Higher Taxes May be Triggered by Flipping Properties
Investors that buy and sell (flip or churn) properties may find that a sizable chunk of their profits go to the Internal Revenue Service. Many investors are confused by the 1997 roll-over provision that allows property owners to sell their personal homes tax-free in many cases. This does not apply to properties that were bought as investments. In addition, holding the property for less than a year means that the seller will pay capital gains tax a higher rate than a long-term investor will. Capital gains tax maxes out at 15 percent for long-term investors. Some investors may make profits by rapidly flipping properties, however, when too many properties are flipped within a short amount of time, the IRS may consider property churning a business (real estate dealer) instead of an investment. If the IRS believes that the investor-seller is actually a dealer, then he/she can be subject to the regular income taxes plus perhaps another 15.3 percent for being self-employed. For real estate investors taxes can be postponed by using the like-kind exchange for another investment property. However, when the property in the exchange is finally sold, then the investor will owe taxes. There are two key areas to reduce tax liability for investment properties. First, hold on to properties for longer periods of time. Long-term investments are taxed at a lower rate. Second, keep good records of property-related expenses in order to deduct them. It is important to have organized, written records in the event of an audit.
Information courtesy of Bankrate.com, January 2006

San Diego Rated As Top Spot for Real Estate Investors
Demand for residential and commercial space coupled with its shortage has made San Diego America's top location for real estate investment in 2006 according to the Urban Land Institute. It is believed that research and development facilities will propel the industrial sector. The scarcity of available land will continue to push developers towards redevelopment in the retail sector rather than new buildings. San Diego is also a top prospect for new home development. Many tracts of land originally intended for apartments are being re-priced as condos. More high-density housing is expected to be built. The report also predicts that the demand for rental housing will be insatiable.
Information courtesy of the San Diego Daily Transcript, November 22, 2005

Areas to Save $$$ on Energy
Here is a list of ways to save money on energy costs when replacing appliances and fixtures in a home:

• Buy energy-efficient appliances. Although they cost more upfront, in the long run consumers come out ahead with reduced energy bills. In addition, there are energy efficient mortgages, tax breaks from state and federal governments and some utility companies offer rebates. Look for comparison information on the tags.
• Use compact florescent bulbs (CFB) instead or conventional incandescent lighting. CFBs cut energy costs in half and last ten times longer than standard bulbs. The bulbs are smaller, cheaper and brighter than they once were and offer improved color quality.
• When the water heater is replaced, buy a higher-efficiency model. These use 10 to 50 percent less energy. Check the thermostat on your current model. It should be set no higher than 120 Fahrenheit.
• Use energy efficient heating and cooling devices and make sure that all heating and cooling ducts are properly insulated.

San Diego Shifts to a Normal Market
The days are past when a seller might expect a bidding war from buyers eager to get in the market. There are signs that the market is shifting towards a normal give and take between motivated parties. These include:

• Home appreciation has been running below the 10 percent mark since May 2004. Last November, it was up 6.4% - a major change since October 2004 when year-over-year appreciation was at its peak of 26.4 percent.
• The number of listings countywide has nearly doubled from its low of 7,818 in March 2000 to 15,019 in November.
• The time it takes to sell a listing has more than doubled from 22 days in June 2004 to 59 days in November.

Creative Loans Leave Some Homeowners Ready to Rent
Rising interest rates on adjustable-rate mortgages (ARMs) have left some overly-leveraged homeowners looking to sell. Some recent buyers are beginning to realize that they have taken on too much debt. Many buyers that have ARMs took a gamble that their incomes would increase or their home prices would continue to dramatically appreciate. When the market slows and interest rates rise, these homeowners, particularly if they have no equity in the home, may be looking to get out.

There are a variety of "creative loans" that attract potential homeowners in high-cost markets. Though helpful to "get in" such mortgage holders may build up little or no equity in their homes. Some types include ARMs, interest-only loans and piggy-back loans. These loans can leave owners with a tough "monthly nut" once the honeymoon period of the loan is over. These conditions can create cautions or even a negative attitude about jumping into homeownership. Housing experts believe that would-be homeowners will continue to rent a bit longer.
Information courtesy of the San Diego Union-Tribune, January 1, 2006

S.D. Apartment Sales Slow
Apartment complexes may be the first of San Diego real estate sectors to experience a market correction. The number of sales for apartments has declined for the third straight quarter and year-to-date sales are the lowest since 1996. The slowdown in sales is not necessarily a precursor to an overall correction in the housing market according to real estate experts. While there is some slowing in other real estate sectors, agents say that this is normal after a period of frenzy that resulted in double-digit annual increases in home values. The key reason why apartment communities sold well was condo conversions. Currently, it is oversaturated in some markets which has slowed sales of apartment complexes for conversion. Although developers are still buying complexes, they are becoming more selective due to increased competition for sales. Many apartment sellers have increase prices to the point where buyers cannot justify purchasing, because market rents will not support the mortgage payments. The average two-bedroom apartment rents for $1,058 - up three percent from last year. Eventually sales prices are expected to come down due to lack of demand.
Information courtesy of the San Diego Union-Tribune, November 3, 2005.

