decades

Apache is functioning normally

Apache is functioning normally

Here’s some timely mortgage Q&A: “Do mortgage modifications work?”

Since the mortgage mess got in full swing, mortgage lenders and loan servicers have been increasingly offering mortgage modifications to stave off foreclosure, but the results haven’t been too hot.

This begs the question as to whether these loss mitigation tools actually work, especially if the homeowners are so underwater that it will take them literally decades to get back above water.

Consider the Re-Default Rate

  • While it’s still early days
  • The re-default rate on loan modifications
  • Which is when a delinquent borrower is late on their loan mod
  • Has been quite high, putting into the question the success of these offerings

What we know so far is that the re-default rate on loan modifications has been so high that many question if they even work, and if they’re worth all the legwork/trouble, not to mention the money involved.

Back in May, Fitch Ratings warned that 3 out of 4 mortgage modifications may re-default after just 12 months, a staggeringly high failure rate for what were regarded as potentially home-saving loss mitigation tools.

Of course, there may be a reason all these loan modifications are turning out nasty numbers; they don’t actually lower monthly mortgage payments.

Are These Really Loan Modifications? Or Just Repayment Plans?

  • While it’s easy to claim they don’t work
  • You have to look at what’s really being offered here
  • If the borrower is set up to fail
  • They’ll probably fail

That’s right, many of these loan modifications actually result in payments that are unchanged or higher than they were before, thanks to past due amounts being piled on top of the existing balance.

These types of loan modifications, if you can even call them that, are really just simple repayment plans that get borrowers current but fail to address affordability concerns.

Clearly that’s no way to help a struggling homeowner get back on track, unless by chance they had a brief loss of income that has since been restored.

So what’s the answer?  How do we make more mortgage modifications work?

If It Doesn’t Lower the Payment…

  • An unchanged or higher mortgage payment
  • Probably won’t change the borrower’s situation for the better
  • It’s pretty obvious that they need a lower monthly payment
  • In order to get back on track, so start with that!

Well, it’s not as hard as it may seem; apparently a combination of lower monthly payments, along with principal forbearance or forgiveness will get the ball rolling and make for more sustainable payments moving forward.

After all, if a homeowner can’t make their $2,000 a month housing payment, why should we expect them to make a $2,500 payment? That makes absolutely zero sense.

Taking the time to determine what borrowers can actually afford via proper income documentation and other sound underwriting measures will likely lead to a better loan modification success rate.

If banks and loan servicers don’t actually assess the situation properly, it’s a big waste of time and money, and just delays the inevitable.

Unfortunately, more stringent underwriting tied to loan mods may also reveal that foreclosure is simply the only answer for many, especially those who are in no shape to make reduced payments on a severely underwater home.

But we should still explore what works because there are probably millions across the nation who could benefit here, and that will help the real estate market as a whole.

Source: thetruthaboutmortgage.com

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Virtual Tour Equipment used to Make Virtual Tours

Over the summer, I did over 3,000 business contacts by phone, text message, email, LinkedIn, Instagram, Twitter, and much easier, out-of-the-box on REveo of course in just seconds, with over 600 Real Estate brokerage executives and decision makers.

Yes, it takes a bit of work to build a new brand!

Back in 2012, three years after I discovered the idea for a new way to do virtual showings that would solve for all the pitfalls of the legacy virtual showing solutions, I interacted with hundreds of home buyers in the Silicon Valley at University Café at the time (now local union 217, I recommend it! 🙂 ), on University Avenue in Palo Alto a few steps away from Stanford University.

I would purposefully speak to home buyers who spent their entire day driving around listings with their buyer agents most of the time. Many were out-of-state executives looking for their new place for starting a new tech executive role there, many were also locals actually.

What struck me at that time is that a large portion of them vetted the properties they were going to tour for the day on an interesting form of static marketing- 360 tours. Imagine the Google Map pedestrian experience but inside a home. The 360 experience had been around already for a few years and looking to cater to several industries, including insurance among many others.

The net of their property pre-qualification, static 360 experience — no real-time communication with agent in the canned tours that make me totally dizzy personally, and I am not the only one — was once they drove miles and miles to get there, the properties didn’t look anything like the canned tours had made them envisioned. Huge disappointment. Huge waste of time, for both the agents and the clients, and huge waste of natural resources and unnecessary pollution for no reasons.

Yet, in 2020, I did speak to a few brokerage decision makers who in spite of the steep cost and complexity of creating such tours — see YouTube video above “Virtual Tour Equipment used to Make Virtual Tours” — still want to dedicate resources to a far-from-optimal way to make their agents interact with clients to sell homes.

This will definitely change. It’s just a matter of time. A matter of education.

When you lead a Real Estate brokerage you should look for ways that are “out-of-the-box” for your Real Estate agents to deliver great client success in just seconds without any cumbersome operations to set up, nor lengthy training that drains your operational profit while delivering dismal marketing results for a high cost.

Ways that are much more dynamic at taking your agent-client interactions to a whole new level of closing rates and closing speed…

Source: geekestateblog.com

Apache is functioning normally

Apartment hunting in Southern California is notoriously difficult. In the last two years, the search turned particularly nightmarish.

In part for pandemic-related reasons, the number of units available to lease fell to historical lows. Rent soared.

Some apartments even had bidding wars — an unwelcome reality typically limited to the for-sale market.

But now, a little bit of sanity is returning.

If you’re looking for a new rental, don’t expect a deal, but you may find the search less maddening.

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What exactly is happening?

Simply put, there are more apartments for people to move into. Across the region, vacancy rates are rising after falling to decades-long lows in 2022 and 2021.

In Los Angeles County early last year, only 3.7% of apartments were vacant and available, the lowest level since 2001, according to real estate data firm CoStar. Now that measure is up to 4.4%.

