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Compton to Launch Guaranteed Income Program for Low-Income Residents
On October 19th, Compton Mayor Aja Brown announced a pilot program called the Compton Pledge. The Compton Pledge is a guarantee of monthly payments over a two-year period to some irregularly employed residents, immigrants, and formerly incarcerated persons, and is expected to reach 800 people. The exact amount of the monthly payments is not yet determined, but will be approximately a few hundred dollars.
The Compton Pledge is not the first guaranteed income program in California. Due to the success of the Stockton Economic Empowerment Demonstration, the Compton Pledge has received strong support. It currently has about $2.5 million in funding.
Photo by Giorgio Trovato on Unsplash
More: https://www.cnn.com/2020/10/20/us/compton-guaranteed-income-trnd/index.html
LA County Offering Free Flu Shots
Free flu shots will be available at select LA County libraries while supplies last, and select Kaiser Permanente locations through at least November 14th. Insurance is not required and you do not need to be a Kaiser Permanente member. Flu shots are especially important for those with weakened immune systems or who regularly live with or care for someone who is at risk. This can be due to chronic conditions or age (both under 18 and over 65), but also remember that pregnancy can result in a temporarily weakened immune system.
The following link, provided by California Senator Steven Bradford, provides more information about locations and times that you can get your free flu shot:
https://sd35.senate.ca.gov/sites/sd35.senate.ca.gov/files/e_alert/20201021_SD35_newsletter_459.htm
Photo by National Cancer Institute on Unsplash
[UPDATED] What Will Halloween Look Like During COVID-19?
![[UPDATED] What Will Halloween Look Like During COVID-19?](https://www.beachchatter.com/wp-content/uploads/2020/09/jackolantern.jpg)
[UPDATE] As of Oct 18, there is some additional guidance regarding holiday activities. Buying and carving of pumpkins is allowed, as long as the pumpkin patches follow safety guidelines. Some outside gatherings are now permitted, a change from the prior guidelines. These gatherings can have a maximum of 2 other households, can last no more than 2 hours, and require face coverings and social distancing across households. There are also new recommendations for Dia de los Muertos. These include displaying your altar outside or in a front window, utilizing virtual spaces such as email or social media, and limit cemetery visits to your own household with masks and social distancing.
LA County has issued its regulations regarding Halloween activities, if restrictions continue through October 31. Many traditional activities won’t be permitted, and others are allowed but not recommended. The activities not permitted include carnivals, festivals, haunted houses, live entertainment, gatherings, and parties with non-household members, whether or not it is outside. Of note, trick-or-treating is not listed as a non-permitted activity, but LA County Public Health does not recommend it.
The guidelines also provide a list of suggested activities that are safer. Drive-in movie theaters, outdoor dining, outdoor museums, and car parades are still allowed, subject to the normal regulations. Public Health Director Dr. Barbara Ferrer is hopeful that no more COVID-related regulations will be necessary by Thanksgiving or Christmas.
Photo by Benedikt Geyer on Unsplash
More: https://www.laweekly.com/trick-or-treating-discouraged-in-l-a-county-this-year/
What is the MID?
You may have heard the term MID in the context of purchasing a home or filing taxes. But what does this term mean? MID stands for mortgage interest deduction, and is a type of reduction in taxable income available to homeowners with a mortgage on their first or second home, or secured by their first or second home. When filing taxes, you can either take the standard deduction or itemize your expenditures. It’s common to simply take the standard deduction because many people aren’t sure how to itemize and may not even benefit from doing so. However, MID is one reason homeowners with a mortgage may want to itemize, since it is one of the itemizable deductions. The amount that the MID reduces your taxable income varies from 10% to 37% based on your homeowner’s tax bracket. It’s still possible that you would be better suited taking the standard deduction, depending on your expenditures and tax bracket.
Photo by Constantin Wenning on Unsplash
For more specifics regarding the MID, please see the full article at https://journal.firsttuesday.us/tax-benefits-of-ownership-the-mortgage-interest-deduction-2/73853/. You can also call or email us with any questions you may have.
Prop 15 Explained
By now you all should have received your ballots for the upcoming election. You may even have already voted, but if you haven’t and are struggling with understanding Prop 15, here’s an explanation.
Prop 15 aims to close a loophole created by Prop 13 that reduces property taxes for investors and businesses. Under Prop 13, property taxes are based on their purchase price rather than current market value, and caps increases at 2% per year. In California, property values increase at a rate higher than 2% per year, which means removing this limit and switching to assessments based on current market value would certainly increase property taxes. But if you’re struggling to pay property taxes on your home, have no fear — Prop 15 won’t remove the cap for everyone, only commercial and industrial properties. The measure also excludes properties zoned for commercial agriculture and small businesses whose properties are worth $3 million or less.
If Prop 15 passes, the changes will begin to be phased in in 2022, over three to four years. Reassessment for commercial and industrial properties would be required at least every three years. 40% of the estimated $6.5-11.5 billion in additional property tax revenue would go to schools and community colleges, with the remaining 60% going to cities, counties, and special districts.
Photo by Josh Hild on Unsplash
More: https://journal.firsttuesday.us/prop-15-property-tax-measure/74456/
The Impact of COVID-19 on Senior Housing
It’s been demonstrated that senior citizens are a vulnerable group for COVID-19 and experience worse symptoms, with 73.6% of COVID-19 related deaths being those age 65 and over. It’s important to keep them safe and isolated. Senior living communities, on the other hand, are often multi-family. Even though they do frequently have health care workers on-site, that doesn’t negate the proximity to other people. This means fewer seniors are going to want to live in a senior living community if they can avoid it, instead living at home.
Those not yet at the normal retirement age have also had to change their plans. Some purposefully retired early in order to lessen their exposure to COVID-19. Others were unfortunately forced into early retirement, as a result of losing their job at an age when it’s near impossible to re-enter the workforce. These groups will also be living at home. They’ll be hoping to later sell, but in the meantime will suffer from reduced or no income and have no guarantee of getting a good price when they do eventually sell. This in turn impacts other age groups, as more homes are occupied and unavailable for purchase by first-time prospective buyers, especially with residential construction being inadequate.
Photo by camilo jimenez on Unsplash
More: https://journal.firsttuesday.us/is-covid-the-end-for-senior-housing/74433/
San Pedro’s ‘West Harbor’ Set to Open in 2022
What was previously known as San Pedro Public Market has been rebranded as West Harbor, and is expected to open in 2022 after delays due to COVID-19 that have pushed the date back from the previously expected 2021. The San Pedro Fish Market is definitely staying, and the U.S.S. Iowa may have a new location within West Harbor. Likely or confirmed new additions include AltaSea, Harbor Breeze Cruises, another Gladstone’s location, at least two other restaurants, a farmer’s market, and an amphitheater. Also in the works are plans for a brewery and beer garden, a barge, and possibly a beach. West Harbor is also getting a new nautical theme and color scheme.
