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Tag: homeowner

  • Robocalls, ringless voicemails and AI: Real estate enters the age of automation

    Robocalls, ringless voicemails and AI: Real estate enters the age of automation

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    Southern California’s real estate market is as cold as the snow currently adorning the peaks of its mountains. Interest rates are up. Inventory is down. And deals are few and far between.

    In slow markets, the agents at the top — those with experience, connections and plenty of clients — typically maintain a modest but steady stream of business. It’s the agents at the bottom — those just getting into the industry who’ve only managed to close a handful of sales — who starve.

    As those agents have grown more desperate for leads, they’re trying alternative ways of finding them. Some are outsourcing the work overseas, and others are turning to AI or automation in a last-ditch attempt to find a seller.

    During the record-breaking pandemic market, there were so many transactions that most determined real estate agents were able to make a living. More than 43,000 single-family homes traded hands in L.A. County in 2021, and more than 42,000 were sold in 2022, according to the Multiple Listing Service.

    During that time, tens of thousands joined the National Assn. of Realtors, or NAR, with membership swelling to a record 1.6 million in 2022, up 200,000 since 2020. Real estate wasn’t just a solid job; it was a way to leap into a higher tax bracket.

    But then the market started to freeze in 2023 as mortgage rates shot up. Only 11,539 single-family homes sold that year, and sales are at a similar pace so far this year.

    Some agents are simply calling it quits. In California alone, NAR lost 9,723 members from December 2023 to January 2024 — a 4.75% decline . But even after the drop, California still holds the second-most active Realtors in the nation at 194,964, and they’re all fighting for an extremely small pool of sellers.

    At the peak of the pandemic market, Tyler Andrews, 29, tried his hand at real estate in the Inland Empire, thinking he would use his outgoing personality to sell homes as L.A. residents flocked to the area during the pandemic. He got his license and helped a few friends with their house hunts, but ultimately didn’t earn any commission and stopped in 2023.

    He’s one of many agents who rushed into real estate hoping for a taste of California’s latest gold rush.

    From the outside, listing a house in a hot market seems like the easiest of get-rich-quick schemes. Homes sell in days, and a 3% agent’s commission on a $1-million sale comes out to $30,000. If you represent both sides of the deal, it turns into $60,000.

    But the real estate industry isn’t an easy one to break into. You typically get paid only if you close a sale, and in any market, most homeowners still prefer to go with an agent with experience.

    In a hot market, sellers find an agent. In a cold market, agents have to find a seller. The situation is coming to a boil in many areas, such as Leimert Park, where residents have been barraged by agents asking whether they’re interested in putting their homes up for sale.

    Cold calling is time consuming — and stressful, considering the ire it draws from those on the receiving end. So some agents are handing that thankless task to machines.

    A handful of companies such as Slybroadcast and Salesmsg offer “ringless voicemail,” a robocall-adjacent tool enabling agents to send pre-recorded messages straight to your voicemail box without your phone ever ringing. The messages are often meant to trick you into thinking you missed a call, saying things like, “Sorry I missed you! Give me a call back whenever you get a chance.”

    In 2022, the Federal Communications Commission declared the trend a form of robocalling and said it’s illegal if the caller doesn’t have the recipient’s prior consent. But that hasn’t stopped agents from sending out such voicemails to potential clients.

    “I don’t have time to cold call all day,” said one real estate agent who asked to remain anonymous due to the potential taboo of using the technology. “I have to find clients somehow, and in a market like this, you have to get creative.”

    The thinking is this: An agent could spend eight hours a day calling every home in a neighborhood to ask whether they want to sell their home. Or they could send out 500 ringless voicemails simultaneously, and those who bother to call back have a better chance of needing the services of a real estate agent.

    Andrews said he had heard of other agents trying such technology as the market got colder in 2023, but he never bothered doing it himself because it didn’t seem authentic. It also would’ve been an extra expense — one he didn’t have a budget for.

    Mary Thompson has owned her home in Beverly Crest for more than a decade. Over the last year, she’s received multiple ringless voicemails asking whether she wants to list or buy a house.

    “I was fooled by the first one. I called back and ended up on the phone with an agent for 15 minutes asking about my plans as a homeowner,” she said. “I don’t bother calling back anymore.”

    U.S. consumers received more than 55 billion robocalls in 2023, 5 billion more than the previous year, according to the YouMail Robocall Index. Roughly 15 billion were telemarketing calls, and 8 billion were scams. California consistently ranks as the state with the second-most robocalls, behind only Texas.

    As a response to thousands of unwanted call complaints, the FCC has established a Robocall Response Team to combat the influx of robocalls, many of which are targeted toward homeowners.

    Last year, the commission shut down a robocalling campaign from MV Realty, a real estate brokerage that was sending out robocalls with misleading claims about mortgages. A whistleblower from the company told a Seattle news outlet that employees were directed how to use software called PhoneBurner and required to make at least 450 calls per day.

    Other companies such as VoiceSpin give agents access to auto-dialing software, which, like it sounds, automatically dials numbers from a list. VoiceSpin claims to use AI and machine learning and enables agents to drop voicemails straight into inboxes, record calls or even use local area codes so you’re more likely to pick up.

    In that case, you’d be talking to an agent, but sometimes you might find yourself unwittingly conversing with a robot.