It was even worse in both the Inland Empire and Orange County, where the vacancy level fell to about 2% in 2021. In Riverside and San Bernardino counties, that set a record in a data set that goes back to 1982; in Orange County it was essentially equal to a record set in 1984.

Vacancy has now doubled in both areas, up to 5.4% in the Inland Empire and 4.1% in Orange County.

In Ventura and San Diego counties, vacancy similarly fell below 3% in 2021 and is now 3.8% in San Diego and 5.4% in Ventura.

Rob Warnock, a researcher with the rental website Apartment List, said vacancy fell so low because many people moved out of shared living situations with family or roommates in 2021 and 2022. They wanted a place of their own and essentially created a wave of new households that gobbled up available rentals.

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A rebounding economy, stimulus payments and a desire to no longer be cooped up with others like early in the pandemic probably helped drive the surge, Warnock said.

Now, the switch is flipped.

As consumers worry about inflation and the direction of the overall economy, they’re forming fewer households as new apartments continue to open up.

“Unemployment still looks good, but there is that uncertainty,” said Ryan Patap, an analyst with CoStar. “That makes people more cautious in spending up, committing to a new lease, moving out of their parents’ house — all of those dynamics.”

Richard Green, director of the USC Lusk Center for Real Estate, said another factor may be at play.

“The mystery [was] people are leaving California — how come vacancies weren’t rising?” he said. “Maybe it’s starting to show up.”

What does that mean for me?

To be clear, vacancies are still far lower here than many markets around the country, which economists attribute to the difficulty of building housing in California. But if you are out there searching for a place, you may have an easier time than this time last year.

Michael Lucarelli is chief executive of RentSpree, a Sherman Oaks-based company that provides application and rent collection services for 41,000 leasing agents, property management firms and individual landlords in California.

With the rise in vacancy, he said renters are less likely to have to make snap decisions on whether a place is right for them, and he hears less and less about bidding wars at his client’s properties.

“It’s creating a little bit more leverage on the side of the renter,” Lucarelli.

What about rent?

By most measures, rent is still rising, but not as fast as it was.

Rising vacancy levels have not only made it harder for landlords to charge more, but after years of sharp increases some tenants are tapped out.

According to data from real estate firm RealPage, average asking rent for a vacant L.A. County apartment during the first quarter of 2022 was up 17% from the same period a year earlier.

But by the first three months of this year, rent growth had slowed, with prices rising 6% from 2022 levels.

A similar slowdown was seen in the Inland Empire, as well as Orange, Ventura and San Diego counties.

Data from Apartment List and CoStar indicate a more favorable environment for renters.

According to CoStar, average rent is still positive in all Southern California counties, but rising less than RealPage data show.

According to Apartment List, the median rent for a vacant unit has turned slightly negative in the Inland Empire, Orange County and Ventura County, dropping by less than 2% in April from the previous year.

In L.A. County, median rent was up just 0.21%.

Warnock says he expects rent across L.A. County to also turn negative in coming months, but he doesn’t expect rent there and elsewhere in Southern California to see a sustained, or meaningful drop, because too few rentals are being built.

“A 1% annual rent decrease is not going to bring much comfort to someone who is out there searching,” he said, particularly when Apartment List data show rent in L.A. County is 11% higher than the start of the pandemic and 33% higher in the Inland Empire.

What if I can’t afford the housing that is listed for rent?

That’s not uncommon in expensive Southern California.

One option you have is Section 8, a federal program run by local authorities. If you meet the income qualifications and receive one of the coveted vouchers, you can find housing with a private landlord on the open market and you’ll pay roughly a third of your income toward rent with the government paying the rest.

However, there aren’t enough vouchers for everyone who could qualify.

You can check with your local government to see whether it is accepting applications, but it may not be. The city of Los Angeles opened its wait list last fall for the first time in five years, but it is now closed.

Another option you have is to apply to apartments reserved specifically for people of lower incomes. This can be government-owned public housing or housing built by nonprofits.

At times, for-profit developers include a handful of low-income units in their new projects as a condition of the project’s approval.

You can find more information on how to apply for these various apartments and subsidies in the following guides from The Times.

If I don’t want to move, will my rent to go up?

Potentially.

Landlords say their costs to manage and maintain buildings have risen along with overall inflation, meaning unless they cut back on those expenses, they’ll need to raise rent if they want to keep earning the same amount.

At the same time, rising vacancies can be a threat to a property owner’s bottom line, and many landlords are likely to be “more amenable to doing what it takes to keep you there,” Warnock said.

Some landlords have different financial motivations, however.

For example, one popular investment strategy in the real estate industry is to purchase buildings that have rent well below the typical going rate, then increase rents rapidly to what is considered market.

According to RealPage, whose data cover mostly large complexes, the average renewal increase for L.A. County tenants was 5.5% in the first quarter of 2023, down from from nearly 8% in the second quarter of 2022.

Is there any law that limits how high my rent can increase?

In most cases, yes.

In California, landlords of non-income restricted units can charge whatever they can get for vacant units but usually face some sort of limit on rent increases for existing tenants.

If you live in an apartment building built more than 15 years ago, a state rent cap law limits your annual rent increase to no more than 5%, plus inflation, with a maximum of a 10% increase. Since inflation is so high, the current cap is set at that 10% level.

Some cities have stricter rules often referred to as rent control or rent stabilization.

In the city of Los Angeles, buildings built on or before Oct. 1. 1978 — and even some new buildings — fall under the city’s rent stabilization ordinance.

In the years before the pandemic, the law limited annual rent increases for existing tenants in those buildings to 3% or 4%.

Currently, city law prohibits any rent increases for existing tenants in rent stabilized buildings. The ban, passed in the early days of the pandemic, is scheduled to expire in 2024.

In most cases, if you live in a building built within the last 15 years, there are no legal limits to how much your rent can increase in both Los Angeles and statewide.

However, during declared states of emergencies — like during the recent storms — anti-price gouging rules come into effect and bar rent increases above 10%.

