What $500,000 Buys You Around California – and How It Shapes Where We Move

San Jose Realtor Holly Barr sold this burned-out home for more than $900,000.San Jose Realtor Holly Barr sold this burned-out home for more than $900,000. (Matt Levin/CALmatters)Technically, California has seen higher prices before. During the housing boom of the mid 2000s, the median statewide price nearly broke the $600,000 barrier (and that’s without adjusting for inflation). Many parts of California are still cheaper now than they were a decade ago.But Silicon Valley is not one of those places.The median price of a single family home in Santa Clara County — home of Apple and Google — hit $1.4 million in March of this year, according to data from the California Association of Realtors. That’s an all-time high.The region’s housing market has transformed any piece of available land into a veritable gold mine. No matter what sits on top of it.Real estate agent Holly Barr says she’s never had a listing generate as much attention as the one on Bird Avenue in the San Jose neighborhood of Willow Glen. The house caught fire two years ago during a remodeling job. What was left was a burned-out husk of a California bungalow sitting on 5,800 square feet of land.When Barr put the property on the market in April for $800,000, the listing made international headlines. It sold for over $900,000 — in less than a week. The burned down house will be razed and a new property will be built there that will likely sell for far more.“I wasn’t surprised,” said Barr. “It’s not about the house, it’s about the land and location.”It’s also not a surprise that with unliveable wrecks selling for that much, residents are starting to look for other places to live.According to data from the California Department of Finance, Santa Clara County lost 17,000 more residents to other parts of the state or country than they gained last year. That’s the second biggest net domestic migration loss of any county in the state.Los Angeles: A Fixer-Upper, or a House Smaller Than Your Expectations

A fixer-upper east of downtown Los Angeles is on the market for more than $500,000. (Courtesy of Jenn Cahill)Los Angeles County saw the largest drop in net domestic migration, losing 58,000 more residents than it brought in. The region tops the list partly because it’s simply so huge. More than 10 million people call it home, which means any population shift in L.A. County is likely to dwarf other parts of California.But the rising cost of housing is also playing a role. The county’s median home price broke the $600,000 barrier late last year. In a region famous for sprawl, prices are getting prohibitively expensive in and around L.A.’s downtown core.Los Angeles real estate agent Jenn Cahill specializes in neighborhoods east of downtown Los Angeles like Boyle Heights. She says she gets approached by young families with budgets of $500,000 all the time. Which means a lot of her role is adjusting expectations.“You walk into a bedroom, and they immediately think it’s a closet,” says Cahill. “And you’re like, no, no ,no, it’s a bedroom, with a little shoebox closet in the corner.”Cahill says options are limited if you want to stay relatively close to downtown — you could find a fixer-upper closer to your job, or you could choose to go farther out and commute.A recent study found that Southern California commutes were the most stressful in the country.Sacramento: A Large Suburban Home That’s Luring More and More CaliforniansA house in the Elk Grove suburb of Sacramento priced at nearly $500,000.

A house in the Elk Grove suburb of Sacramento priced at nearly $500,000. (Courtesy Veronica Nelson)Where are housing refugees from the Bay Area and Los Angeles going? Many are heading to the Sacramento area, where $500,000 still gets you pretty nice digs.Sacramento saw the largest population growth of any major city in California last year, breaking 500,000 residents for the first time. Where did they come from? Topping the list were L.A. and Santa Clara counties.Why? A five-bed, three-bath home in Elk Grove, an affluent Sacramento suburb, goes for $490,000. Realtor Veronica Nelson specializes in showing what middle class Bay Area families can get 90 miles East.“I’ve had teachers, Kaiser employees. They commute [to the Bay],” says Nelson. “Spend a night or two with a relative in the Bay Area, and make the best of it.”Nelson says she often talks with other Sacramento real estate agents about the influx of residents from costlier parts of the state. She worries that Sacramento is becoming unaffordable to Sacramentans — and knows some clients that are pushing even farther East.Reno, Nevada: A Big Home, But Maybe Not as Big as You ThinkA five bed, three bath house in Reno is listed at $498,000. “

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Delinquency and the HOA

The timely collection of fees and assessments is the lifeblood of any HOA, condominium association, co-operative, or timeshare. However, unit owners are not always able to pay their fees and assessments on time. Depending on the state you live in and the penalties for late payments ascribed in the governing documents, delinquency is handled in one a few different methods. This article describes some of the best practices common interest community associations can use to keep their delinquencies to a minimum and their collection efforts on track to keep the revenue flowing while the delinquency is remedied.