    The tech company Ylopo recently uploaded a video showcasing an AI assistant conversing with a potential home buyer planning a move to the North or South Carolina coast. The company said it’s “one of thousands of AI calls being made daily already for Ylopo clients.”

    Cinc, a real estate lead generation platform, offers agents an AI-powered digital assistant that purposefully misspells words and uses emojis to make interactions with potential leads appear more human.

    The NAR itself offers an AI scriptwriter powered by ChatGPT that analyzes housing trends so that agents can appear more knowledgeable about the market. Agents can even choose the tone: professional, engaging or conversational.

    Earlier this month, the FCC continued its fight against robocalling by outlawing robocalls that use AI-generated voices. Since the ruling is so fresh, it’s unclear how companies utilizing the technology will be affected.

    In a market as slow as this one, even finding numbers to call becomes a challenge; tech becomes useless if it’s being wasted on the wrong potential clients. So many agents are looking for leads.

    On Fiverr, an online marketplace for freelance services, a glut of listings has popped up offering agents potential leads on prospective buyers or sellers. One of the most prolific is Abhishek Rai, who has racked up more than 3,000 five-star reviews offering leads on motivated sellers, vacant properties or absentee owners since joining the platform in April 2020.

    Rai, who’s based in India and uses the handle @virtualguy2020, typically charges $10 for 100 leads, $50 for 650 and $100 for 1,500.

    “Real estate agents have demanding schedules, and outsourcing lead generation tasks allows them to focus on other aspects of their business, such as client meetings, property showings, and negotiations,” he said.

    Rai has clients across the U.S., including many in Southern California. He added that generating leads is a specialized skill and not every agent has the expertise to find them on their own.

    For his leads, he combs through public records, online databases and real estate sources such as property records, tax records and foreclosure listings.

    To be clear, the vast majority of agents in Southern California still conduct business the old-fashioned way. But the ones trying new things are often doing so in order to make a living.

    In 2022, Realtors with 16 or more years of experience made a median gross income of $80,700, according to the NAR. But those with two years or less experience made just $9,600.

    According to a report from business networking platform Alignable, 31% of real estate firms struggled to pay rent for their office in January.

    AI’s subtle invasion of the real estate industry doesn’t necessarily come as a surprise because the technology has pervaded nearly every profession over the last few years. But for an industry that has long relied on human connection — handshakes, open houses, fresh flowers and other personal touches — AI’s cold, sterile seep into housing has become unnerving for some.

    “When I do need a real estate agent, I need one that I can connect with,” Thompson said. “I don’t want anything to do with their AI assistant.”

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    Jack Flemming

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  • California extends relief for homeowners who missed mortgage or tax payments

    California extends relief for homeowners who missed mortgage or tax payments

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    Sometimes, the state just can’t give it away.

    As part of the American Rescue Plan Act of 2021, the federal government awarded California $1 billion to help homeowners who fell behind on their mortgage payments during the pandemic. The state has used the money to offer up to $80,000 to low- and moderate-income homeowners with mortgage debt, overdue property taxes and deferred monthly payments.

    These are not loans that must be repaid. Instead, they’re payments the state makes on the borrowers’ behalf to clear their mortgage or property-tax debt.

    The thing is, homeowners haven’t exactly beaten down the state’s doors for the free help — not because they don’t need it, but because they may not know about it or know how to get it. So the California Mortgage Relief program has repeatedly extended the aid to more homeowners, and is now offering help to borrowers whose troubles began long after the COVID-19 restrictions were lifted.

    In the latest extension, assistance is available to qualified homeowners who’ve missed at least two mortgage payments by Feb. 1 and are still in arrears, or who’ve missed at least one property tax payment by Feb. 1. Various restrictions apply, but the main ones are that aid is available only for owner-occupied homes and that an applicant’s total household income must be no more than 150% of the area median income. In Los Angeles County, that’s $132,450 for an individual and $189,150 for a family of four.

    State officials have said the program will keep operating until all $1 billion has been awarded. According to the program’s data dashboard, a little less than a quarter of the money remains. Nearly 30,700 households statewide have seen their debts reduced by an average of $25,000.

    James An, president of the Korean American Federation of Los Angeles, said the lingering effects of the pandemic are still causing problems for homeowners, especially elderly ones. Many of them had modest businesses that didn’t survive the pandemic, or they got sick, or their marriages crumbled under the stress, An said.

    “A lot of horrible things happened during the pandemic that were either directly or indirectly related to COVID,” he said. “It caused long-lasting damage that a lot of people are never going to recover from.”

    An said his organization has helped more than 400 people, many of whom didn’t have the tech savvy required to participate in the program. Elderly homeowners in particular can have trouble finding, scanning and submitting online the documents required to qualify for aid, he said.

    The Korean American Federation continues to help applicants across Southern California on a voluntary basis, An said. The mortgage relief program’s website also offers support via phone and email, or through referrals to federally certified housing counselors.

    Here are more details on who’s eligible, how to apply and what’s covered.

    Who qualifies for relief?

    Under federal law, households earning up to 150% of the median income in their county who suffered a pandemic-related financial hardship are eligible for up to $80,000 in relief. The limit rises as the number of people in your household increases; to find the limit for your household, consult the calculator on the program’s website.

    The program defines a financial hardship as either reduced income or increased living expenses stemming from the COVID-19 pandemic. According to its website, qualifying expenses include “medical expenses, more people living in the household or costs for utility services.”