As of May 1, according the website for the Governor’s Office of Emergency Services, those anti-gouging rules currently apply only to Riverside, San Diego, Contra Costa and Yola counties. They are set to expire May 20.

More information on how to tell whether your building falls under some of these limits can be found here.

Are there any other tips I should know when looking for a new place?

Yes. Though vacancy is increasing, it is still tight and you may need to apply to multiple places before finding a home. With each landlord typically charging an application fee, those costs can add up.

If you want to limit fees, check to see whether the landlord does, or will, accept applications from companies like Zillow or RentSpree that allow you to apply to multiple properties for a flat rate

For more tips, check out The Times’ overall guide to renting in Southern California.

Source: latimes.com

Apache is functioning normally

Human beings like heuristics and rules of thumb because they make our complicated world a little bit more simple. 

However, these steadfast rules that we believe in for generations, the ones that are passed down from grandparents to parents, to us. These can be dangerous if they go unchecked. 

So, after 2020, a year that made us question everything, it’s time to reassess some of the old money rules that we heard from our parents and they learned from theirs. We need to ask ourselves if these rules still hold true. For example, is buying always better than renting? I mean, that’s what my parents told me. And should you always pay off debt before you start investing? 

Here are 10 out-dated money rules that just don’t hold true in a post-2020 world.  

What’s Ahead:

Real estate is always a good investment

Your parents have probably touted this financial truth, I know mine have. But is real estate always a good investment in today’s world? I can tell you from first-hand experience that no, it’s not always a good investment. 

Sometimes you buy high and then the market changes and you’re stuck in a situation where you have to sell low and take a loss. This is what happened to me and my husband. When we were looking for our first home, the market was pumping. There were lineups to get into open houses and bidding wars were commonplace. Flash forward seven years and we are selling our home for a significant loss. 

If we would have invested all of the money we spent on our downpayment and other homeownership costs into the stock market, we would be much better off financially today. But, we love our home. It’s where our children took their first steps and where we’ve shared many wonderful memories. Despite it being the anti-investment that we were promised by our parents, I’m still glad we did it. And it’s important to point out that this was just our experience. You may have better luck, but as with any investment, know the risks, don’t just take the advice of your family and friends. 

Buying a home is always a better financial decision than renting

As I just discussed, buying a home is not always a guaranteed investment. Depending on your circumstances, renting can be a better financial decision. For instance, if you’re debating homeownership versus renting and you don’t plan to stay in the home long-term (more than five years), it probably makes more financial sense to rent. This is because moving and homeownership are expensive. 

Buying a house requires a downpayment, home inspection fees, closing costs, lawyer fees, and moving fees. Once you’re in the home you have to pay mortgage payments, condo fees, property taxes, and home maintenance.

Other times when you might want to consider renting instead of buying are if you have a large amount of high-interest debt, if you value flexibility and the ability to move around frequently, or if you aren’t interested in taking on the risk and responsibility that come with maintaining a home.

You should pay off your mortgage as soon as possible

I’m sure you’ve heard this at least once before. It’s well-intentioned advice but it doesn’t hold true for every person. Paying off your mortgage as soon as possible is not always the best financial decision (again, for some). You can think about this in terms of opportunity cost. 

Let’s say you are paying 3% interest on your mortgage. If you pay off your mortgage as soon as possible, then you put that 3% back in your pocket. However, you could be earning more elsewhere. The average return on the S&P 500, since its inception, is approximately 8%. This means you’re better off making your regular mortgage payments at 3% and investing any extra money that you have into the market for an average of 8%. This leaves you with a 5% profit. 

Pay off all debt before you start investing

If you’re in heaps of debt and you’re just trying to make ends meet, you might be wondering if you should still contribute to your retirement savings. While you may have been told that you should halt all investing until your debt is completely paid off, this is not always the best course of action.

The debt versus investing debate is much more nuanced than just deciding to pay off debt or do both. Sometimes it makes sense to hold off on investing if you have a lot of high-interest debt. For instance, if you’re paying 20% or more in interest on a credit card, and you’re making an average of 8% on your investments, then, based on a simple calculation, it makes more financial sense to focus on paying off debt. 

However, if you’ve taken out a mortgage at 3% and it’s going to take you 25 years to pay back, you don’t want to hold off on investing. 

Investing is also about habit formation. Even if you start investing a super small sum of money each month, you get yourself into the habit of doing it. So, when your debt is paid off and you have more money to invest, you’re not starting from zero. You already know what to do. 

You should always be hustling

I consider myself to be a hard worker. I always have been. I find joy in crossing things off of my “to-do” list. However, even I’m getting tired of the “rise and grind” or “I’ll sleep when I’m dead” style quotes. And, the advice to get up at 4 am if you want to achieve any kind of financial success…give me a break. 

Your self-worth shouldn’t be based on how busy you are or how sleep-deprived. There’s nothing wrong with hustling but the goal should be to find balance. Sometimes you need to put in a few super long days to get your work done, and sometimes you need to go to bed at 7:30 and have a 12-hour sleep to refuel. 

You need to have the equivalent of your annual salary saved for retirement by 30

Fidelity has a well-shared rule of thumb about how much you should have saved for retirement based on your age. They recommend saving at least one time your annual salary by age 30. This means if you earn $50,000 a year then you want to have $50,000 in retirement savings.  

While this isn’t bad advice, it tends to oversimplify things. Rules of thumb are great for making financial concepts seem more simple; however, they eliminate all of the individual contexts. If you are nearing 30 and you know there is no way you will have the equivalent of your annual salary saved by your birthday, don’t feel bad. 

Instead of focusing on a specific number, focus on creating short and long-term financial goals that are reasonable for you based on your individual situation. Thirty is still young. You have lots of time to increase your earning potential and your savings. The most important thing is that you are making saving a priority and putting away what you can each month. 

