On Wed, I am having the screening procedure that Katie Couric so vividly demonstrated some years ago. Basically the story is that if you have this procedure at age 50, any colon cancer that might be detected will be at a sufficiently early stage for it to be quite curable. So because I have good health insurance, I can be sure I will not die of colon cancer.
Those without insurance are not so fortunate. Such patients can only get the screening if they pay out of pocket ($2000-$3000) or, if they are patients at places like the LA County hospital, if they are symptomatic, which means the cancer might not be caught early. For the median family, $2000 is a lot of money; for those who occupy the netherworld of having too much money to get medicaid but not enough to afford health insurance, it is even more so.
I hope the new health care system rectifies this. Under the old system, this difference in service delivery was unjust.
[Updates: First, I misspelled "colon," which shows that I should never write things while being reflective at midnight. Second, it is worth saying something about cost benefit analysis and screening--according to this source, the cost per life year is about $45,000, which seems like a good deal to me].
Monday, 28 June 2010
One more take on Kartik Athreya's critique of economics bloggers
Athreya is arguing that the blogosphere's various critiques of modern macro are being made by insufficiently expert bloggers using insufficiently rigorous arguments. As is often the case, the best rejoinder comes from Mark Thomaand I suppose I don't have much to add myself. (I would link to the essay, but it seems to be broken right now)
But George Akerlof did [have a lot to add], way back in 2006, during his American Economic Association Presidential Address. which was entitled "The Missing Motivation in Macroeconomics." I remember finding the piece enthralling (I know, we economists aren't supposed to use such emotion laden words), because it made the very simple but devastating case that when the foundations of modern macro (the independence of consumption and current income (given wealth); the independence of investment and finance decisions (the Modigliani-Miller theorem); inflation stability only at the natural rate of unemployment; the ineffectiveness of macro stabilization policy with rational expectations; and Ricardian equivalence) are tested against data, they generally fail the test. I remember at the time that some economists thought that Akerlof had taken leave of his senses (and some friends of mine thought I had taken leave of mine because I so admired the address).
But in the end, we should be respecting evidence more than clever theoretical edifices. And yes, Kartik, while I am not an expert in macro, I did have to slog through lots of OLG models and rational expectation models and real business cycle stuff in graduate school, and pass prelim questions on them, so I have at least some idea of what it is that I find intellectually unsatisfying. Akerlof's view, expressed before we had the financial meltdown, that we really need to start over with modern macro, has, I think, largely been vindicated.
But George Akerlof did [have a lot to add], way back in 2006, during his American Economic Association Presidential Address. which was entitled "The Missing Motivation in Macroeconomics." I remember finding the piece enthralling (I know, we economists aren't supposed to use such emotion laden words), because it made the very simple but devastating case that when the foundations of modern macro (the independence of consumption and current income (given wealth); the independence of investment and finance decisions (the Modigliani-Miller theorem); inflation stability only at the natural rate of unemployment; the ineffectiveness of macro stabilization policy with rational expectations; and Ricardian equivalence) are tested against data, they generally fail the test. I remember at the time that some economists thought that Akerlof had taken leave of his senses (and some friends of mine thought I had taken leave of mine because I so admired the address).
But in the end, we should be respecting evidence more than clever theoretical edifices. And yes, Kartik, while I am not an expert in macro, I did have to slog through lots of OLG models and rational expectation models and real business cycle stuff in graduate school, and pass prelim questions on them, so I have at least some idea of what it is that I find intellectually unsatisfying. Akerlof's view, expressed before we had the financial meltdown, that we really need to start over with modern macro, has, I think, largely been vindicated.
Thursday, 24 June 2010
Hard to believe
I was on the radio the other day, discussing the future of Fannie and Freddie, when another guest said that all we had to do was fully privatize the mortgage market for all to be well. I know that I can't expect everyone to be aware of the 1920s, but the period 2002-2006 was a period in which the "pure" private sector took away substantial market share from Freddie-Fannie, and look how well that turned out.
Of course in the end there is no such thing as a pure private market, because when large financial institutions get in trouble, the government comes to the rescue, either through an injection of funds or through extremely low interest rates. We are all GSEs.
Of course in the end there is no such thing as a pure private market, because when large financial institutions get in trouble, the government comes to the rescue, either through an injection of funds or through extremely low interest rates. We are all GSEs.
Jack Guttentag found that mortgage rates in the 1940s were in the low fours.
Here is the link. [update: of course these were typically 20 year loans, so the comparison is not perfect].
Lisa Schweitzer on time-service quality trade-offs for transit and autos
She writes:
.
As she wrote this yesterday, I couldn't help thinking about it yesterday during my transit trip home. I take transit in LA every now and then, in part because that it the sort of guilty liberal I am. But yesterday, when all the stars were aligned (I arrived at bus from USC to Union Station at exactly the time in left; I only had to wait a minute or two for the Gold Line connection from Union Station to Pasadena), it took me just less than one hour to get from my office door to my front door. When I drive to work in the morning (at a strategic time), it takes me 20 minutes. When I return home in the afternoon (using surface streets until Hill or Figueroa meets the Pasadena Freeway), it rarely takes more than 35, and never more than 45. So my worst days in the car free up about an hour relative to transit. In case you are wondering, it is 11 miles from home to campus.
But don't I find driving unpleasant? Not really, I can plug my i-pod into my car stereo, or listen to NPR or the BBC, or a CD...In the morning, when traffic is clear, I get pleasure from driving my car at freeway speeds. I do miss the walk that I get when I use transit.
To some extent, the problem is that the street system in Los Angeles, with lots of redundancy, works too well. In Washington DC, Metro was a viable alternative to driving--it would often get me to work faster than taking my car. The street lay-out in Washington, set as it was in the late 18th century, was not designed to keep auto traffic moving. Metro is also very good--when people in DC complain how how awful it is, I want to laugh.
At the same time, I don't think a transportation system whose principal mode is people driving alone is sustainable. We need to think about some system in between driving alone and fixed route transit. It seems eminently doable to me, but it will take some imagination to make it work.
.
..People tend to like to separate travel time and service quality based on the arguments, like Litman uses, that the time in transit or walking is more pleasurable and productive than being in a car. But they are only right for people whose preferences align with theirs. For other segments of the mobility market, they are wrong. Moreover, it’s wrong to assume that these are the only things being traded: yeah, you hate to drive and you’d be happier not driving, but the extra half an hour that transit takes you means a half an hour you’re not with your kids, cooking, drinking wine with your spouse at home, watching the game, or any number of things you can’t do on transit, either. So yeah, I’d prefer to get the exercise walking than driving, but I prefer to spend the time cooking so that my kids aren’t sitting around hungry after school more than I prefer the exercise.
