Most Renters Unable to Afford a Home Purchase

Financial hardships are preventing most renters from entering the real estate market, a recent Freddie Mac survey found, but new low-down-payment programs could help some of them unlock purchasing power and become first-time homebuyers.



According to poll results, 45 percent of U.S. renters said they live from paycheck to paycheck, while another 17 percent reported an inability to pay for basic necessities. And although 91 percent of renters believe that homeownership is a source of pride, just 39 percent said that they expect to purchase a home over the next three years.

Renters who plan to get in the game tend to be younger, with 47 percent of those in the 25-to-34 age bracket foreseeing a purchase by 2017. Generation Xers seemed even more certain that homeownership is in their future, with 58 percent of those aged 35 to 44 responding that they expect to buy a property within the next three years. Renters who haven’t bought a home by the age of 45 were unlikely to do so, Freddie Mac noted.

In a statement accompanying the survey results, Freddie Mac Multifamily Executive Vice President David Brickman said that an inability to afford a down payment is preventing some renters from buying, but the California Association of Realtors believes that new lending programs could help turn the tide.

Last week, both Freddie Mac and Fannie Mae unveiled programs that would allow qualified first-time buyers to obtain a loan with as little as a 3 percent down payment.

“Our goal is to help additional qualified borrowers gain access to mortgages,” Andrew Bon Salle, Fannie Mae Executive Vice President for Single Family Underwriting, Pricing and Capital Markets, said in a statement.

CAR commended the programs, saying that increased access to credit would greatly benefit the state’s first-time buyers.

“Saving enough money for a down payment is the biggest hurdle for most first-time home buyers, but this program will help remove that barrier, and at the same time, lenders can be assured they are providing a safe, affordable loan to creditworthy borrowers,”CAR President Chris Kutzkey said in a press release.

Still, not all renters want the responsibilities and commitments that come with homeownership, according to Freddie Mac. Freedom from home-maintenance chores and expenses is the main advantage of renting, 78 percent of respondents answered, while 68 percent said that renting allows for greater flexibility in terms of location.

And the country’s recent recession and housing collapse is still very much top of mind, with 66 percent of those polled responding that continuing to rent would protect them against future home price declines.

(Photo: Flickr/NoHo Damon)

Think Your House Is Small? Try a Microapartment.

One of the most common reasons apartment dwellers give for purchasing a single-family home is the desire for more space. Another bedroom, perhaps, or a private office or den. And a family room with enough space to accommodate a “Guitar Hero” showdown.

So imagine the pent-up desires of people who live in microapartments — living spaces so small they redefine the concept of cozy.

In Seattle, some residents are living in apartments as small as 90 square feet. That’s the size of a guest bathroom in many Bay Area homes.

An article on the Gizmodo website notes that a quirk in the Seattle housing code allows developers to count kitchens, not bedrooms, when defining housing units, so several microapartments share kitchen space to meet the letter of the law. Accordingly, one Seattle development has 64 living spaces in a building that would typically hold eight units.

San Francisco‘s housing code provides just a bit more space, allowing apartments as small as 220 square feet — the size of a master bathroom in many Bay Area homes.

But these microscopic apartments can still command eye-popping price tags per square foot. In San Francisco, the smallest condominium for sale in the third quarter of this year was just 311 square feet, according to MLS data. It eventually sold for $381,000 — slightly more than original price — for a price per square foot of $1,225.

San Francisco and Washington, D.C., tied for four fourth place for the smallest allowable apartments in major U.S. cities. Placing second and third after Seattle’s 90 square feet are Portland, Ore., (150) and Los Angeles (200).

Rounding out the list are Providence, R.I. (225); Chicago (275); Boston (350); and Austin, Texas, and New York City (400).

Gizmodo notes that the United States is hardly the leader in microhousing. “Japan, Hong Kong, and much of Europe have been doing tiny apartments better than us for years,” the article says. “But culturally we’re moving in that direction: 28 percent of all American households were made up of single people in the 2010 census, a number that’s been growing since the 1970s.”



(Image: Flickr/ClatieK)

Buying a Home is 38% Less Expensive than Renting!

In Trulia’s 2014 Rent vs. Buy Report, they explained that homeownership remains cheaper than renting throughout the 100 largest metro areas in the United States; ranging from an average of 5% in Honolulu, all the way to 66% in Detroit, and 38% Nationwide!

The other interesting findings in the report include:
Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting.

Some markets might tip in favor of renting later this year as prices continue to rise faster than rents and if – as most economists expect – mortgage rates rise, due both to the strengthening economy and Fed tapering.

Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.

Bottom Line
Buying a home makes sense. Rental costs have historically increased at a higher rate of inflation. Lock in a mortgage payment now before home prices and mortgage rates rise as experts expect they will.


Article and Photo Sourced From:  http://www.keepingcurrentmatters.com/2014/09/10/buying-a-home-is-38-less-expensive-than-renting/?utm_source=feedburner&utm_medium=email&utm_campaign=Blog_Promo 

The Cost of Renting versus Buying

 

Infographic Sourced From:  http://www.keepingcurrentmatters.com/2014/09/05/the-cost-of-renting-vs-buying-infographic/ 

Color-Coding San Francisco's Totally Bonkers Rental Market

[Graphic via Priceonomics]
We all already know that the laws of supply and demand have pushed San Francisco rents through the roof over the past few years. Tens of thousands of people are moving to the city, but the supply of housing is relatively fixed thanks to zoning laws. Now Priceonomics, a local data company, has broken down those price increases and provided one of the more accurate surveys of the current rental scene that we've seen. According to their analysis, the city's most expensive neighborhoods, ranked by the price of one-bedrooms, are nowdowntown, Mid-Market, and some southern parts of the city. Hayes Valley, the Financial District, the Castro, SoMa, Bernal Heights, and Potrero Hill top the list, driven by proximity to highways and shuttles and the construction of luxe new apartment buildings in those areas.

[Graphic via Priceonomics]

Almost wherever you go in San Francisco looking for an apartment, prices will be high. Priceonomics puts the median price of a San Francisco apartment renting today at $3,600, up from $3,023 last year. Studios are fetching $2,300, one-bedrooms come in at $3,120, the median two-bedroom costs $4,000, and three-bedrooms are going for $4,795. They've also put together a handy price cheat sheet with median prices for apartments of every size in neighborhoods across the city.

[Graphic via Priceonomics]

The city's current most expensive neighborhoods are also among those that have seen the biggest price increases over the past three years. The price of a one-bedroom in Bernal Heights has more than doubled since 2011. Civic Center, the Mission, and Hayes Valley have also seen hefty increases. Meanwhile, traditionally expensive neighborhoods like Pacific Heights and Russian Hill are still expensive but have seen much more modest jumps—in fact, the median price of a one-bedroom in Pacific Heights hasn't risen at all over three years.

[Graphic via Priceonomics]

In the past year, even neighborhoods once considered very distant from the city's center have begun to rise. The Excelsior saw a 30 percent jump in one year and the Portola District rose 20 percent, although Hayes Valley and Bernal Heights still saw the biggest increases. Some of the far southern neighborhoods like the Bayview, the Excelsior, and Portola still offer some of the city's best deals, along with the Outer Sunset and Outer Richmond. However, with the most desirable neighborhoods in the city shifting southward, even those areas will likely see further rises. So, if you have a rent-controlled apartment, hold on for dear life.


Article and Photos Sourced From: http://sf.curbed.com/archives/2014/08/14/colorcoding_san_franciscos_totally_bonkers_rental_market.php 

S.F. landlords offer tenants tempting offers to move out

There's $50,000 on the table if the Reyes family is willing to leave the Mission District apartment that has been home for 24 years.

"It seems like a lot of money, it does, but when you think about it, when you think about your future, it doesn't go as far as you think it does," said Jacqueline Reyes, 19, who has lived in the studio with her parents all of her life.

The rent-controlled space costs the family $549 a month - a nearly impossible price to match in today's scorching real estate market.

As an influx of wealth reshapes the city, housing advocates allege that the main way for landlords to replace longtime tenants with those willing to pay more has become rather simple: offer a pile of cash.

San Francisco landlords have made use of buyouts for years, but the practice "seems to be becoming the preferred method" of ousting tenants in the current economic boom, said Ted Gullicksen, executive director of the San Francisco Tenants Union, which has tracked nearly 900 buyouts reported to the group since 2006.

For years, only one or two renters a year would report receiving buyouts to the Tenants Union. Now, Gullicksen's organization logs between 25 and 30 a month. Advocates contend that for every renter who has contacted the group about receiving cash to vacate, there may be three or four more who haven't reported it.

Unlike Ellis Act evictions, which are often used when a landlord wants to oust tenants in order to sell the unit, buyouts happen off the books. They allow landlords to skirt most regulatory protections for tenants - and allow them to rent the units at market rates when the former tenants leave.
Ellis Act payments

Tenants booted by Ellis Act evictions do receive some compensation: Each tenant is required to be paid $5,200. But the Board of Supervisors is considering legislation that could substantially increase that payment by creating a new formula that would take into consideration factors like how long the tenant had lived there, where the apartment is, and the difference between their current rent and what they would have to pay for a similar place for two years.