Always pay with cash

The idea of always paying with cash is that it makes it easier to stick to your budget and avoid overspending when you can physically see your money leaving your fingers. When you can feel and see the cash leaving your hands, you might think more about how you are spending your money versus when you swipe your credit card. 

Also, if you can pay for something with cash it means you have enough money in the bank to cover the purchase. In other words, you don’t have to borrow the money or pay anyone interest.

Again, while this isn’t bad financial advice it’s just not realistic for many people these days. First, there are advantages to paying for things using credit cards. You can earn cash back and points. With the rise of online shopping, it’s also more convenient to pay for your purchases using PayPal or Venmo. 

Also, when paying with cash you have to consider the opportunity costs. If you want to buy a big-ticket item like a car and you have enough cash on hand to do it, it still might not be the right move. Again, it comes to a simple calculation. If you can borrow money at an interest rate that is lower than what you could earn on the money you invest, then it might be better to take out a loan and invest your cash. 

If you want financial stability, find a steady nine-to-five job and stay there

In the past, it was normal to get a job right out of college, work there for the next four decades, and then retire with a healthy pension. This rarely happens anymore. 

While working a steady job at the same company for an entire career might have been commonplace for your grandparents this is not the case for most Millennials. In fact, this doesn’t even hold true for most boomers. According to the Bureau of Labour Statistics, boomers born between 1957 and 1964 “held an average of 12.3 jobs.”

Today, more and more young people find themselves working multiple jobs in order to pay their bills. Contract and freelance positions are more commonplace and almost everyone you meet has a side hustle. 

Now, most college grads leave school with a significant amount of student loan debt and often struggle to find a well-paying job that will keep them on and continue to promote them for years and years. 

You can’t retire until you’re 65

Retiring at 65 is a money rule that is seriously outdated. In 1935 the Social Security Act set the minimum age of retirement at 65. This was the age when you could start receiving full retirement benefits. 

Today, young Americans aren’t even sure they are going to receive Social Security. For those nearing retirement, many are worried about the state of their social security. 

On the other side of this coin, many people have decided that they don’t want to wait until they are 65 to enjoy the benefits of retirement. With the FIRE movement, the goal is to save as much as you can in your younger years so you can stop working in your 30’s, 40’s, or 50’s. 

The point here is that retirement looks different for everyone. Age 65 is an arbitrary number. Some people will never be able to fully retire while others are doing what they can to stop working as soon as possible.

If you can save $1 million, you can retire comfortably

$1 million. It might still sound like a lot of money, and it definitely is but it still may not be enough to cover the cost of your retirement. 

As a result of people living longer and at a higher cost of living, a million dollars just isn’t what it used to be. And yet, it is one of those financial rules of thumb that many people still hold on to. According to a survey of 1,015 Americans by TD Ameritrade, 6 out of 10 Americans believe they can comfortably retire with $1 million saved.  

For those living in a high-cost area or those that want to retire early, a million dollars is simply not going to cut it. Instead, you should be thinking about your individual context. Where do you live? What kind of retirement do you envision? At what age do you want to retire? Have you considered the cost of inflation? Have you considered the costs associated with long-term care? 

For some, the idea of saving $1 million is completely inconceivable. For others, it won’t get them through their first decade of retirement. 

Summary

When it comes to your personal finances remember this – it’s personal. What works for your friend Bob, or your Dad, or your aunt Sue, won’t necessarily work for you. While financial rules of thumb make the complicated world of money seem a little bit more manageable, they aren’t a silver bullet. 

It’s important that you question these financial “truths” and really think about your situation and what works best for you. The best thing you can do is develop consistent habits around saving, investing, and debt repayment and continue to grow your financial knowledge. 

Read more:

Source: moneyunder30.com

Apache is functioning normally

Housing is the largest expense in the budget of most families. But how much is too much to spend on shelter? An article in Saturday’s New York Times contains a shocking example of one woman who crossed the line:

What she got was a mortgage she could not afford. Toward the $385,000 cost, [Christina] Natale made a down payment of $185,000, a little less than what she took away from the sale of her grandfather’s home. The loan that made up the difference, with closing costs, broker’s fee, taxes and insurance, meant a monthly bill of $1,873.96, about $100 less than her monthly take-home pay as an administrative assistant.

I am not unsympathetic to tales of financial hardship, but this stretches even my compassion. Ms. Natale (who has three children) took out a housing loan that left her just $100 a month for every other expense in her life. She shouldn’t need an outside voice to tell her that this was an impossible situation. (All the same, where were the outside voices?)

Although this is an extreme example, many other people buy homes only to discover they’re in over their heads, unable to make payments. How can you prevent this from happening to you?

Debt-to-Income Ratio

Fortunately, decades of financial data have produced computerized models that help to determine how much a person can afford to spend on housing and debt. To learn more about this, I recently spoke with Robb Severdia of Guarantee Mortgage in Portland. I asked him to describe how the process works. (If I have anything wrong here, it’s my fault, not Severdia’s.)

Traditionally, lenders have used the debt-to-income (DTI) ratio to estimate how much a homeowner can afford to borrow. This ratio is computed by comparing your expenses to your gross (pre-tax) income. The lower the number, the better. If you make $3,000 a month before taxes, and you pay $300 toward debt, your debt-to-income ratio is 10%.

Banks and mortgage brokers look at two numbers:

  • The “front-end” debt-to-income ratio, which includes total housing expenses: mortgage principal, interest, taxes, and insurance.
  • The “back-end” debt-to-income ratio, which includes all of the above plus other debt payments: auto loans, student loans, credit cards, etc.

When a prospective borrower submits her paperwork, the computer evaluates it, applying statistical models to be sure the proposed debt load falls within accepted ranges. After this automated process, the loan proceeds to manual underwriting, where a human screens the application and makes the ultimate determination to approve or deny the loan.

Industry-standard debt-to-income ratios drive this process.

