While, yes, a lot of companies are reeling as the economy grinds to a halt — that doesn’t mean all of proptech is struggling.
One of the obvious byproducts of COVID-19 is virtual showings, open houses, staging, 3d tours, and floorplans–not to mention anything video related–finally have their moment in the spotlight.
That said, it’s still an unknown whether such services will be permanently pushed from “nice to have” to “need to have” once socially distancing is behind us. All the tech in the world isn’t going to change the fact that most homes that are transacted are purchased by buyers who lives in the vicinity and can easily drive to see the home in person. And, if they can drive to the house prior to spending hundreds of thousands of dollars and committing to 30 years of payments, they will. However, maybe the big lasting change will be consumers realizing they don’t have to look at every home in person–saving both agents and buyers considerable time.
Among those members represented in the Geek Estate Mastermind, a few companies well-positioned to capitalize on the urgency socially distancing has created:
Asteroom: 360° tours created by attaching their Pano Kit to your phone. Learn more.
FloorPlanOnline: creates virtual tours, 2D and 3D floor plans, 3D RoomPlanner tools and videos for real estate properties. Geek Estate Offer // Learn more.
Motivo: specialize in collaborating with nonprofit organizations and startups to produce and market multilayered media campaigns. An example of their work is here. Learn more.
Padstyler: offers virtual staging and 3D architectural rendering, alongside services many other real estate marketing services. Learn more.
PlanOmatic: a tech-enabled service company that provides high-quality professional photography and floor plans for real estate, nationwide. The company serves real estate agents, property management companies, single-family rental owner/operators and iBuyers. Learn more.
REveo: A tool that connects real estate agents and homebuyers in a single click from any screen, LIVE – sans any apps to download —no tech, just a single click. Mastermind Showcase // Learn more.
WellcomeMat: helps make video the center of the real estate consumer experience by maximizing the value of video for agents, brokers and brands. Learn more.
Another category that is poised for growth is anything the helps people tour properties (both for sale or rent) without being subjected to other people. While many cities are locked down entirely now and no one is touring properties, this sector will gain substantial momentum as lockdowns end and buyers and agents are still practicing socially distanced ways to conduct showings. Two companies from this sector represented in the Geek Estate Mastermind are:
Kleard: a fully integrated cloud-based solution providing real-time visitor verification for open houses and showings to increase safety and helps prevent crime. Learn more.
Knock:A leasing experience redesigned with smart locks. Renters tour apartments by themselves, whenever they want, no agents on-site, no scheduling. Learn more.
RentZap: works with the top property management companies, enabling prospective renters to view the homes on their time, not an agent’s. Learn more.
Beyond that, I also believe CoBuy (job losses will mean more people have to find budget solutions) as well as Remarkably (more analytics for multifamily operators/landlords can only help as marketing spends are slashed) will both emerge stronger.
What sectors of the industry are you most excited about right now?
Completed homes fell 11.8% from the prior month and were 5.4% below the July 2022 level. The pace of single-family home completions picked up from the prior month, boosted by gains in the Midwest and West.
Meanwhile, there are just over one million multifamily units under construction, a record.
Still, it’s a good, not great report, economists said. Housing starts have been down for 13 of the last 15 months on a year over year basis. And the NAHB/Wells Fargo builder confidence index also fell in August, the first decline in 2023.
Declines in the current pace of sales and the next six months pushed the index down, said George Ratiu, chief economist at Keeping Current Matters.
In spite of the affordability challenges, homebuyers remain eager to buy. Developers and construction companies seem to “have come to terms with the affordability challenge and have been erecting smaller homes at more approachable prices this year,” said Ratiu.
Though there are near-term and medium-term challenges with mortgage rates and waning affordability, the fundamentals still look good, economists said.
“Higher mortgage rates threaten affordability and builder supply-side challenges remain, but the housing market remains fundamentally underbuilt and existing homeowners aren’t moving,” said Odeta Kushi, deputy chief economist at First American. “While builders can’t make existing homeowners move, they can add more new homes to the housing stock.”
Completions were down in July, but that is about one year after permits and starts began to decline, leaving fewer homes in the pipeline and thus dampening completions, said Nicole Bachaud, an economist at Zillow.