    There are a few more limitations, however:

    • The home in question must be your principal residence.
    • You may own only one property, although it may have up to four units on it.
    • If you’ve already paid off your mortgage or tax debt, you can’t recoup that money by applying for state aid.
    • You will not qualify if your mortgage is a “jumbo” loan bigger than the limits set by Fannie Mae and Freddie Mac.
    • You can’t obtain the state’s help if you have more than enough cash and assets (other than retirement savings) to cover your mortgage or tax debt yourself.
    • Your mortgage servicer must be participating in the program.

    What kinds of help are available?

    The program isn’t limited to helping people with mortgage and property tax debt. Funds also can be used for:

    A second shot of relief. The mortgage relief program was originally seen as one-time-only assistance. Now, however, California homeowners who’ve already received help can apply for more if they have missed more payments and remain eligible. No household may collect more than $80,000 over the course of the program.

    Reverse mortgages. Homeowners with reverse mortgages can apply for help with missed property tax or home insurance payments.

    Partial claim second mortgages and deferrals. This applies to certain borrowers who fell behind on loans backed by the Federal Housing Administration, the U.S. Department of Agriculture or the Department of Veterans Affairs. Rather than demanding larger payments to cover the past-due amount, the agencies encouraged lenders to split off the past-due portion into a second, interest-free mortgage called a partial claim. That way, a borrower could stay current by paying just their usual monthly payment.

    The partial claim second mortgage could be ignored until the house was sold, the mortgage was refinanced or the first mortgage was paid off, at which point the partial claim would have to be paid in full. In the meantime, it’s a real debt that affects the borrower’s ability to obtain credit.

    Similarly, some lenders offered deferrals that bundled the missed payments into a sum that was tacked on to the end of the loan. Borrowers wouldn’t face higher monthly payments, but they would have to pay off the deferred amount (a “balloon payment”) when they refinanced, sold their house or reached the end of their loan.

    The mortgage relief program offers up to $80,000 to pay all or part of a COVID-related partial claim or deferral received during or after January 2020.

    How do you apply?

    Applications are available only online at camortgagerelief.org. For help filling one out, you can call the program’s contact center at (888) 840-2594, where assistance is available in English and Spanish.

    If you don’t have access to the internet or a computer, you can ask a housing counselor to assist you. For help finding a counselor certified by the federal Department of Housing and Urban Development, call (800) 569-4287. You may also get help from the company servicing your mortgage.

    The online application process starts with questions to determine your eligibility. If you meet the state’s criteria, you can then complete an application for funds. Here’s where you will need some paperwork to establish how much you earn and how much you owe.

    According to the program’s website, among the documents you will need to provide are a mortgage statement, bank statements, utility bills and records that show the income earned by every adult in your household, such as pay stubs, tax returns or a statement of unemployment benefits. If you don’t have access to a digital scanner, you can take pictures of your documents with your phone and upload the images.

    You’ll also need to provide a California ID or a Social Security number.

    The site provides links to the application in English, Spanish, Chinese, Korean, Vietnamese and Tagalog.

    Who has received aid?

    According to statistics kept by the program, about two-thirds of the money has gone to households at or below the area median income. In fact, half of the funding has gone to families whose incomes are no more than 30% of the area median, which in L.A. County would be about $26,500 for a single person or $37,830 for a family of four.

    About 52% of the aid has gone to Latino and Black Californians, who together make up about 29% of the state’s homeowners.

    The money will be awarded on a first-come, first-served basis, with two important caveats: According to the California Housing Finance Agency, 60% of the aid must go to households making no more than the area median income, and 40% must go to “socially disadvantaged homeowners.” Those are residents of the neighborhoods most at risk of foreclosure, based on the Owner Vulnerability Index developed by UCLA’s Center for Neighborhood Knowledge.

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    Jon Healey

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  • Opinion: Why is L.A. still letting single-family homeowners block solutions to the housing crisis?

    Opinion: Why is L.A. still letting single-family homeowners block solutions to the housing crisis?

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    Last month YIMBY Law, a nonprofit, pro-housing advocacy group, sued the City of Los Angeles on behalf of a private developer seeking to construct a 360-unit apartment building in Canoga Park. These apartments would be only for renters who meet the federal definition of low to moderate incomes in L.A. The project was submitted under Mayor Karen Bass’ Executive Directive 1, meant to dramatically speed up the approval and permitting process for 100% affordable housing projects. But recently the city revoked the eligibility of the Canoga Park building for this program following complaints from single-family homeowners.

    This about-face is part of a trend. Last year, the mayor’s office amended ED1 to shield single-family zones from streamlined development — after eight such applications, including the Canoga Park proposal, were already submitted. Those proposals were then denied eligibility for ED1. Some of the projects have filed appeals; one denial has been overturned, but the City Council rejected an appeal for the Canoga project.

    Without ED1, these projects face a discretionary approval process that may involve lengthy environmental review and other delays likely to prevent them from happening. This turn of events may cost the city more than 1,100 affordable apartments.

    Bass announced ED1 as moving “City Hall away from its traditional approach that is focused on process and replacing it with a new approach focused on solutions, results and speed.” The mayor’s stated intention received a remarkable boost via the state law AB 2334, passed in 2022, allowing developer incentives for 100% affordable projects including substantial increases in height limits and allowable density (the number of housing units on a given-sized parcel of land) in “very low vehicle travel areas,” where limited residential development has kept down traffic. The idea is that these areas can more easily accommodate any extra traffic stemming from increased housing density.