As she wrote this yesterday, I couldn't help thinking about it yesterday during my transit trip home. I take transit in LA every now and then, in part because that it the sort of guilty liberal I am. But yesterday, when all the stars were aligned (I arrived at bus from USC to Union Station at exactly the time in left; I only had to wait a minute or two for the Gold Line connection from Union Station to Pasadena), it took me just less than one hour to get from my office door to my front door. When I drive to work in the morning (at a strategic time), it takes me 20 minutes. When I return home in the afternoon (using surface streets until Hill or Figueroa meets the Pasadena Freeway), it rarely takes more than 35, and never more than 45. So my worst days in the car free up about an hour relative to transit. In case you are wondering, it is 11 miles from home to campus.
But don't I find driving unpleasant? Not really, I can plug my i-pod into my car stereo, or listen to NPR or the BBC, or a CD...In the morning, when traffic is clear, I get pleasure from driving my car at freeway speeds. I do miss the walk that I get when I use transit.
To some extent, the problem is that the street system in Los Angeles, with lots of redundancy, works too well. In Washington DC, Metro was a viable alternative to driving--it would often get me to work faster than taking my car. The street lay-out in Washington, set as it was in the late 18th century, was not designed to keep auto traffic moving. Metro is also very good--when people in DC complain how how awful it is, I want to laugh.
At the same time, I don't think a transportation system whose principal mode is people driving alone is sustainable. We need to think about some system in between driving alone and fixed route transit. It seems eminently doable to me, but it will take some imagination to make it work.
Tuesday, 22 June 2010
One more point about fixed-rate mortgages
They seem to be safer. From the Mortgage Bankers Association of America:
Some of this may just be that people who take less risk select themselves into fixed-rate loans, but even so....
On a seasonally adjusted basis, the delinquency rate stood at 6.17 percent for prime fixed loans, 13.52 percent for prime ARM loans, 25.69 percent for subprime fixed loans, 29.09 percent for subprime ARM loans, 13.15 percent for FHA loans, and 7.96 percent for VA loans. On a non-seasonally adjusted basis, the delinquency rate fell for all loan types.
The foreclosure starts rate increased for all loan types with the exception of subprime loans. The foreclosure starts rate increased six basis points for prime fixed loans to 0.69 percent, 17 basis points for prime ARM loans to 2.29 percent, 18 basis points for FHA loans to 1.46 percent, and eight basis points for VA loans to 0.89 percent. For subprime fixed loans, the rate decreased nine basis points to 2.64 percent and for subprime ARM loans the rate decreased 39 basis points to 4.32 percent.
Some of this may just be that people who take less risk select themselves into fixed-rate loans, but even so....
Monday, 21 June 2010
Bob Hagerty blogs about Patrick Lawyer on Fixed Rate Mortgages:
He writes, in part:
The context is important. One of the reasons the 30 year fixed rate mortgage is ubiquitous is the United States may be the existence of Fannie and Freddie. If we do away with FF, we may also do away with the 30-year fixed rate mortgage. So let me defend the 30-year fixed a bit with something I wrote about 3 years ago:
Allotted only about 10 minutes to share his vision, Mr. Lawler....first made the obligatory statement that he was expressing his own views and not those of his federal agency. Yeah, right, I thought, and reached for my triple espresso.
But then Mr. Lawler launched a frontal assault on the most sacred element in U.S. housing-policy dogma: the 30-year fixed-rate mortgage loan, providing the right to refinance at any time, with no prepayment penalty. If more members of the audience had been fully awake at this moment, I feel sure that their gasps would have been audible.
Now, Americans are very attached to their 30-year fixed-rate freely prepayable mortgages. They like not having to fuss about the possibility of 28% interest rates in 2032, even though most of us will move or die long before then. They love to refinance every time rates drop and then brag to their neighbors about how much they are saving per month.
What they don’t stop to realize often enough is that they are paying a very large price for that privilege– twice.
The context is important. One of the reasons the 30 year fixed rate mortgage is ubiquitous is the United States may be the existence of Fannie and Freddie. If we do away with FF, we may also do away with the 30-year fixed rate mortgage. So let me defend the 30-year fixed a bit with something I wrote about 3 years ago:
The problem with advising people to use adjustable rate mortgages, however, is that ARMs give households liabilities that have short duration--that is, liabilities whose market value remains close to face value at all times. This is because the rates on ARMs by definition change to meet market rates on a regular basis. Houses, on the other hand, are assets with lots of duration. The services they give to homeowners (shelter and a set of amenities) is pretty much invariant to market conditions. Consequently, house values change with market conditions, such as changing interest rates.
Good financial management practice suggests that to minimize risk, the duration of of assets and liabilities for any institution, including households, should be matched. In the case of houses, this means that households looking to minimize risk should use a fixed rate mortgage to finance their house. There are exceptions--if one buys a house and expects to sell it in five years, a five year ARM makes lots of sense, because the duration of the asset (housing services over five years) and the liability would match.
This is not to say there is anything wrong per se with people getting ARMS, so long as they explicitly understand the risk embedded in them. But a principle I have been pushing for years is that if people can't afford a house with a fixed-rate mortgage, they probably shouldn't buy a house. It is one thing to have the option of the FRM, and then decide to take the risk of the ARM anyway. One of the nice things about the United States is that FRMs are easy to come by--this is not true in most countries around the world. It is something else to be forced into taking a risk in order to buy. Under these circumstances, buying probably isn't worth it.
Everything involves real estate: music edition
I went to hear the Concertgebouw Orchestra in the Concertgebouw last Friday night. There is no experience like it--the hall is remarkably intimate, and the sound washes over listeners without being blurry. Bass notes in particular both rumble and have great pitch definition. Not even Symphony Hall in Boston, Orchestra Hall in Minneapolis, or Disney Hall here in LA (all of which are terrific venues) compare. One of the reasons the orchestra has a consistent and unique sound (beyond, of course, the magnificent players) is its building--real estate creates sound character.
Yet buildings need to be renovated from time to time, otherwise they just wear out. Yet any change to the Concertgebouw--the upholstery, the wood on the stage, maybe even the paint--has the potential to change those special acoustics. What does one do to preserve such a place?
p.s., a young woman name Susanna Malkki took over from an ill Jansons. She was really, really good. Perhaps I saw an early performance from a future superstar?
Yet buildings need to be renovated from time to time, otherwise they just wear out. Yet any change to the Concertgebouw--the upholstery, the wood on the stage, maybe even the paint--has the potential to change those special acoustics. What does one do to preserve such a place?
p.s., a young woman name Susanna Malkki took over from an ill Jansons. She was really, really good. Perhaps I saw an early performance from a future superstar?
Detroit has not had the largest peak-to-trough decline in percentage terms among American large cities
Although it is getting close. Detroit has lost about 58 percent of its 1950 population; St. Louis has lost about 59 percent. And Detroit's population is much bigger than it was in 1900; St. Louis has lost about 30 percent of its population since 1900 (just prior to the 1904 World's Fair, when 20 million people visited St. Louis).