Most Expensive Markets To Buy A Four-Bedroom Home
According to Coldwell Banker, La Jolla is the most expensive market to buy a four-bedroom, 2,200 square-foot home in. Nine of the top ten markets were in California. Here are the ten most expensive markets to buy a home:

1. La Jolla, CA	$1,875,000
2. Santa Monica, CA	$1,766,666
3. Beverly Hills, CA	$1,656,500
4. Santa Barbara, CA	$1,603,750
5. Palo Alto, CA	$1,550,000
6. Newport Beach, CA	$1,499,000
7. San Mateo, CA	$1,334,425
8. San Francisco, CA	$1,300,000
9. San Jose, CA	$1,272,625
10. Greenwich, CT	$1,267,500

Current vs. Proposed Tax Breaks for Homeowners
Here is a breakdown of how things might change if President Bush's bi-partisan tax panel's recommendations that lawmakers reduce the mortgage tax break for homeowners. The nine-member panel suggested the following reforms:

• Lowering the amount of mortgage loan that homeowners will receive a tax-break for interest paid to an amount between $227,000 and $412,000.
• Converting the mortgage-interest deduction to a tax credit equal to 15 percent of the interest paid up to the mortgage-interest cap.
• Eliminating the deduction for interest paid on second homes and home-equity loans.
• Lengthening the time taxpayers must own a principal residence before any gains from selling are tax free.

Free Government Publications
Looking for a little free advice? Try asking Uncle Sam. The U.S. Government has many publications available free or for a nominal charge on subjects covering everything from mortgages and insurance to moving to fraud and consumer protection to your rights. These titles can be ordered through the General Services Administration's Federal Citizen Information Center (FCIC), either via the Internet at www.pueblo.gsa.gov, or by calling (888) 8-PUEBLO. FCIC releases a quarterly catalogue of its available resources. You can either download the information to your computer or printer or it can be ordered.
Information courtesy of the San Diego Union Tribune, November 8, 2005.

"Affordable Housing" Being Offered to Middle-Class
In many areas the "hot" housing market has become increasingly unfriendly to middle-income, first-time homebuyers. Known as inclusionary, low-cost or workforce housing these homes are priced for those earning 80-120 percent of the area's median income. These affordable home buying programs are designed to keep key workers such as civil servants, law enforcement, firefighters, nurses and teachers living in the communities they work in - particularly in areas where only the wealthiest can afford to buy a home. These price breaks are achieved mostly cost-cutting strategies such as zoning changes for developers, providing land at reduced cost, expediting approvals and allowing the construction of larger more expensive homes elsewhere. Special lending programs are also used and more rarely, direct subsidies.
Information courtesy of the San Diego Union-Tribune, October 25, 2005.

Nationwide Demographic Trends Affecting the Housing Market
Although housing markets are mostly locally driven, here are five nation-wide housing trends to watch:

• The Baby Boomers - This group (76 million people) is in the market for second homes. In addition, boomers are moving to "active adult communities" for those who are 55 and older, but not ready to retire.
• Minorities - Minorities are making economic progress (more are joining the middle class) and more are in a position to become homeowners.
• Immigrants - One million immigrants arrive in the U.S. each year. Household growth is expected to accelerate over the next ten years due to immigration and it is expected that immigration will account for one-third of household growth. Second-generation immigrants are expected to out-earn their parents, fueling housing growth for the next two decades.
• Single Females - According to the National Association of Realtors, single women purchased one-fifth of all homes in 2004. Single females are expected to be a source of increased housing demand over the next decade.
• Echo Boomers - This large demographic group aged 11 to 28 is expected to have a profound effect on the U.S. economy as they find jobs and purchase homes.

Growing Disparity Between Housing Prices & Wages
The median home price rose 20 percent while wages for key community workers remained stagnant during that last year and a half according to the Center for Housing Policy. The report, "Paycheck to Paycheck: Wages and the Cost of Housing in America" found that the cost of a median-priced home increased from $186,000 to $225,000 while the annual income needed to purchase a home grew from $54,855 to $71,354 or about 30 percent. Wages for key community workers such as elementary school teachers, police officers, licensed practical nurses, retail salespersons and janitors remained flat in the majority if U.S. cities and remains significantly below the amount need to purchase a home in some metropolitan areas. The report compared data for homeownership and rental affordability findings with median community wages for nearly 200 metropolitan areas and more than 60 occupations. The report found that based on median income that retail salespersons and janitors must pay an excessive proportion of their income in order to rent a one-or-two bedroom apartment. While most reports focus on the Northeastern and Western markets, "Paycheck to Paycheck," found that the growing disparity between wages and home prices is a nationwide trend.
Information courtesy of Novogradic & Company, LLP, October 2005.