    The potential cost savings from ED1 and AB 2334 encouraged private developers to produce long-term, income-restricted units — crucially, without relying on public financing. If the more than 1,100 apartments now held up from ED1 streamlining were built through the standard publicly subsidized pathway, at a typical cost of around $600,000 per unit, they could require up to $660,000,000 in public funding. Privately funded alternatives are a boon to local, regional and state governments that have sought for years to spur the production of so-called “missing middle” housing that is affordable to working-class and middle-income households.

    Yet now this progress is in question, just as the power of these complementary city and state reforms has begun to emerge. The lawsuit concerning the Canoga Park building may result in one or more of the halted projects being built eventually, and the state has suggested that the city erred in revoking their ED1 eligibility. But even if these projects get approved, since ED1 now excludes the single-family neighborhoods that make up approximately three-quarters of residential land in L.A., they would mark an end rather than a beginning to similar development.

    Some residents of these neighborhoods say that’s only fair. According to Councilmember Bob Blumenfield, for homeowners affected by new apartments, “their property value is going to get cut in half, they’re going to have a big shadow over their place.”

    As it happens, I can speak personally to these concerns. I am the owner and resident of a unit in a small rowhouse condo development on the Westside located directly across the street from an ongoing project converting a single-family home into a multi-unit apartment building.

    My neighbors and my family are losing a good deal of sunlight throughout the day from the new building. Our street has been a cacophonous, messy construction site for so long it’s hard to remember what it was like before.

    But I know that this is what solving the housing crisis looks like: A single parcel that previously housed one family is being transformed into apartments for perhaps 15 to 25 people, with units reserved for low-income households. Like those in the contested ED1 projects, these affordable units won’t require public funding.

    There is simply no way to solve our housing crisis without throwing shade in some single-family residential areas. We might have to increase traffic in some neighborhoods, too, though providing more housing in jobs-rich West L.A. could ultimately reduce traffic by allowing people to live closer to where they work. As for property values, multiple studies have shown that low-income housing does not substantially reduce them, including in high-cost neighborhoods, and often increases them.

    Some constituencies will always oppose development. Local policymakers who are serious about solving our dual crises of housing affordability and homelessness have to take a hard look at how much political capital they are willing to spend to create effective policies in the face of such objections.

    If we can’t build fully affordable projects that don’t drain government coffers even on the edges of land zoned for single-family residences, then Angelenos should prepare for a permanent housing crisis.

    But if this sounds like the wrong direction for the city, Bass and the City Council should fully commit to protecting and expanding innovative policy such as the original ED1, without categorical exclusions for single-family neighborhoods, and AB 2334. Mechanisms that convince private developers to produce long-term affordable housing offer what is as close to a free lunch on this crisis as L.A. is ever likely to get.

    Jason Ward is an economist at Rand Corp. and the co-director of the Rand Center on Housing and Homelessness.

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    Jason Ward

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  • Should retirees consider a home equity sharing agreement (HESA)? – MoneySense

    Should retirees consider a home equity sharing agreement (HESA)? – MoneySense

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    Clay raised seed funding in 2023 and is initially launching the product to home owners in the Greater Toronto Area as an alternative to reverse mortgages and the simple—although not always ideal—option of selling a property to downsize or become renters.

    What is a home equity sharing agreement?

    The HESA is a relatively straightforward concept. You give some of your home equity to Clay in exchange for cash today. Clay will get paid when you sell your home in the future, up to 25 years down the road, meaning you don’t need to make monthly payments in the meantime.

    The limit for a HESA is up to 17.5% of your home’s value, up to $500,000. However, most home owners will get nowhere near that $500,000 limit. The average Canadian home price in December 2023 was $657,145, according to the Canadian Real Estate Association. That would translate to a potential lump sum cash payment of $115,000. The maximum payment of $500,000 would apply to homes valued at around $2.8 million.

    An interesting option with the HESA is that you can buy back Clay’s share of your home anytime after the first five years. So, it’s not an irreversible decision. But there are a few costs to consider.

    Before you can access a HESA, your property is independently appraised to determine its fair market value. Clay will then apply a risk adjustment rate of 5% to determine its starting value for the HESA. Home owners must cover a 5% origination fee and a closing fee of 1% of Clay’s share of your home appreciation (or $500, whichever is greater). The home owner must also pay the cost of inspections, appraisals and fees to cover the registration of Clay’s charge on the property.

    So, Clay gets a good deal on purchasing some of your home’s equity at a lower price, and you pay the ongoing maintenance costs for 100% of the property going forward. The origination and closing fees can also add up. These nuances help make the HESA a good investment for Clay.

    Should retirees consider a HESA?

    I give Clay credit for its innovative approach to helping seniors access their home equity in retirement. Retirees who can’t tap into their home’s value may not have sufficient income to cover their expenses. Some retirees want to use home equity for gifting to their children during their lives, sometimes to help them get into homes of their own.

    A simple alternative may be to downsize or to sell and become a renter. But downsizing can be costly when you consider the transaction costs, including real estate commissions and land transfer tax.

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    Jason Heath, CFP

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  • California offers affordable loans again to first-time home buyers, with a catch

    California offers affordable loans again to first-time home buyers, with a catch

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    When the California Housing Finance Agency offered no-interest, no-monthly-payment loans in the spring to help lower-income residents come up with a down-payment and fees to buy their first home, the entire budget of nearly $300 million was gobbled up in only 11 days.