Photo by Ronan Furuta on Unsplash
Housing Opportunity Index at its Lowest Since 2018
The National Association of Home Builders (NAHB) now has data for Q2 of the year for its Housing Opportunity Index, which measures affordability of homes compared to median income. The US adjusted median income is currently $72,900. With these earnings, 59.6% of home sales were affordable in Q2 of 2020. This is down from 61.3% in Q1. This downward trend is largely expected, though, since the overall direction of movement has been down since NAHB introduced the Housing Opportunity Index in 2012, with occasional ups and downs. At its inception, the value was 78.8%.
What causes affordability to go down? The index looks at three factors: mortgage interest rates, median incomes, and home prices. Since interest rates are at historic lows right now, they’re not the culprit for falling affordability. Home prices are still rising more quickly than the median income, despite the rate of increase for home prices dropping in the last several years. Not to mention much of the recent boost to median income is not actually a result of increased wages, but rather job losses — since unemployed persons are not included in the median income figure, low-wage earners losing their jobs due to the recession and COVID-19 has artificially inflated the median income.
Photo by Diane Helentjaris on Unsplash
More: https://journal.firsttuesday.us/homebuilders-housing-opportunity-index-declines/73810/
Residential Construction Continues to Slow
Residential construction of both single-family residences (SFRs) and multi-family housing has been on a downturn since the most recent peak in 2018. SFR construction in particular is a long way down from the 2005 numbers when they started to nosedive, while multi-family housing construction has been relatively stable since the 1980s, albeit much lower than it should be.
The number of SFR starts in 2020 is projected to be about 53,000, 10% lower than in 2019 and less than a third of the 2005 number of 154,700. Multi-family housing construction has rebounded from the 2009 trough, but at an expected 48,000, is still down 5% from last year. For multi-family housing, the 50,300 value in 2005 was actually lower than the 2017 and 2018 peak of 53,800 both years.
Photo by Sven Mieke on Unsplash
More: https://journal.firsttuesday.us/the-rising-trend-in-california-construction-starts/
Real Estate Speculation Expected to Rise
As with any recession, at some point the direction of prices is going to change. In most cases, real estate speculators purchase at low prices so they can later sell at a higher price. Currently, speculators are most likely to be sellers, not buyers, since home prices are already high, and are expected to decrease in 2021 as sales volume continues to drop. Once prices start dropping, as buyers are waiting for prices to bottom out, sellers are looking to sell as quickly as possible to get the most money. With more seller willingness, buyer speculators are also coming in 2021.
Given the current high buyer demand, a sudden increase in seller willingness is going to look like the beginning of a recovery. Don’t be fooled by this. Speculators are generally people who can afford to be wrong. This increase in activity is not going to be a result of a stabilizing economy, but of opportunists who were largely unaffected by the recession wanting quick sales. Speculators generally only constitute 20% of buyers. For an actual recovery, the rest of the populace needs a stable income. That means job recovery, which isn’t expected until 2023.
Photo by Thought Catalog on Unsplash
More: https://journal.firsttuesday.us/prepare-now-for-the-return-of-real-estate-speculators/73795/
HUD Discards Fair Housing Guidelines
A 2015 Department of Housing and Urban Development (HUD) rule, called Affirmatively Further Fair Housing (AFFH), had presented guidelines for what constitutes barriers to fair housing and required recipients of HUD funding to reduce or eliminate these barriers. This rule was deemed to be an overstep of federal bounds, as matters of this nature should be determined at a local level. The HUD’s new rule, called Preserving Community and Neighborhood Choice, still requires funding recipients to affirm that they’ve furthered fair housing, but no longer offers any guidelines for what that means.
Of course, this is no longer federal overreach, but that’s because it doesn’t actually do anything. Barring any state or local laws, the definition of fair housing is now entirely up to the individual receiving the funds. With no need to report any plans or data, the recipient can simply affirm that they did further fair housing, without needing to change anything or provide any proof. In essence, the HUD has simply eliminated the AFFH while pretending it was a partial rollback.
Photo by Blake Wheeler on Unsplash
More: https://journal.firsttuesday.us/hud-kills-fair-housing/73816/
Spinach & Strawberry Salad
The traditional dinner salad is most often an unexciting food. Ditch that classic iceberg lettuce studded with cherry tomatoes in favor of this taste treat. These flavors will burst in your mouth from the first bite to the last. Whether you serve it in the heat of summer, or as a year-round starter, this dish is a treat for the eyes and the taste buds.
Serves 6
Ingredients
2 (6-oz.) bags baby spinach
1 (16-oz.) container strawberries, quartered
1 (4-oz.) package crumbled blue cheese, feta cheese, or goat cheese
1/4 medium red onion, thinly sliced
1/2 cup sliced toasted almonds or halved candied pecans
Balsamic vinaigrette (recipe follows or use bottled vinaigrette)*
Directions
Toss all the salad ingredients together and drizzle with dressing.
*Easy Balsamic Vinaigrette
1/4 cup balsamic vinegar
1 tsp prepared mustard
1/2 tsp salt
1/2 tsp freshly ground black pepper
3/4 cup olive oil
Directions
Place the vinegar and seasonings in a bowl and whisk to combine. Slowly add the olive oil and whisk until the dressing is emulsified.
Some surprises in South Bay Real Estate, 2019 vs 2020
It’s October 1, so it’s time to look at the changes in the local real estate market, both for the month and for the third quarter.
2020 has been a year for making and breaking records. Most of them have been records we truly didn’t want to even consider, like the number of pandemic deaths, and the number of unemployed. Until now, we had little reason to believe the real estate market might bring better news.
Through the first half of the year, the number of homes available on the market just kept climbing. At the same time, the number of homes selling remained stubbornly flat. Despite interest rates hovering just above zero, it seemed buyers had other things on their mind. Then in July the number of closed sales jumped 41%, while available inventory came up a tiny 7%.
Sales continued to climb in August and September, though nothing as dramatic as July. Overall, for the third quarter, unit sales were nearly double those of both, the first quarter of the year (+79%) and the second quarter (+76%).
Comparing to last year, that huge spike in sales brought September in at 47% more sales than in September of 2019. On a quarter over quarter basis, Sales are up 23% over 2019. The red bars in the “Sold vs Available” chart above shows the climbing number of sales, with the blue bars showing the sudden drop of available inventory in September.