Detroit Shrinking
The New York Times has a good story about it this morning. It reminds me of the Talking Heads song Nothing but Flowers:
Where, where is the town
Now, it's nothing but flowers
The highways and cars
Were sacrificed for agriculture
I thought that we'd start over
But I guess I was wrong
Once there were parking lots
Now it's a peaceful oasis
you got it, you got it
This was a Pizza Hut
Now it's all covered with daisies
you got it, you got it
I miss the honky tonks,
Dairy Queens, and 7-Elevens
you got it, you got it
And as things fell apart
Nobody paid much attention
you got it, you got it
I dream of cherry pies,
Candy bars, and chocolate chip cookies
you got it, you got it
We used to microwave
Now we just eat nuts and berries
you got it, you got it
This was a discount store,
Now it's turned into a cornfield
you got it, you got it
Don't leave me stranded here
I can't get used to this lifestyle
Saturday, 19 June 2010
Does The Greatest Trade Ever produce evidence of prospect theory?
There is a statement in Gregory Zuckerman's terrific book that really struck me: he notes that people hate negative carry, and far prefer positive carry (I don't had the book in front of me right now, so I need to paraphrase). In Paulson's context, he was able to buy credit insurance very cheaply--this limited his downside risk in a way shorting would not, while allowing him to invest consistent his bearish views on the housing market. But it also meant he was paying out cash flow and not gettting anything in return until subprime mortgages and other instruments began failing.
To some extent, there is a discounting issue here: if investors take losses on the negative for several periods, the gains they receive in the future will be discounted. But still, it is an interesting question whether investors discount negative carry trades too much--whether the typical Wall Street investor sold Paulson insurance that was, under reasonably discounting, an ex ante positive NPV bet for Paulson. I am not sure how one would go about testing this, though....
To some extent, there is a discounting issue here: if investors take losses on the negative for several periods, the gains they receive in the future will be discounted. But still, it is an interesting question whether investors discount negative carry trades too much--whether the typical Wall Street investor sold Paulson insurance that was, under reasonably discounting, an ex ante positive NPV bet for Paulson. I am not sure how one would go about testing this, though....
Wednesday, 16 June 2010
Multiple listing service (MLS)
The Real Estate Dictionary term of the day is, the Multiple Listing Service, is a system that brokers affiliate their selves with to share and coordinate real estate listings with each other. The Real Estate Dictionary has identified an example of this term. Say you tell a real estate agent that you want a house that is under $200,000 that is three bedrooms and two baths with a pool. The broker will look up all the houses in the system shared by the brokers and agents and from this list they compile a list of houses to show the agent. This system is the most vital part of information sharing in the broker and agent community. Multiple listing service joins brokers together. The Real Estate Dictionary believes that this is a very well established an organized program for searching property. HOME
Real estate listing agreements
The Real Estate Dictionary topic of the day is, Real Estate listing agreements are a contract between a buyer or a seller and a real estate broker. The Real Estate Dictionary has identified 3 rules of a listing agreement:
1. Brokers or the agent of the broker (salesperson) are only allowed to offer a property for sale for the amount agreed upon in the listing agreement.
2. All of the instructions or requests made by the owner in the agreement must be followed as long as the requests correspond with laws.
3. All information a seller gives to the agent or broker must be verified as true and must be accurate in order to avoid false advertising.
There are four types of listing contracts for real estate. Remember a listing contract is just an agreement by an owner to have a home sold by a broker or agent on their behalf?
Open Listing: The Real Estate Dictionary has identified the open listing. This is a listing agreement where the seller basically says they have the right to have multiple representatives (brokers) trying to sell the property. This means that whoever sells the house gets the commission. This is the lease desirable listing because you will work to sell the house and someone else could sell it quicker and you basically worked for free. Under this contract just remember who ever is the procuring cause of the sale gets the commission.
Exclusive Agency Listing: The Real Estate Dictionary has identified the exclusive agency listing as a lot better then an open listing but still not the most desired contract. This type of agreement says that only one broker is allowed commission on the sale of the house. This provides protection for the broker. The downside of this agreement is that the owner of the house retains the right to sell the house on their own and not pay a broker commission. Also the broker can work with other brokers and sell the house with negotiated commission splits. A possible scenario that can occur making the agreement not so desired is a broker finds a buyer and then the seller contacts the buyer and says wait until my agreement is expired and I will sell you the house for cheaper since we will not have a commission to pay.
Exclusive Right-to-Sell Listing: The Real Estate Dictionary has identified this type of listing as the mother of real estate listings. This one offers the most protection and offers the greatest incentive for the broker to get the job done. Under this agreement only one broker is allowed a commission on the sale of the house. If anyone else sells the house while under this contract the broker who has this contract gets the commission even if they did not sell the house. This means that no matter who locates a buyer the one with this agreement gets the commission and the best part is that they do not even have to prove they are the reason the home sold.
Net Listing: The Real Estate Dictionary has identified this as a agreement where the seller states the amount they want the house to sell for and the broker or agent gets any amount of money that the house sells for beyond that price. An example is a person selling a house for $80,000and the broker sells it for $90,000, he broker gets $10,000 in commission. Net listings are illegal in most states and the rest they are frowned upon. You will most likely never get to do one of these listings.
In order for a listing agreement to be valid it must contain these items:
1. It has to be in writing.
2. It must contain a description of the property aka legal description.
3. The price it’s selling for (listing price).
4. Date the agreement ends (expiration date).
5. Total commissions to be paid.
6. Which type of listing it is.
7. Terms of listing and conditions of listing.
8. Agreement must be signed by both the seller and the broker.
Listing agreements can be terminated in the following ways?
1. Property sells.
2. Agreement expires
3. Seller or the broker dies
4. Property is eliminated example it burns down/
5. The property is subjected to Condemnation
6. The property is foreclosed.
7. All parties of the agreement mutually terminate agreement.
8. One party decides to cancel the agreement
***In the situation where one party decides to back out of the agreement there is a possibility for the other to take recourse of action ex. lawsuit.
A protective period clause or safety clause provides protection from a seller waiting until a contract has expired to sell the property to an interested buyer. During this timeframe stated the broker is due a commission if they are the cause of the sale even after the agreement is expired.
The Real Estate Dictionary has believes this is everything that you need to know about real estate listing agreements. HOME
1. Brokers or the agent of the broker (salesperson) are only allowed to offer a property for sale for the amount agreed upon in the listing agreement.
2. All of the instructions or requests made by the owner in the agreement must be followed as long as the requests correspond with laws.
3. All information a seller gives to the agent or broker must be verified as true and must be accurate in order to avoid false advertising.
There are four types of listing contracts for real estate. Remember a listing contract is just an agreement by an owner to have a home sold by a broker or agent on their behalf?
Open Listing: The Real Estate Dictionary has identified the open listing. This is a listing agreement where the seller basically says they have the right to have multiple representatives (brokers) trying to sell the property. This means that whoever sells the house gets the commission. This is the lease desirable listing because you will work to sell the house and someone else could sell it quicker and you basically worked for free. Under this contract just remember who ever is the procuring cause of the sale gets the commission.