“New construction remains a vital source of new inventory in this market, with many builders still offering incentives that allow for more buyers to find opportunities in the new homes market, so continuing to build is important to the overall health of this market,” she said.
There are other challenges for prospective homebuyers to overcome, said Travis Hodges, a managing director at insurance brokerage VIU by HUB. It’s become much more difficult to secure homeowners insurance in several markets, and rising costs are a big concern.
“With insurance premiums expected to be up 7% this year on average, finding coverage at a reasonable price is key for new home buyers to carry a mortgage,” Hodges said.
States like California and Florida, which are both prone to extreme weather events, are now facing issues of multiple carriers leaving the market. A similar situation might happen in Maui after catastrophic wildfires destroyed parts of the island.
The Housing Policy Council (HPC) is urging the Federal Housing Finance Agency (FHFA) to modify its proposed government-sponsored enterprises (GSEs) single-family pricing framework, including coordination with banking regulators to streamline capital requirements and retention of upfront guarantee fees.
The original request for input published in May was designed to gather public feedback on goals and policy priorities the agency should pursue in its oversight of the pricing framework. FHFA also sought input on the GSEs’ single-family upfront guarantee fees and whether to continue linking those fees to the Enterprise Regulatory Capital Framework (ERCF).
HPC, in its comment letter, expressed support for the ERCF, suggesting the agency also require pricing levels that will let enterprises earn target rates of return over a reasonable period of time.
The Council also noted that the RFI did not address the financial benefits and operating advantages that Fannie Mae and Freddie Mac derive from their government-sponsored status.
The enterprises, said HPC, “are advantaged by a lower cost of debt financing and a lower cost of capital.” A borrower subsidy, HPC argues, is directly descended from such charter privileges enjoyed by the GSEs.
HPC also suggested that FHFA retain upfront guarantee fees, since it sees those fees as a critical post-financial crisis safety and soundness reform measure. FHFA, it noted, should continue to calibrate risk-based pricing to the ERCF. Meanwhile, the cross-subsidization model is not working as intended and actually contributed to GSEs’ failure in the run-up to the 2007-08 financial crisis, the Council said.
The ERCF, which was established in 2020, has a “significant impact on the risk-based pricing component of the enterprises’ guarantee fees,” the FHFA said in its May RFI. The FHFA began using the ERCF to measure the profitability of new mortgage acquisitions in 2022.
FHFA Director Sandra Thompson said the RFI was issued to increase transparency.
“FHFA seeks input on how to ensure the pricing framework adequately protects the enterprises and taxpayers against potential future losses, supports affordable, sustainable housing and first-time homebuyers, and fosters liquidity in the secondary mortgage market,” she said.
In our latest real estate tech entrepreneur interview, we’re speaking with Jonas Bordo from Dwellsy.
Who are you and what do you do?
I’m Jonas Bordo and I’m the CEO and Co-Founder of Dwellsy, a free rental listing site where owners and property managers can get high quality leads for free and where renters can find a rental and make it home.
What problem does your product/service solve?
In recent years while I was leading central operations for Essex Property Trust, I saw it get more and more difficult for renters to find rentals as fraud on Craigslist exploded. At the same time, the pay-to-play ILS platforms consolidated and raised prices aggressively, causing their rental inventories to shrink and marketing costs to grow rapidly for multifamily and single-family owners and operators. All the while lead quality floundered.
Before Dwellsy launched, those owners and operators had no easy, free path to publicize their listings and get high-quality leads, and renters had no obvious tool to access a broad range of different rental options. Dwellsy fills that gap as a completely free listing service (free to list, and no charges for leads or leases) that makes it easy for renters to find their next home.
What are you most excited about right now?
Against the backdrop of the COVID 19 pandemic, I’m feeling very fortunate that Dwellsy is in a position to help America’s 110 million renters and more than 10 million owners and property managers.
For property managers, we’re a free tool to drive high-quality leads and lower their cost of marketing – much needed at this time. And for renters, we offer an incredibly broad and growing inventory, great search tools and true organic search – which will make any search for a new rental home or apartment more successful.
What’s next for you?