Lending Limits

When we bought our first home in 1994, everyone involved in the transaction told us that our front-end debt-to-income ratio should be 28% or less. That is, we should pay no more than 28% of our gross income toward housing expenses. The back-end ratio was 36%, which meant that our housing expenses and debt payments combined should total less than 36% of our income.

Example: Our gross (pre-tax) income in 1994 was roughly $60,000, or about $5,000 per month. To stay under the 28% front-end debt-to-income guideline, we could afford housing expenses of no more than $1,400 per month, including insurance and taxes.Because Kris had student loans and I had credit card debt, we couldn’t get close to the 28% front-end DTI ratio because it would push us over the 36% back-end. Our high debt-load meant we had less to spend on a house. Our eventual payment was $1,086 per month.

When we bought our new home in 2004, the debt-to-income ratios had changed. “That 28% figure is old,” we were told. “Most people can go as high as 33%.” The back-end ratio had been raised to 38% — and even to 41% in some models!

From what I understand, debt-to-income guidelines have gradually become more relaxed over the years. Here’s what I could puzzle together about the history of DTI (I would love to have clarifications or corrections to this list):

  • Reportedly, during the 1970s (before credit-card debt became common), DTI wasn’t split between front-end and back-end. There was only one ratio, and it was 25%. If your mortgage, taxes, and insurance were less than 25% of your income, it was assumed you could afford the payment.
  • In The New Rules of Money, Ric Edelman writes that the lending limits “used to be” 22% and 28%. I’m guessing that this must have been the rule-of-thumb during the 1980s.
  • When we bought our first home in the mid-1990s, the front-end ratio was 28% and the back-end ratio was 36%.
  • By 2004, those ratios has increased again to 33% and 38%, respectively. (To qualify for an FHA loan, your front-end DTI is limited to 29%, and the back end is capped at 41%.)

A 5% increase may not seem like a big deal, but when you’re talking about a house payment, it’s huge. Remember: 5% of a $60,000 income is $3,000 per year, or $250 a month. Many foreclosures occur because people take on housing payments that are as little as $250 a month more than they can afford.

Afraid to Say “No”

During my conversation with Robb Severdia, I asked him about the growing debt-to-income ratios. He acknowledged that he’d seen the numbers rise during his decade in the industry. “Banks feel they need to increase the limits in order to be more competitive,” he explained.

“I think that in most cases, it’s a bad idea for borrowers to push that 41% back end,” Severdia said. “It might make sense in some instances, but it can be a recipe for disaster.” In other words, give yourself a margin for error. Instead of basing your home budget on a 33% front-end debt-to-income ratio, consider dropping that to 28%. You won’t be able to afford as big of a mortgage, but you won’t feel as pinched by the payments, either.

I asked Severdia how people like Christina Natale from the New York Times story were able to get mortgages that amounted to more than half their income. “People are afraid to say ‘no’,” he told me. “They were afraid to lose the deal.” Thus the subprime mortgage crisis.

In The Automatic Millionaire Homeowner, David Bach warns:

You should generally assume that the amount the bank or mortgage company is willing to loan you is more than you should borrow. […] Don’t fool around with this. Do the math. Be realistic about your situation. Don’t pretend you’re in better shape than you really are.

Nobody cares more about your money than you do. Your real-estate agent, your mortgage broker, and the bank all have a vested interest in encouraging you to buy as much house as possible. Their incomes depend upon it. Listen to what they have to say, but make your decisions based on your own knowledge of the situation.

Better Safe Than Sorry

Homeowners are often admonished to “buy as much house as you can afford”. There’s some merit to that statement — in general, housing prices do increase, as does personal income. As a result, your mortgage payments generally become more affordable.

The problem, of course, is that when you buy as much house as you can afford, you’re left without a buffer. What if you lose your job? What if you’re forced to sell your home, but housing prices have dropped? I think it makes more sense to buy as much house as you need, keeping the conventional debt-to-income ratios as ceilings.

Ultimately, it doesn’t matter what the guidelines are. What matters is what you can afford, what you’re comfortable paying. Just because conventional wisdom says you can take out a $1400 monthly housing payment on your $60,000 annual income doesn’t mean you have to do it.

Foreclosure photo by respres.

Source: getrichslowly.org

Apache is functioning normally

Librarian Miki Goral has lived in the massive Westside residential complex Barrington Plaza for more than three decades. She swims in the large heated pool nearly every day and, from her one-bedroom apartment on the 10th floor, she has a view of the ocean. The building is a 15-minute bus ride from her job at UCLA and it’s rent-controlled, allowing her to retain some certainty over housing costs even as rents in the neighborhood have skyrocketed.

Like many of the Plaza’s long-term tenants, Goral had planned to stay for many more years.

This month, she learned that she and each of the residents of the complex’s 577 occupied units were being evicted so that the owner could install fire sprinklers and other safety upgrades. Most were given four months to leave, though Goral and others who are at least 62 or disabled can take up to one year. But Goral can’t imagine leaving.

“I don’t want to move,” she said. “I’ve been here for 34 years. It’s my home.”

Three months after the end of pandemic-era protections limiting the ability of landlords to evict tenants, the owner of Barrington Plaza has initiated one of the largest mass evictions in L.A. in recent years, pushing hundreds of Westside tenants out of their homes at the same time that the city grapples with a housing crisis.

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Landlord Douglas Emmett Inc. says the move is necessary to install the sprinklers and other safety equipment in a complex with a history of dangerous fires. It has invoked the Ellis Act, which allows landlords to evict rent-stabilized tenants to remove units from the rental market.

Some tenants are already in the process of leaving, facing a significant jump in rent and the potential cruel irony that their own evictions — hundreds of Barrington residents dumped into the market at once — might drive up prices even more.

But Goral and others believe the company is improperly applying the law and that it can make the safety upgrades without permanently displacing them. They say they will fight to stay.