What's in a Name?
"Bubble" has become a common term when describing the real estate market conditions; however, the meaning attached to the term can vary from positive to negative and can have connotations ranging from catastrophic to a gradual slowing of the market. Defining whether there is a "bubble" is complicated, not only because of linguistic confusion where everyone seems to define "bubble" to fit their own agendas, but also because real estate is less volatile than other commodities that have experienced "bubble" conditions. People do not trade real estate as frequently as stocks and real estate tends to face slow declines in value rather than the sharp, sudden drops experienced by stocks. The last decrease during the late 80s and early 90s rebounded by 2000. The data is contradictory - housing starts are up, but so is the number of existing homes for sale as is the time is takes to sell a home. Taken as a whole, data indicates that the hottest housing markets are cooling off, but whether it is a gradual slowing or a more serious drop remains to be seen.
Information courtesy of Corcoran.com, October 2005.

HOA's Power Limited Under New CA Legislation
Three new bills in California offering consumer protections to homeowners from homeowner's associations were signed into law by Governor Schwarzenegger. The new laws limit the power of HOAs by requiring the use of secret ballots when electing board members and imposing levy increases; prohibit foreclosing on a property when a homeowner owes less than $1,800 in assessments and gives members the right to view financial and other important records of an HOA. The first law stemmed from complaints that some associations require identification in elections which has led to lobbying and intimidation by some board members. The second law was created after a Calaveras County couple's $300,000 home was foreclosed over a $120 bill.
Information courtesy of the San Diego Union-Tribune, October 10, 2005.

CA Experts Predict Slower Housing Market for 2006
The chief economist for the California Association of Realtors predicted slowing sales and price increases for 2006. This "soft landing" as opposed to the "burst bubble" is predicted because although many Californians are priced out of the housing market, housing still remains in short supply. Price increases are expected at a healthier 10 percent. The prediction was for the entire state as opposed to regional markets. San Diego's cooling trend began last year. In August, prices were only 2.1 percent higher than the previous year. The cooling trend in San Diego may soon spread to other regions.
Information courtesy of the San Diego Union-Tribune.

CA Electronic Parcel Maps Are Public Domain
Electronic parcel boundary maps maintained by county assessors are public records and must be provided for minimal copying fees according to an opinion released Attorney General Bill Lockyer. Under California law, government documents kept in electronic formats have the same disclosure requirements as traditional paper documents, but the legislation was confusing causing many counties to charge excessive copying fees for electronic fees for maps. A minimal copying fee is defined as being no more than the direct costs for the maps.
Information courtesy of the San Diego Union-Tribune, October 25, 2005.

Signs of a Predatory Lender
According to the Florida Department Banking and Finance, consumers shopping for home loans (buying or refinance) should watch for the following warning signs to avoid a predatory lender:

• Excessively high interest rates and hidden, inflated fees
• "Bait and switch" tactics where a broker/lender initially offers one set of terms, then pressures the buyer into signing another contract with more expensive terms and hidden fees.
• Loans from door-to-door salesmen or home equity loans related to unsolicited home improvement contracts.
• "No-income, no-credit loans, no-problem loans" that offer to qualify the borrower based on home equity.
• Never sign a note, mortgage or other legal document with blank spaces that can be filled in at a later date.

San Diego Apartment Market Good for Owners
Apartment owners are able to "realize gains in revenue" as vacancy rates are dropping due to condo conversions and a lack of inventory being built. Condos, which usually cost about $200,000 less than a house, are considered entry-level housing; however most renters at apartment communities undergoing conversion are unable to afford to buy. According to the report by Marcus & Millichap, the number of apartments that have been built or will be opened in 2005 is down and although another 6,000 are planned many of these will be switched to condos prior to completion. Condo developers are able to pay more for land because of returns from the sale, which prices many apartment developers out of the market. The regional vacancy rate is expected to drop to 3.5 percent this year. The real estate industry considers a 5 percent vacancy rate to be a balanced market. Mira Mesa and Mission Valley have been the most active areas for removal of apartment stock. The decreasing vacancy levels mean that every submarket in the region has been able to increase rents from 1 to 6.5 percent over the past 12 months.
Information courtesy of the San Diego Daily Transcript, September 8, 2005.

Legislation to Keep 60-Day Notice Rule Defeated
The 60-day notice of termination requirement for month-to-month tenancies will be repealed effective January 1, 2006. Residential owners and property managers will be allowed to give 30-day notice to terminate to their month-to-month residents (unless the property is rent-controlled or subsidized). The 60-day rule was originally enacted in 2002 as a pilot project to help tenants who purportedly needed more time than the allotted 30 days to make new housing arrangements in the tight rental market. However the California Association of Realtors opposed the 60-day notice because it made it difficult to evict problem tenants. Many owners preferred to serve the 30-day notice instead of the 3-day notice to perform or quit which often required litigation over issues such as noise, nuisance or illegal activities by the tenant. The 60-day notice places an undue burden on the owners, property managers and other residents in the building.
Information courtesy of the California Association of Realtors, September 19 2005.

