Author: Marlowe Clark

Blanket Bans On Tenants With Criminal History Are Illegal

California has a long list of protected classes under its fair housing laws. Landlords are forbidden from refusing tenants on the basis of being in a protected class. People with a criminal history, however, are not a protected class, and landlords are allowed to request a background check and base their decisions on it. So landlords may not be aware that it is illegal have a blanket ban on tenants with criminal history. Why is this the case, then? The answer is implicit discrimination.

It’s well known that racial minorities, particularly Blacks, are heavily disproportionately criminal record holders. Regardless of the reason for this fact, it’s true that blanket bans on criminal record holders do therefore disproportionately affect racial minorities. Because of this, California law prohibits these blanket bans. It is, of course, also illegal for landlords to only conduct background checks on members of specific protected classes, but this shouldn’t come as a surprise. In addition, landlords cannot reject tenants on the basis of suspected criminal activity without a criminal record, nor on the basis of gang affiliation. Despite the association of gang affiliation with probable criminal activity, it is not actually illegal to simply be a member of one.

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More: https://journal.firsttuesday.us/california-targets-unlawful-crime-free-housing-policies/90723/

Getting A Loan With Irregular Income

Freelance workers and some self-employed people typically don’t have a consistent income. This leads some to doubt whether or not they qualify for a mortgage loan. Lenders will never blanket deny everyone with an irregular income, but it certainly could be more difficult to get a loan. As long as your credit history and debt-to-income ratio are good, it shouldn’t be too much of an issue — you simply may need more documentation to prove that you’re good for it. While lenders will always look at recent income, in the case of irregular income, they may also consider whether or not you’re likely to have clients in the near future based on your occupation.

If you get rejected outright, it’s likely that now isn’t a good time for you to buy in the first place. As long as you aren’t getting rejected, the worst case scenario is a non-qualified mortgage loan, or non-QM loan. Non-QM loans don’t meet the Consumer Financial Protection Bureau guidelines that are designed to ensure borrowers are able to repay their loans, and not all lenders offer them. They may be used for self-employed people, people with irregular income, people with low credit scores, or non-traditional types of properties. Because non-QM loans are riskier for the lender, they do have a drawback for the borrower. They typically have higher interest rates, larger down payment minimums, and/or shorter repayment periods.

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How To Write A Convincing Counteroffer

It can be a difficult decision for a seller whether or not to write a counteroffer. In addition to there being two other options, accept the offer as is or reject it and wait for a better offer, the counteroffer has the potential to push away the buyer and possibly force you to wait for another offer. But this decision can be made easier by learning how to write a good counteroffer.

The worst thing you can do when making a counteroffer is not communicating. Usually this is done through agents and not directly with the buyer, but that’s better than nothing. Try to learn what the buyer’s goals and motivations are, and craft a counteroffer that provides what they want in exchange for something else that you want. A counteroffer that attempts to assert the seller’s position is a bad counteroffer. A counteroffer that recognizes what a fair deal is in the current market conditions is a good counteroffer. In addition, don’t try to confuse buyers into accepting a bad deal with tricky wording. If the buyer can’t understand the counteroffer, they won’t accept it.

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The Four Types Of Commercial Leases

There are four different types of commercial leases that each place different responsibilities on the tenant and landlord. These are known as net lease, double net lease, triple net lease, and absolute triple net lease. They can be abbreviated as N, NN, NNN, and Absolute NNN respectively. In general, N places the fewest responsibilities on the tenant and Absolute NNN places the most. However, in certain cases a tenant may prefer an NN lease over an N lease, if the tenant is adamant about not paying maintenance costs.

For each of these lease types, the tenant is responsible for their base rent plus some additional property expenses. The landlord in turn is responsible for structural issues, for all except an Absolute NNN lease, and may be responsible for some other costs. In an N lease, the additional property expenses tenant is responsible for include a portion of the property taxes, insurance, and maintenance costs. The landlord is responsible for major repairs. With an NN lease, the tenant is responsible for the entirety of the property taxes and insurance, but unlike an N lease, it’s the landlord who is responsible for maintenance costs. With an NNN lease, the landlord’s only responsibility is major structural repairs. The landlord’s only role for an Absolute NNN lease is collecting rent.