“In a period where we’re dealing with homelessness throughout the city and county, it’s a major issue that this company would suddenly put almost 600 people on the housing market to compete for housing,” Goral said. “It’s not a sensible thing to do.”

Housing officials say the city has little discretion once a property owner says they are taking a property off the rental market under the Ellis Act but that they are working to help residents relocate. City rules require landlords to pay tenants relocation assistance, amounts that range from about $9,000 to about $23,000, depending on how long they have lived in the apartment, their age, income and other factors.

“The impact of this is profound,” said Greg Good, senior advisor on policy and external affairs for the Los Angeles Housing Department. “There’s no way around that. It’s 577 units, and it will create significant disruption.”

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The owner of Barrington Plaza on the Westside has initiated one of the largest mass evictions in L.A. in recent years.

(Jason Armond / Los Angeles Times)

When it opened in 1962, Barrington Plaza was celebrated as the tallest residential complex west of Chicago and the biggest urban renewal project ever insured by the Federal Housing Administration. There were extensive gardens, a nine-hole putting green and a unique intercom system that allowed residents to dial two digits to call down for maids, sitters and caterers.

Over the decades, the apartments would change ownership multiple times and residents would raise repeated safety concerns at the complex, which was exempted from laws requiring fire sprinklers because of when it was built.

On New Year’s Day in 1971, a Christmas tree caught fire, causing the building to be evacuated and the elevators to be removed from service for several days. In 2013, another fire injured several people, including a toddler, and displaced the residents of dozens of units. And in January 2020, another fire left a 19-year-old exchange student dead and several others injured. News stories featured images of a man clinging to the outside of the building several stories up as he tried to escape the blaze.

Firefighters look out from a charred balcony after putting out a fire at Barrington Plaza in 2013.

(Genaro Molina / Los Angeles Times)

After that fire, eight floors in the complex’s tallest building were red-tagged, and they have remained vacant since.

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Eric Rose, a public relations executive working for Douglas Emmett, said in written responses to questions that when the company submitted plans to rebuild the damaged floors, the city conditioned its approval on the installation of sprinklers and other safety equipment throughout Barrington Plaza’s three towers.

Those changes cannot be done without vacating the three towers at the same time, Rose said, because building systems are shared among them and “structural changes, including changes to ceilings and walls, need to be made in order to carry the weight of the sprinkler system.”

This month, the company notified the city that it would withdraw the complex from the rental market under the Ellis Act, a 1985 state law that allows landlords to evict tenants in rent-stabilized apartments if, for instance, they are taking the building off the rental market to convert the units to condos.

Under city rules, owners invoking the Ellis Act must seek “in good faith” to remove it “permanently from rental housing use.”

Tenants and advocates say they believe the long-term plan is to rent the apartments once again. Because of that, they say, the evictions would be an improper use of the law.

“They want to renovate it. And they clearly want to re-rent it, and that’s not what the Ellis Act is about,” said tenant rights advocate Larry Gross, of the Coalition for Economic Survival.

He said the company should have used the city’s Tenant Habitability Program, under which landlords doing major renovations can temporarily relocate residents to comparable units until the work is done.

Rose says the Tenant Habitability Program is typically used for renovations that last days or months, not years.

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“At this time, the owners of Barrington Plaza are removing the units from the market and have options as to how those units will change, be rehabilitated through new life-safety measures or become something different,” Rose said.

He suggested that the apartments could eventually return to the rental market under rules laid out by the city.

Any rehabilitation of the complex will take years, he said, and “after that time, if the units were brought back onto the rental market, the owner would follow the obligations relative to former tenants as provided in those state and local rules.”

There are no plans to build new condominiums on the site, Rose said.

Residents have struggled to make sense of the lack of clarity about the building’s future.

Attorney Nima Farahani, who has conducted legal clinics and met with several of the Barrington tenants, said that under the Ellis Act, “if you really, in good faith, can’t be a landlord, you can stop being a landlord.”

But, he said, “you’ve got to go out of the rental business. End of story.”

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Under the law, if within two years a landlord rents an apartment vacated under the Ellis Act, they can be liable to former tenants for damages.

But after that, the consequences are less severe. If they rent within five years of the evictions, they must offer tenants a right of return with the same rent that they were paying when they were evicted, plus certain approved increases.

If the company rents again between five and 10 years, it must offer a right of return but can charge a market rate rent.

Advocates say that after two years, most residents will have resettled and be unlikely to return.

Residents have formed a tenants association, and many are preparing for fight the eviction. Some see it as part of a larger effort to protect affordable housing in Los Angeles.

A majority of the building’s tenants — who include a mix of retirees, working-class and white-collar workers and students — moved into the building in recent years. But more than 100 residents have lived at the Plaza for five or more years, according to city records. The median length of residency among those long-term tenants was 12 years. Some have lived there since the 1960s.

But even among those who have moved in more recently, there are residents who don’t want to go. Many say they chose the building because it was rent-stabilized, and that finding something similar will be next to impossible.

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Jacqui Fournier, 56, moved in to Barrington Plaza during the pandemic, in August 2020. She pays $1,595 for a studio on the 10th floor, a rate she believes was lower than it might have been under normal circumstances.

“We want to stay in our homes,” she said. “We cannot get, on the Westside, a comparable apartment at what we are paying now.”

The going rate for a studio apartment in the vicinity of Barrington Plaza is about $2,600, said Ryan Patap, senior director of market analytics with CoStar, which tracks real estate data.

The median rent paid by tenants at Barrington is $2,295, according to city data. That amount includes studios, one-bedroom and two-bedroom apartments.

Patap said it is possible that the large-scale evictions themselves could cause moderate rent increases in the surrounding neighborhood.

“This many renters probably would push up the rents. But to what extent, it’s hard to quantify,” he said.

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At the same time, it’s likely that many tenants won’t be able to remain in the neighborhood at all, because they wont be able to afford it, he said.

