas such as Palm Springs and Lake Tahoe didn’t have a high permanent population, just a lot of transient residents, especially during holidays. Now, these areas are in high demand for homebuyers who wish to live there permanently.

It’s true that vacation towns are generally expensive. You’ll get that anywhere where tourism is a major source of the city’s income. But the 30% price jump in Palm Springs over the past year was not because of tourism, since tourists don’t buy houses there. Demand is increasing for areas close to recreation, since the same people can also work there, at their new home, instead of commuting. This is especially true of outdoor recreation, but even Truckee, with its numerous art galleries and clothing boutiques, doubled its median home price.

Some of these towns are struggling to take in new residents, though. Housing can’t be built overnight. While vacation towns often have more than enough space for their relatively small number of permanent residents, it’s frequently in the form of hotels, AirBnBs, and second homes. The former two are generally still occupied as well, just not by their owners.

Photo by Nawartha Nirmal on Unsplash

More: https://www.latimes.com/homeless-housing/story/2021-04-30/covid-wfh-boosts-palm-springs-lake-tahoe-housing-markets

What to Look for in a Family Home

If you have a large family, or are expecting your family to grow, chances are you’re thinking you need a lot of space. That’s not necessarily the case. A little can go a long way if you have the right kind of space. Here’s what you should be looking for.

Your primary focus should not be living space, but rather storage space. A person doesn’t take up a lot of room. But for each person in your family, there’s going to be some space that needs to be dedicated to their belongings. This means you’ll need closet space and cabinets, or maybe an attic, not expansive bedrooms or large living rooms. The total size of your house isn’t as important as what functions it can serve.

Speaking of functions, the right functions for your family may be different than those of another family. Some families like to all sit down together for dinner, and want a dining room that can accommodate a large dinner table. Other families would benefit more from a game room for Friday game nights. Also keep in mind that if a space is flexible enough, it could serve the purpose you want even if it wasn’t designed that way. However, it’s important to note the space’s floor plan. Maybe the office is too far away from the bathrooms to benefit from converting it into a bedroom. Perhaps that space that’s the right size for your living room is next to the kitchen and may be better suited as a dining room. Also ask yourself where you want your kids’ rooms to be in relation to each other and yours.

Photo by SOHAM BANERJEE on Unsplash

Catalina Tourism Booming After Prolonged Closure

In response to the Covid-19 pandemic, Catalina Island was closed to tourism. Tourism is a major economic sector on the island, making the pandemic a significant economic crisis in addition to a health crisis. With Catalina Island now reopened, tourists are eager to get in on the fun. Tourist activities include kayaking, zip lining, outdoor recreation classes, hiking, tours, fishing, and souvenir shops.

Photo by Jaakko Kemppainen on Unsplash

Here are some photos from earlier in the month: https://lbbusinessjournal.com/in-pictures-visitors-are-flocking-back-to-catalina-island-for-outdoor-adventures-and-fun-in-the-sun

California Delays Eliminating Mask Requirement

On May 13th, the CDC dropped the recommendation of wearing a mask for fully vaccinated persons. However, the CDC guidelines are only recommendations, not law. Federal, state, and local laws still apply. California law still has a mask requirement, so even fully vaccinated people should still be wearing masks inside businesses. The state has opted to wait until June 15th to remove this requirement.

Not everyone in California is vaccinated yet, particularly in underserved communities. The hope is that the four week period will help ensure more people are vaccinated, as well as give businesses time to readjust to the new regulations. Vaccination progress will be monitored. Current trends are good, so if they continue as they have been, vaccinated people should be able to keep their masks off after June 15th. Of course, the virus doesn’t care about laws — it may still be there after that date, so if you want to stay safe, nothing is preventing you from continuing to wear your mask until you feel comfortable.

Photo by Kobby Mendez on Unsplash

More: https://lbpost.com/news/california-keeps-mask-rules-june-15

189-Unit Residential Building to Be Added to Long Beach

In Long Beach, construction has now started on a seven story residential building on The Promenade. The structure, currently named The Inkwell but subject to change, will have 189 units as well as 10,000 square feet of commercial space on the ground level. It will also have a fitness room, club room, pool decks, and pool. Subterranean parking is available, with 268 car stalls and 40 bike stalls.

The Promenade is an established commercial district, with multiple popular restaurants within walking distance of the new building. Business owners in the area have mixed feelings about the new construction. While it’s sure to bring more traffic to the area once it’s completed, we can guess that’s probably 18 to 24 months away from now. In the meantime, dust and construction noise are likely to cause a dropoff in activity for local businesses, particularly during lunch hours. Some of these businesses are just getting back on their feet after a rough time during the pandemic.