We had a huge year in 2019 – launched the business, built an amazing core team, went live with our initial product and started finding renters great homes and apartments.
2020 is going to be about broadening and deepening our reach and enhancing our product. We have almost 8 million units and a quarter of the NMHC Top 50 Property Managers listing with us today and we aim to increase that substantially. We have just started to welcome consumers to our platform this year, and we anticipate that growth in consumer traffic – and delivery of free leads to property managers – will continue to grow at a rapid rate this year.
We will also launch our first few paid products — for renters to help them conduct more effective searches and to help small mom & pop landlords list properties more effectively.
Of course, we will continue to offer the same free, high quality leads to owners & managers – that will not change.
What’s a cause you’re passionate about and why?
It’s hard to name just one, but top of mind today is the Housing Industry Foundation, which has done amazing work here in the Bay Area supporting renters in times of crisis over the years. They are all the more necessary now, given how many renters are struggling with affordability today.
Thanks to Jonas for sharing his story. If you’d like to connect, find him on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
Have homebuilders reached their limit on how much they can lower mortgage rates to boost demand? Today we got the housing starts data, which was a beat of estimates, but total housing activity isn’t booming here.
I firmly believe that the builders can’t solve the housing inventory situation when it comes to single-family units because they will simply not provide enough. As shown below, we currently have only 72,000 new homes for sale.
This data is returning to more normal levels, but even during the worst days of the housing bubble crash, we never got to 200,000 homes. In a country with over 335 million people (and over 156 million people working), 72,000 isn’t going to do much to move the needle on inventory.
From Census:
Housing Starts: Privately‐owned housing starts in July were at a seasonally adjusted annual rate of 1,452,000. This is 3.9 percent (±16.0 percent)* above the revised June estimate of 1,398,000 and is 5.9 percent (±16.1 percent)* above the July 2022 rate of 1,371,000. Single‐family housing starts in July were at a rate of 983,000; this is 6.7 percent (±13.0 percent)* above the revised June figure of 921,000. The July rate for units in buildings with five units or more was 460,000.
As you can see in the chart below, housing starts have stabilized as new home sales are still showing year-over-year growth, but starts aren’t exactly booming. We must remember that the homebuilders still have a sizable backlog of houses they haven’t started to build yet.
Building permits: Privately‐owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,442,000. This is 0.1 percent above the revised June rate of 1,441,000, but is 13.0 percent below the July 2022 rate of 1,658,000. Single‐family authorizations in July were at a rate of 930,000; this is 0.6 percent above the revised June figure of 924,000. Authorizations of units in buildings with five units or more were at a rate of 464,000 in July.
Housing permits have also stabilized from their fall, and we are seeing more single-family permits issued, but it’s not a big move, as the chart below shows.
How long will the builders keep their advantage?
Why am I focusing on mortgage rates now? Well, mortgage rates are now at the high end of my forecast range for 2023, and we are still dealing with a stressed mortgage market. Over the last year the builders have grown yearly sales by offering lower mortgage rates, which they could do because they had good enough profit margins.
However, for the first time this year, they have expressed concern about their future in the builder’s confidence index: back-to-back declines in the forward-looking six-month data line from the builder’s survey. The headline data also fell for the first time in a long time, but last month the forward-looking data line declined even with the positive print.
Forward-looking housing data for the builders was positive for many months, but in the last two months, that changed, so the builders are more cautious about their future. What has changed is that mortgage rates have stayed higher for longer over the last two months, so we have a direct correlation to higher rates here.
I am a big fan of the HMI data because the builders know more than anyone else what they can and can’t do. You just have to believe in this survey and keep an eye out for whether higher rates are starting to hit their confidence metrics looking ahead. I see cracks in the system that warrant close monitoring because this data line can be very choppy sometimes, but if we get a string of these lines, it makes a trend.
For now, I am keeping a watchful eye on this because if the builders are having issues looking ahead, then the housing market, in general, will be in a slow phase as well. As we saw today with the purchase application data, we aren’t crashing in sales like in 2022, but we aren’t growing either.
At last glance, the 30-year fixed mortgage was back above 7%, depending on the data source.