There is no such scale, however, for buyouts. According to the Tenants Union tally of buyouts, some have been for as little as a few thousand dollars and some for more than $40,000.

According to a November report by the city's budget and legislative analyst, Ellis Act evictions jumped 170 percent from the year that ended in February 2010 to the year ending in February 2013. During the same period, there was a 38 percent spike in all evictions. Rents rose 10.6 percent in December over the previous year - compared with a 3 percent increase nationally, according to real estate website Trulia.

Beyond the Tenants Union's admittedly incomplete data, buyouts aren't tracked. Nobody knows definitely how many are offered, accepted, or for how much. But San Francisco Supervisor David Campos, who represents the Mission District, considers them a factor that's changing the face of the city.

"You can't just ignore what's going on with buyouts," said Campos, who is working on legislation that would address buyouts. "It's another form of displacement."

While entirely legal, advocates say that allowing a landlord to buy out a tenant renders eviction regulations and rent-control rules largely meaningless.

"The fact is that they're using the buyouts to circumvent tenant protections that city government put into place to deal with evictions and the loss of rent-control units," Gullicksen said.

Gullicksen acknowledged that courts have ruled that offering a tenant a buyout is essentially a form of free speech.

However, a landlord would be crossing the line if he were to say, " 'Fat chance if I maintain the building anymore if you don't accept it,' " said Ascanio Piomelli, a professor of law at UC Hastings Law School.

Landlords are also barred from making threats verbally or through actions, such as not fixing a door that needs repair, said Piomelli. 

Many provisions in Campos' buyout legislation are still being hammered out, but one would require landlords to file notices with the city's rent board if they offer cash to a tenant - much like evictions are currently recorded.

Campos hopes his legislation will help protect tenants who might struggle in negotiations, perhaps because they don't speak English well.

"We have heard from families who have been bought out for very little money," Campos said. "There's nothing wrong with looking at the issue and trying to figure out if there is a way to regulate the process."

But Janan New, executive director of the San Francisco Apartment Association, said that tenants in less than 1 percent of the city's housing stock received eviction notices in the last year, and she estimates fewer than that have accepted buyouts.

"It's not as big of a deal as our elected officials are making it out to be," New said. "We believe that buyouts have been in existence for the past 10 years for a way for building owners under strict rent regulations to kind of manage their properties."
'Private contracts'

She's dubious about whether any legislation could regulate the practice because "buyouts are privately contracted agreements, and it's very difficult for the government to control private contracts."

New doesn't favor requiring that buyouts be recorded, either.

"It's not a transfer of real estate," she said. "It's a private agreement between two parties. So I don't really think that's feasible. We believe the system works well for both parties now."

New believes it works for the tenant's benefit.

"We're pro-choice here," New said. "If they choose to accept the money, that's what they choose to do. They have a right to do it. They may choose to become homeowners and buy a home and put some money down."

Earlier this year, 68-year-old Sally Goldin accepted a $15,000 buyout to leave the three-bedroom home in the Excelsior neighborhood, where she has lived for 25 years. Prior to the deal, her rent was $1,750.

Leaving wasn't an easy decision. When she learned that her landlord planned to sell the property, Goldin said, she asked for a buyout of $80,000. She said her landlord called that a "blackmail" attempt.

But as time dragged on, Goldin grew worried that she wouldn't be able to find another place in the city by the time the house was sold. She managed to find a much smaller senior-housing apartment for $734 a month and kept $9,000 of the buyout, giving $6,000 to her son, who was living with her before the deal. He moved to the East Bay.

"I think I got taken advantage of because of what I got offered was a drop in the bucket for what that place was worth," she said.
Sweetened offer

In the Mission, Blanca Reyes wonders whether to accept the buyout and leave the only place she has lived in since emigrating from El Salvador more than two decades ago. The nurse's assistant said her landlord even gave her some leads on other apartments - which the landlord owns - but they cost more than $2,000 a month. The landlord recently bumped up the offer by $5,000.

Following the path of other displaced San Francisco tenants to the East Bay isn't an option for her family. Gasoline costs for her and her husband, a mechanic, would soar. Her daughter's transportation time to San Francisco State would more than double, making it difficult to take early morning classes.

"I would rather move back to my home country than move to Oakland," Blanca Reyes, 50, said. "I am a citizen here. And this is the only home I've ever known in this country."

