April 27, 2015

Taking Equity To Purchase Investment Properties

The Monterey Herald reports from California. “The number of homes for sale in Monterey County in March hit its second lowest point in 20 years. Scarcity has helped increase the countywide median home price to $515,000. ‘It’s not good for buyers … we were really surprised it became a sellers’ market so quickly,’ said Sandy Haney, CEO of the Monterey County Association of Realtors. Haney said the lack of housing can create anxiety among real estate agents. ‘Realtors get very frustrated for their buyers,’ she said. ‘Now you have buyers who want to get into the housing market but are priced out.’”

The Sacramento Business Journal. “Luxury home sales in the Sacramento region took a 30 percent jump in the first quarter of 2015 compared to a year earlier. The easiest explanation? Look west. ‘I think we’re seeing Bay Area retirees move here,’ said Terri Briggs, regional VP at Coldwell Banker Residential Brokerage in Sacramento. ‘The Bay Area is just really hot.’”

The Calaveras Enterprise. “The housing market in Calaveras County is improving, according to the Calaveras County Association of Realtors. Valerie Moon, administrative manager for the association, said that the booming housing market in the San Francisco Bay Area appears to be finally impacting Calaveras County as Bay Area residents take the equity they have in homes there to purchase investment properties, second homes and vacation homes here. ‘Our second home market is integral to the overall picture of our sales volume,’ Moon said.”

The Daily Press. “Although California rental rate increases continue to lead the nation, the rental market remains affordable in the High Desert Becky Otwell, president of the High Desert Association of Realtors, said the High Desert does not fit into the category of ‘normal or average’ when compared to other locations in California. ‘The High Desert is a different animal when it comes to home prices, including rentals,’ Otwell said. ‘We may have a lot of homes available, but people are still wary of buying versus renting. Rents are low because many people still don’t have money to purchase a home and property owners know it.’”

The Lompoc Record. “When Santa Barbara Realtor JJ Lambert purchased his three-acre ranch property in his hometown of Santa Ynez, he had a plan in mind. List it on Airbnb, and scores of websites just like it, and turn a profit on the property as a vacation rental. But local jurisdictions are taking action against the sharing platform. In the tourism-saturated Santa Ynez Valley, both Buellton and Solvang have imposed strict regulations against hosts like Lambert.”

“‘It’s confusing for somebody selling property here because you can’t represent the fact that you can do a vacation rental, and you know people are intending to do that. It becomes a disclosure issue … and then makes it a very tough selling point. It could hurt property values in the area,’ said Lambert. ‘The only feasible way [to afford the home] was to vacation rent it and use it when it’s vacant. If I’m not renting it, then I’m selling my house.’”

From San Diego News. “Those for and against short term vacation rentals (STVRs) testified April 22 before the city’s Smart Growth and Land Use Committee, which took no action and will continue the hearing on May 29. The committee meeting had to be moved to Council chambers due to the huge crowd that turned out for the contentious issue. Several residents, many along the coast, testified that they were responsible STVR landlords. Many of them noted that was the only way they could continue to own their homes given today’s high cost of living.”

The San Diego Reader. “While local cities continue to seek regulations on short-term vacation rentals, a bill making its way to the state legislature may provide the teeth needed for effective enforcement. In San Diego, an overflow crowd showed up to a city-council committee meeting on Wednesday, April 22, to voice their opinions. Those supporting the rentals said they took care to be conscientious neighbors, and that the income from renting out spare bedrooms or even entire residences allowed them to pay for needed repairs or supplement meager incomes. A La Jolla man said he’d face foreclosure if he was no longer able to rent out a second unit on his property to vacationing tourists.”

The LA Downtown News. “Once again, a new high-rise has been proposed for South Park. Also once again, it marks the revival of a project announced before the recession. Vancouver, Wash.-based developer Holland Partner Group is moving ahead with plans for a 28-story, 341-apartment tower on Ninth Street between Figueroa and Flower streets. The project, originally broached by developer Sonny Astani, would join two existing residential complexes on the block, the 30-story Apex and the seven-story Concerto.”

“Astani had completed the seven-story annex and was in construction on the 30-story tower when the recession hit and he encountered trouble with his lender, Corus Bank. Corus went bankrupt and a heated legal fracas ensued. The parties settled in 2011, but Astani had to give up his stake in the project.”

“The current project has smaller floor plans than originally envisioned. Tom Warren, head of Holland Partner’s Southern California development, said that is a response to slow turnover of the bigger apartments in nearby residential complexes. ‘What we know is that the larger units in [Apex] are struggling. They are still several that are vacant at the top of the tower,’ Warren said.”

Bits Bucket for April 27, 2015

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