Tag Archives: Judy Dutton

Cities With the Worst Rent

Posted on by

photo by Alex Lozupone

Realtor.com quoted me in Cities With the Worst Rent: Is This How Much You’re Coughing Up? It opens,

Sure, rents are too dang high just about everywhere, but people living in Los Angeles really have a right to complain: New analysis by Forbes has found that this city tops its list of the Worst Cities for Renters in 2018.

To arrive at these depressing results, researchers delved into rental data and found that people in L.A. pay an average of $2,172 per month.

Granted, other cities have higher rents—like second and third on this list, San Francisco (at $3,288) and New York ($3,493)—but Los Angeles was still deemed the worst when you consider how this number fits into the bigger picture.

For one, Los Angeles households generally earn less compared with these other cities, pulling in a median $63,600 per year. So residents here end up funneling a full 41% of their income toward rent (versus San Franciscans’ 35%).

Manhattanites, meanwhile, fork over 52% of their income toward rent, but the saving grace here is that rents haven’t risen much—just 0.4% since last year. In Los Angeles, in that same time period, rent has shot up 5.7%.

So is this just a case of landlords greedily squeezing tenants just because they can? On the contrary, most experts say that these cities just aren’t building enough new housing to keep up with population growth.

“It is fundamentally a problem of supply and demand,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “Certain urban centers like Los Angeles, San Francisco, and New York are magnets for people and businesses. At the same time, restrictive local land use regulations keep new housing construction at very low levels. Unless those constraints are loosened, hot cities will face housing shortages and high rents no matter what affordable housing programs and rent regulation regimes are implemented to help ameliorate the situation.”

Obamas Buy Their Rental

Posted on by

2011 portrait by Pete Souza of the Obama family

Realtor.com quoted me in Former President Obama Finally Buys the DC Home He’s Renting: 6 Smart Reasons Why. It reads, in part,

Former President Barack Obama has decided that buying beats renting. The former first family have surprised many by purchasing the Washington, DC, house they’ve been leasing and living in since January, coughing up $8.1 million to call the place their own.

After vacating the White House, the Obamas had moved into the 6,441-square-foot, nine-bedroom, 8.5-bath mansion, located at 2446 Belmont Road NW in the tony neighborhood of Kalorama. The neighborhood has since become the place for the new political elite, with Jared Kushner and Ivanka Trump moving into a luxe rental a couple of blocks away, and Secretary of State Rex Tillerson snapping up a $5.6 million Colonial Revival down the street.

The reason the Obamas decided to stick around DC in the first place was so their younger daughter, Sasha, then a freshman at posh Sidwell Friends, could finish up high school there. With only three years to go, renting seemed to make sense so that the Obamas could easily pick up and move once she’s done.

But apparently, there’s been a big change of heart. Why?

On its surface, their decision seems a bit puzzling, given Sasha now has only two–and-a-half years to go. In real estate, the general rule is that it makes sense to buy a home only if you plan to stay put for five years, because this allows time for your house to appreciate, which helps you recoup hefty closing costs.

“People who sell after a year or two of ownership will often find that they have lost money on their purchase,” explains David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School.

Nonetheless, real estate agents and other experts we spoke to say there could be plenty of reasons it’s smarter for the Obamas to buy rather than rent, even for this short span of time. Here are a few possibilities to ponder.

Reason No. 1: They’re making a commitment to DC

As presidential spokesman Kevin Lewis explained in a statement, “Given that President and Mrs. Obama will be in Washington for at least another two and a half years, it made sense for them to buy a home rather than continuing to rent property.”

Granted, you can read a whole lot into that “at least” if you want. After all, as Atlanta Realtor® Bruce Ailion explains, “Many buyers think they will only be in a property for two to three years and end up living there three to seven years. That is common.”

And it might be an indicator that our former commander in chief isn’t ready to shed the political life quite yet.

“Perhaps they want to keep a foothold in Washington, DC, for other reasons with regard to political advocacy and involvement,” says Florida Realtor Cara Ameer.

Reason No. 2: In certain markets, 2.5 years is long enough to make a profit

While 2.5 years might not be long enough to profit on a home in general, that rule varies widely by neighborhood, based on rent levels, home prices—and how quickly both are going up. And this is one hot neighborhood.

It isn’t known exactly what the Obamas were paying in monthly rent, but estimates hover at around $22,000. It’s entirely possible that the former first couple did the math and determined that buying made far more financial sense, and that mortgage payments would be less of a monthly nut. (To find out what’s best for you, you can crunch the numbers in an online rent vs. buy calculator.)

*     *     *

Reason No. 5: This home will sell for a premium—he’s a former president, after all!

“It was always a little perplexing why the Obamas would ever rent if they planned to stay for anything longer than a year,” contends Washington, DC, real estate agent Rachel Valentino.

Her reason: “While they’re buying at market value, they can eventually financially benefit on the back end, where a buyer will pay significantly more for the celebrity factor. We aren’t Southern California, where every house has that star appeal. So, I can only imagine what a buyer will eventually pay to own a piece of history.”

Reason No. 6: Profits aren’t everything

“One lesson we can draw from this story is that buying a home should not always be seen as a financial transaction,” says Reiss. “Sometimes we buy a home because it’s best for our family at a particular time. Sometimes we buy a home because we fall in love with it. And sometimes those are the best reasons of all to buy a home, profits be damned.”

Renovating Among The Stars

Posted on by

Justin Theroux, photo by David Shankbone

Realtor.com quoted me in Justin Theroux’s Renovation Drama: What Went Wrong? It opens,

Actor Justin Theroux might have many admirers (including his wife, Jennifer Aniston), but apparently the “Leftovers” hunk inspires more than his share of haters, too—including his Manhattan neighbor Norman Resnicow. Apparently their feud started two years ago, when Theroux decided to renovate his apartment; Resnicow lives one floor down.