Joe Garofoli is a San Francisco Chronicle staff writer. E-mail: jgarofoli@sfchronicle.com Twitter: @joegarofoli

Article and Photos Sourced From:  

Parody Photos of the SF Rental Market are Darkly Funny

 

SF's nutso housing situation has evolved to the point of parody. So if you're sick of reading about it, take a break to laugh (or cry) at these photos by SF photographer Scott Hampton. Scott describes the project as "a mordant exploration of SF's current housing crisis, emphasizing how ludicrous the rental market has become."
Indeed, although even without the lens of commentary, turns out I just really enjoy reading real-estate-esque descriptions of mailboxes and garbage cans.

Waterfront Condo - $5000

Waterfront condo in the highly desirable, up-and-coming Mid-Market area. Luxurious living at its finest! Enjoy the sounds and smells of the UN Plaza fountain as you relax in your condo after a hard day of complaining about the homeless. Close to public transportation, Civic Center Farmers Market, @Twitter, the @Tenderloin and several aggressive seagulls. 33 SQ. FT. Utilities not included, nor available.

Cozy "Studio" - $4100

Cozy "studio" with skylights right in the heart of the rapidly redeveloping Mid-Market area. Daily housekeeping included! Right on several major Muni lines, and close to BART. Perfect for the daily commuter. Utilities not included. .83 SQ. FT.

Studio Loft - $3000

Government housing. Section 8 OK! Studio loft with vaulted ceiling! Located in Financial District, near Market street. Close to shops, food and public transportation. 2.17 SQ. FT. Utilities not included.

Quaint Inlaw Unit - $2100

Quaint Inlaw unit with open floor plan. Right on several major Muni lines. Close to UN Plaza, in highly desirable Mid-Market area. 1.35 SQ. FT. Daily housekeeping included!

Garden Penthouse Studio - $7350

Garden penthouse studio in Mid-Market area. Light and Airy! You'll enjoy the fresh breezes of Market Street as they blow through your perfectly manicured and landscaped garden. Coveted mid-market area, close to shops and right on the major Muni and BART lines. Landscaping included. Utilities not included.

Basement 1 BR - $3500

Spacious basement apartment. Classic architecture; very Romanesque and gothic! Arched interiors! Close to public transportation. PG&E not included. Not ADA-compliant; requires the use of a ladder for entry.

Studio Container - $2000

Container living in SOMA! All the rage, modern container living right in SOMA! Studio container with open floor plan, built-in bench and rooftop garden. Close to SFMOMA, Yerba Buena Gardens, shops and public transportation. Utilities not included. Please DO NOT DISTURB current tenant!



Original Article and Photos sourced from:  http://www.thebolditalic.com/articles/4637-parody-photos-of-the-sf-rental-market-are-darkly-funny

San Francisco Rental Ads and Bargain Basement Prices of Yore

[1951 ad for Stonestown Apartments from the San Francisco Chronicle, via Western Neighborhoods Project]
San Francisco has always been a renters town, with boarding houses going back to the city's earliest days. Today's rental market is nothing short of masochistic, so let's take a trip back in time to pre-Craigslist San Francisco to look at some of the first rental ads to hit the city.





[Dec 1849 classified from the Daily Alta California newspaper, viaCDNC]
1850s boarding house: Immediately following the Gold Rush, San Francisco grew from a tiny town into a thriving west coast city. By 1850, San Francisco had 25,000 residents, almost entirely young men who were headed for, or were just back from, the gold fields. Boarding houses were the rental option of choice for the mostly male initial population - larger homes or buildings were split into five or six individual single rooms rented as low for $2-8/month, or a bit more for fancier digs.




[Oct 1890 classified from The Morning Call newspaper, via Library of Congress]
1890s wealth: Gold Rush success brought mega wealth to the city, but you didn't have to own property to be well respected. You could rent your way to the top with a fancy furnished mansion, only costing you $125/month (or about $3145 today). Too much opulance for you? How about a five-room cottage in Nob Hill for $30/month?




[Moving an Earthquake Refugee Shack, via NoeHill]
1906 earthquake shack: When the 1906 Earthquake and Fire devastated the city and left over 16,000 homeless, the City Corps of Engineers commissioned 5,610 cottages that averaged 10'x 14' and consisted of two or three rooms, a gas connection, and a coat of green paint. The charge was $2/month per shack, and for $12 to $25 the shack could be moved to private property once the family got their affairs in order. All the paid rent was then refundable once the shack was relocated.