Most HOAs have rules about when payments are late and what steps the association should take to collect delinquent funds. Consult with your association’s governance documents to see how delinquencies are handled at your HOA. If the documents are silent or the penalties are not strong enough to encourage compliance, it may be time for new rules and a document revision to help ensure that there are adequate penalties and remedies in place for late payments. Generally speaking, a fine ($25 or so) is imposed for payments that are 10 days or more in arrears. Additionally, there are collection efforts at 30, 60, and/or 90 day intervals when payments are missed.

At 30 days, a letter of demand is usually issued. This letter details the delinquency, reaffirms the fine that went out 10 days after the payment was missed and details what further collection activities await if the payment is not made in timely fashion. At 60 days, the matter is generally turned over to the association’s attorney or collection agent for legal proceedings. The legal costs are generally paid by the association and assessed to the delinquent unit owner as outlined in the association’s governing documents. The simple desire to avoid all of these additional costs is usually enough incentive for the unit owner to make good on the debt at this time. The addition of the attorney’s fees on top of the unpaid common fees and fine really drive up the debt. It is not uncommon for these fees to top $500 or more depending on the part of the country you live.

Finally, if the delinquent unit owner is unable or unwilling to pay the delinquent fees, the association can begin foreclosure proceedings against the unit owner. Again, laws vary from state to state but, generally speaking, delinquency can be remedied via foreclosure action, although unit owners have very specific rights from state to state. That is why it is best for associations to work closely with legal counsel during this phase of collection procedures. Laws also vary from state to state about the right of priority (who gets paid first) when foreclosure occurs as there are usually multiple claimants in the foreclosure proceeding. It is a drastic and final measure for just this reason.

There are times when HOAs, condominiums, timeshares, and cooperatives simply need more money than they have collected for capital improvement projects that are needed. HOALendingXchange.comis the easy choice for community associations and HOAs seeking money. Getting started with your own HOA loan is easy. Simply fill out the HOALendingXchange inquiry form and HOA loan experts will get busy preparing their very best HOA loan concepts for your consideration.

In San Francisco’s Housing Lottery, It’s the Luck of the Draw

By EMILY BADGER AND INYOUNG KANG
The Natalie Gubb Commons in San Francisco in February. Last fall, 6,580 people applied for 95 apartment units. Jim Wilson/The New York Times
Good morning.
People told Isabel Sanchez that the housing lottery was a waste of time. The odds were too long. Her family would never win. Happy endings are rare in San Francisco’s housing market for anyone who can’t afford luxury rents.
But she and her family were facing a no-fault eviction last fall; the house where they rented an in-law unit had been sold to new owners, who wanted their mother to move in. So Ms. Sanchez applied for the city-run lottery for Natalie Gubb Commons, a new 95-unit affordable housing development downtown open to households making up to 50 percent of the area median income.
Ms. Sanchez and her family were among 6,580 households that applied for the property, whose lottery and aftermath The New York Times chronicled through this spring. Such lotteries are a regular feature of housing policy in high-cost cities. Far more people need — and qualify for — public housing, housing vouchers or below-market-rate apartments than the assistance available. And so cities, housing authorities and developers often dole out what they have by drawing numbers.
Ms. Sanchez pulled No. 16. In April, her family moved into a new three-bedroom apartment renting for a fraction of market rate. That they won the first lottery they ever entered — while some people apply, and fail, for years — shows how utterly random the results are.
Lotteries don’t reward the neediest families, or the most persistent applicants, or those closest to eviction. Although luck still lands on households that fit these descriptions.
The larger problem, in California and elsewhere, is that scarce housing assistance makes these distinctions relevant. In a situation where everyone in need can’t have help, the fairest solution is arguably to set aside the impossible task of deciding who merits help the most, and simply draw winners at random.

