What Is Tenant-in-Common Homeownership?

What is tenant-in-common ownership and why has it become so popular lately? Let’s discuss.

When multiple people purchase a property together, but each only maintains a certain percentage-based portion of ownership, this is what’s known as being “tenants in common.” 

Because of the rising cost of housing and the lack of available inventory in and around Los Angeles, tenant-in-common homeownership has become increasingly common in our area lately.

Therefore, many former landlords are converting multi-unit properties into tenant-in-common properties to be sold with multiple titleholders.  This is an especially popular move in light of tight inventory on core city areas and cumbersome housing regulations, which would make condo conversion more difficult, if not impossible.

So how is ownership divided among tenants? 

Well, while this can be negotiated however the tenants see fit, most people choose to divide ownership (and the costs associated with it) equally. This means if a home was occupied by four tenants in common, each person would own 25% of the property.

Tenant-in-common ownership is popular among former landlords, sellers, and buyers alike.

Not only does this make for a more equitable living situation, it also ensures that each person carries an equal amount of responsibility for living expenses, like utilities and maintenance.

Better yet, one particular bank here has even made it possible to finance a tenants-in-common loan for as little as 10% down with an interest rate around 4.5%. 

In short, tenant-in-common ownership is popular among former landlords, sellers, and buyers alike. 

If you have any other questions or would like to learn more, feel free to give me a call or send me an email. I look forward to hearing from you soon.

What I Learned About Our Market at a Recent Conference

I attended the largest default servicing conference in the country. Here are three things that I learned

I recently spent three days in Dallas attending the largest default servicing conference in the country.
Here are three specific takeaways from this conference that I want to share with you:

1. Fannie Mae has reported a very healthy gain. They have returned $193 billion to the treasury of
the $119 billion that they took out as a loan. At the height of the great recession in 2010, they had
a 170,000 home inventory. Right now, they only have an inventory of 22,000 homes.

2. Future trends. As you might recall, from 2012 to 2014 we saw the initial rate cast down to 2.5% for

five years. Now, those have been recast back up to 5% or 6%. Will homeowners be able to afford this?
We should know about a year from now, however, this won’t affect the market much aside from an
increase in distressed properties.

3. Demographics. This has a very important impact on our marketing and the economy. There are 75

a million millennials out there aged 19 to 34 and peer research has shown that over 50% of them are
still living with their parents. This explains why the home building industry hasn’t recovered like it has
in the past after past recessions.

Currently, the housing market is healthy overall, but there are definitely things to keep an eye out for

in the future. If you have any questions for me about the market or any of these takeaways that I’ve
discussed, don’t hesitate to give me a call or send me an email. I look forward to hearing from you
soon.

How Has the Southern California Market changed in a Year?

The latest statistics are in for the Southern California market.

Here’s what we’ve been keeping an eye on.

Today I’ve got the latest numbers from our Southern California real estate market and I want to bring
that data to you. Our market is defined from Monterrey Park and Pasadena to the west, Rancho
Cucamonga to Eastvale on the east, and along the 60 and 210 freeways.

In summary, our real estate market is very healthy. Here are a few reasons why. For starters, our
unit sales have decreased by 4.75% in 2018 from what we saw from January to July in 2017. In
addition to that, the average price has increased by 6.43% from last year.

Last year in July, the average home sold for $633,000. Today, the average home is selling for
$665,000. That’s an 8.1% price increase in the summer market alone. This is partially a result
of increased demand. The average days on market has played a big role as well. We saw it drop
from 26 days last year to 18 days this year.

Another thing I wanted to bring up is our inventory levels. Our inventory is a measure of how long it
would take to sell all the homes on the market if no new homes were listed. This year, our inventory
has dropped from 2.87 months to 2.8 months.

That’s my real estate report in a nutshell. If you have any questions for me or want to know more
about the numbers for rental properties or the numbers in your specific area, I’d be happy to assist
you. I look forward to hearing from you soon.

How Accessory Dwelling Units Help Resolve Our Housing Shortage

Today I’d like to cover a few key points that California homeowners should know about accessory dwelling units.

Accessory dwelling units (or ADUs) are creating a lot of buzz in the market lately.

They even have the blessing of the state legislature in the form of Assembly Bill 2299 and Senate
Bill 1069, which Governor Jerry Brown signed into law in 2017. This legislation has unified all disparate
municipal codes in terms of the legality of ADUs.