Exclusive Agency Listing: The Real Estate Dictionary has identified the exclusive agency listing as a lot better then an open listing but still not the most desired contract. This type of agreement says that only one broker is allowed commission on the sale of the house. This provides protection for the broker. The downside of this agreement is that the owner of the house retains the right to sell the house on their own and not pay a broker commission. Also the broker can work with other brokers and sell the house with negotiated commission splits. A possible scenario that can occur making the agreement not so desired is a broker finds a buyer and then the seller contacts the buyer and says wait until my agreement is expired and I will sell you the house for cheaper since we will not have a commission to pay.
Exclusive Right-to-Sell Listing: The Real Estate Dictionary has identified this type of listing as the mother of real estate listings. This one offers the most protection and offers the greatest incentive for the broker to get the job done. Under this agreement only one broker is allowed a commission on the sale of the house. If anyone else sells the house while under this contract the broker who has this contract gets the commission even if they did not sell the house. This means that no matter who locates a buyer the one with this agreement gets the commission and the best part is that they do not even have to prove they are the reason the home sold.
Net Listing: The Real Estate Dictionary has identified this as a agreement where the seller states the amount they want the house to sell for and the broker or agent gets any amount of money that the house sells for beyond that price. An example is a person selling a house for $80,000and the broker sells it for $90,000, he broker gets $10,000 in commission. Net listings are illegal in most states and the rest they are frowned upon. You will most likely never get to do one of these listings.
In order for a listing agreement to be valid it must contain these items:
1. It has to be in writing.
2. It must contain a description of the property aka legal description.
3. The price it’s selling for (listing price).
4. Date the agreement ends (expiration date).
5. Total commissions to be paid.
6. Which type of listing it is.
7. Terms of listing and conditions of listing.
8. Agreement must be signed by both the seller and the broker.
Listing agreements can be terminated in the following ways?
1. Property sells.
2. Agreement expires
3. Seller or the broker dies
4. Property is eliminated example it burns down/
5. The property is subjected to Condemnation
6. The property is foreclosed.
7. All parties of the agreement mutually terminate agreement.
8. One party decides to cancel the agreement
***In the situation where one party decides to back out of the agreement there is a possibility for the other to take recourse of action ex. lawsuit.
A protective period clause or safety clause provides protection from a seller waiting until a contract has expired to sell the property to an interested buyer. During this timeframe stated the broker is due a commission if they are the cause of the sale even after the agreement is expired.
The Real Estate Dictionary has believes this is everything that you need to know about real estate listing agreements. HOME
Sunday, 13 June 2010
A line in Clark Hoyt's final column bothers me
He writes:
There is also no question that The Times, though a national newspaper, shares the prevailing sensibilities of the city and region where it is published. It does not take creationism or intelligent design as serious alternatives to the theory of evolution.This is not sharing "prevailing sensibilities." This is simply reporting overwhelming scientific evidence. It is no more about sharing sensibilities than not taking flat-earthers seriously is about sharing sensibilities.
Saturday, 12 June 2010
Federal fair housing law
The Real Estate Dictionary topic of the day is Fair housing:
The Real Estate Dictionary believes that Fair Housing is the most important aspect of real estate to learn. Fair housing was created in 1968 in response to the overwhelming demand in America for equal rights to buy, rent, or advertise real estate without unfair treatment based on an individuals class.
Classes are simply a grouping of different types of individuals. The following classes or individuals that are protected under the fair housing amendment are race, religion (aka creed), sex, national origin, handicap, and familial status.
Most of these classes are easy to define based on simply the word that describes the class. There are two that are not so simple. The first is handicap. Handicap classification is defined as a person limited because of physical or mental capacity to function or make decisions. In order for a person to be protected under the fair housing they must have the handicap acknowledged by a doctor or a legal court. Handicapped persons are allowed to update a place they are renting at their own financial burdeon.
The second is familial status. In order for to be considered under this classification there must be one adult and one child that is under 18 years of age. Understand that a family can be refused rental if they are trying to rent a property that does not have adequate space. An example of this would be a parent with three kids trying to rent a one bedroom apartment.
There are certain situations where the fair housing laws do not apply. The three situations are an owner with three or less properties, not using a broker, and an owner who not discriminate in advertising. What all this means is that if a person does not buy and sell or rent homes for a living hence the three or less properties, does not use a broker to sell the home, and does not discriminate when they advertise the property for rent or sale, they can chose to rent or sell to whoever they want.
Another type that is exempt from fair housing laws is an multi family unit building of 4 units or less that is owner occupied. A multi family unit is basically one big house that is converted into 4 separate little apartments. Important very important the unit must be owner occupied which makes it less then four properties.
Religious organizations are also exempt from fair housing. In order for them to be exempt they must rent or sell to people only of that religion and the property can not be commercial. What commercial means is opening a restaurant for example and saying only Christians allowed.
Private clubs such as a golfing club are also exempt from fair housing as long as they remain private and are not commercial real estate.
******Multi-family properties that were constructed before the year 1992 must have handicap access defined within the amendment. This is called reasonable access. Reasonable would be something like getting a parking space zoned as handicap not constructing an elevator for a person.
Properties that were constructed after 1992 must have fair access for everyone. This means things such as elevators or access suitable for a wheelchair to enter like a ramp.
Familial status does not have to be acknowledged when the housing is for a retirement community which requires all residents to be over the age of 62 years old. It is important to understand that communities like this require special licenses, and you can’t just decide your only going to rent to people over that age to exclude families or African Americans for example.
Besides the exemptions listed it is 100% illegal to refuse to rent, sell, or even refuse to talk about selling or renting to people of a protected class. It is also illegal to increase the rent on a protected class because they are that class. If you are renting or selling you can not advertise one type of contract and then change the terms for the protected class. A simple example of this would be offering rent at $500.00 per month to everyone and then offering $600.00 a month rent to a protected class.
There are certain activities that are prohibited in fair housing and they have catchy names. These activities are blockbusting, steering, and redlining.
Block busting is convincing owners to sell because a protected class is moving to the neighborhood. An example would be convincing white people to move because of African Americans coming to the neighborhood.
Steering is intentionally not showing real estate to a protected class. This would be say a real estate agent telling a white person they will not be a good fit in Compton, California. So they say lets go look in Hollywood instead.
Redlining is not approving loans or decreasing the number of loans to protected classes within a certain area. An example would be if a bank says we can only give out 5 loans this year for black people in Hollywood.
Fair housing is enforced in three different ways. Federal fair housing laws, state fair housing laws, and local fair housing laws. Federal is managed by housing of urban development (HUD), state is managed by individual state agencies, and local is managed by whatever local entity they have in place.
If you are a protected class that feels these rights have been breached, you can file a complaint with each of the agencies and the agency with the strictest regulations are the rules of that area that must be followed. What this means is that if a state has tighter restrictions on fair housing a person can not just follow the federal law, they are in violation if they do not follow the stricter law. Hopefully by now you have a good idea what federal fair housing is.
The Real Estate Dictionary has discovered a site that you can visit to file a complaint you can go directly to the site by clicking this link to the HUD websiteHome
The Real Estate Dictionary believes that Fair Housing is the most important aspect of real estate to learn. Fair housing was created in 1968 in response to the overwhelming demand in America for equal rights to buy, rent, or advertise real estate without unfair treatment based on an individuals class.