Renting Preferable in Some Markets
Approximately, 30 percent of the U.S. population rents. Not everyone who rents does so because they can't afford to buy. Renting a home is generally costs less per month than buying. Some, who believe that the real estate market may be shaky, choose to invest money in other areas. Others in particularly hot housing markets have found that the asking price is actually a starting price when bidding wars tend to drive up prices significantly. In many cases, the price to buy has climbed so significantly, that people find they have a better standard of living as renters. They can afford to rent (live) in a home that they would be unable to buy. Rents tend to lag behind the cost to buy (monthly mortgage rates) making renting - even in more expensive areas - a relative "bargain."
Information courtesy of Forbes Magazine, September 19, 2005

The Most Expensive Rental Markets
According to Forbes Magazine, these are the most expensive rental markets by square foot (note: the national average is $14.53 per square foot):

Rank	Market	Class A*	Class B**
1	New York, New York	$26.04	$17.19
2	Boston, Massachusetts	$24.33	$16.88
3	Honolulu, Hawaii	$23.27	$16.54
4	San Francisco, California	$22.48	$18.33
5	Northern New Jersey	$22.36	$15.16
6	Stamford, Connecticut	$21.76	$13.87
7	Nassau-Suffolk, New York	$21.05	$15.65
8	Los Angeles, California	$20.34	$16.89
9	San Jose, California	$20.23	$15.99
10	Orange County, California	$19.54	$16.53
11	San Diego, California	$19.19	$14.32
12	Oakland, California	$17.66	$16.06
13	Washington, D.C.	$17.54	$14.34
14	Central New Jersey	$16.54	$13.57
15	Philadelphia, Pennsylvania	$15.40	$11.30
16	Riverside-San Bernardino, California	$14.81	$12.35
17	Baltimore, Maryland	$13.91	$11.25
18	Chicago, Illinois	$13.57	$10.26
19	Miami, Florida	$13.49	$10.20
20	Sacramento, California	$13.16	$10.45

* These are very high-quality buildings that are beautifully maintained and managed.
** Not the best buildings, but decently maintained and managed.
Note: Many of these markets include surrounding areas and/or counties.

San Diego on List of Most Expensive Rental Markets
A recently, released list of most expensive rental markets ranked San Diego as the eleventh on the Forbes list of most expensive rental markets in the United States. A high-quality building that is beautifully maintained and managed rented for $19.19 per square foot (the national average is $14.53 per square foot). An average decently maintained and managed building rented for $14.32 per square foot. According to 2004 data from the U.S. census bureau, 44% of the population in San Diego rents.

Many Renters Without Pets Would Keep Them if Allowed to
A recent study showed that 35% of renters without pets would keep them if their rental housing permitted animals. The study by the National Council of Pet Population and study also confirmed what many animal shelter workers have known for years - cat and dog owners often relinquish pets because their landlord does not allow pets. According to the study, if all rental housing permitted pets, 6.5 million animals could be placed with new owners.
Information courtesy of the Delta Society, August 30, 2005.

Study Says It's Unlikely that a Bust Will Follow Housing Boom
Doomsday investors shouldn't hold their breath. A recent study found that a "bust" rarely follows a "boom" housing market. The study by the Federal Deposit Insurance Corp. analyzed housing trends in 54 markets in 46 areas between 1978 and 1998 that had enjoyed booms and 21 markets that had suffered busts. By examining the data experts noted that housing busts very rarely followed booms. What was far more likely was a period of stagnation that allowed incomes to catch up with home prices. What usually causes local housing markets to collapse? Usually it's a severe local recession that cause people to move away to find jobs causing home prices tank because there are far more homes on the market than buyers. Researchers caution however, that this may be an imperfect guide to the current situation. The nationwide housing boom is unprecedented and in addition there is an unusually high percentage of buyers with subprime mortgages (10% of all outstanding mortgage loans). In addition, it has also become more common to borrow more than 80 percent of the home's purchase price often using multiple loans.
Information courtesy of the San Diego Union-Tribune, September 7, 2005.

First-Time Buyers May Affect Housing Market
Home sales are predicted to soften in the third quarter due to first-time home buyers being increasingly unable to afford a home, according to a Merrill Lynch analyst. According to David Rosenberg's research, "the housing market has become so stretched that the affordability ratio for first-time buyers, the folks who drive the incremental demand in the real estate sector, has deteriorated to levels last seen in the third quarter of 1989." He said that there was an unprecedented gap between the increase in the cost of the average starter home (14 percent) and the increase in income for the average first-time buyer family (4 percent). This has lead to an increase in the number of new homes on the market. Although some analysts are concerned about a nationwide bubble, most experts believe that local market conditions will have more to do with whether there is a decline in home prices.
Information courtesy of the San Diego Union-Tribune, August 30, 2005.

