Housing Affordability Trends

Studio Apartment

California’s passing of SB1069 (link here: http://sd10.senate.ca.gov/news/2016-09-27-gov-brown-signs-wieckowskis-accessory-dwelling-units-bill-provide-more-affordable) took the old concept of renting out one’s garage/storage space and made it legal.  Although restrictions exist, the new law is one more sign that housing affordability is just as much a concern for Californians as housing availability.  Homeowners looking to reduce the cost of home ownership have always considered whether to rent out a room or make an illegal garage conversion.  With the law being put into effect it is likely to keep the residential fixer-upper contractors busy for a while.  There are 3 BIG advantages a garage conversion has over renting out a room in your main house.  My top three are:

PRIVACY – There is nothing more odd than sharing a space with a roommate in your home, if its your home and its been years since you have non0family roommates.  The occasional run in at the bathroom or refrigerator can be as meaningless or annoying as you make it out to be, but you have to prepare for it either way.  For some that will feel odd and even find yourself asking “why am I sharing this house with this person?  Oh yeah, that’s right – Because its the only way I can pay the mortgage and have enough money left over to have a life!”  The detached garage/storage space solution eliminates the social complexity of sharing space because everyone has their own space and well defined boundaries.

SCHEDULES NEVER CONFLICT – Come and go as you please in a detached garage/storage space situation but NOT so when you rent out a room.  If you have a renter that keeps off hours, to some extent so will you.  An owner really needs to focus on lifestyle questions in the renter interview process to better understand if a roommate will functionally “work out” or result in a toxic living environment.  Additionally, schedules can change.  A change in a persons job, profession, relationships, etc. can turn a once functional lifestyle arrangement into dysfunctional arrangement if both parties are not willing to make compromises.

PAYING YOUR FAIR SHARE – A detached garage/storage space arrangement makes it easier for the renter and the owner to determine what a fair rent is because the market can be compared much more easily for a converted garage.  Renting a room is almost impossible to find a comparable rent because no two houses are the same.  Additionally some owners do not want renters using in-home laundry facilities and would rather they go to the local laundromat to help keep utility usage down.  Splitting utility billing can also be tricky because renting a room (maybe 100 square feet) is not really renting a room but also the hallway, the living room, the family room, the kitchen, etc.  By going the converted garage/storage space route an owner and renter can agree more easily on what parts of the property will be included in the lease and which ones are not.

Thanks for reading!

 

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Los Angeles: 7% Annual Rental Increases!

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Renters in Los Angeles will find this one of the MOST IMPORTANT stories about our housing crisis written to date!  The days of 3-4% rental increases are well behind us…why? AN UNSTOPPABLE GROWING DEMAND FOR HOUSING.  I’m adding the link for all to read. When I explain to renters that increases of 7-10% are not uncommon their faces turn flush.  Its the new, “New.”  Here’s the link:

http://www.myvoicenation.com/promotions/viewEmailByDistLstDelivId/vmg-80161/1/#.Vv_5Lk0rnX4.twitterLA Weekly Rental Crisis

US Home Ownership Plunges

U.S. HOMEOWNERSHIP RATE HITS 48-YEAR LOWSource: Wall St. Journal

http://blogs.wsj.com/economics/2015/07/28/u-s-homeownership-rate-hits-48-year-low/

The homeownership rate continued to decline in the second quarter of 2015, hitting a 48-year low. The country is experiencing its lowest homeownership rate since 1967. According to the Commerce Department, the seasonally adjusted homeownership rate declined to 63.5 percent, down from 64.7 percent in the second quarter of 2014. However, it should be noted that the decline in homeownership reflects a positive trend: The number of rental households is growing.