Classes are simply a grouping of different types of individuals. The following classes or individuals that are protected under the fair housing amendment are race, religion (aka creed), sex, national origin, handicap, and familial status.
Most of these classes are easy to define based on simply the word that describes the class. There are two that are not so simple. The first is handicap. Handicap classification is defined as a person limited because of physical or mental capacity to function or make decisions. In order for a person to be protected under the fair housing they must have the handicap acknowledged by a doctor or a legal court. Handicapped persons are allowed to update a place they are renting at their own financial burdeon.
The second is familial status. In order for to be considered under this classification there must be one adult and one child that is under 18 years of age. Understand that a family can be refused rental if they are trying to rent a property that does not have adequate space. An example of this would be a parent with three kids trying to rent a one bedroom apartment.
There are certain situations where the fair housing laws do not apply. The three situations are an owner with three or less properties, not using a broker, and an owner who not discriminate in advertising. What all this means is that if a person does not buy and sell or rent homes for a living hence the three or less properties, does not use a broker to sell the home, and does not discriminate when they advertise the property for rent or sale, they can chose to rent or sell to whoever they want.
Another type that is exempt from fair housing laws is an multi family unit building of 4 units or less that is owner occupied. A multi family unit is basically one big house that is converted into 4 separate little apartments. Important very important the unit must be owner occupied which makes it less then four properties.
Religious organizations are also exempt from fair housing. In order for them to be exempt they must rent or sell to people only of that religion and the property can not be commercial. What commercial means is opening a restaurant for example and saying only Christians allowed.
Private clubs such as a golfing club are also exempt from fair housing as long as they remain private and are not commercial real estate.
******Multi-family properties that were constructed before the year 1992 must have handicap access defined within the amendment. This is called reasonable access. Reasonable would be something like getting a parking space zoned as handicap not constructing an elevator for a person.
Properties that were constructed after 1992 must have fair access for everyone. This means things such as elevators or access suitable for a wheelchair to enter like a ramp.
Familial status does not have to be acknowledged when the housing is for a retirement community which requires all residents to be over the age of 62 years old. It is important to understand that communities like this require special licenses, and you can’t just decide your only going to rent to people over that age to exclude families or African Americans for example.
Besides the exemptions listed it is 100% illegal to refuse to rent, sell, or even refuse to talk about selling or renting to people of a protected class. It is also illegal to increase the rent on a protected class because they are that class. If you are renting or selling you can not advertise one type of contract and then change the terms for the protected class. A simple example of this would be offering rent at $500.00 per month to everyone and then offering $600.00 a month rent to a protected class.
There are certain activities that are prohibited in fair housing and they have catchy names. These activities are blockbusting, steering, and redlining.
Block busting is convincing owners to sell because a protected class is moving to the neighborhood. An example would be convincing white people to move because of African Americans coming to the neighborhood.
Steering is intentionally not showing real estate to a protected class. This would be say a real estate agent telling a white person they will not be a good fit in Compton, California. So they say lets go look in Hollywood instead.
Redlining is not approving loans or decreasing the number of loans to protected classes within a certain area. An example would be if a bank says we can only give out 5 loans this year for black people in Hollywood.
Fair housing is enforced in three different ways. Federal fair housing laws, state fair housing laws, and local fair housing laws. Federal is managed by housing of urban development (HUD), state is managed by individual state agencies, and local is managed by whatever local entity they have in place.
If you are a protected class that feels these rights have been breached, you can file a complaint with each of the agencies and the agency with the strictest regulations are the rules of that area that must be followed. What this means is that if a state has tighter restrictions on fair housing a person can not just follow the federal law, they are in violation if they do not follow the stricter law. Hopefully by now you have a good idea what federal fair housing is.
The Real Estate Dictionary has discovered a site that you can visit to file a complaint you can go directly to the site by clicking this link to the HUD websiteHome
Friday, 11 June 2010
How to punish universities without punishing students
I understand that when universities violate rules (NCAA or otherwise), they need to be punished, so that rules have credibility. But it seems unfair to punish current students for past misdeeds. In the current context, a fair sanction would be to allow current students to play in bowl games, but forbid the university from taking any money for them. Just a thought.
Downtowns
When I moved to Madison in 1984, the downtown there wasn't much--despite the fact that it has lots of worker density from state government and the University of Wisconsin. But the city--and in particular its chief planner, George Austin--had the sense to see that Euclidean zoning was not compatible with downtown redevelopment. Downtown zoning was essential replaced with Planned Urban Developments. Ironically, I remember some environmentalists--people who want transit oriented development--opposed some of the plans on the grounds they would bring too much density to downtown. Oh well.
In any event, the transformation of downtown Madison has been astonishing. It now has very attractive condos, and a restaurant scene that is remarkably strong (I was going to add the caveat "for a city of Madison's size," but the caveat is actually unnecessary). The area is now lively, with people strolling even in cold that is now, well, beyond my personal limit of tolerance (I have gotten soft since leaving). The city also built a beautiful Frank Lloyd Wright inspired convention center that provides an anchor to the south end of downtown. Unlike many such places, it was designed to be a gathering place for the community, and it has worked magnificently.
When I first saw Pasadena in the early 1980s, it was actually a pretty unattractive place, with dilapidated commercial areas and an under-maintained housing stock. The air quality was terrible--I remember my nostrils stinging the whole time I was there--and I wondered why anyone would live there.
Two important changes have since happened. First, the air quality, while still not good enough, is much, much better. I can see the San Gabriel Mountains pretty much every day now; in the 1980s, it was hard to know that the place even had mountains. My colleague Chris Redfearn maintains that once air quality improved, people began reinvesting in the very beautiful pre-World War II houses that make up a good chunk of Pasadena (more evidence that environmental regulations that target real externalities are economically beneficial).
Second, the city set up a business improvement district in Old Town that operates much like a mall operating agreement. This allowed anchors such as Crate and Barrel to internalize some of the external benefits that they create by being a draw. An advantage regional shopping malls have had over traditional downtowns is that mall operators can create lease structures such that anchors can recover benefits from the traffic they generate for other stores. This is why anchors pay lower rents than in-line stores. In general, local government subsidies to businesses are not wise, but subsidies for anchor department stores may be an exception. Ideally, governments will set up districts in which merchants whose traffic is driven by anchors will subsidize the anchors, but to get downtowns started, governments themselves might need to give the subsidy.
BP Spills Coffee
I get as frustrated as anyone when government performs poorly. But could we please stop the narrative that the private sector always does better?