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More: https://www.harborwestcommercial.com/post/n-nn-nnn-absolute-nnn-leases

No More Federal Rate Hikes Expected

The high mortgage interest rates we’ve been experiencing have been the result of benchmark rate increases by the Federal Reserve. The benchmark rate isn’t directly tied to mortgage interest rates, but the benchmark rate does have a strong effect on interest rates. Now, though, no more rate hikes are expected, which should cause interest rates to level off, and then start to decline.

This levelling off followed by a decline is exactly what the Fed was aiming for with the rate hikes. It’s impossible for mortgage rates to drop without the real estate market, and in turn the economy as a whole, taking a hit. By raising rates above what they should be during a period of high prices, what the Fed has done is soften the blow by allowing the decline to be more gradual. Of course, this comes at the cost of significantly decreased affordability for the period of the rate hikes. Once interest rates fall below 6%, which should happen before the end of the year, the market should pick back up again. However, the effect may not be noticed until next year, as the end of the year is not generally a time of heavy market activity.

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More: https://www.realtor.com/news/trends/good-news-for-homebuyers-mortgage-rates-are-poised-to-fall/

Tax Implications Of Assisting Your Kids With Mortgage Payment

Some parents want to help their kids any way they can, including by helping them pay their mortgage. Or perhaps they’ve suggested that their inheritance be used for this purpose. Others want to instill the importance of financial responsibility or independence. Some simply can’t afford to help. But if you do want to help your kids with their mortgage, there is some important tax information you should be aware of.

One very common way for parents to assist their kids is with a financial gift. This isn’t just as simple as giving them money. Financial gifts above a certain amount per year do need to be recorded, and may be subject to a gift tax. In 2023, this amount is anything over $17,000 annually, but this value could change each year. Income tax could come into play if instead of gifting your child money, you provide them with a loan. The interest you receive on the loan must be reported as income and may be subject to income tax, and may also be deductible for your child. Capital gains tax is relevant if your kid inherits a property from you or you gift them a property. In the case of a gift, when your kid sells the home, they will need to pay capital gains tax if the home appreciated in value. In the case of inheritance, the capital gains tax amount is based only on the amount of appreciation and not the total value of the home.

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Builders Reducing Home Sizes To Meet Demand For Affordability

Builders have had it rough the past few years. The pandemic resulted in skyrocketing lumber prices as well as many job losses for construction workers. In order to get the most bang for their buck, builders started building luxury homes, which generally have a higher profit to cost ratio. But this couldn’t last long, as both market demand and legislation pressured them towards construction of affordable living homes, while at the same time, zoning restrictions made even this rather difficult.

Pressures on construction companies have started to ease up in most of the country, but not everywhere. Particularly in the West and Northwest, available land is an issue. Fortunately, builders may have figured it out and now have a new plan: Make smaller homes. It’s predicted that more affordable starter homes will become available within the next year or two, as 42% of builders are reducing the square footage of their homes. It doesn’t even require a big change — the nation’s largest homebuilder, D.R. Horton, is only reducing home sizes by an average of 2%. Builders are also planning to build more townhomes and duplexes, which take up significantly less space per unit than single-family residences.

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More: https://www.realtor.com/news/trends/first-time-buyers-rejoice-builders-are-finally-putting-up-more-affordably-priced-starter-homes/

Affordability Rebounding, But Still Below A Year Ago

The initial estimate of the median home price in California in the first quarter of 2023 was $760,260, for single-family residences (SFRs) only. Using this estimate, about 20% of California households could afford to purchase a median-priced home. This demonstrates a rebound from the last quarter of 2022, where it had dropped to 17% of households, down from 24% in the first quarter of 2022.

Affordability is weakest in Mono County, which experienced no change from its very low 7% affordability. The most affordable county has remained Lassen County, despise a slight drop from 54% at the end of 2022 to 53% now. Mendocino County had the largest increase in affordability, an increase of 12% from 14% at the end of 2022 to 26% now. No decreases in affordability exceeded 3% during the same time frame.

Though the US as a whole is significantly more affordable that the rather expensive California, the numbers show a similar trend. Affordability was higher in the first quarter of 2022, at 47%. It had dropped to 38% in the last quarter of 2022 before inching back up to 40% in 2023. Only three California counties — Siskiyou, Plumas, and Lassen — have a higher affordability rating than the national average.