Prior to late July and early August, the popular loan product could be had for closer to 6.5%. Or even in the high 5s if paying points.
And forecasts from prominent economists pointed to rates making their way back to the 5s, or even the 4s by next year.
Then rates suddenly reserved course and continued their upward climb, challenging the high levels seen last November.
The question is, why are mortgage rates so high? And why aren’t they coming down if the Fed is done hiking and inflation is abating?
Blame the Resilient Economy for High Mortgage Rates
As a quick refresher, good economic news tends to lead to higher interest rates.
And bad economic news typically results in lower interest rates.
The general logic is a hot economy requires higher borrowing costs to slow spending, otherwise you get inflation.
Meanwhile, a cool economy may require a rate cut to spur more lending and get consumers spending.
Unfortunately, the economy continues to defy expectations, in spite of the many Fed rate cuts already in the books.
Since March of 2022, the Fed has raised their key fed funds rate 11 times, from near-zero to a range of 5.25-5.50%.
This was deemed necessary to battle inflation, which had spiraled out of control, causing the prices of everything, including single-family homes, to skyrocket.
While the Fed has more or less signaled that it’s now in a wait-and-see holding pattern, mortgage rates have continued to march higher.
The reason is hot economic data, whether it’s the CPI report, jobs report, retail sales, etc.
Sure, some of these reports have come in better than expected recently, but it’s never convincing enough to result in a mortgage rate rally.
On top of that, Fitch recently downgraded the credit rating of the United States, citing “expected fiscal deterioration over the next three years,” along with growing government debt.
Nobody Believes the Inflation Fight Is Over
While the Fed doesn’t set mortgage rates, its own fed funds rate does dictate the general direction of long-term interest rates such as those tied to home loans.
As such, rates on the 30-year fixed (and every other type of mortgage loan) increased markedly since early 2022.
Those 11 rate hikes translated to a more than doubling of the 30-year fixed, from around 3% to 7% currently, as seen in the illustration above from Optimal Blue.
It was further exacerbated by a widening of mortgage rate spreads relative to the 10-year Treasury.
And while the Fed appears to be satisfied with its rate hikes, they’re still watching the data come in each month.
Without getting too convoluted here, nothing has convinced Fed watchers that a rate cut is in the cards anytime soon.
Simply put, this means mortgage rates may need to stay higher for longer, even if the Fed is done hiking.
Compounding this higher-for-longer narrative is the U.S. deficit and their larger-than-anticipated borrowing costs, which will require selling more bonds.
This puts additional pressure on interest rates as the supply of bonds grows and their associated rates increase.
But that’s just the latest sideshow. The overarching theme is that the economy remains too hot, unemployment too low, and consumer behavior not much changed.
Despite much higher borrowing costs, whether it’s a mortgage, a credit card, a HELOC (whose rates are up about 5% from 2022 thanks to the increase in the prime rate), the economy keeps chugging along.
There has yet to be a recession and the stock market has been resilient. In other words, there’s really no reason to lower interest rates and reduce borrowing costs.
Why would the Fed do that now, only to risk another surge in inflation? Or another home buying frenzy.
What Would Lower Mortgage Rates Mean for the Housing Market Today?
Let’s consider if mortgage rates finally did trend lower in a meaningful way.
Despite some short-term victories over the past year, they’re pretty much back near their 20-year highs.
If they did happen to fall back to say the 5% range, what would what mean for the housing market?
In case you haven’t heard, Zillow expects home prices to rise 5.5% this year after beginning the year with a decidedly bleaker -0.7% forecast.
This figure is “roughly in line with a normal year,” despite those 7% mortgage rates.
But what would happen if rates came down to 5%? Would we see a return to bidding wars and offers well over-asking?
Would home price appreciation reaccelerate to unhealthy levels again?
The answer is most likely yes. And this kind of sums up why the Fed isn’t going to just start cutting its own rate anytime soon.
All their hard work would be in vain if inflation notched higher again and their so-called housing market reset became awash.
Even if a rate cut does come as early as 2024, it might only be a 0.25% or something relatively insignificant, which may not move the dial on mortgage rates much.
Like the Fed, mortgage lenders (and MBS investors) are defensive as well. This explains why it has been really hard to see a meaningful mortgage rate rally in 2023.