Photo by iMattSmart on Unsplash

More: https://lbbusinessjournal.com/189-unit-residential-project-underway-on-the-promenade

Mortgages Keep Market Competitive Despite Lack of Job Recovery

2020 saw a large increase in mortgage originations, particularly refinances, as a result of low interest rates. It was expected that this would start to fall off in 2021, since interest rates are starting to go back up. However, they’re still low enough that refinances continue to be common. The statistics are a bit misleading for purchases, though. Low inventory is boosting home prices, accounting for a significant part of the increase in loan origination dollar amount even beyond increasing the number of loans originated.

Something is still missing, though. Even though much fewer loans are delinquent now than in 2020, the share of them that are over 90 days delinquent is increasing. This is because people continue to tread water through moratoriums, but aren’t earning any money. Jobs still haven’t recovered from 2020. Foreclosure moratoriums and forbearance programs are going to end eventually, and that’s going to be a problem for some people who have lost their jobs during the pandemic and haven’t been able to find work yet. If home prices continue to rise without an actual jobs solution, these stopgap measures are going to be the proverbial dam that causes the market to crash when it breaks.

Photo by Jilbert Ebrahimi on Unsplash

More: https://journal.firsttuesday.us/mortgage-originations-will-2021-shatter-2020s-record/77747/

California Suffers Steady Decline in Population Growth

California is the most populous US state, and as with every state in the nation, the population is continually increasing. Well, most of the time. California’s population actually decreased from 2018 to 2019 for the very first time, albeit only by 0.1%. From 2010 to 2020, California’s population growth of 6.1% was 1.3% below the national average of 7.4%. Growth has been on a decline for quite some time: It was 13.8% in the 1990s and 10.0% in the 2000s. In fact, California is set to lose one of its congressional seats due to lack of population growth.

There are several factors that combine to account for this. Birth rate has declined in recent years, with younger generations waiting longer to have children, or not having children at all. The death rate also increased by 26% between 2019 and 2020. California’s immigration rate is also slowing, partially due to increased housing costs. Increased housing costs primarily affect the more expensive coastal cities, which are the areas that saw actual population decreases in 2019; less expensive areas of California had increases in population. Rising prices can be traced back to slowing construction, which in turn is partly a result of strict zoning laws, and has been exacerbated by job losses due to the pandemic and recession.

Photo by Timo Wielink on Unsplash

More: https://journal.firsttuesday.us/californias-housing-shortage-has-led-to-population-decline/77704/

What Factors Does an Appraiser Look For?

Appraisers may have to make some minor personal judgments when examining a property’s potential value, but they have less leeway than you may think. There are several factors that an appraiser must take into consideration. It’s important to realize that an appraiser’s job is to report a property’s value, not determine it. The factors that an appraiser looks for include those related to the property itself in addition to the surrounding environment.

The property’s individual characteristics are called elements of value, and they can be remembered using the acronym DUST. They are demand, utility, scarcity, and transferability. Demand is the same for an appraiser as it is for anyone else — the number of buyers who may be interested in the property. Utility looks at all of the property’s potential uses. Scarcity is similar to supply, but is specific to properties similar to the one in question. Transferability relates more to the seller than the property itself, and simply asks whether the seller is legally able to transfer the property.

The environmental factors include physical, economic, government, and social considerations, or PEGS. Physical considerations are the property’s proximity to various resources, such as public transportation or amenities, and even natural resources. Economic factors include data such as rents, vacancies, and homeownership rates, as well as employment opportunities. Among the government considerations are property taxes, zoning and building codes, and local government services. The social aspects are such things as crime rates, school ratings, and recreation.

Photo by Tierra Mallorca on Unsplash

Heavy Competition Poses Problems for Appraisers

We’ve mentioned several times already how cutthroat the competition is in the current housing market, and how this is raising already high prices. The effect on people across the industry — such as buyers, sellers, lenders and real estate agents — is apparent. One group that you wouldn’t think would be strongly affected is appraisers, since their pay isn’t affected by home prices. In reality, they are beginning to struggle. Not only do they have much higher demand when the market is hot, but it actually makes their job much more difficult.

Appraisers are often using values of recently sold homes as a point of comparison. While this is not the only tool appraisers have at their disposal, it’s a major one, and its efficacy is called into question in the current market. Houses are selling very quickly, and prices are rising rapidly. Adjusting the formulas to account for a sudden burst of competition isn’t easy. In addition, an appraiser’s job isn’t to predict the future. Even if we can see that the market is unstable, or heading in a particular direction quickly, an appraiser reports the current value of a property, not what its value may or may not be in the near future. These factors all result in undervaluation of properties, which we can see sellers or their agents are also doing as many properties are selling well over the asking price.

Photo by Júnior Ferreira on Unsplash

More: https://journal.firsttuesday.us/appraisers-struggle-to-keep-up-with-2021s-hot-market/77767/