Not only were the number of sales climbing, but prices have continued to escalate year over year. September of 2020 showed median prices had increased 23% over September of 2019. Median prices rose 15% for the third quarter of 2020 versus the same time period in 2019.
Combined, the impact of the increased sales and increased prices brought the total dollar value of sales for September 2020 up 89% over that of September 2019. Quarter to quarter, the annual increase was 40%.
“South Bay residential sales for the third quarter of 2020 exceeded two billion dollars.”
How do we explain record sales and prices during a pandemic, with sky-high unemployment, and the threat of a recession coming from behind? It’ll be weeks before the pundits have sorted it all out. In the meantime, here are a couple of possible explanations.
Third quarter sales range from $285K to $10.5, so we know some of these have been entry level homes. Folks who have been priced out of the area, and because of the lower interest rate could suddenly qualify to purchase here, have jumped at it. Sales under $1M comprise 42% of the total.
At the opposite end, sales over $3M made up 9%. Once again, the interest rate makes it possible to leverage a mansion at a relatively affordable monthly payment. A lot has been said about the future worth of property compared to today’s dollar. Investing at a reduced interest rate usually contributes to a sizable profit at some future sale date.
In between, from $1M to $3M, we have 49% of the third quarter sales. That’s roughly the number of people we would expect to sell for one or another of the typical reasons people move. In fact it corresponds nicely with the rate of market activity for the first half of the year.
In summary, if the thought of making a move in the near future has crossed your mind, this may be the best moment to do so. Call and we’ll put together some numbers specific to your property and your situation. No problem–no obligation!
Photo by Richard Horne at unsplash.com.
Long Beach to convert hotels into homeless housing
California, in partnership with Long Beach and LA County, has begun the process for Project Homekey, a project to convert two hotel properties into homeless properties. One will be a 100 unit project and the other approximately 50 units. While it’s not yet announced which properties have been chosen, the decision has already been made, and these criteria narrow it down significantly. Only one property fits for the 100 unit structure — the Best Western of Long Beach. There are a few different options for the 50 unit project.
The converted units aren’t going to be ready immediately. The properties have not yet been purchased, and the deadline to do so is December 30, so it could be up to two months before the conversion even begins. The contract for funding the conversion process is expected to last several years, though the conversion could already be complete before the contract expires.
New Long Beach port bridge opens soon
The port of Long Beach will open its eagerly awaited new bridge on Oct. 5 after seven years of construction. The long wait was due in part to COVID-19 restrictions and was also intentionally delayed for careful attention to earthquake safety. The bridge currently has no name, but will be replacing the Gerald Desmond Bridge.
This new bridge will have three lanes in each direction across its two mile length to reduce traffic congestion. It will have connections to the 710 Freeway, Terminal Island, and Downtown Long Beach. In addition, larger container ships will be able to pass under the bridge, as it is taller than the Gerald Desmond Bridge.
Photo by kyler trautner on Unsplash
More: https://www.lbbusinessjournal.com/bridge-to-everywhere-set-to-open-for-vehicle-traffic-oct-5/
The Federal Reserve’s post-recovery plan
The Federal Reserve is now looking to the future to figure out their plan for once the economy has recovered. The Fed doesn’t intend to make changes until a solid recovery has occurred, which they anticipate will be at least three years from now. Their new goals will be to maintain stable prices, maximum employment, and moderate long-term interest rates.
How do they plan to enact this? Well, not directly. The Fed’s plan is to maintain a 2% average annual inflation rate, which actually means increasing it above 2% in the years following a recession when inflation rates are low. Their expectation is that higher prices will boost the job market. The Fed can’t increase the annual inflation rate directly, though. They will have to put money into the hands of investors and lenders, and simply hope that they spend it.
This is only one pitfall of the Fed’s plan. It also promises nothing for the housing market, as prices are already high, not low as they are normally during a recession. The housing market needs the job market to stabilize before it can even begin to recover. Additionally, the Fed’s reasoning that higher prices will increase employment is flawed. Most people don’t choose to remain unemployed, unless they’re abusing the unemployment welfare system, which is extremely rare and what few cases there are would be better resolved by reforming the welfare system. Forcing already unemployed people to pay higher prices is not suddenly going to give them a job.
Photo by Jess Bailey on Unsplash
More: https://journal.firsttuesday.us/how-the-feds-new-policy-stance-impacts-housing/73439/
Job recovery will be slower than expected
Reports demonstrate record job gains in California in the last few months, nearly 700,000. But that doesn’t mean we’re actually making new jobs. It means that we lost so many jobs this year that even recovering a small percentage of them is going to look like a large number. There were actually over 2.7 million jobs lost in California between December 2019 and April 2020, significantly more than were lost in two years during the 2008 recession. So we’re still a long way off from returning to the December 2019 peak, let alone generating new jobs.
Federal assistance has been necessary to keep the economy floating, but it’s also been inadequate. We’re going to need a lot more help. A COVID-19 vaccine is a solid step, allowing more people to return to work. It’s not going to be enough, though, since the economy was already on a downward trend before COVID-19 — recall that the peak was December 2019, three months before the lockdowns. The recovery is expected to be W-shaped, with some unstable gains from now through 2021, and no clear upward trend until 2022 or 2023. Even then, job recovery will have just started, and the real estate market is going to need even more time after jobs start back up.
Photo by Ibrahim Rifath on Unsplash
More: https://journal.firsttuesday.us/job-losses-will-inevitably-continue/73104/
Companion robots: Are they a good thing?
Companion robots, whether for practical or sentimental purposes, have been around for a while. But this pandemic presents an opportunity for their popularity to grow. With many people isolating themselves, they’ve grown lonely or are lacking in vital assistance. Some things robots are able to do are provide comfort, tell jokes, recite Bible passages, play music, or, for those with more physical needs, feed you, bathe you, or lift you up out of bed. Benefits of robotic companions are that they are always available and never get angry at you, won’t forget important dates or times, and won’t be abusive or fraudulent.
There’s fairly solid consensus that robot companions are useful during a pandemic. Some worry, though, what may happen to human companionship or caregiving if robots catch on beyond their use during a pandemic. As much as social robots can try to fill the void for people who are truly isolated, humans still require interaction with other humans for their mental health. Family members may feel their elderly relatives are completely fine because they aren’t totally on their own, but that would be a mistake. And there are also concerns with the robots themselves — some of them have built-in cameras to monitor when they are needed, which, while they are intended as a safety feature, may be a privacy concern for many people. It’s also inevitable that some caregivers would lose their jobs to robots.