Housing Market
The American dream of owning a home is becoming out of reach for many lower and middle income workers, such as teachers, firefighters, police officers and other community workers, a new study found. According to the Center for Housing Policy, home prices increased 20 percent over the last 18 months, while wages stayed flat or increased only slightly. The least affordable places were San Francisco, Orange County, New York and Boston. San Diego ranked 10th on the list. Twenty-one of the top 50 least affordable markets were in California. Some of the most affordable markets are located in the Midwest, although some traditionally affordable markets in that region such as Tulsa and Minneapolis are becoming a concern. Real estate experts point out that first time homeowners, especially in markets such as San Diego, rarely purchase a median-priced single-family home. Instead, they tend to opt for lower-priced options such as condominiums as starter homes. On the rental side, fair market rent for a one-bedroom in San Diego is $975 and $1,183 for a two-bedroom apartment in San Diego. A renter would need to earn $18.75 or $22.75 per hour respectively to afford those rents. Less than a third of those surveyed made enough to afford a one-bedroom apartment on their own, only 10 percent earn enough for a two-bedroom.
Information courtesy of the San Diego Union-Tribune August 14, 2005.

No Countrywide Ruling Against Mortgage Mark-ups
When it comes to those extra mortgage fee hikes, consumers may be out of luck depending upon which state they live in. That's because although HUD regulations do not allow the markup of mortgage fees - particularly when no actual extra service has been performed - enforcement is entirely dependant on the ruling of the federal appellate court over individual states. This means that although it is illegal to charge $65 dollars for a $3 credit check fee that was performed entirely electronically in Florida, consumers in Wisconsin are out of luck. Currently, this is the breakdown of states where unlimited mortgage markups are legal and illegal based on federal appellate court rulings:

• Legal - Maryland, Virginia, North and South Carolina, West Virginia, Illinois, Iowa, Wisconsin, Indiana, Minnesota, Missouri, Arkansas, Nebraska and North and South Dakota.
• Illegal - Florida, Georgia, Alabama, New York, Connecticut, Vermont, Pennsylvania, New Jersey and Delaware.
• Legal Limbo - All other states not listed above have had no federal appellate court decisions regarding this issue.

Be Careful What You Tell Your Insurer
Insurance companies are increasingly using the Comprehensive Loss Underwriting Exchange (CLUE) to decide whether to drop or deny coverage to homeowners. CLUE was initially used to detect fraud and find consumers with a history of numerous claims, however, recently insurance companies have become more aggressive about using is to "weed out" homes with damages that could create risks in the future. This means that if a consumer tells his/her insurance company about water damage - even if no claim is filed - that the insured could be dropped or denied future coverage with another company. Water damage is seen as a risk factor for mold claims which have proved costly to insurance companies, particularly in California and Texas. Consumers have found that some inquiries about damage or claims filed have made it particularly difficult to get insurance in the future or occasionally have even jeopardized the sale of a home. Although it is not a common circumstance, home buyers have been known to "back out" after they discover that it is difficult or unusually expensive to get coverage on a home that has had water damage. MSN Money offers five tips for homeowners when it comes to protecting themselves from insurer's overreactions:

• Keep your home in good repair.
• Keep your deductible high and pay for smaller expenses out of pocket.
• Think twice about reporting water damage - particularly if you plan to sell within a few years (five or fewer).
• Don't tell your insurer about a problem unless you're sure you'll file a claim.
• Get a copy of your CLUE report. It's free if you've been denied coverage or costs $9 otherwise.

August Prime Month for Burglaries
The month of August is a prime month for burglars with many homes left vacant by their vacationing owners. Here are some tips from the Home Safety Council for locking things down when you leave town:

• Make sure outside doors are hinged from the inside and place bars in the tracks of sliding doors.
• Make sure all door and window locks are working. Replace broken locks.
• Purchase several different light timers so that lights go on and off at different times. Check bulbs and wiring of the lights attached to timers.
• Install motion detector lights outside. Point the lights towards doors and windows.
• Cover windows so that no one can look inside.
• Remove keys that are hidden outside. Give a key to a trusted friend or family member and have them check up on things while you are away both inside and outside the house.
• Do yard work before leaving. Have tree limbs trimmed away from windows. Prune hedges so that an intruder could not hide behind them. Arrange for someone to mow the lawn.
• Get the post office to hold your mail and stop delivery on your newspaper or have someone pick it up.
• Give your home the appearance that someone is always there. Consider having a trusted neighbor park his/her car in the driveway while you're away.
• Never tell callers that you are out of town on your answering machine message.
• Leave emergency contact information with a friend or family member.