The purpose behind these bills is to address housing availability. As you likely know, California is
seeing a housing shortage of more than half a million units. Accessory dwelling units help to
resolve issues related to this shortage. Elderly people who have an in-home healthcare worker,
for example, are just one demographic that benefit from the pieces of legislation I mentioned earlier.

Also, land is expensive. This makes accessory dwelling units an attractive option, since they are built
onto an existing structure or property. In turn, this eliminates additional expenses such as those related
to utilities or sewer connections.

Land is expensive, which makes accessory dwelling units an attractive option.

There are three types of accessory dwelling units: detached, attached, and those that
repurpose an existing structure—in other words, an existing home can be remodeled so that certain
rooms become classified as their own unit. This last type of ADU is particularly interesting because it is something the city of Chino has allowed homeowners here to pursue long before recent statewide
legislation came into play.

But how large can ADUs be built? Well, according to state law, an ADU may be no larger than 1,200
square feet. And ADUs attached to an existing structure may not exceed 50% of the total building.

There are a number of options for adding an ADU to your property. Adding an ADU above your
garage, for example, is another route homeowners may take. And parking restrictions will not apply to
these properties, as on-site parking is not required so long as the property is within a half-mile radius
of public transportation.

Of course, before you settle on any of these options, it’s important to determine whether adding an
ADU will be legal for your specific property. Zoning requirements stipulate that the current
residence on the property must be a single-family home.

If you have any other questions or would like to learn more about ADUs, feel free to give me a call
or send me an email. I look forward to hearing from you soon.

Good Tax News for Business Owners

I’ve got good news for business owners and other self-employed individuals. Keep reading to find out what it is.

Today I want to share with you some news that will be of special interest for those of you who are business owners, contractors, and otherwise self-employed.

The good news is that if you have had your business for over four years and you have a good credit score of 720 or higher, Fannie Mae and Freddie Mac only require your most recent tax return, as opposed to the last two years.

If you know of anybody that this tip could help, go ahead and forward this article to them.

The way it stands now, you need a $100,000 average over two years in income to qualify for the purchase of a home. Now, with their new underwriting system, only one year of income over $100,000 is needed to qualify. This will be great savings for you.

If you know anybody that this could help, share this with them. If you have any other questions in the meantime or you’re looking to buy or sell a home soon, don’t hesitate to give me a call or send me an email. I would love to hear from you soon.

2017 Has Been a Good Year for Real Estate

Since the year is just about over, I thought it would be a good idea to tell you a little bit about how the market did over the course of the year.

As the year draws to a close, many of you have asked me how the real estate market did in 2017. I have good news to report to you about that. Stock values like the Dow Jones Index, NASDAQ, and S&P 500 have increased by about 25%, and the real estate market is doing well also.

In the market that I’m tracking for you, in 2016, we had an average price of $550,000 with an average square footage of about 1,780 square feet. Rounded off, it’s about $310 per square foot. In 2017, the average price is now $604,500 with an average square footage of 1,885 square feet, which amounts to about $327 per square foot. Between this year and last year, we saw about a 5.55% increase in the average price.

Based on this information, a person with an FHA loan who put 3.5% down (roughly $19,250) has seen their home value increase by another $30,000. This is about a 157% increase on the equity that they have on their home.

For a person who’s going for a more traditional approach, if you put 20% down (based on the average price, this would be about $110,000), that same $30,000 increase in equity gave them a 27% return on the equity, which is very good.

All in all, it’s been a very good year for our market.

The days on market has decreased from the 2016 average of 90 days to 66 days, which is in line with an observation I made in my August report. All in all, it’s been a very good year for our market, and I expect to have even better news come the new year.

If you have any questions about the market or real estate in general, please feel free to give me a call or send an email. Until next time, I wish all of you to have a Merry Christmas and a happy, healthy, prosperous 2018.

How Our Market Differs From Recession Markets

Many people are worried the changes in the market mean we are headed for another recession. I’ll go over why there’s no reason to worry about that today. 

Many people have asked me if the changing numbers in our market from 2015 to 2016 mean we’re headed for a market recession in 2017. I’ll go over why there’s no reason to worry about that today.

Back in 1989, the number of homes built was about 180,000, and in 1990, when we entered the recession, we still had about 100,000 new homes built.