Photo by Brett Jordan on Unsplash
Despite fierce competition, it’s not indicative of recovery
Throughout California, homes are selling quickly. 46% of homes are on the market less than two weeks. Using data from Redfin, 54% of offers were contested. The breakdown by region is 67% in the San Francisco/San Jose area, 65% in San Diego, 58% in Los Angeles, and 47% in Sacramento. However, don’t mistake this for a healthy market — we’re still in a transition period.
The actual reason for low days-on-market is a combination of high buyer demand, due to low interest rates, and low inventory. Those who are able to buy correctly recognize this as a great time to do so if you are able to afford it, and are scrambling to get at what few properties are available for sale. Even the high demand, though, is merely high relative to inventory — there still aren’t very many people who are able to afford a purchase right now. Whether or not we get a COVID-19 vaccine before then, the housing market won’t properly right itself until the job market stabilizes. The expectation is that this won’t happen until 2022 or 2023.
Photo by Randy Fath on Unsplash
More: https://journal.firsttuesday.us/summer-2020s-unseasonably-hot-housing-market/72921/
California gets revised eviction protections under AB 3088
AB 3088 was signed into law, extending eviction moratoriums to January 31, 2021, under certain conditions. While tenants will still be responsible for unpaid amounts after this date, they cannot be evicted for missing payments between March 4 and August 31. For rent due between September 1 and January 31, tenants will be required to pay at least 25% of the amount owed each month to be immune to eviction. Tenants also are not immune to eviction for causes unrelated to missing payments.
In order to be eligible for these protections, tenants will also need to declare financial distress as a result of the COVID-19 pandemic. This could be in the form of loss of income, increased expenses related to performing essential work or to health care, child care, elderly care, disability, or sickness, or some other category, but must be a result of the pandemic. This declaration also applies to 15-day eviction notices the tenant may receive. If no response is provided, the tenant may still be evicted.
Photo by Bill Oxford on Unsplash
More: https://journal.firsttuesday.us/ab-3088-new-eviction-protections/72951/
Work-From-Home likely to continue beyond COVID-19
The increasing number of people working from home was initially supposed to be a temporary response to COVID-19 lockdowns. Companies also took it as an opportunity to experiment with the work-from-home model. And for the most part, it seems to work. It’s expected that there will be many more permanent work-from-home positions even after vaccines are distributed.
This has had and will continue to have implications for spending patterns and stock values. Traditional work clothes aren’t necessary for many people, nor is spending on commutes, work lunches, and coffee breaks. Most shopping is going to be done for the home — and also at home, signaling a boon for e-commerce. In the real estate sector, commercial construction is expected to drop as fewer companies require as much office space. A major advantage of the work-from-home model is that more people are able to enter the workforce, since it opens the doors to people unable to commute, such as those who are disabled, can’t afford reliable transportation, or have children at home.
Photo by Mikey Harris on Unsplash
More: https://www.morganstanley.com/ideas/coronavirus-work-from-home-trend
Unemployment delays homebuying for adults under 30
As of July, over half of adults under 30, 52%, are now living with one or both parents. The previous recorded high was 48% in 1940, eight decades ago. No data is available for the period including the Great Depression, but it’s likely the number was higher during that period. The majority of this increase comes from those in the 18 to 24 age range, with particularly large spike in April.
In some instances this could be a conscious choice, at least initially, as people moved in with their parents during lockdowns so they could isolate with family members instead of alone while working from home. Even for those for whom this was the plan, their stay has been extended longer than expected. For most people, though, it’s because they aren’t working from anywhere — it correlates strongly with rising unemployment numbers. Unemployed young adults aren’t financially stable enough to become independent homeowners. Increasing student loan debt is also a significant factor.
Photo by Thought Catalog on Unsplash
More: https://www.huffpost.com/entry/young-adults-living-with-parents-covid_n_5f53a937c5b6946f3eb291b0
Lenders in uncertain territory, but hopeful
As a result of home sales volume dropping by 30% in Quarter 2 of 2020 from 2019, loan origination has also dropped considerably. The effect was somewhat lessened by low interest rates, which resulted in more refinances. The commercial sector, however, didn’t have that luxury. The Mortgage Bankers Association (MBA) forecasts a 59% decrease from 2019 in total commercial loan amount, from $601 billion to $248 billion. The majority of this will be from the multi-family sector, which was at a record high of $364 billion in 2019 but is only expected to reach $213 billion this year.
Lenders are optimistic, though, as long as governments can continue to keep people housed. Vacancies aren’t great for lenders, as they reduce the prospects of landlords, and recently evicted people certainly won’t be looking to originate new home loans any time soon. The MBA expects 2021 to bring the number up to $390 billion for commercial loans. The catch is that commercial landlords aren’t protected by the recently extended foreclosure moratorium. If multi-family homeowners are hit with a foreclosure, all their tenants will be affected as well. Commercial property owners as well as lenders are looking for new methods of loan accommodations.
Photo by Morning Brew on Unsplash
More: https://journal.firsttuesday.us/commercial-lending-plummets-in-2020/72811/
Demystifying mortgage insurance
There are two types of mortgage loan insurance, and it’s also possible to avoid needing insurance. Mortgage insurance premiums (MIP) are the type of insurance required by the Federal Housing Authority (FHA). The other type is private mortgage insurance, or PMI. It’s easier to qualify for FHA loans, but private loans come with some additional benefits if you do qualify. Most notably, it’s only PMI that you can avoid; if you only qualify for an FHA loan and not a private loan, MIP can’t be ignored.
Private lenders generally have stricter credit score requirements than the FHA. In return, the higher your down payment, the lower your premium amount. Furthermore, if your down payment is at least 20%, you aren’t required to get loan insurance, so you avoid paying PMI. If you’re getting an FHA loan, you’re stuck with MIP for at least 11 years. On the bright side, the down payment amount to qualify for a reduction to 11 year MIP is 10%, not 20%.
Generally, the greater you can make your down payment, the better. Of course, paying all cash to avoid a loan at all is ideal, but not everyone can afford to do that, so keep in mind the important breakpoints. If you qualify for a private loan, putting at least 20% down is probably your best bet. Even if you only qualify for an FHA loan, be sure to put at least 10% down so that you aren’t stuck with MIP for the entire duration of the loan.
Photo by Letizia Bordoni on Unsplash
More: https://journal.firsttuesday.us/fha-pmi-or-neither/
Is sales volume a good predictor of economic recovery?
Sales volume and home prices tend to correlate, albeit on a delay of about a year. It’s usually helpful to look at changes in one to predict changes in the other. But sometimes that’s not the case — most notably, at the start of an economic recovery. Looking only to sales volume to forecast a recovery can result in some false starts.