[March 1907 classified from the San Francisco Call newspaper, via Library of Congress]

post-earthquake flat rentals: After the earthquake, there was a major housing crisis in the city. Many larger single-family homes were converted into apartments, and larger lots were subdivided to make room for the construction of flats and apartment buildings. Boarding houses and large mansions were replaced by flats for growing middle-class. Massive by today's standards, theflats rented around $80-100/month.





[1951 ad for Stonestown Apartments from the San Francisco Chronicle, via Western Neighborhoods Project]
Mid-century apartment buildings: By the mid-twentieth century, housing trends shifted towards high density apartment buildings. According theSan Francisco Modern Context Statement, from 1961?1970 more than a third of residential buildings were multi?family townhouses, duplexes, apartment buildings, and towers. These were often built as in?fill construction in already established neighborhoods or on the outer edges of the city where there was more land to develop, like theStonestown Apartments (now part of SFSU) where in 1951 you could get athree-bedroom, two-bath for a whopping $159/month. Ah, the good old days.






Artcle & Photos Sourced From CurbedSF:

http://sf.curbed.com/archives/2013/11/18/san_francisco_rental_ads_and_bargain_basement_prices_of_yore.php

Couch-crashing in S.F. will cost you $1,075 a month

If ever you need reminders that San Francisco is the most jacked-up rental market in the U.S., peruse the city’s Craigslist ads.

A woman looking for someone to share her 600-square-foot studio posted an offer on the classifieds site to sublet her couch for $1,075 a month with $1,500 down – as long as the new roomie brings her own sleeping bag.
While the price may shock most of the nation, it’s pretty much the going rate for a studio share in S.F., where the median rent for a two-bedroom in the Mission or Potrero Hill takes five minimum-wage jobs to afford. And remember, that’s based on the city’s minimum wage rate of $10.55 an hour.

The place offered here rocks a walk-in closet (or second bedroom?), skyline view and prime location at Laguna and Market, which means the going rate for the entire place is probably upward of $2,000 a month.
The couch-rent ad may have triggered incredulity, but it’s still a better deal than this curbside abode. And it’s way less cutthroat than this name-your-price listing for a pad in Hayes Valley.


h/t Jezebel
Find Jennifer Wadsworth on Twitter at @jennwadsworth.

Article & photo sourced from:  sfgate
http://blog.sfgate.com/hottopics/2013/10/14/couch-crashing-in-s-f-will-cost-you-1075-a-month/

Real Estate Roundup: New Rental Homes Reach Capacity; Pending Sales Retreat

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:

NEW RENTAL PROPERTIES FLOOD MARKET
For months now we’ve been hearing of investors buying up bargain-priced homes and converting them into rental properties. But a report from Trulia suggests the market may have reached capacity.
Rental rates on single-family homes flattened in March, rising just 0.1 percent nationwide over the past year. In San Francisco overall rents were down 3.7 percent from a year earlier, and in San Jose they decreased 4 percent. Rents rose just 2.7 percent in Oakland.

“With four million more rental homes now than during the bubble, supply has expanded to meet demand, and rents are flat or falling in markets where investors are most active,” Jed Kolko, chief economist at Trulia, said in a statement accompanying the rent report. “Rising prices and flattening rents change the math for investors and renters. Some investors will decide to sell the units they’ve been renting out, which would create new desperately needed for-sale inventory.”

---

INVENTORY SHORTAGE HOLDS BACK SALES
Tight supplies of homes for sale kept pending home sales flat in February, according to the National Association of Realtors, although sales remained at the second-highest level in nearly three years.
February pending sales — a forward-looking indicator based on contract signings — slipped 0.4 percent from January but were up 8.4 percent from a year earlier.

Limited inventory is holding back sales, according to the NAR’s chief economist, Lawrence Yun.
“Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels,” Yun said in a statement. “Most local home builders are small businesses and simply don’t have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market.”

---

FIRST-TIME BUYERS GROW IN NUMBER
First-time homebuyers were the fastest-growing segment of buyers in January and February, accounting for 34.5 percent of home purchases in February, according to a survey of 2,000 real estate professionals nationwide.

The Campbell/Inside Mortgage Finance survey found that first-time homebuyer traffic has jumped dramatically in recent months. After dropping to a four-year low in December, it reversed course and set a four-year high in February.

“First-time homebuyers are the wildcard in the upcoming spring-summer homebuying season,” Thomas Popik, research director for Campbell Surveys, said in a statement. “We see strong first-time homebuyer traffic, but it’s still not clear that the traffic will translate into increased purchases.”



(Photo courtesy of homeguides.sfgate.com)