Chuck Martinez poses for a portrait inside his studio at Barrington Plaza on May 15.

(Jason Armond/Los Angeles Times)

Chuck Martinez, a driver for Uber Eats, moved into Barrington Plaza in 2021. He knew it was the right place when he learned it was rent stabilized.

“I thought, ‘I’m going to need this,’ ” he said. “Looking back, I was happy I made the decision because now we’re dealing with inflation. The price of everything has gone up.”

He pays $1,850 a month for his studio on the 12th floor. From the windows that wrap around the corner unit, he can see Griffith Observatory and the Getty Center on a clear day.

“It’s a million-dollar view for $1,850,” he said.

For the last couple of weeks, when he’s not working he’s been meeting with other tenants, lawyers and advocates, trying to figure out if there is a way for him and others to avoid leaving.

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“I’m trying to save myself from losing my rent-stabilized apartment,” he said. “It’s the only way to try to keep something livable.”

Source: latimes.com

Apache is functioning normally

Author note: This story was initially published in early July of 2023, before the “Barbie” movie’s initial release date. Some of the verbiage will be updated after the film’s public premiere.

Think pink.

It was once an unassuming sleeper hit directed by Greta Gerwig (the mind behind the films “Little Women” and “Lady Bird”). However, because of some cleverly teased marketing and some timely escapism, now it’s the movie of the summer. And it isn’t even out yet.

“Barbie” is now receiving high praise from the lucky critics that have gotten to see it. More importantly, its public approval soars as social media is exploding with pink, flashing pictures of what has come to be known as “Barbiecore.” What started with runway couture fashions has trickled into home fashion, as home decor publications are starting to show off a variety of 80s-esque vintage furniture and multiple shades of pink. Barbiecore became a cultural phenomenon, a feeling reflecting where we are in 2023 and where we wish to be.

What is Barbiecore, how did such an unusual trend emerge and how can you recreate its glossy joie de vivre in your own home? Find out here, and find some pieces that will fit your fantastic new life in plastic.

Barbiecore defined

Barbiecore is seeing life through rose-colored sunglasses. It is the essence of pink, of opulence and happiness. Summer drives with the windows down in a shiny coupe. ’80s-inspired party houses that people in the 2020s only dream of spending the night in. Perfectly swirled strawberry ice cream and sparkly designer pumps.

Barbiecore is a feeling — an escapist dream, a sweet, pink cloud of cotton candy plastered onto the COVID-weary, austere reality. Or as Emily Huggard, an assistant professor of fashion communication at Parsons School of Design states, “People are really latching on to escapism and things that they know and feel safe with. When we think about this trend [Barbiecore], it’s pretty, it’s hot pink, it’s not too complex — I think people are craving a time when things felt less heavy.”

How the Barbiecore trend is owning home decor

In fashion, this trend dominated the runway in 2022 via an all-pink Valentino fashion show. Since then, “dopamine dressing” has been popping up on social media, featuring showy, often bright designs that the pre-pandemic world might have deemed gaudy.

This same concept permeates all the home decor it touches too. Though everyone has their own personal take on the aesthetic that works for their home’s personality, the style features many high-contrast, high-gloss colors and textures — blended with fluffy, dreamy textiles in accents rugs and pillows. Meanwhile, the furniture often has vintage touches and bubbly, simple shapes that hearken back to happier times: You might even see some hearts, stars and glitter thrown in for good measure. And don’t forget the color pink.

Barbiecore spans design styles and decades

Many designers are opting to mix the style to their liking with cottagecore, shabby-chic and even coastal grandmother. After all, Barbie’s versatility made her famous, as she’s had more careers than anyone else you’ve ever met.

Just as Barbie has been celebrated throughout the years, you’ll find Barbiecore inspiration in multiple aesthetics, spanning each decade since she arrived in 1959. Barbie represents all that feels fun, luxurious and light in every era. Whether it’s the economic prosperity and traditionalism of the ’50s; the bold modernism of the ’60s; the sparkly disco balls of the ’70s; the brash consumerism of the ’80s; the sophistication and social progress of the ’90s; the pop music craze of the ’00s; the eclectic, identity-challenged 2010s or the social consciousness and maximalism of the 2020s, there’s a version of Barbiecore for all of our homes, too.

Vintage and modern Barbie

For example, if you love the geometric simplicity of the midcentury’s take on modern, opt for furniture with hairpin chair legs and pink upholstery. Capture the ’60s and ’70s with lucite furnishings because life in plastic is fantastic.

Live out your ’80s bubblegum dreams with glitter and crystalized accents galore. Find the ’90s aesthetic in floral wallpapers with pink accents, or go all out on early-aughts style with butterfly chairs, inflatable furnishings and textured walls.

If you don’t want to time-travel back that far, the 2010s and 2020s offer plenty of style varieties to try. After all, the 2010s gave us none other than Millennial pink, a more subdued take on Barbie’s signature hue. Rose gold finishings and chevron prints also dominated these years, both perfect for Barbiecore. The 2020s saw a resurgence in curvy furniture and maximalism, so if you’ve ever wanted to spring for something heart-shaped and over the top, do so now while it’s still on trend to also get it in pink.

Barbie buying guide

Now that you have more ideas about the Barbiecore concept, we’ll bring it down to earth with some Barbie-ish pieces you can buy, suiting many design tastes.

1) This fabulous, full-length mirror

IMAGE SOURCE: AMAZON.COM

It’s pink, it has rhinestones, and it’s long enough to see if your shoes match your dress. What more could you want if you’re unashamed of your new Barbiecore aesthetic? Outfits sold separately.

2) These flirty champagne flutes

IMAGE SOURCE: AMAZON.COM

Drink to your dream house with these high-quality champagne flutes, thanks to a collaboration with drinkware creator, Dragon Glassware. If you’d prefer coffee to champagne, the designer makes some gorgeous Barbiecore mugs as well.