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More: https://www.car.org/aboutus/mediacenter/newsreleases/2023-News-Releases/1qtr2023hai

Checklist For Hiring Contractors

If you’re planning to hire a contractor, chances are it’s because you don’t know how to do the work yourself. Because of this, it’s common to believe that the contractor knows what they’re doing and you don’t need to get involved or ask questions. But that couldn’t be further from the truth. Communication is very important when dealing with contractors to make sure the job that’s being done is the job you wanted. It may require a bit of research, but you should learn how to ask the right questions to get the right contractor for your job.

The specifics will depend on the particular job you want done, but there are some things you should be doing prior to choosing a contractor regardless of the job. When looking for a contractor, get quotes from multiple people and verify all of their credentials, licenses, and certifications, as well as experience. Make sure the contractor you pick has liability insurance and worker’s compensation insurance. The next part is what may require some additional research, and that is defining the scope of the job and setting a timeline. If you don’t know exactly what you’re looking to be done, the contractor won’t either, even if they know how to do it. When you get the contract, make sure it contains all the necessary elements before signing. A proper contract contains all the terms and conditions, payment information, warranties, and dispute resolution procedures.

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California Sales Trends Don’t Match Rest Of US

In the US in general, the market has been slowing down. This is leading to a higher inventory — in March 2023, the number of homes for sale was 9% higher than in March 2022. But this isn’t the case in California. In fact, for-sale inventory in California’s largest metro areas was actually down 14% between the same two months. The difference is most stark in San Jose, where inventory dropped 32%.

However, this does have a couple of explanations. Available inventory is a raw number. It doesn’t take into account the number of buyers. Home sales volume is more indicative of the number of buyers, and that dropped significantly more than 14% between March 2022 and March 2023, by 33%. Thus, the ratio of homes available per buyer is actually higher than it was last year. In addition, California is still being affected by lower construction rates, while it has recovered in many other states. The major reason is pushback from local homeowners who don’t want additional construction in their neighborhood.

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More: https://journal.firsttuesday.us/fewer-new-listings-as-californias-for-sale-inventory-dips/90477/

Most Popular Baby Names Of 2022

Are you planning to have kids soon and need ideas for names? The Social Security Administration (SSA) just released the list of the most popular baby names last year. If you want to be trendy, you can pick something from this list. Alternatively, you can take it as a list of names to avoid. Either way, it could be useful information, or could simply spark your creativity.

Liam and Olivia are the top choices for boys and girls respectively, and have been for several years now. Liam has been #1 for six years, and Olivia for four. The rest of the top ten list for boys are Noah, Oliver, James, Elijah, William, Henry, Lucas, Benjamin, and Theodore. For girls, they’re Emma, Charlotte, Amelia, Sophia, Isabella, Ava, Mia, Evelyn, and Luna. Of all twenty of these names, Luna is the only one that has never been in the top 10 before now.

The SSA also provided data on which names are growing fastest in popularity. None of these names are anywhere near the top 10, but they’re gaining the fastest. For boys, they’re Dutton, Kayce, Chosen, Khaza, and Eithan. For girls, they’re Wrenlee, Neriah, Arlet, Georgina, and Amiri.

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More: https://www.ssa.gov/news/press/releases/2023/#5-2023-1

How To Eliminate Existing Private Mortgage Insurance

Private Mortgage Insurance, or PMI, is a type of insurance that many lenders require for any mortgage with a down payment less than 20%. This is the main reason a minimum 20% down payment is so widely suggested. But if you aren’t able to put 20% down and are forced to take PMI, you needn’t worry too much. It’s also possible to get rid of existing PMI in certain circumstances.

One method that doesn’t require any specific action on your part is to simply wait until automatic termination of PMI, which occurs when you reach 22% equity and are current on your mortgage payments. However, it’s possible to request to terminate it earlier as long as your equity is at least 20%. There are a few ways to do this faster. The simplest option is to pay more than the required mortgage payment. This allows you to reach 20% equity faster while also reducing your PMI costs along the way. Another way you could potentially reduce payments to speed up equity gain is to refinance to a lower interest rate. Depending on your circumstances, this may or may not increase your total mortgage cost excluding PMI, but could eliminate PMI faster. There’s one more possibility: Reappraising your home. It’s possible that your home has accrued enough value that determining the new value of your home reveals that you actually do have at least 20% equity. If you do, you can request to remove PMI.