Monday, 7 June 2010
How New Urbanist Jeff Speck would fit into the Bush Adminstration
My colleague Lisa Schweitzer points me to Jeff Speck's screed against those who would question some of the tenants of the New Urbanist movement. This line stands out in particular:
To this group [libertarians], which is quite skilled at mustering facts in support of its utterly counterintuitive claims, the only rebuttal is to revert to common sense and a single question: How, by any possible stretch of the imagination, could it be considered efficient, healthy, or even acceptable to have spent the better part of a society’s wealth constructing a national landscape in which most citizens require a one-ton, poison-belching prosthetic device to satisfy their daily needs? (Slap forehead and continue … )Yes, Jeff, let us ignore facts and respond to them with common sense. The most recent administration didn't like facts much, and clearly neither do you. If you don't like the evidence, just ignore it. Because we all know that like George W Bush, Duany knows all, and can't be bother with facts--such as the fact that people all over the world really, really like their cars.
Why do high income people feel so put upon?
A mystery to me is why households earning $250,000 per year seem to resent being called rich. This income is roughly five times the median US household income.
So it occurred to me that perhaps the marker basket upon which high earners spend has risen in price more rapidly than the CPI. So for fun (and only for fun--this is not a systematic price index), I looked at four items: income taxes, the price of a BMW 3-series, houses in Los Angeles, Santa Barbara and New York, and Harvard tuition, all going back to 1988.
It is hard to do an apples-to-apples comparison on taxes, but based on the NBER Taxsim Model, wage income for high earners is taxed at about the same level, and capital income is taxed less relative to 1988.
CPI has not quite doubled since then. While the BMW 3-series is not the same car as it was in 1988 (it is almost certainly better), its price has not quite doubled. House prices in the California are about 2.7 times higher than in 1988; in New York they are 2.2 times higher (these are MSAs--Malibu and Manhattan are probably different stories). Harvard tuition is three times higher.
People really notice how much they are paying for their houses and how much it costs to put their kids through school. So while I continue to think it is silly for people who earn five times the national median to feel anything other than extremely well off, it is possible that those right at the 250k level perceive their living standards to be no better than they were 20 years ago.
So it occurred to me that perhaps the marker basket upon which high earners spend has risen in price more rapidly than the CPI. So for fun (and only for fun--this is not a systematic price index), I looked at four items: income taxes, the price of a BMW 3-series, houses in Los Angeles, Santa Barbara and New York, and Harvard tuition, all going back to 1988.
It is hard to do an apples-to-apples comparison on taxes, but based on the NBER Taxsim Model, wage income for high earners is taxed at about the same level, and capital income is taxed less relative to 1988.
CPI has not quite doubled since then. While the BMW 3-series is not the same car as it was in 1988 (it is almost certainly better), its price has not quite doubled. House prices in the California are about 2.7 times higher than in 1988; in New York they are 2.2 times higher (these are MSAs--Malibu and Manhattan are probably different stories). Harvard tuition is three times higher.
People really notice how much they are paying for their houses and how much it costs to put their kids through school. So while I continue to think it is silly for people who earn five times the national median to feel anything other than extremely well off, it is possible that those right at the 250k level perceive their living standards to be no better than they were 20 years ago.
Saturday, 5 June 2010
Eminent domain
Real Estate Dictionary has concluded that eminent domain is a set of words that is commonly heard in media and has caused many lawsuits throughout the history of real estate. The important question that is asked by many or runs through the minds of the person watching the news is what is it and how does it effect me?
Eminent domain is a law that states that the certain entities can take a property from an owner for the greater good of the community. An example of eminent domain is a city having constant traffic and the city needs your property to extend the road from a one lane to a two lane road.
The other question is how is conducted. This rule is conducted by paying fair market value for the property. In other words if your home in fair market value is $80,000 they only have to give you $80,000. The issue that a lot of people have with this is some people spend $40,000 fixing there house up and it could be worth $120,000, meaning the homeowner basically gets the house stolen from them.
There are a couple of entities that can enforce this policy. They include utility companies, military, government, and railroads. The federal government states that each state in the united states has the authority to decide what justifies enforcement. This means that if missouri for example decides that a farm owner would be able to provide cheaper corn to the people and provide it faster if an extension was built. Missouri could realistically decide that the farmer has power under this law. This is an unlikely scenario but very possible under eminent domain. HOME
Eminent domain is a law that states that the certain entities can take a property from an owner for the greater good of the community. An example of eminent domain is a city having constant traffic and the city needs your property to extend the road from a one lane to a two lane road.
The other question is how is conducted. This rule is conducted by paying fair market value for the property. In other words if your home in fair market value is $80,000 they only have to give you $80,000. The issue that a lot of people have with this is some people spend $40,000 fixing there house up and it could be worth $120,000, meaning the homeowner basically gets the house stolen from them.
There are a couple of entities that can enforce this policy. They include utility companies, military, government, and railroads. The federal government states that each state in the united states has the authority to decide what justifies enforcement. This means that if missouri for example decides that a farm owner would be able to provide cheaper corn to the people and provide it faster if an extension was built. Missouri could realistically decide that the farmer has power under this law. This is an unlikely scenario but very possible under eminent domain. HOME
Thursday, 3 June 2010
privacy policy
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These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://realestate-encyclopedia.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://realestate-encyclopedia.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://realestate-encyclopedia.blogspot.com/ privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
If you require any more information or have any questions about our privacy policy, please feel free to contact us by email at clinton.muehlenbrock@yahoo.com.
At http://realestate-encyclopedia.blogspot.com/, the privacy of our visitors is of extreme importance to us. This privacy policy document outlines the types of personal information is received and collected by http://purchaseleaseoptionscontracts.blogspot.com and how it is used.
Log Files
Like many other Web sites, http://realestate-encyclopedia.blogspot.com/ makes use of log files. The information inside the log files includes internet protocol ( IP ) addresses, type of browser, Internet Service Provider ( ISP ), date/time stamp, referring/exit pages, and number of clicks to analyze trends, administer the site, track user’s movement around the site, and gather demographic information. IP addresses, and other such information are not linked to any information that is personally identifiable.
Cookies and Web Beacons
http://purchaseleaseoptionscontracts.blogspot.com does not use cookies.
DoubleClick DART Cookie
.:: Google, as a third party vendor, uses cookies to serve ads on http://realestate-encyclopedia.blogspot.com/
.:: Google's use of the DART cookie enables it to serve ads to users based on their visit to http://purchaseleaseoptionscontracts.blogspot.com and other sites on the Internet.
.:: Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy at the following URL - http://www.google.com/privacy_ads.html
Some of our advertising partners may use cookies and web beacons on our site. Our advertising partners include ....
Google Adsense
These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://realestate-encyclopedia.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://realestate-encyclopedia.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://realestate-encyclopedia.blogspot.com/ privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
No money down real estate investment
No money down real estate investing is complex. Throughout the history of real estate, the desire to get rich quick without risking your own financial security is the big question. Every night on many television stations there are many people who advertise how easy it is to make money in real estate without spending money. They offer you the key to financial freedom for 3 monthly payments of $19.99. Every single night people call the 1-800 numbers at the bottom of the screen and purchase the plan failing to realize they just spent money to figure out a way to invest without spending money. The unfortunate fact is that yes there are ways to invest in real estate without spending money, but spending giving 3 payments of $19.99 is not the way. The following is a step by step way to invest without throwing away money on advertising gimmicks.