    Lawmakers then steered an additional $225 million into the program during the state budget negotiations last year, and CalHFA is aiming to award those funds this spring. But there won’t be a mad dash for cash this time — instead of handing out the loans on a first-come, first-served basis, the state will choose qualified applicants by lottery.

    The program has also tightened its requirements, requiring applicants not just to be non-homeowners, but also to have parents who are not currently homeowners. The point is to focus the program more tightly on Californians most in need of the state’s help.

    About 2,100 of the loans were granted before the money ran out in April, said Eric Johnson, a CalHFA spokesperson. Since then, home sales have cooled in California as interest rates climbed above 7%.

    Limited to covering the down payment and closing costs on a first home, the California Dream for All Shared Appreciation Loans max out at $150,000 or 20% of the home’s purchase price, whichever is smaller. They’re treated as second mortgages, but require no payments of any kind until the home is refinanced, resold or its first mortgage is paid off, at which point the state loan must be repaid in full.

    What makes the loans unusual — and attractive — is that they don’t accrue interest. Instead, their value rises over time with the value of the home. When a Dream for All loan comes due, the borrower repays the principle plus a percentage of the increase in the home’s value that matches the percentage of the purchase price covered by the loan. If the home doesn’t increase in value, nothing is added to the Dream for All loan.

    For example, if the Dream for All loan covered 18% of the purchase price and the borrower sells the home for $100,000 more than they paid for it, the borrower would have to repay the Dream for All loan plus 18% of $100,000, or $18,000. Borrowers with incomes of 80% or less of the county’s median income get an additional break, paying a smaller percentage of the increase in value.

    Aspiring homeowners can’t apply for the loans just yet, but they can work with participating lenders on the paperwork required to obtain one. The program will start accepting applications online in April, Johnson said.

    Who can obtain a Dream for All loan?

    To meet the definition of a first-time, first-generation homeowner, the borrower must not have held a stake in a house in the United States in the last seven years. Also, their parents may not currently hold a stake in a home. If the parents are deceased, they may not have owned a home at the time of their death. The program is also open to any Californian “who has at any time been placed in foster care or institutional care,” CalHFA says in the program manual.

    If there is more than one buyer involved, at least one must be a current California resident, and at least one must be a first-generation home buyer. Borrowers must also be U.S. citizens or noncitizens authorized to be in the country, and they must make the home they buy their main residence within 60 days after purchasing it.

    The annual income limit for qualified borrowers is 120% of the area median income, which varies from county to county. For example, it’s $155,000 for borrowers in Los Angeles County, $202,000 in Orange County and $195,000 in Ventura County.

    How do you apply?

    The first step, Johnson said, is to work with a lender that’s participating in the program to obtain a prequalification letter. The lender’s role is to make sure that you’re qualified for the Dream for All program, not necessarily for a loan. Yet before issuing a letter, the lender will check your credit report and debt-to-income ratio to determine how large of a loan you could potentially afford, so your financial health will be a factor.

    You can find a list of lenders participating in the Dream for All program at the CalHFA website.

    The state will open an online portal in the first week of April for applicants to submit their prequalification letters, Johnson said. One reason to give the public a few months to prepare before applications can be filed, he said, was to allow people time to improve their credit scores or take other steps needed to obtain a prequalification letter.

    How will applicants be chosen?

    CalHFA will accept prequalification letters for about a month, Johnson said, and they’ll all be treated equally regardless of when they arrive during that period. After reviewing the letters to make sure the applicants are qualified, the agency will hold a lottery to select which borrowers will receive vouchers for the Dream for All loans.

    The total budget for the program is enough for about 1,670 loans of $150,000. Johnson said many borrowers will take out smaller amounts, so the program expects to support 1,700 and 2,000 loans.

    What happens after you receive a voucher?

    Getting approved for a Dream for All loan doesn’t mean that you’ll be able to buy a house. You’ll still have to find one for sale that you can afford, persuade the owner to choose your bid, and then qualify for the mortgage loan from a bank, credit union or other lender.

    With a voucher in hand, however, you’ll be able to make a substantial down payment, which translates to lower monthly mortgage payments.

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    Jon Healey

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  • Los Angeles County demographic changes: What you need to know about new 2022 U.S. Census data

    Los Angeles County demographic changes: What you need to know about new 2022 U.S. Census data

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    The U.S. Census Bureau released the 2022 American Community Survey this week. The survey, which looks at demographic data in five-year increments, introduced several new detailed tables and demographic breakdowns. We looked at some trends in the data.

    Nearly 6 million people 65 and older live in California, a figure that is slowly growing. In the last five years, 716,000 people became senior citizens in the state. That number will nearly double by 2030. Los Angeles County is home to roughly a quarter of the senior citizens in the state.

    As the cost of living increases, the number of Golden State senior citizens in poverty is also rising, with nearly 14% of Los Angeles County senior citizens living below the poverty line. The national poverty rate declined significantly to 12.5% during the five-year period from 2018-22.

    Across the country, housing costs continue to rise. Financial planners advise that no more than 30% of household income be spent on housing costs. The latest data show that is far from the reality for 41% of homeowners with a mortgage in Los Angeles County. For homeowners without a mortgage, roughly 16% are house burdened. It’s also not easy for renters. More than half of renters spend more than 30% of their household income on housing costs.