San Diego Left Off of List of "Treacherous Housing Markets"
San Diego was not included in the 13-member list of the nation's "most treacherous housing markets" by the Kiplinger's Personal Finance's August edition. Three other major metropolitan areas in the state, San Francisco, Los Angeles and Sacramento were among the top five on the list. San Diego was left off of the list because of its diversified economy, strong population and economic growth and because of the continual demand that outstrips the regions supply. Some critics are surprised that San Diego was left off the list considering that the median housing prices have risen far above what a person making the median income can afford. Currently only nine percent of residents can afford a median-priced house.
Information courtesy of The San Diego Daily Transcript, July 20, 2005.

Apartment to Condo Conversions Increase Ten-Fold in 2004
The number of apartments converted into condos increased ten-fold from 7,800 in 2002 to 78,000 in 2004 according to Real Capital Analytics. As of June 1, 43,900 units have been sold to redevelopers this year according to the firm. The trend is particularly strong in Southern California, Northern Virginia, Las Vegas and Miami. These condo conversions are seen by many as an opportunity for renters normally priced out of the housing market. In San Diego County such condos sell for $250,000 less than the median priced home. El Cajon mayor, Mark Lewis said, "We take people normally collecting rental receipts in shoe boxes and make them homeowners." Currently 1,000 units are being converted in El Cajon. There is concern about the diminishing stock of available rentals on the market, although some real estate analysts say the stock of apartments has not been significantly depleted.
Information courtesy of the Arizona Republic, July 6, 2005.

San Diego Voters Approve Vector Control Ballot
San Diego County voters approved a new vector control fee by mail-in ballot. The fee would charge an additional $8.55 to the existing fee of $2.28-$3 charged for single-family homes. Rental properties will also be assessed an additional $3.42 for each of the first 20 rental units and $.86 per each additional unit. The measure was designed to help combat West Nile virus and other insect and rodent borne diseases. The new fee will generate an additional $7.3 million a year. The bill was opposed by the San Diego Apartment Association because it felt that the bill unfairly burdened the owners of multihousing complexes, didn't give enough credit to private pest control measures and represented an increase of 430 percent to all property owners in the region.
Information courtesy of the San Diego Union Tribune, July 13, 2005 and the San Diego Apartment Association.

Housing Affordability Continues to Decline
According to a report released by the California Association of Realtors (C.A.R.), housing affordability in California continues decline. Statewide only 17 percent of household can afford to buy a median-priced home. In San Diego County the percentage is even lower 10 percent down from 14 percent April 2004. The median price for a home was $593,600 in April up from $527,320 in April 2004. To put this in perspective, a median price home (statewide) at $509,230 would require an annual household income of $120,290 assuming the prevailing interest rate (5.93 percent) and a 20 percent down payment. Nationwide the median price for a home is $206,000 with a minimum income of $48,660 needed.
Information courtesy of Yahoo!, June 10, 2005.

Supreme Court Rules That Cities May Seize Homes
The Supreme Court ruled that cities may seize homes for projects that benefit the public interest even if the property is not blighted or the project's success is not guaranteed. The 5-4 ruling allows cities to seize properties under eminent domain to sell to private developers. Opponents, including property rights activities and advocates for the elderly and low-income homeowners, argue that the ruling violates the Fifth Amendment of the Constitution that prohibits the seizing of private property - even with compensation - for anything except "public" use. Justice Paul Stevens who wrote the majority opinion said that "public use" could mean any project that could revitalize a city such as creating jobs. He said that "promoting economic development is a traditional and long accepted function of government." Sandra Day O'Conner, who wrote the dissenting opinion said that the "specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory." She felt it leaves small property owners with little recourse against the powerful and influential in society.
Information courtesy of the Washington Post, June 24, 2005

LA County Supervisors Ban Sex Offenders from Public Housing
The Los Angeles County Board of Supervisors voted unanimously to allow the county's housing authority to terminate a lease with a three-day's notice if a renter is found to be a sex offender. The ordinance will be incorporated into all future leases and lease extensions. After the Supervisor, Mike Antonovich, learned that a sex offender was living in public housing near an elementary school, he directed the board of supervisors and outside legal counsel to look at ways to bar sex offenders from living in public housing in the future. The new ordinance will be phased in over the next twelve months as leases are renewed.
Information courtesy of NBC 4 News Los Angeles, June 28, 2005.

EPA to Conduct a 6-Month Study on Pollution from Lawnmowers
The Senate approved a delay on a federal ruling stating whether lawnmowers and other small-engine machines needed to be fitted with catalytic converters to reduce air pollution. There is some concern over whether fitting the machines with catalytic converters could pose a potential safety threat. Engines fitted with catalytic converters may burn hotter creating a fire hazard.
Information courtesy of the Washington Post, June 10, 2005.

