Property Insurance Costs

After several years of record-breaking California wildfires, insurance companies have responded by imposing huge premium increases on property owners, or even worse, flat-out denying coverage and canceling policies. Here are some tips to help property owners maintain their current insurance plan or, if necessary, find a new one.

Rising Insurance Costs
Rising Insurance Costs

FHA Condo Buyers Get Relief Soon

HUD

In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) published a final rule which establishes a new condominium approval process. The polices become effective October 15, 2019. FHA’s new rule introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing; extends the recertification requirement for approved condominium projects from two to three years; and allows more mixed-use projects to be eligible for FHA insurance. “Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,” said U.S. Housing and Urban Development Secretary Ben Carson. The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s programs. As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.Source: Forbes

Coming Soon to Country Club Estates

Pebble Beach Home

Coming Next Month to Country Club Estates! This 3 bedroom, 2 bath home is approximately 1312 SF and the perfect residence for those looking to be close to the Truckee River. Pricing on this home is expected to be under $400,000. Contact Robert Stiles, REALTOR® at Chase International for more details. 530-314-0352 BRE 01279125

NOTICE TO TAXPAYERS OF DOUGLAS COUNTY, NEVADA

Douglas County Treasurer

The first installment of the 2019-2020 property tax is due and
payable on August 19, 2019. There is a 10 day grace period. If any
person charged with such fails to pay by August 29, 2019,
there shall be added thereto a penalty as provided by law (NRS 361.483).
Payments may be dropped off 24 hours a day, 7 days a week in our
drop box at the southwest end of our building at 1616 8th Street in
Minden or at 175 Hwy 50 in Stateline. Payments may also be
made through our web: http://cltr.douglasnv.us.

FHA ISSUES NEW CONDOMINIUM APPROVAL RULE

HUD

In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) today published a long-awaited final regulation, and policy implementation guidance, which establish a new condominium approval process.

Designed to be flexible and responsive to market conditions, FHA’s new condo rule and the new Condominium Project Approval section of the Single Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy.  In particular, the new policy will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The polices become effective October 15, 2019. Read FHA’s new condominium approval regulation.

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities. FHA’s new rule:

  • Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
  • Extends the recertification requirement for approved condominium projects from two to three years;
  • Allows more mixed-use projects to be eligible for FHA insurance.

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,” said U.S. Housing and Urban Development Secretary Ben Carson. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery added, “Today we are making certain FHA responds to what the market is telling us. This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are most likely to enter the market with the purchase of a condominium.”

The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.

Single Family Policy Handbook Guidance

FHA’s new Single Family Handbook sections published today provide the additional requirements that lenders and other industry participants need in order to implement FHA’s new policy, including requirements for single-unit approvals, minimum owner occupancy requirements, and commercial/non-residential space limits. Read FHA’s changes to its Single Family Handbook.

Single-Unit Approvals

As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved.  An individual unit may be eligible for Single-Unit Approval under the following conditions:

  • The individual condominium unit is located in a completed project that is not approved;
  • For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements

FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects

FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits

FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.

What is the responsibility for private businesses to provide housing?

city drawing

I came across this article and wanted to share with others as Lake Tahoe is in the midst of a housing shortage as well. Robert Stiles

Google recently announced its $1 billion+ commitment to increase housing in the Bay Area.

The promised money won’t be in the form of straight cash. Of this $1 billion promise, $750 million will come from land Google currently owns, to be repurposed for housing. Google estimates the amount of land it’s devoting to the project will house roughly 15,000 new units, to be built over the next ten years. They propose these units will be available to “all income levels” of Bay Area residents, though the final number of affordable housing units built will be up to the private developers who bid on the projects.

Google is also promising to establish a $250 million investment fund to help developers finance 5,000 affordable housing units across the region. Finally, they will give $50 million in grants to nonprofits focused on assisting the Bay Area’s homeless population.

However, rest assured that Google’s move is not quite as generous it seems, as land it gifts for the construction of housing may be used as a tax write-off. Further, the broad promises and lack of detailed plans have many questioning how Google is going to spend its money and whether it will actually make a mark on the region’s housing crisis.

