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California’s housing crisis and the density delusion

“Getting people out of their cars in favor of walking, cycling or riding mass transit.” notes Liam Dillion, “will require the development of new, closely packed housing near jobs and commercial centers at a rate not seen in the United States since at least before World War II.” Besides being ahistorical — this kind of housing was restricted to the urban cores a few of the largest metropolitan areas — many residents of these districts, including in California, gleefully abandoned this lifestyle for a more private, lower-density and family friendly lifestyle as soon as it became practicable. The density delusion The density-seeking measures such as state Sen. Scott Wiener’s highly contested SB827 seek to dismantle local zoning to boost densities, allegedly to address state’s housing affordability crisis. High density housing is far more expensive per square foot to build than townhouse or single-family construction. Nearly all the new market-rate housing built in the state is “luxury” by middle-income standards, and more expensive than what it replaces. Decades of densification in Los Angeles has seen ever higher rents, displacing low-income, especially minority households. Nowhere, here or abroad, has densification materially improved housing affordability, whether for low income households or the larger number of middle-income households. Even the pro-density UC Berkeley Termer Center, acknowledges that virtually banning urban fringe development will account for barely 1 percent of the proposed state GHG reduction by 2030 — a pittance for polices that could drive house prices and rents even higher. The whole policy assumes density will force more people unto transit, a dubious suggestion with transit ridership plunging in both Los Angeles and the Bay Area. But ultimately, prices can only be brought down by allowing more construction on the fringe, restoring the competitive market for the price of land. Finally, if we want to build more affordable housing, we look at non-profit organizations — including churches and charitable groups — to build housing without the need to create high returns or raise rents on their market-rate customers.

Top Cities to See a Rise in Rents

The slow rate of home building has impacted the rental space, according to a report from RentCafe. According to RentCafe’s Apartment Market Report for August 2018, the national average rent reached an all-time high of $1,412 in August 2018, a 3.1 percent increase year over year, 0.1 percent month over month. Queens (NYC), Las Vegas, and Phoenix saw the highest increase in rent rates while Baltimore, San Antonio, and Washington, DC experienced the least changed rents. With apartment construction slowing down, the national average rent went up by $42 year over year in August and $2 month over month. RentCafe states that a higher than normal number of renters this summer, notably college students, as well as more rent renewals are possible causes of the higher rents. According to RentCafe, Orlando saw the highest increase in rent over the past year, jumping 7.7 percent since 2017, hitting an average rent of $1,393 in August,a $99 per month increase. San Antonio saw the least rent growth, growing by only 1.5 percent to $996. Los Angeles renters are feeling the biggest changes year over year, with rents increasing $102 per month on average, or $2,395 a month, a 4.4 percent increase. Manhattan, New York City holds the highest average rent prices, at $4,119 in August, up 1.9 percent from $4,042 year over year. While most cities saw rent increases, cities such as Brownsville, Texas felt their average rent drop.

Should you be investing in cryptocurrency?

A year ago, that number was just $21 billion, according to Coin Market Cap, a website that monitors cryptocurrency and ICO markets. An ICO usually involves selling a new currency, or token, as a way for a company to raise money. “Some are rushing into the cryptocurrency market and contributing their hard-earned money into products that they don’t fully understand.” What makes it so difficult? The company simply didn’t register its offering under the securities laws. EY reported that, at the time, the total amount of funds raised through ICOs was approaching $4 billion, twice the volume of venture capital investments in blockchain projects. “Take your time to understand new cryptocurrencies,” Rasmussen said. “Don’t get swept up in the hype of cryptocurrencies and don’t let your fear of missing out cause you to put money into an ICO that you can’t afford to lose.” Notably, Vitalik Buterin, the founder of the popular cryptocurrency and blockchain technology Ethereum, urged those looking to invest their savings to seek out traditional methods instead of putting their hard-earned money into volatile cryptocurrency. If you’re trying to figure out where to store your life savings, traditional assets are still your safest bet.” If you’re seeking to invest in a company and a digital currency it is raising funds with, Rasmussen cautioned potential investors to take a close look at the white paper or other offering document that a company may have released leading up to the launch of an ICO. “Our team is seeing interest from other buyers and sellers in these kinds of transactions.” Perez said he sees bitcoin and ethereum transactions – for general goods and services, as well as real estate – becoming more frequent. Perez believes the volatility of the market comes from those who don’t quite know or understand the technology behind the coins.

14 states that still haven’t fully recovered from the housing crash

American households lost $16 trillion in net worth because of the housing and credit crisis of the late 2000s, according to CoreLogic. Since then, there's been a long and slow slog to recovery. Compared to the peak of the national housing market in 2006, US home prices are about 1% higher, on average. But many states still have home prices in the red compared to where they were at the top. To be clear, home prices at the precrash peak were far from normal; that's why a bubble formed and then popped. Yet some homeowners who bought at the market top and survived the crash would sell at a loss today. Below are the states where average home prices are still below their precrisis peak. It has the negative peak-to-current price change, reflecting how far underwater homeowners who bought at the top and held on still are, and the trough-to-current price change, showing how much prices have recovered from the worst point of the crisis.

