Sep 08

A good article on the current try at zero-down mortgages.

Why “zero-down” mortgages are gaining ground
https://www.axios.com/2022/09/08/banks-mortgages-zero-down-payment?

Details: Bank of America’s “zero down payment” loans are a bit of a misnomer. They do technically require a down payment, but the bank is offering grants of as much as $15,000 to cover it.

So buyers don’t have to come up with the down payment, but they are not borrowing the entire cost of the home, and they wind up holding some measure of equity right off the bat.
That’s distinct from the zero-down loans that, along with questionable underwriting standards, helped make such a mess in the run-up to the Great Recession.

It is great that more folks have the opportunity to buy homes and create equity and stability. However, for these programs to achieve what they set out to, they cannot facilitate the purchase and then leave the new homeowner to fend for themselves, but instead also provide resources for the buyer’s future success.

A significant problem with these first-time buyer programs is they focus on the sale and do not offer ongoing support for the buyers, many of whom are generational renters. When something needs repair, even if you broke it, call the landlord or the city. Problems with neighbors, move. Financial issues, stretch out rent payments as far as you can. Landlords in lower-income neighborhoods are often the unwilling lender, the financial rubberband.

A prime example: Around 2006 or 07, one of our long-term, great renters bought a home. A couple of years later, she was in our lobby crying, ‘Would we rent to her again?’ Child Protective Services threatened to take her kids because one of them mentioned to their teacher that they had not had hot water in months. The former tenant told me she called Blau Plumbing to fix it. They told her the water heater was bad and needed replacing at $900, which she could not afford. I sent one of my maintenance guys out. The water heater was maybe five years old, in good shape, and needed a $6 thermo coupling.

A well-designed program would have had a helpline that the new homeowners could call for advice.

Aug 23

https://www.nbcnews.com/news/us-news/1-oklahoma-deputy-dead-another-wounded-serving-eviction-papers-rcna44325

The gunfire erupted after Oklahoma County sheriff’s deputies tried serving eviction papers at a home southwest of Oklahoma City, Sheriff Tommie Johnson told reporters.

Not only are officers in danger during an eviction, but so are owners.  A couple of decades ago, I had a renter who was three months behind at the time of the move, take a swing at my head with a bedpost.  She hit the upper corner of the cab of my truck, leaving a substantial dent. It would not have turned out well if she had hit my head instead.

These days we find that meditation generally provides as good of results as eviction with much less stress and conflict.  We attempt to mediate all nonpayment and a few behavioral issues, and only file when the renter refuses mediation or does not comply with the agreements.

Check out Landlords | Mediate Wisconsin for more information.

Aug 18

 

Below is an Op-Ed by Yusuf “Joe” Dahl, past president of the Apartment Association. I think owners should be able to exclude drug dealers for a longer period than other crimes, but not a lifetime ban found in the HUD regulations and guidelines. 

https://www.washingtonpost.com/opinions/2022/08/17/drug-sales-exception-fair-housing-law/

Opinion | Congress should remove the drug-sales exception to fair housing law – The Washington Post

Yusuf Dahl is a past president of the Apartment Association of Southeastern Wisconsin; founder of the Real Estate Lab in Allentown, Pa.; and board chair of the Petey Greene Program, a national prison education nonprofit.

At 18, I was sentenced to 10 years in prison for dealing drugs. Twenty-five years later, as a Princeton-educated nonprofit leader and entrepreneur, I thought that part of my past was far behind me.

I had a rude awakening last year when my application to rent a home was denied after a background check. My prospective landlord exercised their legal right to discriminate against me for my prior conviction.

More about Joe:

Joe is a past president of the Apartment Association, a Princeton Alumnus, and until this summer, the Director of the Dyer School for Innovation and Entrepreneurship at Lafayette College, PA. He runs the Real Estate Lab in Allenton. Here are links to his Prison to Princeton and TED talk videos. They are short and worth viewing.

 

Tim Ballering
Tim@ApartmentsMilwaukee.com

 

Aug 16

https://www.nytimes.com/2022/08/15/business/dealbook/adam-neumann-flow-new-company-wework-real-estate.html

Andreessen said in the blog post that he was interested in Flow because the rental real estate market is ripe for disruption. That’s especially true, Andreessen said, now that more and more people are working from home and “will experience much less, if any, of the in-office social bonding and friendships that local workers enjoy.” He also hinted that the company might try to address one of the biggest challenges renters face: “You can pay rent for decades and still own zero equity — nothing.” He added: “In a world where limited access to homeownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community and genuine ownership has transformative power for our society.”

This will be interesting.  

Aug 09

Maybe this falls under the heading of “No Good Deed Goes Unpunished” Sounds like the property owner had kept the rent well below market for years, and now is being attacked for bringing it close to market rate.

Her Rent Is Going Up $700 A Month Because Her Landlord Claims That’s What The Apartment Is Worth

Unfortunately, Grace’s case is not uncommon. According to Rentec Direct, “Most landlords do not regularly raise their rent to match the cost of owning and maintaining a property,” the site explained.

What ends up happening is after 5 years at a steady rental rate, the owner will realize that a rent increase is necessary to keep up with increasing property taxes, maintenance, and market rates.”

Stories like this lead to calls for rent control. If owners kept their rents at market rate instead of large increases, there would be less conflict.  However, most owners, including myself, are reluctant to raise the rents of existing renters.

Mar 01

The forecast

More than three out of four (77%) economic forecasters believe the highest inflation in four decades is either fueling a wage-price spiral or poses a “major risk” of doing so this year, the National Association for Business Economics (NABE) said Monday in its release of survey results.