This happened in 2008, and may be about to happen now. Home sales volume shot up between 2008 and 2009, but crashed back down the next year. This is because economic stimulus resulted in temporary buyer demand, which fell off as soon as the stimulus was used up. Now, in 2020, despite actual buyer demand, sales volume is low as a result of low inventory. Low inventory doesn’t decrease home prices, though, so they’re still going up. Pent-up demand means that as soon as the economy recovers, inventory may be snatched up quickly, resulting in another sudden burst of activity that will rapidly fall off.
So what does need to happen for an economic recovery? The answer is jobs. While sales volume may predict short-term direction of change, the job market is an excellent reflection of the housing market stability, since both homeowners and renters require income in order to make payments. Job numbers aren’t going to be stable for a while either. A full recovery of the job market isn’t expected until 2022 at the earliest, at which point we can start to see the regular patterns emerge again in home sales volume and home prices.
Photo by Chris Liverani on Unsplash
More: https://journal.firsttuesday.us/sales-volume-a-powerful-magnet-for-home-prices/34319/
August 2020 Sales Analysis
It’s September already! That means it’s time to look at a summary of real estate activity for LA’s South Bay neighborhoods over the past month. Our data is ultra-local which means you get to see the market conditions almost immediately after the month ends.
This summer we’ve been enjoying a relatively busy real estate market with a big jump in sales and mixed results in prices. August 2020 weighed in with the median price nearly 6.8% higher than August of 2019. However, it wasn’t enough to beat the median for this July. August median prices were down by 1.8% from last month. In the first eight months of the year, we’ve seen two months where the median increased, versus six months when it decreased.
| Median Prices | August | July |
| 2020 | $1.10M | $1.12M |
| 2019 | $1.03M | — |
We saw 450 homes sold in August, up by 10% from July of this year. Compared to August of 2019, sales this year were up 13%. July and August were exceptional sales months compared to January through June. Both months had sales in excess of 400 units, while the first six months of the year were less than 300. March of 2020 made it all the way to 291 sales despite pandemic activity kicking into high gear that month.
| Closed Sales | August | July |
| 2020 | 450 | 408 |
| 2019 | 398 | — |
July & August sales were up nearly double the sales numbers from the first half of the year. Why the jump in summer? Anecdotally, we’re hearing interest rates being at or below 3% brought those buyers not financially impacted by Covid-19 to the table. That huge savings in interest helped drive prices, as well. To buy now and take advantage of the interest rates, many buyers have been willing to offer slightly above asking price, to lock the deal in.
August brought a significant increase in the number of homes available for sale. At the end of August total available counts stood at 3.68 months of inventory, compared to 2.17 months at the end of July. In raw numbers, that’s an 18% increase in homes available for sale. More sellers put their homes on the market, and there weren’t enough buyers to absorb the increase. As Covid-19 moves to a back burner, we expect the inventory to return to higher numbers comparable to the beginning of the year.
With subsidies and protective government programs closing, we anticipate fewer buyers will be able to purchase. At the same time, we expect the continuing stress will create more defaults and short sales. Forced sales, also known as ‘distress sales’ tend to push prices down.
Combined, a growing inventory and economic stress are precursors of a shift to a buyers’ market. Several noted commentators are predicting a recessionary market lasting through 2021 and possibly into 2022. Like so many things in today’s world, no one is sure of where we’ll end up. But it’s pretty much guaranteed to be different than we had planned.
Photo by Gustavo Zambelli on Unsplash
FHFA delays additional refinancing fees
The Federal Housing Finance Agency (FHFA) announced in August that it would be charging an additional refinancing fee to offset losses due to COVID-19. The new fee was expected to come into effect yesterday, September 1st, but at the last minute, the FHFA rescheduled it to December 1st. We’re still in the midst of a recession, so the FHFA doesn’t want to make too many changes too early.
The new fee exempts refinance loans with balances below $125,000, affordable refinance products, Home Ready, and Home Possible. Applicable loans, which are cash-out and limited cash-out refinance loans, will have 0.5% added to each transaction. While this fee applies directly to lenders, it also indirectly affects borrowers in the form of higher interest rates. While the FHFA certainly wants to recoup their projected $6 billion in losses, they’ve agreed that now is not the time; the economy still needs to recover first.
Photo by Morning Brew on Unsplash
More: https://journal.firsttuesday.us/additional-refinancing-fees-delayed/72824/
Long Beach approves basic income plan
Long Beach just started the planning process for a basic income pilot program. It’s very early in the process, so not much is known, but the City Council just had their vote today, September 1st, and unanimously approved the program, which means it’s sure to happen in some capacity. This pilot program will be privately funded, so it’s not going to be a tax burden.
The decision arrived after witnessing the success of a similar program in Stockton. The Stockton program tested a $500 basic income for 18 months, given to 125 randomly selected residents. The spending breakdown was 40% on food, 25% on merchandise, and about 12% on utilities. It’s unclear what happened with the other 23% — it’s possible it was saved, or maybe it was spent on other categories not listed. Now the mayors of 15 other cities across multiple states want to try it, including Oakland, Long Beach, and Los Angeles in California, Newark in New Jersey, and Columbia in South Carolina.
Photo by Damir Spanic on Unsplash
More: https://lbpost.com/news/long-beach-to-begin-planning-for-basic-income-pilot-program
Here’s why house prices are still high despite the recession
It may seem intuitive to look at past recessions, such as the one in 2008, to predict the market during the current recession. But that doesn’t always work, since the circumstances surrounding the downturn may be different. In 2008, what caused home prices to drop was reduced buyer demand and increased foreclosures and short sales. Now in 2020, that’s not happening.
Buyer demand is actually relatively high right now, as a result of interest rates being low. The Fed decreased interest rates in 2019 in expectation of a recession. They were right, of course, but couldn’t have predicted the exacerbating effect that COVID-19 would have. Interest rates can’t get much lower without the Fed going negative, so the market doesn’t have anywhere to go. Foreclosures may be on the horizon if federal and state governments don’t maintain protections. But for the time being, there’s a moratorium on most foreclosures, so there’s no need to drop home prices. Another factor is the lack of construction. With fewer homes being built, especially in the form of affordable housing, low inventory means there’s no competitive pressure on sellers to reduce prices.
Photo by bruce mars on Unsplash
Foreclosure moratorium extended through December
The CARES Act, signed into law in March, provides multiple benefits to those impacted by the COVID-19 pandemic, including a moratorium on most foreclosures. On August 24, real estate journal First Tuesday pondered what may happen beginning August 31, when the CARES Act was set to expire. However, it was announced August 27 that the moratorium has been extended through December 31.