    The data also point to how the pandemic changed the way people work. In Los Angeles County, the number of people working from home tripled from more than 270,000 to 810,000 in just five years. That number tracks with the rest of the state’s pool of people working from home, which tripled from 1 million to more than 3.2 million. For those having to commute into the office daily, the mean travel time to work has stayed the same with most L.A. County residents getting to work in 30 minutes (although most L.A. city residents would laugh at this figure.) The number of unemployed people in the county has gone down by 4% since 2017 with roughly 300,000 without work.

    The new American Community Survey includes updated race data. They show the county has grown in its Asian and Latino population. Roughly 1.4 million people identified as Asian in Los Angeles County, up 2.4% from a decade ago. Those who identify as Latino and Hispanic account for nearly half of the population of the county. The county lost 80,000 Black people over the last decade.

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    Sandhya Kambhampati

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  • Californians with past-due water bills can get help with payments. Here’s how

    Californians with past-due water bills can get help with payments. Here’s how

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    Low-income Los Angeles County residents who are behind on their utility payments have a chance at keeping the water on, with a federally funded program that has been extended through March.

    The Low Income Household Water Assistance Program, administered by the California Department of Community Services and Development, was established by Congress in December 2020 as a one-time support to help low-income Californians pay past-due or current bills for water, sewer or both services.

    Through the program, eligible applicants can receive up to $15,000 in assistance.

    The program kicked off in 2021 with an estimated $5 million funding, said Frank Talamantes, home energy assistance program supervisor for the Pacific Asian Consortium in Employment.

    For the last two years, Talamantes said only $2 million has been used to assist Californians.

    The program was set to end this fall, but it will now remain available through March or until the funding runs out.

    “When you want to dip into your savings [to pay your bill], why not apply for the program to help you with your water,” he said.

    Here’s what residents need to know about eligibility requirements and how to apply.

    Who is eligible for assistance?

    The program is available to both low-income renters and homeowners — even though most renters are not responsible for their water and sewer bills.

    Homeowners are eligible for the program if their total household gross income is at or below 60% of the state median income.

    For example, if a resident lives in a three-person household with a monthly income of slightly more than $4,300, the applicant is eligible. The California Department of Community Services and Development’s online website has a household income eligibility guide that residents can reference.

    An applicant is also eligible if a household member is a current recipient of CalFresh, CalWORKs, or the Low Income Home Energy Assistance Program.

    Renters who are in charge of paying for their water and sewer bills can qualify for the program if they are past due on their rent. To get the benefit, the renter would need to complete an agreement with their landlord as part of the application.

    How to apply

    Interested applicants can check online to determine whether their water and sewer provider is enrolled in the Low Income Household Water Assistance Program. Providers such as the Los Angeles Department of Water and Power and the Los Angeles County Public Waterworks Districts are enrolled.

    According to the state Community Services and Development website, some utility providers cannot accept program assistance payments on current bills. Residents should check with the enrolled service provider on what the program can assist with.

    For help on the application or to get more information, community organizations — including the Pacific Asian Consortium in Employment, Maravilla Foundation and Long Beach Community Action Partnership — can assist residents.

    To apply you’ll need:

    • Current water and/or wastewater bill.
    • Proof of income for all household members. (That includes proof of participation in CalFresh or CalWORKs.)
    • California I.D.

    Talamantes said that if a homeowner or renter is in the country illegally, he or she can still be eligible for the program as long as one household member is at least 18 and a U.S. citizen; that person can apply for assistance.

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    Karen Garcia

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  • As Mortgages Lock Homeowners In Place, Remodeling Comes Of Age

    As Mortgages Lock Homeowners In Place, Remodeling Comes Of Age

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    The costs to purchase a new home right now continue to escalate, putting it out of reach for much of the population, driving more households to stay in place and do what they can to maintain, repurpose and reimagine their homes.

    Many of the households currently on 15- and 30-year mortgage payment plans are at rates below 5%. Now, mortgage rates have skyrocketed to their highest levels in about 15 years. So, at the new rates, a home buyer would add more than $40,000 to the life of the loan on an average home purchase. With that said, it’s no wonder that a recent Zillow report noted that homeowners with mortgage rates below 5% are nearly twice as likely to want to stay put in their current home.

    While economic factors aren’t the only reasons people stay in place, it is the leading driver today, which is also triggering investments in home improvement projects.

    Commitments to home improvement projects also could be easier today because homes are appreciating at the fastest rates ever. The average annual appreciation typically sits around 4%, but recently homeowners experienced an average of 17%, giving them plenty of equity to tap into to finance projects.

    “Pent-up demand and macroeconomic conditions, such as aging housing stock and high mortgage rates, which continue to drive home improvement activity, are instilling a sense of optimism among builders, remodelers, architects and interior designers as they look ahead to the second half of the year,” said Marine Sargsyan, Houzz staff economist.

    With these drivers motivating more home improvement projects, let’s take a look at some details around who is doing what, when, where and why.

    A Different Era of Remodeling

    Over the years, remodeling projects have evolved. Today, they take on many new variations.

    First, we are coming out of a pandemic. Homeowners are emerging from lock down, and they face new work situations. Companies across the country are shutting down offices, pushing people back into their homes for the daily office grind. So, homeowners are looking at ways to renovate to create quiet, calm, technology-enhanced spaces to work.