San Diego Housing Market Cools
The county's housing market has cooled dramatically according to figures from Sandicor, Inc. the local industry's real estate listing service. In March, the average time for a resale single-family homes hit 54 days compared to 31 days for August 2004 and 40 days for March 2004. The slowdown in the resale condo market is more dramatic averaging 45 days on the market in March. Last March the average time was 21 days and June 2004 averaged 15 days. This can put pressure on sellers on a deadline and requires that sellers price their homes less aggressively. Sellers should hope to get a price similar to a comparable home last sold in the neighborhood instead of prices 10 percent or $25,000 higher. In addition, sellers on a deadline may need to make price concessions in order to sell their homes quickly.

It is a good time to reflect on the long-term financial benefits of owning local real estate. Instead of unnecessarily making concessions on the price of their real estate, smart rental owners will refinance existing properties and become buyers taking advantage of someone else's need to sell.
Some information courtesy of the San Diego Union Tribune, May 16, 2005.

Homeownership in San Diego County Increases
Thanks to low interest rates San Diego County homeownership rose from 51 percent of the population in 1994 to 63 percent last year. Many people who could not afford homes at an eight percent interest rate are taking advantage of the current low interest rates. In addition, those who cannot qualify for the standard 30-year-fixed mortgages are taking out adjustable low-rate mortgages. County home prices continue to rise. According to DataQuick Information Systems, the median price for a resale home in the county hit the half-million dollar mark. The county wide median price for all types of housing was $454,000.
Information courtesy of the San Diego Union-Tribune, June 17, 2004.

San Diego Owners Pay Penalty for Substandard Housing
Two property owners were ordered to pay $22,000 to settle a complaint about illegal housing at their property in the Logan Heights neighborhood of San Diego. The "homes" were converted from storage space and were rented out for $250-$650 a month to low-income renters. The illegal units had inadequate light and ventilation, blocked emergency exits, pervasive unpermitted plumbing, mechanical, electrical and structural work that overwhelmed even experienced building inspectors and code inspectors. If the owners fail to pay the specified civil penalties, an additional $43,000 in fines may be imposed. The renovation and rehabilitation of the properties is underway and all the residents have been relocated.
Information courtesy of KGTV San Diego, June 22, 2004.

Cause Evictions Approved by S.D. City Council
The San Diego City Council passed an ordinance on March 16th that requires landlords to give a cause for evicting tenants that have inhabited their properties for more than 2 or more years. The new ordinance will affect mainly month-to-month leases and will give landlords a list of acceptable reasons for evicting tenants including failure to pay rent, illegal activities and creating a nuisance. Landlords could also evict tenants if they plan to live in the residence themselves. Under the old law landlords did not need to tell a tenant why he/she was being evicted. Proponents of the law said that it would protect tenants' rights against unjust evictions and would make it easier for families to stay in place in a tight and often costly rental market. Opponents of the law, including the San Diego Apartment Association, fear that it will make it more difficult to get rid of "bad" tenants, pit residents against owners and make evictions more costly, which would ultimately raise rents. In addition, it places the "burden of proof" on the owner if the resident decides to contest the eviction in court. Criminal activities can sometimes be difficult to prove - especially since other residents may feel intimidated when asked to testify against a "bad" resident. San Diego is one of two cities in Southern California that requires "just cause" evictions without also having rental control ordinances.
Information courtesy of the San Diego Union Tribune, March 17, 2004 and the Apartment Owners Association of Southern California.

Sacramento Area Owner Pays $100,000 to Settle Sexual Harassment Suit
A Sacramento area landowner paid $92,000 to 12 female residents and an additional fine to settle a sexual harassment suit. The female residents complained that the owner made unwelcome comments and entered their apartments without permission. Male residents were not subjected to similar treatment. In addition, female residents were governed by different rules than males including restrictions on having overnight guests. The Department of Justice said the owner's actions clearly violated the Fair Housing Act.
Information courtesy of the San Diego Union Tribune, May 14, 2004

Rents Rise During First Quarter of 2004
Apartment rental rates saw on average a modest gain during the first quarter despite a decline in the demand for rent housing. Southern California saw the greatest increases with 6.2 percent for Riverside-San Bernardino, and 4 percent for Los Angles and Orange County. San Diego had a 4 percent increase to an average of $1,187 per rental unit. Only three western markets saw a rent decrease: Portland, San Francisco Bay and Salt Lake City.
Information Courtesy of the San Diego Union Tribune, May 14, 2004

Home Sales in San Diego County

Median Price	January 2003	December 2003	January 2004	Change from January 2003
Existing Single	$355,000	$425,000	$425,000	19.72%
Existing Condo	$255,000	$304,000	$300,000	17.65%
Newly built*	$410,250	$454,750	$445,000	8.47%
All Combined	$336,000	$405,000	$396,000	17.86%
Sales
Existing Single	1,988	2,749	1,871	-5.89%
Existing Condo	940	1,274	944	0.43%
Newly Built	540	1,446	752	39.26%
All Combined	3,468	5,469	3,567	2.85%