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New FHFA Schedule Sparks Controversy

At the start of May, the Federal Housing Finance Agency (FHFA) modified the fee structure for loans guaranteed by Fannie Mae or Freddie Mac. The goal of the change was to increase the accessibility of homeownership to disadvantaged groups. In order to achieve this, fees were reduced for low-income borrowers, first-time homebuyers, and those with credit scores below 680.

However, reducing some fees meant needing to increase fees elsewhere. Fees increased significantly for middle income earners, those making larger down payments, cash-out refinance applicants, and second-home buyers. Critics argue this is a bad idea, since middle-income earners are more ready to buy and less risky to lend to. But despite the fee increases for middle-income earners, fees are still lower the higher your credit score — that hasn’t changed. If the changes push middle-income earners away, the effect is probably psychological, not necessarily financial.

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More: https://money.com/fannie-mae-freddie-mac-new-mortgage-fee/

Investing In Real Estate Without The Fuss Of Management

Real estate is almost always a solid investment. The two major barriers are the high initial investment required and the necessity to manage the property. The former can’t really be fixed, but there are things you can do about the latter. While there is always the option to hire a property manager, this increases the investment required and can make the profits less attractive. Fortunately, there are some other options for real estate investment without being involved in management, which is termed passive real estate investment.

The other options are real estate investment trusts (REITs), real estate crowdfunding, private real estate funds, and exchange-traded funds (ETFs). In all of these cases, you are investing only a portion of the funds. This also reduces the barrier to entry, but at the cost of lower profits. REITs are trusts that own and manage income properties. Investors can purchase shares of REITs that pay dividends. Similar to REITs, ETFs are publicly traded; however, ETFs are traded on the stock market rather than purchased as shares of a company. Real estate crowdfunding and private real estate funds both involve a group of investors pooling money for an investment project. Crowdfunding gives each investor more choice about which projects they’re interested in, which is better for an investor who knows what they’re doing while still not putting the onus of management on them. Private real estate funds are the option for investors who just want to throw money at an investment and not be involved at all, as they are managed by professionals that choose the projects.

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When Is A Bridge Loan Right For You?

A bridge loan is a type of loan that uses equity in your current home to finance the purchase of a new home. Like nearly any loan, a bridge loan has interest and is paid off in installments. Unlike a traditional loan, though, the balance is paid off when your current home is sold. While you don’t technically need to sell your current home to pay off a bridge loan, it’s most useful in situations in which you want to both buy and sell.

Some seller-buyers will sell first, then use the sale proceeds to purchase a new home. However, this comes with potential uncertainties about how long you will be left without a home, especially if you make offers and aren’t successful. You may be staying in hotels or renting for longer than anticipated. Another option is to buy a home first using a traditional loan, then sell. If bridge loans weren’t a thing, there wouldn’t be anything inherently wrong with this. But they are a thing, and this is exactly the situation they’re designed for. While bridge loans do come with a higher interest rate than traditional loans, the length of the loan is typically much shorter. After all, most traditional loans are 15 or 30 years, and no one is going to be waiting that long for a sale to finalize. One caveat of bridge loans is that since they are based on the equity in your current home, if your equity is low, the loan amount will also be low.

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JPMorgan Chase Acquires First Republic Bank

This year has not been a good year for banks. City National Bank settled for millions early this year. In March, two major banks — Silicon Valley Bank (SVB) and Signature Bank — went bankrupt. These weren’t the only banks to fail, but they were the most well known. Now, First Republic, the largest bank to fail since Washington Mutual in 2008, has been added to list of failed banks. After First Republic failed, it was briefly taken under government control before being auctioned off. JPMorgan Chase, who had also purchased Washington Mutual when it failed, is the new owner of First Republic. The entire situation with First Republic has cost the Federal Deposit Insurance Corporation (FDIC) about $13 billion.