    Second, the pandemic also drove households to think about their home can impact their health. So, remodeling projects centered around health and wellness, including indoor air quality, are becoming more frequent. Research from Chrissi Antonopoulos, a senior energy analyst at Pacific Northwest National Labs, shows that many of the motivators for home improvement projects are quality of life based.

    Third, the housing stock is aging. Today’s Homeowner reports that the median age of a home in the U.S. is 39 years old, with 50% of homes being built before 1980. So, a larger percent of projects are tied into the ongoing maintenance and upkeep of homes.

    Houzz data goes into additional detail on the projects that are related to the aging housing stock, with close to 30% of homeowners choosing to upgrade plumbing in 2022, with electrical and home automation improvement projects close behind.

    Finally, the government is offering incentives that are motivating owners to consider clean energy retrofits. Harvard’s Improving America’s Housing Report shows that 34% of home improvement spending goes to energy-related projects, which has remained steady during the last decade. There is a strong correlation between the aging of a home and the investment in energy efficiency projects, which increases substantially when the house is more than 20 years old.

    These incentives provided by the Inflation Reduction Act are new and just being communicated to homeowners at a state level, so could inspire much more remodeling activity during the coming months.

    Regardless of the incentive, the study also shows that 93% of homeowners felt they had a better quality of life after finishing their renovations, which as Antonopoulos pointed out, is a major incentive.

    Homeowners Age In and Out of Remodeling

    Why would the homeowner’s age matter in these home improvement activities? In general, older homeowners have more disposable income to finance projects and to hire labor to do the project. On the flip side, they also have the experience and knowledge to tackle projects on their own. Plus, they most likely have been living somewhere longer, so they have built up more equity in their home, which can also be a financing mechanism.

    “We know older generations who have been in their homes longer have, on average, more equity to tap into to do more expensive jobs which typically involves a contractor,” said Dave King, the executive director of the Home Improvement Research Institute (HIRI). “Additionally, there is some evidence to suggest that younger generations simply aren’t as interested in the trades and haven’t learned the same DIY skills as their older counterparts. and are therefore less likely to do DIY as a percentage of total projects done.”

    However, many younger buyers aren’t going to be priced out. To find affordable housing, many have to take on fixer uppers, and they may just simply have the energy to make it work. Data provided by HIRI show that younger generations are more likely to purchase a home that needs improvement.

    “There has also been some work in the last few years from HIRI that suggests Millennials are more likely to do a hybrid with contractors,” King said. “Gen Y will do some of the work themselves, then have a pro come in for certain aspects.”

    The National Assocation of Realtors reports that 12% of recent buyers who are older Millennials purchased a previously owned home because they wanted a DIY fixer upper.

    The group’s deputy chief economist and vice president of research, Dr. Jessica Lautz, adds that a considerable share of younger buyers may have compromised on the condition knowing they would need to later remodel, but did what they could to enter the housing market today.

    The Social Media Impact

    Younger generations also grew up watching every style, size and shape of renovation show on TV, and now watch social media influencers talk about renovations online. When I did a quick search for influencers focused on remodeling, I got lists of hundreds, and the most popular have more than a million followers.

    This content and the influencers behind it are creating streams of content that are easy to access and can make anyone catch the DIY bug. The HIRI data shows that younger populations are much more likely to consider themselves “heavy DIYers.” Maybe that is because there is a Youtube video that can walk them through nearly any project that they want to take on.

    It appears that younger generations are doing more projects that fit in the discretionary space such as needing more space in their home compared to older generations who are more likely to simply be doing maintenance, which again could be because of the longevity in the home.

    From the Harvard Joint Center for Housing Studies Remodeling Futures Group recent Improving America’s Housing report we see similar data. It shows that younger owners continue to be the most likely to do DIY projects and are somewhat less likely to do pro projects. But, maybe that is not always the case.

    “That said, we have seen the DIY share of improvement spending trend downward over the last several decades for the youngest owners under age 35, which we’ve also speculated is because younger owners today are not as skilled at DIY projects as prior generations or as interested in spending their time on these activities,” said Abbe Will, senior research associate and associate project director with the Remodeling Futures group. “And with the aging of the housing stock, younger owners today are also buying into homes that are more likely to need upgrades requiring skilled installation like roofing and electrical/plumbing systems and equipment.”

    Data from Today’s Homeowner supports this, showing that older homeowners only spend 15% of their home improvement budgets on DIY projects.

    Houzz reports show an increase in households of every generation hiring pros to do the work, up 2 percentage points to more than 9 in 10 renovation projects in 2022. The same report points to Gen Xers and Seniors relying the most on pros at 46% each.

    Another demographic differentiator was marriage. The Today’s Homeowner reports show that married couples with children spent more on remodeling projects than single people.

    Bringing Meaningful Value

    With every homeowner chasing their dream home, there are lots of opportunities for renovations. As homeowners spend more time at home, they need a space that can deliver intangible value, be safe, healthy, comfortable and secure. Anotopoulous says that means talking to them about health and wellness, not about money savings.

    “In residential there are no shareholders, so they don’t renovate homes because they want to make money,” she said. “They are concerned about indoor air quality, or health. The motivations that the U.S. Department of Energy traditionally use are not the things that drive uptick in the residential market.”