By EMILY BADGER AND INYOUNG KANG
The Natalie Gubb Commons in San Francisco in February. Last fall, 6,580 people applied for 95 apartment units. Jim Wilson/The New York Times
Good morning.
People told Isabel Sanchez that the housing lottery was a waste of time. The odds were too long. Her family would never win. Happy endings are rare in San Francisco’s housing market for anyone who can’t afford luxury rents.
But she and her family were facing a no-fault eviction last fall; the house where they rented an in-law unit had been sold to new owners, who wanted their mother to move in. So Ms. Sanchez applied for the city-run lottery for Natalie Gubb Commons, a new 95-unit affordable housing development downtown open to households making up to 50 percent of the area median income.
Ms. Sanchez and her family were among 6,580 households that applied for the property, whose lottery and aftermath The New York Times chronicled through this spring. Such lotteries are a regular feature of housing policy in high-cost cities. Far more people need — and qualify for — public housing, housing vouchers or below-market-rate apartments than the assistance available. And so cities, housing authorities and developers often dole out what they have by drawing numbers.
Ms. Sanchez pulled No. 16. In April, her family moved into a new three-bedroom apartment renting for a fraction of market rate. That they won the first lottery they ever entered — while some people apply, and fail, for years — shows how utterly random the results are.
Lotteries don’t reward the neediest families, or the most persistent applicants, or those closest to eviction. Although luck still lands on households that fit these descriptions.
The larger problem, in California and elsewhere, is that scarce housing assistance makes these distinctions relevant. In a situation where everyone in need can’t have help, the fairest solution is arguably to set aside the impossible task of deciding who merits help the most, and simply draw winners at random.

Is It Time To Sell Your Apartment Investment?

by  Lee Kiser 

As a multifamily real estate investor, you probably get calls from brokers all the time telling you now is the perfect time to sell. The reality is that there is no perfect time. Because there are numerous parameters, the decision to sell is beyond anyone’s knowledge but yours. After analyzing clients’ decisions over the years, four key buckets stand out in determining if it is time to sell: macroeconomic trends, microeconomic trends, asset-specific factors and personal factors.

Ask yourself the following questions to determine the status of your property. Whenever you feel you are in two or more of these buckets, it is more than likely a good time to sell. If you find yourself in all four buckets, sell the property.

Bucket 1: Macroeconomic Trends

Alternative use of capital (stock market, etc.), interest rate changes, job growth, GDP, fair housing changes — all these are examples of macroeconomic trends that could impact your desire to keep your multifamily investment. The easiest example of a macroeconomic decision tree is interest rates. Have you factored rising interest rates into your investment hold? If you have a term loan, when is it due and what impact will interest rates have on your refinance? What does your return on capital look like on a refinance versus obtaining acquisition financing for an alternate property — and does it make sense to move the equity from your current investment into a new one by selling?

Bucket 2: Microeconomic Trends

Changes often occur in the city, county and state where your investment is. Is the market improving? Are new jobs coming in? Is there a growing tech and startup scene? How are renewals treating you? Seasonality is always a factor, but are you experiencing more or less vacancy than last year and the year before? Is the city imposing new restrictions on multifamily or affordable housing, which change the nature of your investment? What is the long-term fiscal outlook for the state in which your apartment property is located — and should you consider an alternative in another product type of neighboring state?

 

Bucket 3: Asset Specific Needs

How old are your roof, boiler, kitchens, baths, etc.? What does your building need, expense wise? Beyond just running your building, what are the capital expenditures you have realized versus those still remaining? How close are you to having obsolete structures and systems? What capital would be needed to bring these items current — and does it make sense to invest that additional capital in the building or release the equity from the investment through a sale and redeploy it in another property?

What does your investment look like? What is your total capital in it the apartment? Because of depreciation or appreciation, what portion of the value of your property is equity? How is that equity working for you? Does it make sense to keep the equity here? After a careful analysis, many times the most sensible thing to do is sell the property and purchase a replacement on a different basis.

Bucket 4: Personal Changes

There are so many things you have control over, but there are also things you don’t have control over. Death, divorce, retirement, career changes, relocation and so many more events can happen in your personal life that may make it the right time to sell. I weigh the personal bucket the highest of all the other indicators.

Too often owners make the decision to sell too complicated. Is it time to sell? Take a step back and look at your investment from the perspective of these four buckets and the decision becomes clearer.

In a First, California Will Require Solar Panels On All New Homes

Almost all new homes in the state will be required to come equipped with solar panels starting in 2020, under a proposal before the California Energy Commission today. (Lauren Hanussak/KQED) 

On Wednesday, the California Energy Commission unanimously voted to approve new energy standards that will require all new homes in California to have solar panels and other measures geared toward making buildings more energy-efficient.

“This is just a milestone. There’s a hell of a lot of work to do between now and 2020,” said chairman Robert Weisenmiller. “The bottom line is we’re going to stay focused on making this happen, and happen smoothly.”

The commission held a hearing before the vote to solicit public comment from various trade groups. The majority of those present, which included environmental groups,  solar companies, and utilities, voiced their strong support for the new standards.

At least one manufacturing trade group, however, urged the commission to delay the move. A spokesperson for the Air-Conditioning, Heating, and Refrigeration Institute expressed concern over late changes in the standards that would affect high efficiency air filters and water heaters.