Even when a jobs report or CPI report comes in cooler than expected, it quickly gets overshadowed by something else.
And that’s just the nature of the trend right now, which isn’t a friend to mortgage rates.
This will eventually change, but it could take longer than expected for mortgage rates to finally reverse course.
Similar to how they stayed low for so long, they may remain elevated well beyond the rosy forecasts indicate.
Homebuilder confidence declined for the first time this year in August, reflecting the difficulties of 7% mortgage rates and reduced housing affordability.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report showed that builder confidence fell 6 points from July to a reading of 50.
The HMI index is a monthly survey that gauges NAHB members’ perception of current single-family sales, expected sales for the upcoming six months, and potential homebuyer traffic. An index of 50 is neutral; higher than 50 indicates that builders view conditions as favorable.
“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” said Alicia Huey, NAHB Chairman and a homebuilder from Birmingham, Alabama.
Huey added that while housing affordability remains a persistent challenge, demand for new construction has been aided by a lack of resale inventory. Many homeowners are locked into low-rate mortgages and are staying put, she said.
In July, shelter inflation accounted for 90% of the Consumer Price Index’s reading of 3.2%, contributing to housing affordability challenges. The NAHB said builders need to be constructing more multifamily and single-family homes to cut into the decade-long inventory shortage.
“The best way to bring housing inflation down and ease the housing affordability crisis is to enact policies at all levels of government that will allow builders to construct more homes to address a nationwide shortfall of approximately 1.5 million housing units,” said Robert Dietz, the NAHB’s chief economist.
Additionally, high mortgage rates called for the return of sales incentives in August. After dropping steadily for four months (from 31% in March to 22% in July), the share of builders cutting prices to bolster sales rose again to 25% in August. The share of builders using incentives to bolster sales was 55% in August, higher than in July (52%). However, it was still lower than in December 2022 (62%).
The NAHB also reported that all three major HMI indices posted declines in August. Homebuilders’ gauge of current sales conditions fell 5 points to 57. The gauge measuring traffic of prospective buyers declined 6 points to 34. And the component charting sales expectations over the next six months fell 5 points to 55.
The three-month moving averages for HMI were mixed across the four major regions. The West edged down a single point to 50, the Midwest and the South remained unchanged, while the Northeast rose 4 points to 56.
In spite of a falling homebuilder confidence index, the Wall Street Journal reported this morning that Warren Buffett’s Berkshire Hathaway made a fresh bet on U.S. homebuilders in the second quarter. The company revealed new positions in D.R. Horton , NVR and Lennar, cumulatively worth more than $800 million at the end of June, when rates were still high but not quite 7%.
Homebuilder stocks have been at record highs in recent months.
Rising rates took a toll on builder confidence in August. The National Association of Home Builders (NAHB) said the NAHB/Wells Fargo Housing Market Index (HMI) dropped 6 points as rates neared 7 percent. The HMI, a measure of home builder confidence in the market for newly constructed homes, had risen for seven straight months but is now at 50.
Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three major HMI indices posted declines in August. The HMI index gauging current sales conditions fell 5 points to 57, the component charting sales expectations over the next six months declined 4 points to 55, and the gauge measuring traffic of prospective dropped from 40 to 34.
Deitz said that declining customer traffic is likely a result of the 7.7 percent rise in shelter inflation over the last year. It accounted for a striking 90 percent of the July Consumer Price Index reading of 3.2 percent. “The best way to bring housing inflation down and ease the housing affordability crisis is to enact policies at all levels of government that will allow builders to construct more homes to address a nationwide shortfall of approximately 1.5 million housing units,” he said.
The NAHB monthly survey of its new home builders also shows that rising rates are again pushing the use of sales incentives. After dropping from 31 percent to 22 percent between March and July, the share of builders cutting prices to bolster sales ticked up to 25 percent in August although the average price decline remained at 6 percent. Overall, the use of sales incentives increased from 52 percent of builders in July to 55 percent this month.
Looking at the three-month moving averages for regional HMI scores, the Northeast increased 4 points to 56, the Midwest and South were both unchanged at 45 and 58, respectively, and the West edged down a single point to 50.