* Includes condo conversions
SOURCE: DataQuick Information Systems and the San Diego Union-Tribune, February 12, 2004

San Diego Projected to Lose Households to Neighboring Regions
The latest forecast by the San Diego Association of Governments shows the county losing up to 93,000 homes to Riverside County, Imperial County and Baja California by 2030 unless measures are taken towards "smart growth." The report by SANDAG stated,"The region cannot continue to meet its housing needs by building out and by exporting its housing units," the plan states. "It must begin filling in and building up in existing urban areas, particularly in areas with good access to public transit, jobs, schools, recreation and services."SANDAG had originally called for more high-density compact "villages" with walkable neighborhoods where people had easy access to shopping and buses. The plan met with widespread opposition. Part of the opposition stems because of the region's aging infrastructure, which critics argue cannot keep up with the additional residents brought in by high-density housing. Traffic is expected to increase from the daily 75 million vehicle miles traveled daily to 112 million. Commuters on the I-15 traveling between San Diego and Riverside counties are expected to increase from 95,000 a day to 234,000. Despite the projected housing shortage, families are expected to find ways to meet their housing needs whether it means doubling up, paying more or having a longer commute.
Information courtesy of the San Diego Union Tribune January 4, 2004.

Housing Bubble May Burst
A recent report by the Center for Economic and Policy Research finds evidence that there is a housing bubble and that it may not be sustainable. According to the report, there has been an extraordinary increase in the price of homes since 1995. The rate of increase has exceeded the rate of inflation by more than 30 points. One of the signs pointing to a housing bubble includes the increasing divergence between renters and owners and while rents have leveled off somewhat, home prices continue to increase. The authors found that some homes could drop in value by 30 percent or more if not physically maintained and improved. It also recommends that lower- and moderate-income households reconsider buying a home at this time. The findings indicate that renting may be better than buying in the current market. This is good news for rental home owners that depend on a steady flow of potential renters along with increasing rents to provide staying power for a long-term holding strategy.

Rent Control in California
Last summer, the California State Senate and State Assembly passed a bill (S.B. 178) that would allow local jurisdictions to impose rent control on new properties as long as developers were offered as incentive, regardless of whether the developer found the incentive acceptable. The old law exempted new construction from rent control. The bill's sponsor has agreed to postpone the bill until the legislature reconvenes. Los Angeles apartment owners suffered a setback when the Ninth Circuit Court of Appeals ruled that federal law does not pre-empt the city of Los Angeles' rent stabilization law. The case involved an apartment owner that was no longer required by federal law to maintain below market rents after paying off the Section 236 mortgage. The city used its rent stabilization law to force the owner to keep below market rents. This affects owners and prospective owners of federally subsidized properties that may wish to convert over to conventional properties later. The ongoing threat and reality of rent control in California is another reason that we recommend rental ownership of individual properties that are rarely included in onerous rent control proposals.

Creating a More Fireproof Home
In the wake of the recent California wildfires people are taking interest in making their homes more fireproof - particularly if they're rebuilding. The concerns about a another wild-fire, which experts say is inevitable, has many people interested in the use of alternative building materials as opposed to the more traditional wood. These materials include: steel buildings, corrugated concrete, double-paned glass, fireproof exteriors and siding, Styrofoam cores and metal window frames. Another method of making homes less likely to burn in the event of the next wildfire include making sure that flammable materials are not close to or touching the home. This includes: wooden decks, shutters and fences; wood piles; and the use of wooden eaves. It is also important to clear away brush and keep the area surrounding the home free of debris. Placing oversized address numbers on a visible location on the side or roof of the home makes it easier for fire crews to find the home if there is an emergency. While it is impossible to ensure that a home will never catch fire, property owners can take practical precautions.
Information courtesy of the Sign-on San Diego. November 17, 2003.

Hiring a Contractor
Here are a few things to keep in mind when hiring a contractor to do work on your property:

• Hire only a licensed contractor and ask to see the license.
• Ask for proof of worker's compensation and general liability insurance, otherwise you could be liable for construction-related accidents.
• Don't rush into repairs - even when they're badly needed.
• Make sure that you're comfortable with the contractor and can communicate easily.
• Don't pay more that 10 percent or $1,000 down - whichever is less.
• Don't pay cash and don't let payments get ahead of the work.
• If possible get at least three written bids.
• Ask for business references and check them out to see if the contractor pays suppliers and subcontractors..
• Have a written contract and make sure you have a thorough understanding of it before signing it.
• Find out if there is any legal action pending against the contractor.
• Ask for customer references and find out if they were satisfied with the work. Would hire the same contractor again?
• If possible, look at a current project to check for the quality of work and materials.
• Check whether the contractor has a permanent business location, a good reputation with banks and how long the contractor has been in business.