Commercial real estate in the age of #MeToo

None of the firms had an equal ratio of male to female brokers, TRD’s analysis found. No other woman was involved in the transaction, Lee said. The women that have made it to the top also have an added pedigree of sorts, according to Stacy Vierheilig-Fraser, senior managing director at brokerage and property management firm Charles Dunn. “I think you’re going to see many more women as brokers in the next five years,” Schatz said. Westside Estate Agency had the lowest ratio of females out of the top local residential brokerages with nearly 42 percent, a TRD analysis showed. About 50 percent of the brokers at the Agency and Hilton & Hyland were female, while Douglas Elliman’s representation of women exceeded 57 percent in its L.A. office. “The residential real estate companies are primarily owned by men,” Rey said. “Women need to form alliances where it’s not a covert industry where only one woman can make it.” Poirier has executed this by hiring several women for her team. That means using words like “collaborative” and “compassionate” in recruiting ads, according to Brokers + Engineers’ Renshaw. “Women are great in commercial real estate — it’s just that someone has to tell them,” Renshaw said.

TEDxEvansville is back, here are this year’s speakers, topics

— Tickets remain available for TEDxEvansville, scheduled for 1-5 p.m. Friday at the University of Southern Indiana Performance Center. Eight speakers are featured at this year's event, which has a one-word theme: "Connect." This year's event is the fourth in Evansville. She is also the mother of an only son who passed in 2017 from complications due to a substance use disorder. Hall is a student at Butler University studying history, political science and Spanish who is from Evansville. His undergraduate research has focused on the importance of public memory and how communities like his hometown remember and commemorate historical events and actors. Caballero holds a Master of healthcare administration from the University of Southern Indiana and is an account executive for Medical Services of America. Caballero has served the needs of the poor through international medical missions, developing multidisciplinary strategic population health plans in the Evansville community and improving Alzheimer’s Dementia care in Southwest Indiana. An Evansville native, Johnson is the founder and executive director of a nonprofit organization called Young & Established, created in 2013. Prior to moving to Evansville, Philip worked for the City of Indianapolis where he managed community and economic development projects in coordination with the city’s Quality of Life Planning initiatives.

Foreign Investment in the U.S. Luxury Real Estate Market Reaches a New High

Foreign investments into the United States luxury real estate market have hit a new high, according to a recent market report from Beauchamp Estates in association with Leslie J Garfield & Co. According to the National Association of Realtors, 44 percent were all-cash purchases. “Data from the National Association of Realtors shows that just five overseas countries dominate investment into U.S. residential real estate, accounting for 50 percent of all transactions,” says Jed Garfield, president of Leslie J Garfield & Co. “They are Canada, the United Kingdom, China, Mexico, and India.” Perhaps most interestingly, the report found that around 40 percent of overseas buyer transactions for properties above $2,700 per square foot were concentrated in three major hubs: Miami, Manhattan, and Los Angeles. Miami Beach, North Bay Road, and Palm Beach ranked high among house hunters—but island destinations such as Fisher Island and Bay Point also proved popular because of the associated privacy and security. Gated or secure waterfront homes were the most sought after, and buyers generally purchased a home that was just over 13,000 square feet. “Miami is a leading hub for overseas buyers investing in U.S. luxury real estate,” says Gary Hersham, managing director at Beauchamp Estates. “Miami is extremely popular with high-net-worth buyers from South America—Colombians, Brazilians and Argentinians—with other key overseas buyers being the British and investors from the Philippines.” In Los Angeles, buyers snatched up properties in coastal areas such as Malibu or along the Pacific Coast Highway, as well as in ritzy neighborhoods such as Beverly Hills and Hollywood Hills West. “In Los Angeles, wealthy overseas buyers tend to purchase in gated communities and prefer mansions or family houses located on large plots,” says Hersham. “Our clients from Britain, France, and Israel who make enquiries about Los Angeles tend to work in the film industry, the media, finance, or tech sectors, and their Los Angeles property serves as both a holiday home, business base, and investment.” And in Manhattan, house hunters generally purchased an approximately 9,500-square-foot property on the Upper East Side, Tribeca, or Greenwich Village. According to the report, homeowners looked for duplexes, penthouses, and townhouses, and prioritized properties that were close to Central Park.

How Much Does a 2-Bedroom Apartment Cost in Your State?

Only in 22 counties in the United States is a one-bedroom home affordable to someone working 40 hours per week at federal minimum wage. That’s from the National Low Income Housing Coalition (NLIHC) report, which outlines the mismatch between wages and rent every year. (Fair Market Rent is an annually updated government estimate, typically the 40th percentile of the gross rent in an area.) NLIHC estimates that the average renter’s hourly wage in the United States is $16.88. The average renter in each county makes enough to afford a two-bedroom in only 11 percent of U.S. counties, and a one-bedroom, in only 43 percent. The national “housing wage” in 2018 is $22.10 for a modest two-bedroom rental home and $17.90 for a one-bedroom, the report estimates. (That’s how much an average renter in the U.S. would need to make to afford a modest apartment at fair market rent, without paying more than 30 percent of their income towards housing. Still, in not a single state, city, or county can someone earning federal or state minimum wage for a 40-hour work week afford to rent a two-bedroom home at fair market rent. The incredible shortfall in affordable units remains the more stubborn, intractable problem. Between 2005 and 2015, apartments costing $2,000 and more increased by 97 percent, according to Harvard University’s Joint Center for Housing Studies; Meanwhile, those under $800 decreased by 2 percent.