The first step to investing in real estate is doing your homework. If you are interested in making money in real estate the first thing you have to understand is the real estate market. Without solid research of market trends and the individual property, it will not matter if you pay $1 for a piece of real estate, you will lose money. Here is a list of items that must be considered before you put into effect any no money real estate ideas:
Research a 10 year statistic of the area. Researching the area to find out the crime rate, and property values for the last 10 years will give you the investor an idea as to whether it is smart to invest within that region. If home prices keep dropping and crime keeps rising, the beautiful area is not worth it because this is what potential home owners look at when deciding whether to buy.
After you find an area that passes the 10 year statistics test, the real fun begins. Locating and inspecting properties. The second step is the most vital step in investing.
2. Are there liens on the property (companies or government assigning debt to the property)? This is important because if a lien of $20,000 in unpaid taxes is attached to the property, the debt will become yours when you take possession of the title. If this happens you will not close on the property and if you pay cash nobody will buy it from you due to lack of clear title.
3. Is the property damaged? It is important to understand that a property may look like a good investment but under the beautiful surface may be a defect that can bankrupt the beginning investor. Plumbing leaks, damaged roof, and crumbling foundation
are just a few of many items that can destroy the unprepared investor.
Once you have done your research and found a property that passes the test of the three areas above, it is possible to invest with no money down. A simple reality that get rich quick advertisers and potential investors fail to mention and realize is that without the ability to sell a deal, there will never be a deal. An individual must be able to convince someone that they should trust you to sell the home or turn over rights to the property.
If you have read this article thus far and feel you have done your homework and you can sell a deal, the rest of this article will give you the keys making money, it is up to you to sell the deal.
The one true way to make money from real estate investing using little or no money is by using the option technique. An option is a contract between the owner and the investor granting the sole right of sale to the investor. This may sound confusing but it is fairly simple. The following is a scenario of how it is used.
Investor tom finds a property that is worth about 60% of the value it should be due to cosmetic problems. Investor Tom asks owner Bill if he is interested in selling his house. Bill says yes I want to sell my house. Investor Tom says great, I lack the ability to purchase the home right now but I will be able to purchase the home within a year. Tom asks bill to sign an option to purchase the home for an arranged sum of money to serve as the purchase price of the option.
Once Tom has secured the option to purchase the home he has one year to find someone who will buy the option from him or try to sell the home himself.
While it is possible to make money investing in real estate using an option, you have to be a salesperson to convince the owner to take the home off of the market for a year while you secure financing.
It is important to understand that nothing in this world is free but things can be cheap. Offering the owner $500.00 for a one year option to buy with right of access and an equity position is a realistic way to approach options. What this means is that the investor and seller agree to the option and the seller grants the investor the right to remodel the house and sell the home for an arranged price plus 25% of the equity gained by remodeling the house. For example say the house could be worth 150,000 once it is remodeled, and it will cost $3,000 to remodel. The investor agrees to let you sell the house for $100,000 and 25% of the equity. This deal would cost the investor $3,500 which is the remodeling and the option price combined. The house then sells for $150,000 having a total equity of $50,000. After deducting the $3,500 dollars from the equity the investor is left with $46,500 to be split between the owner and the investor.
There are other methods being offered to buy houses with no money such as lease options but you must understand that either the investor will be paying that rent or the investor will be finding someone to rent the house. Before you consider that to be a great idea ask yourself two questions:
Is paying rent spending money? What if you do not find a renter?
While it is possible to invest in real estate using no money, it is not likely and will require a investor with superb sales ability. A realistic way to approach investing is to think in terms of little money down instead of no money down because nothing in the world is free but things can be cheap. Here is a site with another informational article on how to invest in real estate without money http://www.helium.com/items/1831420-no-money-down-real-estate
The first step to investing in real estate is doing your homework. If you are interested in making money in real estate the first thing you have to understand is the real estate market. Without solid research of market trends and the individual property, it will not matter if you pay $1 for a piece of real estate, you will lose money. Here is a list of items that must be considered before you put into effect any no money real estate ideas:
Research a 10 year statistic of the area. Researching the area to find out the crime rate, and property values for the last 10 years will give you the investor an idea as to whether it is smart to invest within that region. If home prices keep dropping and crime keeps rising, the beautiful area is not worth it because this is what potential home owners look at when deciding whether to buy.
After you find an area that passes the 10 year statistics test, the real fun begins. Locating and inspecting properties. The second step is the most vital step in investing.
2. Are there liens on the property (companies or government assigning debt to the property)? This is important because if a lien of $20,000 in unpaid taxes is attached to the property, the debt will become yours when you take possession of the title. If this happens you will not close on the property and if you pay cash nobody will buy it from you due to lack of clear title.
3. Is the property damaged? It is important to understand that a property may look like a good investment but under the beautiful surface may be a defect that can bankrupt the beginning investor. Plumbing leaks, damaged roof, and crumbling foundation
are just a few of many items that can destroy the unprepared investor.
Once you have done your research and found a property that passes the test of the three areas above, it is possible to invest with no money down. A simple reality that get rich quick advertisers and potential investors fail to mention and realize is that without the ability to sell a deal, there will never be a deal. An individual must be able to convince someone that they should trust you to sell the home or turn over rights to the property.
If you have read this article thus far and feel you have done your homework and you can sell a deal, the rest of this article will give you the keys making money, it is up to you to sell the deal.
The one true way to make money from real estate investing using little or no money is by using the option technique. An option is a contract between the owner and the investor granting the sole right of sale to the investor. This may sound confusing but it is fairly simple. The following is a scenario of how it is used.
Investor tom finds a property that is worth about 60% of the value it should be due to cosmetic problems. Investor Tom asks owner Bill if he is interested in selling his house. Bill says yes I want to sell my house. Investor Tom says great, I lack the ability to purchase the home right now but I will be able to purchase the home within a year. Tom asks bill to sign an option to purchase the home for an arranged sum of money to serve as the purchase price of the option.
Once Tom has secured the option to purchase the home he has one year to find someone who will buy the option from him or try to sell the home himself.
While it is possible to make money investing in real estate using an option, you have to be a salesperson to convince the owner to take the home off of the market for a year while you secure financing.
It is important to understand that nothing in this world is free but things can be cheap. Offering the owner $500.00 for a one year option to buy with right of access and an equity position is a realistic way to approach options. What this means is that the investor and seller agree to the option and the seller grants the investor the right to remodel the house and sell the home for an arranged price plus 25% of the equity gained by remodeling the house. For example say the house could be worth 150,000 once it is remodeled, and it will cost $3,000 to remodel. The investor agrees to let you sell the house for $100,000 and 25% of the equity. This deal would cost the investor $3,500 which is the remodeling and the option price combined. The house then sells for $150,000 having a total equity of $50,000. After deducting the $3,500 dollars from the equity the investor is left with $46,500 to be split between the owner and the investor.