3) This delightfully fluffy rug

IMAGE SOURCE: AMAZON.COM

Sink your heels into this plush, pink rug when you come home. Or pump up the pop music and invite your slumber party friends to a dance contest. Either way, this floor piece sets the foundation for a Barbiecore room layout.

4) This classy acrylic table

IMAGE SOURCE: AMAZON.COM

Accent any room with this rose-colored table. Though the design looks subtle, it screams Barbie, especially if paired with other pink decor items.

4) This idyllic wall art

IMAGE SOURCE: AMAZON.COM

If a season could be Barbiecore, it would be summer. You can practically smell the sweet drinks, chlorine and sunscreen through the wall. Dream of a world where your swimsuit always fits, where you tan but don’t burn while spending uninterrupted hours by the pool, unencumbered by chores and work. That’s all true, if only for a moment, when you look at this fun decor.

Anything in Viva Magenta

It’s almost as though PANTONE® knew this would be Barbie’s year when they announced the Color of the Year for 2023 as Viva Magenta. Thanks to its newfound fame and the movie’s hype, you’ll find this bright, saturated lipstick-pink shade everywhere. We covered the trend late last year, so check out some additional decor suggestions there as well.

Bring Barbiecore to life at home

Even if you choose not to see the movie, you’ll see enough Barbiecore images and items in the coming months to fulfill your Barbie needs. If you like what you see here, we suggest learning more about the trend and keeping your eye out for decor that fits your ideal aesthetic. Remember, life is your creation with this look, so don’t limit yourself to stereotypes, styles, age, gender norms or timelines. Just like with Barbie’s outfits and shoes, you can always begin with one piece at a time and build your collection.

But wait, are you still looking for a place to convert into your personal Barbiecore dream house? Start your summer here, looking at thousands of fabulous rentals. Make sure to get a place with a pool!

Maggie McCombs is the managing editor at Rent., where she oversees the content calendar and production schedule for three high-traffic websites. She studied linguistics and Spanish at the University of Georgia, where she learned the fundamentals of languages like Arabic, Latin, French and Old English and mastered Spanish literature. Since college, Maggie has developed a strong portfolio of blogs and journalistic pieces alike. Outside of work, Maggie spends time playing video games (especially anything Zelda!), competing in trivia contests, listening to audiobooks, exploring new cities and relaxing with her husband, dogs and cat.

Source: rent.com

Apache is functioning normally

Boston, Mass.

Maddie Meyer/Photographer: Maddie Meyer/Getty

Boston Mayor Michelle Wu is offering hefty tax breaks to companies to turn offices into housing, the latest example of a city seeking to address the challenges of remote work hitting downtowns and a lack of affordable residences.

Wu announced a program this week to encourage conversions by taxing developers at the city’s much lower residential tax rate. The city would then offer a discount of up to 75% on the residential levy, so for a building with an assessed value of $10 million, annual property taxes would drop to as low as $26,850 from as high as $246,800.

There’s no shortage of potential buildings to tap. Boston’s office market has seen its vacancy rate climb to 14.2% during the second quarter, the highest level in two decades, according to data from CBRE Group Inc. Meanwhile, the city of 650,000 is struggling with escalating housing costs. Median monthly rent for a one-bedroom has jumped 8% in just a year to $2,800, Zumper figures show. 

“We must take every possible action to create more housing and more affordability so that Boston’s growth meets the needs of current and future residents,” Wu said in a statement.

Boston’s Wu isn’t the only mayor trying to shore up commercial real estate in their city. In San Francisco, the poster child of cities struggling to revive from Covid, Mayor London Breed wants to use tax incentives to lure new businesses. New York’s Mayor Eric Adams has urged Wall Street to get workers back into offices and also recommended turning empty commercial buildings into homes.

Boston’s program will offer a test case for the viability of office-to-housing conversions backed by tax breaks. Even with the incentive, conversions are often too expensive and complicated to make sense for developers. Many office buildings have large, dark floor-plates that are hard to divide into livable homes. The costs of such projects are also often higher than simply building a new tower from the ground up.

Boston found that reducing the tax rate on residential property by up to 75% for as many as 29 years could “provide a strong incentive to encourage conversion.”

The Brookings Institution said in a recent report that office-to-residential transformations are not a “panacea” and governments should be careful before rushing to fund them. Conversions often aren’t possible without significant government funding, Brookings said. 

A separate study found that conversions in San Francisco, for example, can cost $472,000 to $633,000 per unit before necessary seismic upgrades. 

Boston’s conversion program plans to accept applications this fall through June 2024, but it’s unclear how much the proposal will cost.    

“We may get one, we may get ten, we may not get any, we won’t know what the tax impact will be until we receive the proposals,” said James Arthur Jemison, the city’s planning commissioner.

“Developers and owners are saying I could convert my building or I could try to re-lease and get other tenants, and that is where another hurdle exists,” Jemison said. “As values have declined it’s become more interesting for people to make the conversion.”

Financial Stake

Boston is home to State Street Corp., Wayfair Inc. and General Electric Co. Tech firms though dominate the businesses that are looking to sublease their office space, according to CBRE.

Boston’s downtown, which is home to about half of city office space, has been hit hard by the pandemic compared to other neighborhoods. An October 2022 report commissioned by the city found that economic activity downtown remained 20% to 40% below pre-pandemic levels for industries like retail.

Boston, like other cities, has a financial stake in reviving the office market. The city relies on property tax revenues for about three-fourths of its general fund budget, according to S&P Global Ratings, which gives the city its AAA credit rating.

Dora Lee, director of research at Belle Haven Investments, said it’s important for cities to be responsive to disruptions given the potential hit to their finances.  

“These plans have been very popular but it’s not like these offices will be converted overnight,” Lee added. “This is a years-long process.”

Source: nationalmortgagenews.com