    Her research on the spectrum of home improvement motivators shows that even though people often say they are committing to a renovation for financial reasons, they most often are not. Her advice is to stay away from a focus on lowering utility bills and talk about thermal comfort instead, like most HVAC companies that sell comfort. So, there are other motivators that we have to acknowledge even if the pros, and the homeowner themselves, don’t fully understand.

    The Future

    The market remains healthy. Today’s Homeowner predicts that home improvement sales will reach more than $620 billion in 2025.

    With current economic factors, there will continue to be discretionary spending financed by home equity and homeowners wanting to get the most pleasure out of where they are stuck in place.

    And, once they are invested, they want to stay put for a while. The 2023 Houzz and Home Study reports that more than 60% of homeowners plan to stay in their home for 11 years or more following a planned renovation in 2022. Plus, only 6% of today’s homeowners doing renovations plan to sell their home, which is half of where it was in 2018 at 12%.

    With more homeowners staying in place, not a lot of new housing coming online, it looks like a healthy road ahead for remodeling.

    Plus, 69% of homeowners feel a major sense of accomplishment after they’ve completed their project, but who wouldn’t enjoy a healthier, safer, more resilient home?

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    Jennifer Castenson, Contributor

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  • Why Homeowners Need To Prepare For The Costs Of Climate Change

    Why Homeowners Need To Prepare For The Costs Of Climate Change

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    Climate change is not a distant threat, but a present danger that is already wreaking havoc on our lives and homes. From devastating floods to scorching heat waves to raging wildfires, homeowners need to prepare for the consequences of our warming planet. Preparing for these challenges requires investments at both the household and government levels.The costs of natural disasters will multiply if homeowners and governments delay preparing for the increased frequency of devastating weather events.

    How Homeowners Can Protect Their Property

    Homeowners can take proactive measures to safeguard their properties against the effects of climate change. Installing rain gutters to redirect water away from the home can mitigate flood risks, an air conditioner can shield households from extreme heat, and a metal roof can protect against wildfires.

    Homeowners can also protect themselves by securing insurance against natural disasters. Homebuyers and homeowners should anticipate that the cost of insurance will increase as disasters become more common. Wildfire risk in California and flood and storm risk in Florida has already caused insurers to stop issuing new policies. As this trend continues, some homes will see skyrocketing insurance costs, and some homes will become outright uninsurable.

    In addition to rising insurance costs, homeowners should prepare for changes in their utility bills. In places with high drought risk, water bills will rise. In places with high heat risk, homeowners may need to spend more on electricity to power their air conditioning. Homeowners association fees may also increase as the cost of maintaining and protecting common areas rises.

    The Government Can Do More Than Any Homeowner Can

    Individual actions can only go so far in mitigating the risks of climate change. So homebuyers should consider not only the property’s resilience but also the community’s. Organizations like First Street Foundation analyze climate resiliency and provide detailed projections about the preparedness of communities for disasters like floods, fires and heat waves.

    It is critical for residents to understand and advocate for their communities’ preparedness, because homes won’t be protected from disasters if the community as a whole is unprepared. Rain gutters won’t stop a home’s lower-level from flooding when the sewers are backed up because of outdated infrastructure. A home’s air conditioning can’t protect a household against heat risk when the electrical grid fails. In regions prone to wildfires, having a well-funded fire department equipped with state-of-the-art firefighting technology would do more to protect homes than anything an individual homeowner could do.

    Homes in places that invest in climate adaptation initiatives will be more protected. This protection will attract homebuyers, which will, in turn, protect values for existing homeowners. Researchers at Redfin
    RDFN
    , USC, and MIT found that homebuyers prefer homes with lower climate risk. Homebuyers refrained from making offers on homes with high flood risk after being shown flood risk scores on Redfin’s app and website and made offers on lower risk homes instead.

    Funding Climate Resiliency

    State and local governments play a crucial role in enacting comprehensive climate resilience strategies. Fully funded fire departments, improved sewer systems, resilient electrical grids and effective flood management are just some initiatives governments should prioritize to safeguard communities. However, these investments come at a cost.

    The financial burden of preparing for climate change is twofold: it directly affects homeowners’ wallets, and it requires governments to raise funds through taxes. Homeowners may need to allocate a portion of their income or savings to climate resiliency, such as securing disaster insurance, installing energy-efficient systems, elevating structures to mitigate flood risks, or reinforcing buildings to withstand stronger storms. Furthermore, governments may need to raise taxes or reduce spending in other categories to fund climate resiliency. The more the government does, the lower the burden will be on individual homeowners.

    The Benefits Of Early Action

    While the upfront costs of climate adaptation may seem daunting, delaying action can lead to even more severe consequences in the future. The costs associated with rebuilding after a climate-related disaster far exceed the expenses of investing in preventative measures. And given the ongoing housing shortage, protecting the existing housing stock should be a priority where it is feasible.

    Furthermore, proactive climate adaptation can reduce greenhouse emissions, which would lessen the long-run severity of climate change while supporting the economy. Green investments, like electric rail, flood walls, and preservation of flood-absorbing wetlands, can enhance property values, create jobs, and improve quality of life for residents.

    Homeowners, homebuyers, communities and governments all need to prepare for climate change. We can proactively mitigate the financial risks associated with climate change while fostering a more sustainable and resilient future. The costs of preparation may be significant, but they pale in comparison to the costs of inaction.

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    Daryl Fairweather, Contributor

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