In response to the request, a representative for the commission said there’s no valid legal basis for the delay.

“We understand that we’re good to go,” the representative said.

Original post:

The California Energy Commission approved new standards on Wednesday that will require solar panels for nearly all new homes starting in 2020, marking an historic leap in the state’s efforts to slash greenhouse emissions.

The new standards will apply to homes, condos and multi-family buildings up to three stories high.

The move would be a key step in meeting the state’s ambitious zero net energy goals, says state Senator Scott Wiener (D-San Francisco). In 2007, the energy commission called for all new residential buildings to produce as much energy as they consume by 2020. New commercial buildings have to meet the standard by 2030.

Wiener, who led the successful effort to pass a solar mandate for San Francisco construction in 2016, says solar energy is a necessary component of California’s  zero net energy goals.

“In order to achieve zero net energy, you have to have a renewable energy source,” says Wiener. “With everything happening in the country right now and President Trump’s obsession with coal and the continuing strength of the oil industry, California needs to be aggressive in moving towards a clean energy future, and this is one step in that direction.”

While the step is significant, California has been preparing for the transition to solar energy for years, according to a spokeswoman for the state energy commission.

“We update energy codes every three years and in 2013  we required that all new homes be solar-ready,” says spokeswoman Amber Beck. “Homes had to have a certain amount of space on the roof so a homeowner could add a solar panel later on if he chooses.”Making California homes more energy-efficient is part of a broader initiative to shrink the state’s greenhouse gas emissions 40 percent below 1990 levels by 2030.

Electricity consumed by residential and commercial buildings is responsible for 14 percent of the state’s greenhouse pollutants, according to the California Public Utilities Commission.

Some critics, though, question the wisdom of the transition to solar at a time when California is struggling with a dire housing crisis and skyrocketing housing costs.

In San Francisco, only 12 percent of households can afford a median-priced home, according to a recent report by Paragon Real Estate Group.  And in California overall, half as many people can afford median priced housing as in the rest of the country.

“It absolutely will increase the cost of homes,” says Lisa Vorderbrueggen, director of governmental affairs for the Bay Area Building Industry Association.  “But on the other hand, increasing the energy efficiency of homes has long been a state priority, so there’s no free lunch. We certainly would like to see local jurisdictions reduce costs elsewhere.”

The energy commission’s Beck says the solar mandate will add about $40 a month to the average monthly mortgage payment. But, she adds, the new standards will cut energy use by more than half, and homeowners can expect to save about $80 per month in energy costs over the course of a 30-year mortgage.

Wiener, who has made housing affordability a centerpiece of his agenda, says homeowners will also have the option of leasing their solar panels.

“You can have a third party come in and install and maintain those solar panels,” he says, “so they end up paying for themselves over time.”

Besides the solar mandate, the new standards to be voted on Wednesday include lighting upgrades for all new commercial buildings and high-rise construction above three stories, a transition that will help buildings use 30 percent less energy.

In addition, new ventilation requirements will apply to new homes and healthcare facilities. The measures will protect residents from air pollution originating from outdoor and indoor sources, according to the California Energy Commission.

Attract Tenants by Installing This Affordable Backyard Amenity

Attract Tenants by Installing This Affordable Backyard Amenity

Covered patios come in many shapes and sizes and are a desirable amenity for single-family rentals. One of the most common coverings is the versatile pergola, which offers a natural look and an outdoorsy feel for many years to come.

Pergolas are time-tested wooden open-air structures that can be installed over patios to provide shade and a cozy place to gather on a cool spring evening or warm summer day. They are a backyard amenity that surely will be welcomed by your residents.

Vertical posts support a network of cross beams and a sturdy open lattice, usually cedar, which can be covered or left open to the elements. Many companies offer pre-manufactured kits priced anywhere from $1,500 to $5,000 and others will build to site specifications. Larger applications can run $10,000 to $15,000.

Because most pergolas use rugged stained cedar, the structure can withstand weather and provide structural integrity for 15-20 years if maintained properly. Re-staining every three or four years typically is the only maintenance requirement.

Chris Lee, president of Earthworks, says pergolas can be built for just about any type of covering and offer property managers another amenity to attract new residents and retain others. They can be covered with natural greenery or lightweight screen, breathable polyethylene or canopy-type materials to provide shade and deflect heat.

“It’s another way to create a gathering point, instill that sense of community, which helps retentionand leasing,” he said. “Cedar is very durable, long lasting. It’s expensive but not as expensive as if you build a steel structure. You’re not supporting a lot of weight so there isn’t any real big engineering requirements or anything like that.”