Still, Google’s announcement is in sharp contrast with Amazon’s behavior over the past year, as it forced dozens of U.S. cities to compete for the location of their next headquarters. In return for the promise of more jobs, Amazon sought tax breaks and other incentives. Instead of asking for more, Google is now trying to do its part to alleviate a housing crisis it helped create.

More jobs, more housing

Since Google started in the Bay Area, it has created 45,000 jobs in the region. Not all of these jobs have gone to current residents, so where do these new workers live?

When more jobs come to a region, one can expect more people will want to move there. The Bay Area already has some of the longest commutes in the country, especially for lower-income workers like those who work in the service and retail industries, and even essential employees like first responders and teachers.

But over the past two decades, housing growth has fallen far behind the pace of job additions in the Bay Area, and pretty much everywhere else in California. For every four new residents moving to California between 2010 and 2016, just one new housing unit was constructed, according to Redfin. Worse, most of this construction is located in the mid- and high-price tiers, meaning very few units affordable to low-income households have been constructed.

As a result, home prices and rents have increased more quickly than incomes, meaning residents are forced to spend a significantly higher portion of their paycheck on housing each month. The other option — one that more households are increasingly forced to take — is to move further away from jobs, into the suburbs. For example, just 2% of San Jose homes for sale and 1% of San Francisco homes are affordable on a teacher’s salary. For comparison, 17% of homes are affordable to the average teacher’s salary statewide.

Related article:

//journal.firsttuesday.us/rent-to-income-gap-widens-for-california-renters/68044/

Why hasn’t housing been able to keep up with new jobs across California, and especially in the Bay Area?

The culprit is a lack of residential construction, due to a variety of factors, including:

  • tight zoning restrictions in job-heavy areas;
  • a lack of builder incentives to build low-tier housing; and
  • long and costly building permits and environment review processes.

This begs the question — if new residential construction is lagging behind job creation and business growth, do the private businesses involved have any obligations to get involved like Google is doing?

Housing: Public or private issue?

Some might claim that businesses are already doing their part. For example, the taxes that businesses — and their employees — pay contribute to government-funded housing efforts. But is this enough?

As traditional as the separation of church and state, housing has long been the issue of governments, while the business of businesses are profits and investors. However, as the CEO of San Francisco-based Salesforce acknowledges in a 2018 editorial, businesses like his “are part of our community and our community is in crisis.”

In this editorial, he describes how the increasing homeless crisis is scaring away tourists and other visitors. He says businesses are less likely to consider San Francisco as a home base when the crisis makes it so that there are no safe places to live. As a solution, the author encourages voters to pass Proposition C, which charges a 0.5% tax on the city’s biggest businesses (charged on any money generated over $50 million in annual revenue in the city).

In November 2018, voters did just that, and the city began collecting money from San Francisco’s largest businesses. However, due to legal challenges, the city has held off on spending the funds to help the homeless. Even when a judge dismissed a major lawsuit by the Howard Jarvis Association (the same folks who champion the controversial tax initiative, Proposition 13) in June 2019, the city is still afraid to spend the money due to threats of future legal action by the organization.

Meanwhile, the city’s homeless crisis continues to worsen, and residents’ quality of life remains in decline.

Glancing further up the income spectrum, high housing costs themselves are enough to deter businesses from investing jobs in California’s high-cost areas. They realize that in order to do business in the state, they will need to pay their employees enormous salaries so they can afford a decent standard of living. This suggests that more housing is needed not just to make this a more livable state, but to give jobs and the economy a boost.

The easiest solution that encompasses the most issues plaguing California’s housing market is to ensure more residential construction. Ideally, the government would take care of everything, including allocating funds, amending zoning regulations and encouraging building by removing barriers to construction.

But government efforts have fallen short, bullied into submission by lawsuits and vocal not-in-my-backyard (NIMBY) advocates. It’s time for businesses big and small to step up, or else watch their communities continue down an unsustainable path.

Carrie B Reyes, Market Watch Editor