Rising wages, supply chain bottlenecks and shortages of materials prompted more than half of the forecasters to warn of “upside risks for inflation” in 2022, the NABE said. The week-long survey of 57 forecasters ended Feb. 15, several days before the start of Russia’s invasion of Ukraine pushed up prices for oil and other commodities worldwide.

The forecasters “see a risk that inflation will remain higher than previously expected over the next three years, coming largely from the labor market,” according to David Altig, research director at the Federal Reserve Bank of Atlanta and NABE president.

https://www.cfodive.com/news/forecasters-see-major-risk-wage-price-spiral/619543/

Who are the winners and losers from inflation?

Inflation is a continuous rise in the price level. Inflation means the value of money will fall and purchase relatively fewer goods than previously.

In summary:

• Inflation will hurt those who keep cash savings and workers with fixed wages.
• Inflation will benefit those with large debts who, with rising prices, find it easier to pay back their debts

https://www.economicshelp.org/blog/145181/inflation/who-are-the-winners-and-losers-from-inflation/

Bottomline

Those with fixed assets and fixed-rate debt are the winners unless of course the entire economy fails and we fall into social chaos. But keep 2007 in mind, and do not overpay, lest you end up like so many did in 2008

Dec 13

Interesting. When renting beats owning, holding rentals makes less sense.

https://www.globest.com/2021/12/13/renting-beats-buying-in-eight-major-markets/

In the following cites owners of one and two families appear to be better off if they sold.

In Dallas, Denver, Houston, Kansas City and Seattle, consumers looking to build wealth are better off renting a property and reinvesting the money they would have spent on ownership, according to an analysis by professors at Florida Atlantic University and Florida International University.

That’s because the total monthly cost of homeownership in those areas is rising faster than monthly rents, the researchers said.

In the following cites owners of one and two families may see equal returns if they sell or hold, but the alternatives to rentals are actually passive investments, where scattered-site small properties are more like buying a job.

In Atlanta, Boston, Chicago, Cincinnati, Cleveland, Detroit, Honolulu, Los Angeles, Milwaukee, Minneapolis, New York, Philadelphia, San Diego, San Francisco and St. Louis, consumers are just as likely to create more wealth by renting and reinvesting as owning and building equity.

And the part the media often overlooks

Despite strong demand leading to rising rents, renting typically still costs less per month than owning, after factoring in home maintenance costs, homeowner association dues and other fees. Renters who don’t invest that monthly savings in stocks and bonds might be better off buying because homeownership is a forced savings plan, the professors said.

Nov 14

HT: Dawn Anastasi


Note that this site most likely violates the Fair Credit Reporting Act, but it shows a level of frustration that owners are seeing

https://nypost.com/2021/11/13/fed-up-landlord-makes-website-outing-squatters/amp/

“Most landlords are good & hardworking people,” SquatterRegistry.com declares. “Some tenants need protection, but many have simply lied and leaned into recent provisions that make it impossible for homeowners to defend themselves or their properties.

_._,_._,_

Nov 07


Second-order effects in action again. 

Since January of this year, the national median rent has increased by a staggering 16.4 percent. To put that in context, rent growth from January to October averaged just 3.2 percent in the pre-pandemic years from 2017-2019.

https://www.apartmentlist.com/research/national-rent-data?

We expected to see rents increase as a result of the moratoriums. In fact, using RentoMeter.com we are witnessing even slightly higher increases in many Milwaukee neighborhoods. 

  • Owners need to make up for lost rents caused by the moratoriums.
  • The lack of units available for rent. I find this due to owners removing them from the market to sell or out of fear of removing nonpaying renters. Many owners I’ve spoken are prepping units for sale rather than offering them for rent.
  • The dramatic increase in real estate prices drives up both the cost of ownership and the income needed to meet cap rate expectations. Home Prices Continue Record-Setting Pace, Rising 19.7 % in July | Economy | US News
  • Inflation will force rents to increase. The CPI is up 5.4% year over year. CPI Inflation Calculator Private sector hourly wages in Milwaukee have increased 5.6% YoY Sept. If you look at weekly earnings, it is 11.9%. Databases, Tables & Calculators by Subject At my company, labor costs have risen nearly 10% since June, as we keep up with the wages others are offering. And it is very hard to find employees today.

Point one is temporary, as is the second point. We have already seen a slight increase in vacant units in the past two weeks. We are still below 0.5%, a tenth of what we expected.

I anticipate the third and fourth points having a lasting impact on rents. In part, the sale prices are driven up by artificially low-interest rates. In part, sale prices are up due to the inability to build new homes due to material shortages, U.S. homebuilding stumbles amid unrelenting supply constraints | Reuters and labor shortages U.S. Chamber Commercial Construction Index – Q3 2021 | U.S. Chamber of Commerce

Some will clamor that this calls for rent control, but rent control has failed communities terribly

Oct 09

A good, should read, article

https://reason.com/2021/10/08/the-eviction-tsunami-that-wasnt/

The predictions were dire.

“The tragic, consequential, and entirely avoidable outcome of this ruling will be millions of people losing their homes this fall and winter, just as the delta variant ravages communities and lives,” said Diane Yentel, president of the National Low Income Housing Coalition, in late August.

“The Supreme Court failed to protect 11 million households across our country from violent eviction in the middle of a deadly global pandemic,” said Rep. Cori Bush (D–Mo.), citing one estimate of how many renters were behind on rent.

But the reality was different

“It’s going up but it’s not going up by a ton,” says Peter Hepburn, a sociology professor at Rutgers University and researcher with Eviction Lab. “You look at September relative to historic averages, that leaves eviction filings at 48.5 percent below historic averages…We didn’t see a jump up to normal, let alone a jump past normal into a giant wave of eviction filings.”

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