With rent prices at an all-time high, finding affordable housing is becoming more challenging for all renters. Right now, the average rent for a one-bedroom apartment is $1,722 and the average rent for a two-bedroom apartment is $2,047.
For low-income renters, finding a safe and affordable place to rent is even more difficult. Government programs like Section 8 are in place to help ease the financial burden of rent. But what is Section 8 exactly and how do you find apartments that accept Section 8?
We’ll walk you through the basics of Section 8 and help you understand what it is, who is eligible and how to apply for it. Here’s everything you need to know about Section 8.
What is Section 8?
Section 8, formally called the Section 8 Housing Choice Voucher Program, is a government-funded program run by the U.S. Department of Housing and Urban Development (HUD).
The program aims to help people find and pay for affordable and decent housing. The program gives monthly financial assistance to over 1.2 million households who are struggling to pay rent based on their annual income, which must fall below a certain threshold to qualify for Section 8.
Section 8 housing is not limited to low-income or subsidized housing areas only. Section 8 housing is single-family homes, apartments or townhomes. It’s up to the landlord or property management company to decide whether or not they accept Section 8 vouchers. Some states require landlords to accept Section 8, while other states do not. You’ll want to check with your local government to understand what rules are in place regarding Section 8.
Who is eligible for Section 8?
To qualify for Section 8, applicants must be U.S. citizens (in most cases) and fall under a certain income bracket. While that bracket varies based on the city or area you live in, it generally looks like this:
You make 30 percent of the median income in your area
You make 50 percent of the median income in your area
Typically, priority is given to renters who make less than 30 percent of the median area income as they fall within the category of extremely low income. The local public housing authority must give 75 percent of the Section 8 vouchers to those who make less than 30 percent of the area’s median income. Section 8 will take into consideration all of the gross income generated by people in the household.
Here’s a real-world example for a prospective Section 8 renter living in Los Angeles. The median income in Los Angeles is $71,358 annually. If someone makes $21,407 or less — which is 30 percent of the median L.A. income — they’d qualify for Section 8. To see what the median income in your area is, check out the Quick Facts section of the Census Bureau.
Section 8 does not cover the entire cost of the rent. It subsidizes a portion of it. Typically, Section 8 has the renter pay 30 percent of their salary towards rent and then, Section 8 vouchers cover the remaining rent due.
Section 8 is not an emergency rental assistance program, so keep that in mind if you’re applying for it. It can take weeks or even months to qualify for Section 8. There are often long wait times to receive Section 8 and, generally, only 1 in 4 people receive assistance immediately.
How to apply for Section 8
Section 8 housing can exist anywhere that landlords choose to participate. It’s not limited to certain cities or neighborhoods. Because specific geographic areas determine the eligibility factors, you’ll need to apply through the local public housing authority or PHA.
Here’s a step-by-step process on how to apply for apartments that accept Section 8.
Find your local PHA contact information
Download the PDF with each county’s contact information
Submit an application to verify your eligibility
Wait for approval
Once approved, you’ll either receive your Section 8 voucher or be placed on the waiting list
If you’re placed on a waiting list, here are some tips on how to gauge the actual wait time:
Ask your PHA for a time estimate
Ask your PHA how long the wait list is to see how many people are on it
Ask your PHA for information about the turnover rate to see how quickly the wait list moves
Understand that larger cities usually have longer wait times
Wait times vary city by city but it can take weeks or months to finally receive Section 8 assistance.
Finding apartments that accept Section 8
So, you’ve qualified for Section 8 housing and you’re off the waitlist. Now, it’s time to find an apartment that accepts Section 8 so you can start the apartment search and application process.
Usually, you’ll have 90 days to find an apartment that accepts Section 8. Once you find a place that accepts Section 8, you’ll need the PHA to inspect and approve the unit and the lease. This helps ensure you’re renting a clean, safe and livable place that meets HUD criteria.
There is not a one-size-fits-all approach to finding an apartment or landlord that accepts Section 8, but here is our advice on how to start your apartment search.