More Foreign Capital Flowing to Real Estate Debt Funds

Foreign capital is following the broader market shift that has investors allocating more capital to commercial real estate debt. “Anecdotally, we have been seeing a fairly dramatic uptick in interest from foreign investors into the U.S. lending space over the last 12 to 24 months,” says Ryan Krauch, a principal at Mesa West Capital, a dedicated commercial real estate lender that provides mezzanine and first loans for properties across the country. The South Koreans were on the front edge of that trend two or three years ago, and that interest has since expanded broadly to include Asian, European and even Canadian investors, he adds. Foreign capital is following the broader market shift that has investors allocating more capital to commercial real estate debt. The same factors that have been attracting foreign capital to the U.S. real estate market for decades are still in play in terms of transparency, liquidity, quality assets and stable fundamentals. Searching for alternatives Premium pricing in equity markets is one of the reasons pushing investors to consider alternatives. There is still a lot of dry powder that has yet to be deployed and considerable interest in U.S. real estate, agrees Bob O’Brien, Deloitte’s global real estate & construction sector leader. Investors like debt as a fixed-income alternative, especially because many countries have low 10-year benchmarks in their home countries. So there are still plenty of opportunities for private capital to step into that lending space, he adds. “Consequently, I think you are seeing foreign investors taking a look at that part of commercial real estate investing world and seeing some interesting opportunities from a risk-reward standpoint,” he says.

A Guide to Buying Real Estate in Costa Rica

This is where one of the restrictions mentioned before come into place regarding foreigners investing in real estate property. Titled Property: This is the most common form of real estate investing in Costa Rica, all information for the property should be available and provided by the seller and verified at the public registry and corresponding municipality. Properties in condominium and gated communities: When buying property in a gated community, we may be talking about individual residences or townhouses, apartments in vertical buildings, or condos; this has become a very popular option in Costa Rica particularly because it offers advantages such as private security, common areas (pool, green areas, etc.) Purpose of the Property: As we just mentioned in the paragraph above, you must be very clear on what the purpose of the property is before you purchase it; if you are relocating to the country permanently then there is usually no problems, but if you interest in buying real estate in Costa Rica is to make an investment then you need to be more careful and take into account other aspects; for instance, if you want to buy property to use it as a vacation rental make sure the property can be used for this purpose, in the case of condos and gated communities in the city some have restrictions in this sense, consider maintenance and if you are not going to be in the country to oversee things, then a property management service is a good option; if you buy land for development do not leave it unattended, squatters may take advantage of this. Terminology: Some of the terms you will hear when you are going through a real estate purchase property in Costa Rica are: Registro de la Propiedad: Public Property Registry, basically the government institution where all records are kept for properties. The survey plan for a property is recorded at the Public Registry. Taxes: Don’t just take an impulsive decision when you are buying property in Costa Rica, the best thing to do is consult with a real estate attorney or tax expert regarding the exact amount your will have to pay on property taxes annually, generally, taxes on properties in Costa Rica are a lot more reasonable than what you’d pay in North America. Property taxes are calculated as a 0.25% of the value the property has in the public registry. For the most part it is safe to buy real estate in Costa Rica, the country’s political and economic stability makes it a very attractive country to invest in. If it’s a gated community or a brand new project getting details on the construction of the house should be easy, get details on the developers and construction company and past projects; if it’s an individual residence get as many details as possible from the seller, blueprints, etc.


How One 30-Year-Old Built $40,000/Year Passive Income in a Few Years

When Brady Hanna turned 30, he decided it was time to start building passive income. Here’s exactly what he’s done over the last few years, to build that portfolio. Over the years, I have listened to every podcast multiple times and get fired up every time I hear a new episode.” That’s dedication. His out-to-lunch property manager was starting to cost him serious money. That left him with two vacant units (out of four), as his most recent property was still under renovation. From there, it was a simple matter of getting a mortgage on the property and paying off his HELOC once again. Building a Portfolio and an Evolving Strategy Brady has used the same strategy to finance the next seven properties in his portfolio: buy and renovate with cash from his HELOC and savings, rent it out, get a mortgage. “I’ve taken the income from the rentals and just put it all back into the business, paying down principal on the houses. Related: 3 Real Estate Investing Strategies That Aren’t So Passive (& 4 That Are) Landlord Cash Cushions I asked Brady what advice and takeaways he would offer for other rental investors. “I plan on ‘retiring’ from my full-time job when I am 50 years old.