However, analysts and federal regulators emphasize that the banking crisis has calmed down, now. When SVB and Signature Bank failed, fears were warranted. But those failures sparked an inquiry into which banks were likely to fail, and First Republic was identified as a likely candidate early on. So, this wasn’t entirely unexpected, and regulators were able to act quickly. Additionally, the FDIC admits that SVB’s failure was partially their fault, as they had not been meticulous in their supervision. Analysts aren’t expecting any additional major bank failures in the near future.

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More: https://www.npr.org/2023/05/01/1172868295/first-republic-bank-failure-fdic-jpmorgan-chase

The Features That Translate To Higher Home Values

If you want to make the most of a partial remodel, look no further than the kitchen. Unless no one in the family knows how to cook, people will spend quite a bit of time there. Kitchen remodels are a great investment if you know what’s trending. Right now, that means terrazzo floors, soapstone, and quartz. Marble and granite are old standbys that won’t generate additional interest. Additionally, more avid chefs are definitely looking for less common kitchen amenities. These include steam ovens, pizza ovens, and professional-grade appliances.

Getting all new furniture may not seem like a solid investment, but it certainly can be. You probably do want to if your current furniture is noticeably old or beaten up. And while you’re at it, you should choose the leading trend, which remains the modern farmhouse style. This style is typified by comfort, neutral color schemes, reclaimed materials, and vintage accessories, while at the same time using modern clean lines. Nearly all modern farmhouse style homes use reclaimed wood and have large, comfortable furniture. Many display rustic-looking, but still modern, wrought iron accents as well as antiques.

Having a shed somewhere on the property will also bring in more money. In addition, accessory dwelling units (ADUs) are still popular. Combining the two also works great. Buyers are paying more for properties with sheds converted into living space. Notably, this actually doesn’t translate to a quicker sale – for one reason or another, homes with sheds stay on the market longer, despite selling for more. If you do want to sell quickly, some inexpensive upgrades that will accomplish just that are doorbell cameras, heat pumps, and fenced backyards.

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More: https://www.realsimple.com/features-that-boost-home-values-2023-7375268

Construction Down Overall, But Up For SFRs

While construction rates have been low overall since the pandemic, construction rates can potentially vary significantly depending on the type of building you’re looking at. This can be the result of different levels of demand or zoning regulations. Recent zoning reforms have tried to push construction more towards multi-family residences, believing that zoning is the primary obstacle.

However, if recent numbers are any indicator, there simply isn’t much demand for multi-family residences. Construction starts on buildings with five or more units dropped by 6.7% in March. Permits for such buildings also fell sharply, by 24.3%. At the same time, construction of single-family residences (SFRs) increased by 2.7%, and SFR construction permits increased by 4.1%. Overall, construction starts dipped down 0.8% and permits decreased by 8.8%.

Even though this wasn’t the goal of the zoning reforms, not everyone sees this as a bad thing. SFRs being in higher demand could signal that more people are ready to buy as opposed to rent. However, since it’s not renters but potential landlords that would create demand for multi-family residences, it’s also possible that homeowners simply aren’t seeing the value in renting the units out, leaving potential tenants in the dust.

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More: https://www.reuters.com/markets/us/us-single-family-housing-starts-increase-march-2023-04-18/

Interest Rate Versus APR: What’s The Difference?

When comparing loans, buyers frequently only look at the interest rate. However, that’s not the entire story. There’s another number that lenders are required to supply, but that lendees rarely pay attention to. That number is the annual percentage rate, or APR. This shows an estimate of the actual percentage of the loan amount that you pay each installment period. It takes into account the interest rate, principal loan amount, and loan length, as well as any lending fees or closing costs.

Even though the APR gives you a better idea of how much you’re actually paying, the interest rate by itself is still important. This is because APR doesn’t take into account compound interest. If the interest rate is high, the amount you pay each installment period could increase significantly over time. This means a loan with a lower APR could potentially cost more over time if it has low lending fees. If two loans look very close and you’re concerned about exact numbers, you may also want to look into the APY, which is the annual percentage yield. This value does take into account compound interest. As such, it’s going to be slightly different each year, but knowing the APYs across multiple years will give you the best idea of how much you are actually paying.

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When Can A Contractor Place A Lien On A Property?

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

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

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