Search Rent. using the “income-restricted” filter and ask the prospective landlord if they accept Section 8 vouchers
Use the HUD interactive map to see which areas and apartment complexes accept Section 8
Conduct a basic Google search to see what comes up in your area
Work with non-profit groups that specialize in low-income housing assistance
Settling into your new apartment that accepts Section 8
Now that you’ve qualified for Section 8 and found an apartment that accepts Section 8 vouchers, you’ll want to consider a few other things to set you up for success in your place. Understand the cost of the utilities and security deposits so you can budget accordingly. Also, make sure you thoroughly understand the terms of the agreement of Section 8 — read the fine print! Once you’ve done those things, it’s time to move in and enjoy your new apartment and home.
Sage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.
The chasm runs the full length of the condominium complex, from the shuttered tennis court to the shuttered pool. Measuring more than 500 feet long and 20 feet wide, the gash divides the complex in two, its weed-choked perimeter cordoned off with chain-link fencing. A grimy trickle of water oozes along the chasm’s concrete floor a dozen feet below, like some ugly open wound that just won’t heal.
Welcome to Coyote Village, a 70-unit condo complex in suburban La Habra whose residents have been living out a homeowner’s nightmare. Over the last four years, portions of the tree-lined greenbelt that once shaded the complex have violently collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth. Running beneath it is a cavernous flood channel that decades ago was sealed with a concrete lid then topped with mounds of soil and landscaped with pine trees.
The first collapse of the concealed lid came in January 2019, when a section of the greenbelt near the tennis court caved in, exposing the flood channel below. The second implosion came in March, when heavy winter rains saturated the greenbelt and the concrete lid couldn’t handle the weight of the soggy soil and towering pines. This time, the collapse took out a huge swath of the greenbelt near the community pool.
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Most residents were shocked to learn that their complex was built on top of a private canal that plugs into Orange County’s larger Imperial Channel, which routes storm water out of La Habra, Brea and Fullerton. It stood as the only covered private channel in the county’s 380-mile public storm drain system.
And that “private” designation is where the residents’ encountered another chasm, in the form of a years-long legal battle.
After the 2019 collapse, the county did some cleanup work at the site and provided security fencing around the exposed portion of the channel. Following the March 15 collapse, La Habra brought in construction crews to excavate the channel, which at that point was clogged with dirt, tree limbs and concrete that the city worried would create a damming effect in the broader drainage system during future storms.
But the city’s work stopped there.
La Habra officials have argued since the first collapse that the channel belongs to the complex. And worse, that the channel’s concrete lid had been improperly covered with a breadth of landscaping that violated what had been approved in the city permitting process. According to the city, the homeowners association that represents Coyote Village is responsible for repairing and rebuilding the channel.
The Coyote Village Homeowners Assn. has challenged that stance in a running legal battle, started in 2020, contending the channel is integral to a larger public system and was damaged by public use without just compensation. It has sued the city, the county and the county flood control district, among others, for relief.
“While the conduit runs through the HOA property, the water is public,” said John Peterson, an attorney representing the homeowners group. “The public needs to share in the responsibilities.”
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State Sen. Josh Newman, a Democrat whose district encompasses La Habra, tried to broker a solution last summer and was able to secure $8.5 million in state funding to repair the flood channel. “The residents were wholly unprepared and financially unequipped to deal with this,” Newman said. “I was happy to secure those funds.”
But a year later, that money remains unspent.
La Habra initially questioned the propriety of expenditure, asking the state Atty. General’s Office if the allocation could be considered an improper gift of public funds. The state’s Legislative Counsel determined it was not. In the months since, the city and homeowners association have haggled over who would run the major construction project, with the HOA concerned it does not have the expertise and city officials reluctant to take charge of repairs on a canal they consider private property.
Residents have watched in a mix of frustration and resignation as the saga has unfolded.
Jan Duncan, an HOA board member, said she put her Coyote Village loft on the market in June and received six offers the first week. Then came questions about the flood channel and why it hasn’t been fixed in four years. In short order, every offer was rescinded.
“I cannot give buyers anything in writing to guarantee that this is going to be resolved,” she said. “Without that, they’re uncomfortable. I can’t blame them.”