Even had the moratorium not been extended, First Tuesday said not to panic. The foreclosure process would have to start from the beginning, and it takes time, so homeowners would not be evicted overnight. That said, it’s important that state legislators make efforts to soften the blow even after the federal moratorium ends. Just like foreclosures won’t happen overnight, nor will affected parties recover overnight. Fortunately, there is a statewide bill for California, AB 2501, that seeks to extend it for another 12 months as well as offer forbearance.
Photo by Bruno Figueiredo on Unsplash
Understanding property value reassessment
Under Proposition 13, a property’s assessed value doesn’t change very much from year to year, unless the home is sold, in which case its value may or may not be reassessed. But under what conditions is the value not reassessed? Here’s an explanation.
Several types of transfers don’t trigger reassessment. This includes transfers between spouses or domestic partners, from parents to children, or in some cases from grandparents to grandchildren, though it does not include transfers between siblings. Changes recorded without transfer of ownership also do not trigger reassessment. In some cases, replacing a property may also not trigger a reassessment for disabled persons or seniors. Joint tenancy and co-ownership are also factors in determining whether reassessment applies.
Photo by Mari Helin on Unsplash
More: https://journal.firsttuesday.us/brokerage-reminder-prop-13/17306/
Trends in home sales volume
With their most recent update to home sales volume data for California, First Tuesday has the some of the numbers up to June of 2020. While parts of their analysis have not been updated, we do have data comparing month-to-month sales in June 2020 to both May of 2020 and June of 2019, as well as data for year-over-year sales for June of 2020, 2019, and 2018. We’ve also compiled data exclusively for the South Bay, which demonstrates a much more significant difference.
In June of 2020, the month-to-month sales for all of California were 35,300, with a nearly even split between Northern and Southern California. This is a decrease from the June 2019 number of 39,900, but the numbers are up from May of 2020 at 24,000. Looking at only the South Bay, the trend direction is the same, but the differences are much more stark. There were only 75 sales in May 2020 and 95 in June 2020, compared to 376 in June 2019.
This pattern continues to hold for year-over year sales through June. The total for California was 177,500 in 2020, down from 206,300 in 2019 and 223,800 in 2018. Again, the difference is much more obvious in the South Bay. Following 1692 sales through June in 2018 and 1245 in 2019, there were just 433 in 2020.
Photo by Ussama Azam on Unsplash
More: https://journal.firsttuesday.us/home-sales-volume-and-price-peaks/692/
Predictions for the 2020 recession’s impact on inventory
The real estate journal First Tuesday asked readers in July how they felt the 2020 recession would impact for-sale inventory. The votes are now in.
A plurality of respondents, 45%, felt inventory would go down. This would likely be a result of both anxiety from sellers and not enough construction. However, the number who instead felt construction would increase and there would be rental vacancies, leading to more listings, was 39%, not too far off from the plurality. The third and final category, those who felt there would be little to no impact, totalled 16%.
But that was July. It’s now August, and there certainly has been an impact. It turns out the 45% were right. Inventory has declined steeply, and construction companies are even more wary about building than they already were before the pandemic. Fortunately, declining rental vacancies points to an increase in inventory as soon as construction starts back up. Changes to California zoning laws also hope to speed up construction.
Photo by Macau Photo Agency on Unsplash
How to protect yourself from extreme heat
California is seeing a rise in heat waves. It’s important to know how to keep safe in extreme weather conditions. Here are some suggested precautions from Senator Steven Bradford.
- Avoid the sun– stay indoors from 10 a.m. to 3 p.m. when the burning rays are strongest.
- Drink plenty of fluids– 2 to 4 glasses of water every hour during times of extreme heat.
- Replace salt and minerals– sweating removes salt and minerals from your body, so replenish these nutrients with low sugar fruit juices or sports drinks during exercise or when working outside.
- Avoid alcohol.
- Pace yourself– reduce physical activity and avoid exercising outdoors during peak heat hours.
- Wear appropriate clothing– wear a wide-brimmed hat and light-colored lightweight, loose-fitting clothes when you are outdoors.
- Stay cool indoors during peak hours – set your air conditioner between 75° to 80°. If you don’t have air conditioning, take a cool shower twice a day and/or visit a County Emergency Cooling Center. Find a local emergency cooling center at lacounty.gov/heat.
- Monitor those at high risk– check on elderly neighbors, family members and friends who do not have air conditioning. Infants and children up to 4 years old, people who overexert during work (e.g. construction workers) and people 65 years and older are at the highest risk of heat-related illnesses.
- Use sunscreen – with a sun protection factor (SPF) of at least 15 if you need to be in the sun.
- Keep pets indoors– heat also affects your pets, so please keep them indoors. If they will be outside, make sure they have plenty of water and a shaded area to help them keep cool.
It is also recommended to reduce electricity usage to avoid shortages and service interruptions. If you are experiencing difficulties from extreme heat, Los Angeles County has designated Cooling Centers with air conditioning. A list of the Cooling Centers can be found in the full article.
Photo by Jonathan Borba on Unsplash
More: https://sd35.senate.ca.gov/sites/sd35.senate.ca.gov/files/e_alert/20200820_SD35_newsletter_410.htm
The obstacles to solving the housing shortage
We’re all well aware that California has been facing a shortage of affordable housing. Affordable housing is also an important step in recovering from the current recession. So, why hasn’t it happened yet? There are a couple of reasons.
It’s true that not enough homes are being built, but it’s more complicated than that. Not enough affordable housing is being built — because it’s actually more expensive to build than high-tier homes. Whenever housing is developed, it’s subject to a development fee, the rules for which are set at the city level, so they’re hard to standardize. The development fee can range from 6-18%, reaching upwards of $150,000 in some cities. The big issue is that this fee is charged per unit, which means that affordable housing developments, which invariably consist of multiple, smaller units, are subject to multiple development fees. This makes it difficult for developers to turn a profit from affordable housing projects.
The other reason is also the same reason it’s so important to our recovery — the job loss from COVID-19 and the recession itself. These factors have reduced purchasing power, increased homelessness, and increased the demand for lower-tier housing. Construction companies can’t keep with the ever-increasing demand for their most expensive, lowest return-on-investment projects.
Photo by Jeriden Villegas on Unsplash
More: https://journal.firsttuesday.us/homebuilding-is-key-to-the-next-recovery/72698/
Automation is coming to restaurants
As a result of COVID-19, restaurants are looking for ways to reduce the interaction between workers and customers. One solution? Robots. Robot chefs have been around for a while, but weren’t always successful. They’re now gaining more traction as restaurants see them as becoming a necessity.