There are other methods being offered to buy houses with no money such as lease options but you must understand that either the investor will be paying that rent or the investor will be finding someone to rent the house. Before you consider that to be a great idea ask yourself two questions:
Is paying rent spending money? What if you do not find a renter?
While it is possible to invest in real estate using no money, it is not likely and will require a investor with superb sales ability. A realistic way to approach investing is to think in terms of little money down instead of no money down because nothing in the world is free but things can be cheap. Here is a site with another informational article on how to invest in real estate without money http://www.helium.com/items/1831420-no-money-down-real-estate
Tuesday, 1 June 2010
Finding Affordable Homes
Real Estate Dictionary has identified how to find affordable Real Estate even though it appears impossible to a significant number of people. The reality of purchasing an affordable home is that it is very simple. There are literally hundreds of ways to find discounted Real Estate. The following are the most common identified by the Real Estate Dictionary:
1. Cosmetically injured.
2. Bank owned.
3. Wholesale.
The first way to find an affordable piece of Real estate is to search for a property that is cosmetically injured. Cosmetically injured is a property that appears to be a property in bad condition. These are properties that need paint, carpet, cabinet refinishing, new appliances, and updated fixtures. Each one of these items can reduce the price of a home when it comes to appraisal. The fact is that most homebuyer’s lack the imagination to see what a home could look like fixed up. It is possible to find homes like this for up to 50% below market value. Purchasing one of these properties and spending a couple thousand dollars is your first way of obtaining the dream home at a decent price.
The second way to find affordable Real Estate at a decent price is to look for bank owned property. Bank owned properties are those that the bank foreclosed on the owner due to lack of payment. The reason it is wise to search for this type of property is because the bank simply wants he amount owed. What this means is that if someone purchased a home for $200,000 in 1990, the amount left on the mortgage is going to be significantly lower. The following is an example without interest being computed:
$200,000 (Original purchase price.)
-$133,000 (Total paid by original owner over 20 years.)
________________________________________________
$67,000 (Amount the bank wants for the property.)
As you can see from the equation above, the potential for the dream home and the dream price is very real and there are literally thousands of them on the market. The only challenge of getting a property like this is finding them. Generally you will not find these on the regular Real Estate market because many banks fear it will scare potential borrowers. The way to these homes is to get a realtor that specialized in bank owned property.
The third way to find the dream home for a great price is to purchase the property wholesale. Whole sales Real Estate are homes that are purchased by an individual who specializes in being a middleman in Real Estate transactions. Generally these homes are purchased for 60% of the market value or less. The whole sale specialist then looks for an investor who is wiling to purchase the home for a couple thousand dollars more then what they paid for it. Once again these homes are cosmetic homes and the only difference is that the home search has been completed for you.
In order to find whole sale properties you have to find he whole sale specialist. Whole sale specialists can be found two different ways. The first way is by doing a simple web search, just look up whole sale real estate. The second way to find whole sale specialists is to search the classified listings on your local newspaper.
There are literally hundreds of ways to find discounted Real Estate. Using the three methods listed in this article will open up new doors to having the dream home. Finding a discounted home is simple, it takes research, ability to imagine a damaged home being beautiful, and persistence. Do not give up your future home is out there, just go find it. Real Estate Dictionary home.
1. Cosmetically injured.
2. Bank owned.
3. Wholesale.
The first way to find an affordable piece of Real estate is to search for a property that is cosmetically injured. Cosmetically injured is a property that appears to be a property in bad condition. These are properties that need paint, carpet, cabinet refinishing, new appliances, and updated fixtures. Each one of these items can reduce the price of a home when it comes to appraisal. The fact is that most homebuyer’s lack the imagination to see what a home could look like fixed up. It is possible to find homes like this for up to 50% below market value. Purchasing one of these properties and spending a couple thousand dollars is your first way of obtaining the dream home at a decent price.
The second way to find affordable Real Estate at a decent price is to look for bank owned property. Bank owned properties are those that the bank foreclosed on the owner due to lack of payment. The reason it is wise to search for this type of property is because the bank simply wants he amount owed. What this means is that if someone purchased a home for $200,000 in 1990, the amount left on the mortgage is going to be significantly lower. The following is an example without interest being computed:
$200,000 (Original purchase price.)
-$133,000 (Total paid by original owner over 20 years.)
________________________________________________
$67,000 (Amount the bank wants for the property.)
As you can see from the equation above, the potential for the dream home and the dream price is very real and there are literally thousands of them on the market. The only challenge of getting a property like this is finding them. Generally you will not find these on the regular Real Estate market because many banks fear it will scare potential borrowers. The way to these homes is to get a realtor that specialized in bank owned property.
The third way to find the dream home for a great price is to purchase the property wholesale. Whole sales Real Estate are homes that are purchased by an individual who specializes in being a middleman in Real Estate transactions. Generally these homes are purchased for 60% of the market value or less. The whole sale specialist then looks for an investor who is wiling to purchase the home for a couple thousand dollars more then what they paid for it. Once again these homes are cosmetic homes and the only difference is that the home search has been completed for you.
In order to find whole sale properties you have to find he whole sale specialist. Whole sale specialists can be found two different ways. The first way is by doing a simple web search, just look up whole sale real estate. The second way to find whole sale specialists is to search the classified listings on your local newspaper.
There are literally hundreds of ways to find discounted Real Estate. Using the three methods listed in this article will open up new doors to having the dream home. Finding a discounted home is simple, it takes research, ability to imagine a damaged home being beautiful, and persistence. Do not give up your future home is out there, just go find it. Real Estate Dictionary home.
When does a regulatory taking become a physical taking?
Slate has a piece today on Jay Bybee's 9th circuit opinion that rent control is per se unconstitutional. The reporters argue that the opinion is silly--that the courts have long upheld the right of municipalities to regulate land use (Euclid v Ambler being the iconic case that enshrined the rights of communities to zone). But the Supremes have also maintained that when a regulation deprives owners of property of all economic value, it consitutes a taking under the 5th amendment and thus is either impermissible or must be accompanied by compensation to the property owner (Lucas vs South Carolina Coastal Commission).
It is pretty clear that rent control (something that I dislike based on both equity and efficiency grounds) is consistent with the ability of communities to regulate property for a public purpose. On the other hand, if rent control were set at zero, then it us pretty clear that it would amount to a regulatory taking. The question is the level at which rent control would require a taking. For instance, if cities told landlords that they had to cut their rents by 50 percent, I think one could make a pretty good case that the takings rule would apply. But this is a legal issue and not an economic one--I am not sure whether one could draw a bright line at which a regulation consistutes a taking.
It is pretty clear that rent control (something that I dislike based on both equity and efficiency grounds) is consistent with the ability of communities to regulate property for a public purpose. On the other hand, if rent control were set at zero, then it us pretty clear that it would amount to a regulatory taking. The question is the level at which rent control would require a taking. For instance, if cities told landlords that they had to cut their rents by 50 percent, I think one could make a pretty good case that the takings rule would apply. But this is a legal issue and not an economic one--I am not sure whether one could draw a bright line at which a regulation consistutes a taking.
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