Justin Marinello is among the parents in the complex who worry about the safety risk the exposed channel poses for children. His condo looks out on the gritty channel and his 4-year-old son had a front-row view of the city’s excavation work after the March collapse.
“My son enjoyed watching the construction because he likes giant Tonka toys playing with dirt,” Marinello said. “But it would be nice to be able to open the door up and just have some grass for him to run on.”
On the other side of the chasm, Lizeth Ruiz knew about the exposed channel when she moved to her condo in 2019 but figured it would be quickly repaired. Instead, she finds herself fending off mosquitoes that breed in the canal’s dingy water. “Now, I keep everything closed and have to be more mindful about wearing pants instead of shorts,” Ruiz said, holding her newborn baby tight.
As the summer heat soars, the concrete channel is lined with dry weeds that rise taller than the 6-foot safety fencing. The channel itself is defaced with graffiti. Residents continue to pay $390 in monthly homeowners fees even though the channel’s collapse has sidelined amenities like the tennis court and pool.
It marks a wrenching chapter in the life of a property with an eccentric history.
In mid-century La Habra, a ranch owner flooded a portion of the area to create a lake and islet, deemed “Monkey Island,” where he let feral monkeys roam free. He also eyed the land for a track that would host ostrich races. At the time, ostrich farms were a popular tourist attraction in Orange County.
Later, the lake was drained and La Habra city leaders opted to go a development direction they considered more forward-thinking, erecting a shopping plaza and post office on the site.
In 1978, developer Loren Hendrix proposed an adjacent 70-unit condominium complex, when such communities were still novel in Orange County as an affordable alternative to single-family homes. Without yards to maintain, he envisioned residents being able to stroll along a landscaped creek — a dressed-up version of the flood control channel that crossed the property — as a key selling point.
But Hendrix faced stiff questions from city staff about how he planned to protect children from hazards posed by the channel-turned-creek. Archival records show the county flood control district rejected Hendrix’s creek design. The district recommended design changes Hendrix considered too costly. Instead, the complex would host an enclosed flood channel masked with landscaping.
La Habra City Council members approved the development in April 1979 on the condition that Hendrix’s design be approved by the city’s chief building inspector and the county flood control district. A year later, the building inspector wrote that the complex was “substantially in compliance” with applicable codes. It’s not clear in county records whether the flood control district ever approved the design.
In any case, the condo development and greenbelt were built. And for 40 years, storm runoff flowed through the underground channel unbeknownst to most residents until the 2019 collapse.
La Habra city officials say the cave-ins are more about what was built on top of the channel than what lies below.
Deputy City Atty. Gary Kranker contends that at the time of the 2019 collapse the soil piled above the channel ran 9 feet deep — 6 feet more than the greenbelt design approved by the city — and that the pine trees that by then stood 80 feet tall contributed to the channel lid’s failure.
“It’s the obligation of the individual constructing the channel, or in this case, the channel roof, to make sure it was done properly,” he said. “Based upon the calculations that we have, it would have been done properly had it only had 3 feet of soil.”
And he faults the homeowners association for failing to take aggressive action to alleviate the risks between the first cave-in and the implosion in March. “To be quite candid, [they] did not do anything to try and alleviate this condition,” he said. “They could have hired someone to remove the soil, one wheelbarrow at a time.”
Last year, the homeowners association sued Hendrix, the complex developer, for fraud. The complaint alleged that he concealed the channel and any maintenance responsibilities from the association so he could sell condos “more quickly and at higher prices.” Peterson, the association’s attorney, said a settlement agreement compels Hendrix to find the insurance policies that covered the development and assign the rights over to the association.
Hendrix did not respond to requests for comment through his attorney.
Last week, representatives for the city and homeowners association said they were closing in on an agreement for moving forward with repairs that would free up the $8.5 million in state funding. Once a resolution is reached, the canal’s reconstruction is expected to take at least a year.
Roma Damo, who has lived at Coyote Village for 35 years, doesn’t see much light at the end of the tunnel — or flood channel, in her case.
“I’m seriously thinking about renting this condo out and getting myself an apartment,” said Damo, 88, eyeing the degraded channel outside her condo windows. “I don’t want to spend the rest of my life here looking at this.”