New plans include a burger-flipping robot named Flippy at White Castle and a smoothie-making robot called Blendid, which is expected to have more widespread availability. Chowbotics reports 60% increased demand for Sally, a salad-making robot, and Wilkinson Baking Co. said they have also been getting more inquiries about their BreadBot.
Some are skeptical, though. Max Elder of Food Futures Lab warns that automation can’t solve all the problems within the food industry, and that offering it as a solution may take attention away from issues that were already in existence before the pandemic began. Elder also says the human factor is important — “Food is so personal, and it needs to involve humans,” according to him. Automated food companies insist they aren’t trying to replace human workers, only streamline the process so that workers can be more efficient, but nevertheless automation does reduce the demand for labor.
Photo by David Levêque on Unsplash
Tuna Salad
This is more than a tuna salad. This is a meal in a tortilla, a salad on greens to linger over with wine, hors d’oeuvre on chips, or an ultra tasty wrap in a swirl of your favorite cheese!
Albacore as everyone likes it. My general sizing recommendations are: use one if it’s on the large end of the size spectrum, use two if it’s on the small end, etc.
12 to 15 ounces (approximately) of cooked, flaked tuna
2-3 stalks of celery, in a fine dice
1-2 carrots, shredded
1-2 pickled cucumbers (dill pickles are my favorite)
red pepper flakes (optional)
1 large dollop of Dijon mustard
3-4 large dollops of mayonnaise
1 teaspoon rubbed sage
1 teaspoon dried dill
salt and pepper to taste.
Process
Let’s start by saying that I really don’t measure anything. If it looks like enough, it’s enough. If it doesn’t, add more. By the same token, if there’s something in the refrigerator that looks like it belongs, put it in! This is one of those “family” recipes where the cook adds and subtracts “to taste.”
First step is to get out a large mixing bowl, a cutting board and your favorite knife.
Flake the tuna into the bowl. I generally use canned albacore tuna, solid, white, in water. Albacore is mild and suits most taste buds. Actually, any tuna will do. Fluffed up, it should be in the neighborhood of 1.5 to 2 cups of tuna.
Wash the celery and carrots. I never bother to peel, but feel free to do so, if you like. Cut both lengthwise, into long, thin slivers. Then turn sideways and cut into a fine dice, approximately ¼ inch square, or less. Add to the bowl. There is a tool, photo here, that will do a very creditable job of creating long, skinny slivers without using a knife. Personally, I love my chef’s knife! I even use it for things it wasn’t designed to do.
Moving on, rinse the pickled cucumber. Using the same process, cut it into a small dice, and add to the bowl. If you’re pressed for time, or prefer the taste, there are commercially available pickle relishes, or spreads, that can serve the same purpose. I think Trader Joe still carries one called “sweet pickle relish” that serves nicely and saves a lot of time.
Sprinkle the sage, dill, salt and pepper over the top. At first, it’ll look like too much, but once mixed, it’ll be fine.
Now, add a dollop (I use a tablespoon, heaped to the point of dripping off) of mustard and most of the mayonnaise. Mix thoroughly. The mixture should hold together nicely, without being crumbly, or drippy. If I plan to use it on bread, I like it a bit more moist. If it’s added to lettuce, more dry. Add more mayonnaise as required to reach a suitable consistency.
For a tasty tuna sandwich, try preparing it open face, covered with a thick layer of tuna salad. Top with a generous amount of shredded or sliced cheddar, and toast until cheese is melted. If your taste buds lean to the spicy side, try a liberal sprinkle of red chile flakes before the toaster.
Be expressive with this dish! Use it as an appetizer, with a dollop of tuna on a tortilla chip and a dusting of chopped cilantro. Or top a plate of mixed greens with three good sized scoops of tuna salad and add the fruit of your choice.
Though tradition calls for an earthy white wine, I’ve often paired a spicy tuna mix with a strong red and had a wonderful repast. Enjoy your meal!
Many lockdown layoffs may be more permanent than temporary
Of course, no one who was laid off during the lockdowns was happy to lose their job. But at least initially, the expectation for most was that they would be returning to their job once the lockdown was over. In most cases, that hasn’t happened, both because COVID-19 has not yet been contained and because many of those positions simply don’t exist anymore.
The economic recession has been difficult on small businesses with tight budgets that are not getting as many customers, but still have the same costs without laying off workers and often even closing down facilities entirely. This means that the same businesses won’t have the extra income to rehire the workers they laid off. Businesses that are transitioning online rather than closing down may be hiring people again once a vaccine is widely available, but probably not the same people — they’re going to need a different skillset. People nearing retirement may be forced to retire early, as most businesses won’t want to hire someone who will only be working there a few years before retiring. All in all, a currently estimated 50% of jobs lost during COVID-19 will not be recovered, despite the estimate being 17% in April.
Photo by Markus Winkler on Unsplash
55+ Options in South Bay
This is not intended to be an exhaustive list of 55+ housing choices, but a reference point for the more commonly known, age-restricted accommodations available in the Los Angeles South Bay. We welcome your input, but cannot guarantee inclusion.
Condominiums
Breakwater Village, 2750 Artesia Blvd, Redondo Beach, CA 90278
Courtyard Villas Estates, 3970 Sepulveda Blvd, Torrance, CA 90505
Gables, 3550 Torrance Blvd, Torrance, CA 90503
Meridian, 2742 Cabrillo Ave, Torrance, CA 90501
Montecito, 2001 Artesia Blvd, Redondo Beach, CA 90278
New Horizons, 22603-23047 Maple Ave and 22601-23071 Nadine Circle, Torrance, CA 90505
Pacific Village, 3120 Pacific Blvd, Torrance, CA 90505
Parkview Court, 2367 Jefferson St, Torrance, CA 90501
Rolling Hills Villas, 901 Deep Valley Dr, Rolling Hills Estates, CA 90274
Sol y Mar, 5601 Crestridge Road, Rancho Palos Verdes, CA 90275
Sunset Gardens, 24410 Crenshaw Blvd, Torrance, CA 90505
Tradewinds, 2605 Sepulveda Blvd, Torrance, CA 90505
Village Court, 21345 Hawthorne Blvd, Torrance, CA 90503
Independent/Assisted Living/Memory Care Facilities
Belmont Village, 5701 Crestridge Road, Rancho Palos Verdes, CA 90275; 310-377-9977
Brookdale Senior Living, 5481 W Torrance Blvd, Torrance, CA 90503; 310-543-1174
Canterbury, 5801 West Crestridge Road, Rancho Palos Verdes, CA 90275; (877) 727-3213
Clearwater at South Bay, 3210 Sepulveda Blvd,Torrance, CA 90505; 424-250-8492; (previously Wellbrook)
Kensington, 320 Knob Hill Ave, Redondo Beach, 90277; (424) 210-8041
Manhattan Village Senior Villas, 1300 Parkview Ave, Manhattan Beach, CA 90266; (310) 546-4062
Silverado Senior Living, 514 N. Prospect Avenue, Redondo Beach, CA 90277; (310) 896-3100
Sunrise of Hermosa Beach, 1837 Pacific Coast Hwy Hermosa Beach CA 90254; 310-937-0959
Sunrise of Palos Verdes, 25535 Hawthorne Blvd, Torrance, CA 90505; 408-215-9608
Independent Living Only
Casa De Los Amigos, 123 S Catalina Ave, Redondo Beach, CA 90277; 310 376 3457
Heritage Pointe Senior Apartments, 1801 Aviation Way, Redondo Beach, CA 90278; (844) 220-4169
Seasons at Redondo Beach, 109 S Francisca Ave, Redondo Beach, CA 90277; (310) 374-6664
Mobile Home Parks
Skyline, 2550 Pacific Coast Hwy, Torrance
South Bay Estates, 18801 Hawthorne Blvd, Torrance
South Shores, 2275 25th St, San Pedro
Advantages and Disadvantages of Co-living
Like any living situation, co-living has its pros and cons. An article from the July/August 2020 edition of NAR’s senior newsletter can help you understand what they are. NAR outlines the advantages and potential disadvantages as well as how to mitigate them.