In 2005, when the market was strong and healthy, there were 160,000 new homes built. In 2006 sliding into 2007, we still had 110,000 new homes built.

In 2015, there were only 55,000 new homes built, less than one-third of homes built in 2005 and less than half of the number we had when we slid into the recession.

As you can see, the current pattern is nothing like the one we saw with the last two recessions.

The lending environment is also incredibly different than it was when the last recession hit. Back in 2008, the percentage of home loans that were given to those with less than a 620 FICO score was 47%, which is almost half of all the homes loans that were granted.

In 2015, the number of loans that were granted to those with a FICO of less than 620 was 2.3%. There are no more liar loans, which means there are nowhere near as many foreclosures.

The market has come back up since the last recession, and the market is more on 2006 levels when it comes to price.

The market is stable and healthy and the interest rate is still great, so there is no reason to worry.

Overall, the market in 2017 will more than likely bring a 3 to 4% appreciation for home values and there shouldn’t be a downward trend. The market is stable and healthy and the interest rate is still great, so there is no reason to worry.

If you have any more questions, I would be happy to meet with you for a cup of coffee to discuss the market. Otherwise, please feel free to give me a call or send me an email. I’m always happy to help!

Did Our Market Improve in 2016?

From 2015 to 2016, our market improved greatly. Here are some numbers to supplement that. 

How did our southern California real estate market do in 2016? I pulled the year-end data and compared it to how the market did in 2015, and the news is good.

According to the U.S. Bureau of Labor Statistics, the 2016 inflation rate was around 1.8%. In our market, the median home price increased by 3.6% from $564,000 in 2015 to $585,000 in 2016. In other words, we doubled the inflation rate. The number of homes sold only increased by 0.5% from 2015 to 2016, but the average number of days needed to sell a home decreased by three days. In 2015, it took 61 days. In 2016, it took 58 days.

For a more in-depth look at our local market activity over the past year, I pulled the numbers from three separate regions and did the same comparison with the previous year.

Alhambra: The median home price increased by 2.25% from $550,000 in 2015 to $562,000 in 2016. The number of homes sold decreased by 6% from 405 in 2015 to 370 in 2016. The average days on market increased from 53 days in 2015 to 57 days in 2016. This increase in the number of days needed to sell a home can be partially explained by the fact that Alhambra is a more mature city, age-wise, with fewer new homes and less overall movement between them.

Chino Hills: The median home price increased by 3.6% from $606,000 in 2015 to $628,000 in 2016. The number of homes sold increased by 3% from 884 in 2015 to 908 in 2016. The average days on market decreased from 69 days in 2015 to 60 days in 2016.

Rancho Cucamonga: The median home price increased by 4% from $467,000 in 2015 to $486,000 in 2016. The number of homes sold increased by 9% from 1,791 in 2015 to 1,807 in 2016. The average days on market decreased from 64 days in 2015 to 58 days in 2016.

As you can see, our market improved in 2016, and a 3.6% overall appreciation rate is fantastic. Keep in mind that you have a one-to-five leverage ratio for your down payment on the average home that you purchase. Paying 20% down to control 100% of the value constitutes a one-to-five leverage ratio. A 3.6% appreciation rate multiplied by five equals 18%. Therefore, your down payment has increased by 18%

If you have any questions about our market, please feel free to give me a call. I look forward to talking with you!

What Can You Expect From These Rising Interest Rates in 2017?

While interest rates have shot up since the end of the election and are predicted to rise even further, 2017 will still be a great year to buy a home, and today I want to tell you why. 

Since the election was decided, interest rates have shot up, and many of you have been wondering how that’s going to affect the housing market next year. Today I’ve brought in Dave Brown, Vice President of Catalyst Lending, to help explain in detail what we can expect to see.

The good news is that, according to Dave, our market is strong enough to bear this higher rate. Rates will probably continue to increase slightly, but there are a couple strategies a good Realtor and a good lender can help you implement to mitigate this effect.

First of all, a lot of people don’t realize that instead of getting a reduction on a sales price, you can take those same dollars and use them to buy down the interest rate. That will actually have a much greater impact on keeping the payments low than a reduction in the sale price.