Pergolas are distinctive and may seem to be an ultra-modern amenity, but they’ve been around for hundreds of years. Early examples of pergolas date to ancient Egyptian times, and Italy is known for building the structures as far back as the 1600s. Most were built with creeping vines to provide shaded areas, a practice that still holds true today.

“We have some clients who have planted Wisteria or Trumpet Vines that grow over the structure,” Lee said. “The wood lends well to that, it allows the plant to root in as it grows up. We’ve got some that’s completely shaded because there is a thick weave of Wisteria all through the top of the pergola, simply from planting the plant on the back corners. After a couple of years it will completely cover the pergola.”

He cautions that anytime plants grow on pergola they could cause long-term damage because of the moisture that gets trapped between the wood and plant. Re-staining also becomes an issue.

Lee recommends that any vines or plant life growing on the pergola be maintained so it doesn’t get out of control.

“It’s like everything else, you have to take care of it,” he said. “These structures can last 20 years if well-maintained.”

Because of their simple design, pergolas can be retrofitted to pool areas and patios. Earthworks recently installed one that partially covered a pool, providing relief from the heat for residents at one apartment community.

Size doesn’t necessarily matter either. Pergolas can sprawl across large patios or be reduced to a small area of the backyard with seating. Drapes can provide a semi-private area while still allowing for air movement from the top.

The floor can either be made of grass, stone or rock.

“There’s so much you can do with pergola,” Lee said. “In the grand scheme of things, they are not crazy expensive, and it’s something anybody can do as long you have a 12’ x 12’ area. That’s all you need.

State auditor: California doing a poor job on homelessness

LOS ANGELES (AP) — California is doing a poor job of sheltering the nation’s largest homeless population and needs to provide statewide leadership to address the problem, the state auditor said Thursday in a report that also singled out problems with homeless services in Los Angeles County.

California has about 134,000 homeless people, roughly 24 percent of the nation’s total homeless population, and Los Angeles County has the most within the state — at least 55,000 people, an audit summary said.

“California’s relative position regarding its homeless population points to the need for a single entity to oversee an effective and efficient system to address homelessness,” it said.

The audit cited an array of troubling facts about California’s homeless problem.

With 68 percent of its homeless people living in vehicles, abandoned buildings, parks or on streets, California has the highest rate of unsheltered homeless of any state.

Cities such as New York and Boston, by comparison, shelter more than 95 percent of the homeless population, the report said.

Additionally, 82 percent of California’s homeless youth are unsheltered, compared to 38 percent in the rest of the nation.

The unsheltered population also has an increased risk of exposure to communicable diseases, the audit said, noting that four California counties had the largest person-to-person hepatitis A outbreak in the U.S. since a vaccine to prevent the illness became available in 1966

The audit said a 2016 state law that created the Homeless Coordinating and Financing Council was a good start in providing oversight, but it has no permanent staff or funding.

The auditor recommended the Legislature provide the council funds to hire staff, including an executive director, and then require the council to develop and implement a statewide strategic plan by next April.

State Sen. Scott Wilk, an Antelope Valley Republican who requested the audit, said Thursday he’s planning to amend a current bill to include funding the council and requiring it to come up with a plan of action.

“I’ll start talking to my colleagues,” Wilk said. Homelessness “is literally everywhere … We have to step up because it’s just a massive challenge. We’ve got to do whatever we can.”

In Los Angeles County, the Los Angeles Homeless Service Authority and the housing authorities for Los Angeles County and the city of Los Angeles are responsible for distributing public funding in eight service areas.

The state audit found “significant” funding variations between the eight areas, and the authority generally awarded the smallest amount of new funding to areas outside of the city of Los Angeles during the 2014-15 and 2016-17 fiscal years.

It also found, however, that the authority consistently used “the same reasonable process” to evaluate competing applications but there were problems due to a lack of written procedures, documentation, data analysis of its efforts and other inefficiencies.

The audit acknowledged that the authority has begun to address some of the issues but needs to formalize the improvements.

It also noted that a factor contributing to funding variations across service areas is that allocation decisions can be outside the authority’s control: The city and county have restrictions based on geography.

The Los Angeles Homeless Service Authority said in a statement that internal procedures can always be improved and agrees with the audit’s findings, “meant to not only help refine our procurement process and to continue sustaining the fair and unbiased system we currently have in place, but to help bolster and expand the quality of our service provider applicant pool.”