First, the advantages. Sharing responsibilities in the home is sure to decrease the burden on everyone. It’s especially useful if residents have distinct strengths and weaknesses and can complement each other. Residents in a co-living situation also divide costs, whether it’s mortgages as a homeowner or rent as a renter. Another big plus is the social factor. Humans are inherently social, and our physical and mental well-being depends on a sense of community.
Conflict is bound to arise between any people living together. This is especially true when there are power dynamics or physical limitations at play. Homeowners and renters may battle for a sense of control. Differences in health and mobility may place an unexpected burden on some residents. Luckily, many conflicts can be avoided with written agreements and trial periods. Be sure to interview prospective residents and discuss with them matters of finance, cleaning, visitors and pets, scheduling, and private vs common areas and household items. Background checks and credit checks may also be advised.
Photo by Thanos Pal on Unsplash
Recent South Redondo Sales
We monitor local South Bay real estate activity daily. The data is charted to show the direction of the market in terms of tendency to favor Sellers versus Buyers. Ideal market conditions are in the the center band where both have roughly equal market strength. As you can see, South Bay activity was right down the middle for July. The daily market trend has been more or less level since the beginning of the year, with only a slight upward movement each month.
Cumulatively, since the beginning of the year, the market has shifted from almost being a Buyers’ Market to being almost dead center on the chart. What that means in terms of value can be seen by looking at the most recent three months sales. The list below represents only houses, and only those sold in two neighborhoods. If you’re interested in real time information about homes like yours, or near yours, call and ask about our Neighborhood Notice service.
How To Safely List Your Home During COVID-19
If you’re worried about listing your home during the pandemic, or if you want to take advantage of the increased inventory and buy a new home, there is a protocol for doing so safely, even in heavily impacted areas of California.
You should discuss with your agent the things that can be done to curb the spread of COVID-19. Some things you can do while others your agent will be better able to do. You can leave interior doors open prior to a showing to ensure visitors don’t need to open doors. Also, you can open windows before and after showings to let in fresh air.
In addition to opening windows for a showing, use disinfecting wipes or spray to clean surfaces that you expect may have been touched frequently, such as countertops, cabinets, light switches, and door knobs.
You and your visitors should wash hands or use hand sanitizer, wear masks or other protective face covering, and practice social distancing. Any disposable protective gear should be discarded when leaving.
The listing agent can discuss the precautions with the buyer and/or buyers’ agent. They can discuss taking care to avoid touching surfaces as much as possible and other safety measures, as well as check to make sure everyone is symptom-free.
The California Association of Realtors (CAR) provides a poster guiding the actions of visitors to minimize risk, which should be posted near the entry. CAR also provides a form called the Coronavirus Property Entry Advisory and Declaration (PEAD) which requires all involved to certify that they are aware of the safety requirements. That form should be signed by the agents, seller, and any visitors.
Be sure to call or email us for more information about safely showing property during the pandemic or regarding other aspects of buying and selling in difficult times. We each have over 25 years of experience in good times and in bad.
Photo by Clay Banks on Unsplash
More: https://journal.firsttuesday.us/farm-health-precautions-when-listing-your-home/72565/
California gets serious on housing shortage
It’s no secret that California has exorbitantly high home and rental prices as well as increasing homelessness. What may be less obvious is that the issue lies in housing construction. There simply aren’t enough affordable units being built.
That’s why California’s Department of Housing and Community Development (DHCD) has established ambitious housing goals for the next decade. In order to be eligible for DHCD funding, a county such as Alameda County would need to plan to build 441,000 more housing units between 2022 and 2030. If that sounds unachievable already, take note that Alameda County is still behind by 188,000 units on its 2022 goal. As far as affordability, Alameda County has similar goals as other large metros for income distribution: about 45% to above-moderate income households, about 15% to moderate- and low-income respectively, and about 25% to very-low-income households. Local jurisdictions are also going to need to adjust their zoning laws to accommodate the new goals.
Photo by Denys Nevozhai on Unsplash
More: https://journal.firsttuesday.us/california-sets-lofty-housing-goals-for-the-decade-ahead/72328/
Co-Living vs Co-Housing: What’s the difference?
Co-living and co-housing are two types of housing arrangements that may be confused. Both are types of “intentional communities” — that is, communities in which the residents share some or all of the space. There are important distinctions in how that space is shared, though, outlined in July/August 2020 edition of NAR’s SRES newsletter.
In a co-living arrangement, all residents share a single dwelling, and the residents are not relatives. Each resident will normally have a private bedroom and possibly a private bathroom. The rest of the rooms are communal, including the kitchen, dining room, living room, and laundry area. This will be familiar to college students living in dorms, but it’s also a potentially beneficial housing arrangement of seniors who may not be able to afford their own housing space or may need assistance.
Co-housing communities, on the other hand, are more private, and likely more expensive. Each party in a co-housing situation may or may not be a single individual; they could be couples or families as well. In any case, the living unit is not shared with other parties, and no room inside the dwelling is communal. Instead, the communal space all exists outside the dwelling, in the form of activity rooms, pools, meeting rooms, or similar such areas.
Photo by Nastuh Abootalebi on Unsplash
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
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.
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.