The other strategy is using an adjustable rate mortgage, such as a 7/1 ARM. The average term that people keep their loan is seven years, so why pay for a 30-year fixed rate if you’re not going to keep it for all 30 years? 7/1 ARM rates today are right about where the fixed rates were prior to the election. Speaking from experience, I have an adjustable rate loan from the 80's and 90's until I switched to a fixed rate in 2004. Dave himself has never had a fixed rate mortgage on any of his homes or investment properties.

Lastly, the Mortgage Bankers Association has predicted that we’re actually going to see more purchase transactions in 2017 than we did in 2016. In Dave’s opinion, 2017 is going to be a great year to buy.

If you have any questions, please feel free to give me a call or shoot me an email. Until next time, we wish you a very merry Christmas and a happy New Year.

State of SoCal Home Values in 2016

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Today, I'm happy to give you the State of the Union for home values in the San Gabriel Valley area. From 2014 to 2015, the area saw an increase in the number of units sold. In 2014, 1,990 units were sold. In 2015, 2,158 units sold.

The average sales price also increased from $553,000 in 2014 to $573,000 in 2015. That's an increase of 3.67%.  However, if you compare December of 2014 to December of 2015, the average sales price increased from $546,000 to $595,000. That's a 9% increase in home value. 

What does this mean for you? So far in 2016, the market experienced a healthy increase in both home values and the number of units sold. This trend will continue in 2016 because there is a steady stream of buyers. There are also many move-up buyers who are selling their homes in order to move up into that dream property.

For 2015, I expect we will see a single-digit increase in home values, and mortgage interest rates should stay the same. The China economy is slowing down, Japan's economy is also struggling, and oil prices are headed for $15 a barrel because of the Iran deal. Therefore, the Fed had no reason to increase the rate. In fact, they may even decrease their rate.

Overall, you can expect interest rates to remain the same at least until the summer. May to the end of August is the hottest time in real estate, so if you're thinking of selling your home, give my team a call. We can give you a free home evaluation so you can prepare your home for the spring and summer selling seasons.

As always, if you have any questions about real estate, give me a call or send me an email. I look forward to hearing from you!

Southern California Market Update

 Buying a SoCal Home? Search all Homes for Sale

Selling a SoCal Home? Check out our FREE Home Value Report 

As we move into the fourth quarter, many have asked us how the market is. Today, I’ll share some statistics with you. Luckily, the numbers are good! Specifically, I’ll be looking at data taken from January to September of this year. The area I’ll focus on will be from Alhambra to Rancho Cucamonga east to west and Pasadena to Anaheim north to south. This covers regions within the San Bernardino and Orange counties.

In this area, we’ve sold 12,946 homes. This is about 827 homes more than last year! That’s a 6.8 percent increase of sales.

The median price now is currently at $580,500. Interestingly enough, this average has also increased 6.8 percent compared to last year. Last year, it was $543,200 during the same time.

The market is healthy. Remember if you put twenty percent down on a house, that 6.8 percent translates back to 34 percent return on your money. If you have an investment in real estate, you now have a 34 percent increase.

Next time, we’ll talk more about investment. Why is Southern California a great place to invest? Find out next time!

6-Month Market Update for Covina

There are many great San Gabriel Valley area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (626) 643-7090 for a FREE home buying or selling consultation to answer any of your real estate questions.

There is no better time than the midpoint of the year for an update on market conditions in Covina. With 6 months of real estate data under our belt, it's time to take a look at how we are doing in comparison to last year. The numbers look pretty good:

• January - June of 2013: 
• 8,777 homes sold
• Average sale price: $381,875
• Average days on market: 54
• Active listings: 22,746

• January - June of 2014 
• 7,704 homes sold
• Average sale price: $435,833
• Average days on market: 56
• Active listings: 25,584

As you can see, fewer homes have sold than at this time last year. Other than that, these numbers look pretty strong. Home prices are up, which is a good sign - the average listing price is up $45,000 from last year. Additionally, the average that these homes are actually sold for is up 14%. 

Another sign the market is more normal than it's been in past years is that the number of active listings has increased 12.5%, up 25,548 from 22,746 at this time last year. These stats are good for both buyers and sellers, as there is a good selection of homes for those looking to buy, and sellers are getting higher prices than they were last year.

If you have any questions about what the market looks like in your particular area, or have further questions about what these numbers mean for you, please give me a call. I would love to help you make sense of these conditions.