As anyone who’s lived under, next to, or anywhere near a demolition site knows, home renovations can get noisy—which is why Resnicow, a lawyer, felt it within his rights to ask Theroux to do the neighborly thing and install soundproofing to muffle the ruckus. There was just one problem: According to the New York Post, the requested soundproofing would cost a whopping $30,000 and make it difficult for Theroux to preserve the original flooring in his place, which he was keen to do. So he refused.

That’s when things got ugly. According to a lawsuit filed by Theroux, Resnicow embarked on a “targeted and malicious years-long harassment campaign” to derail those renovations and just make life unpleasant for the actor.

Here’s how the suit lays it out:

  • Resnicow accused Theroux’s contractors of damaging the marble in the building’s entranceway, and demanded they make repairs.
  • He halted Theroux’s roof deck renovations by arguing that the fence separating their portions of the deck encroached on his property.
  • Then, for good measure, he cut down the ivy lining the fence purely because he knew that the site of the foliage made Theroux happy.

Theroux now seeks $350,000 from Resnicow, alleging nuisance, trespass, and all in all “depriving Mr. Theroux of his right to use and enjoy his property.”

But Resnicow remains resolute, telling the Post, “I have acted for one purpose only, which remains to assure my and my wife’s health and safety.”

How to balance renovations with neighbor relations

As Theroux’s predicament makes painfully clear, few issues can ruin a neighborly relationship like noise—particularly if you live in an apartment building or other tight quarters. Problem is, homeowners also have a right to make home improvements. So at what point does reasonable renovation ruckus become so loud it’s a legitimate nuisance? That depends, for starters, on where you live, as noise ordinances and other regulations vary by area.

New York City’s Noise Code prohibits construction noise that “exceeds the ambient sounds level by more than 10 decibels as measured from 15 feet from the source.” (And in case you have no clue how to figure that out, the city uses devices called sound meters; you can also download sound meter apps to take your own measurements.) Volume levels aside, most areas have limits on when you can hammer away; in New York, work is typically limited to 7 a.m. to 6 p.m., Monday through Friday.

The third variable to consider is the co-op, condo, or HOA board that governs your building or community, which may place further restrictions on hours or even the type of renovations you do. Yet if a homeowner like Theroux is following these rules, odds are he’s in the clear.

“In New York City, they say ‘hell hath no fury like an attorney dealing with noisy neighbors,’ but as long as you have the proper permits, then construction noise created during normal business hours is generally allowed, with the understanding that it will only be temporary,” says Emile L’Eplattenier, a New York City real estate agent and analyst for Fit Small Business. “As long as he isn’t running afoul of his building’s rules—which is doubtful—then his neighbor has little recourse.”

Still, if you’re a homeowner about to embark on a renovation who doesn’t want to drive your neighbors nuts, what can you do? For starters, keep in mind that even if the sounds don’t ruffle you, people’s noise sensitivities can vary.

In the words of David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School, “One person’s quiet hum is another’s racket.”

Patenaude To Help Lead HUD

Posted on by
photo: J. Ronald Terwilliger Foundation for Housing America’s Families

Pamela Hughes Patenaude

Realtor.com quoted me in ‘Ultimate Housing Insider’: Pam Patenaude Nominated as HUD Deputy Secretary. It reads,

Pam Patenaude was nominated by President Donald Trump to become deputy secretary of Housing and Urban Development, according to a White House statement released on Friday. The move has been met with resounding applause by industry insiders who think her background could serve as the perfect complement to HUD Secretary Ben Carson, who entered his role without experience in housing or government.

Patenaude, currently president of the J. Ronald Terwilliger Foundation for America’s Families, was formerly an assistant secretary for community, planning, and development at HUD, under President George W. Bush. She also served as director of housing policy at the Bipartisan Policy Center’s Housing Commission. Patenaude’s nomination must be confirmed by the Senate.

“She’s the ultimate housing insider,” says David Reiss, research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School. “She’s connected and has a lot of respect within the housing field.”

Real estate industry organizations hailed the choice, including the National Association of Realtors®. In a statement, NAR President William E. Brown said, “Pam’s extensive and strong background in real estate and housing will be an asset. … Pam is an ideal candidate for the position; she understands the issues that impact the industry.”

David Stevens, president and CEO of the Mortgage Bankers Association, also offered his thumbs-up.

“Pam is an exceptional choice for the position,” Stevens said in a statement. “Personally, I have worked with her for a number of years and she is exactly the kind of leader who will help support the secretary and also address the critical issues ahead for HUD. She has a well-informed understanding of the agency, and essential technical knowledge of the real-estate finance industry. I would encourage the Senate to move swiftly in confirming her nomination.”

This depth of experience, Reiss says, serves as the perfect foil for Carson. As HUD secretary, Carson serves as the public face of this department, while Patenaude will handle the daily duties of running the organization.

“The big criticism of Carson is that he has no experience or background in housing,” Reiss continues. “So to have a No. 2 who’s really responsible for the day-to-day responsibility of the agency is a plus.”

What Patenaude’s appointment could mean for housing

In November, rumors were swirling that the Trump administration was considering Patenaude as HUD secretary, but then Carson got the nod instead, and then the Trump administration released a budget calling for $6 billion in cuts to the department. Patenaude’s nomination has many hopeful that HUD’s core initiatives—like affordable housing—will remain a priority.

“Trump’s ‘skinny budget’ decimated HUD,” Reiss continues. “Trump has made lots of appointments who’ve expressly said they want to destroy the agencies that they’re running. But Patenaude is an insider with HUD. So my hope is she sees the value it provides, and be an advocate for many HUD programs.”

High Times for New REIT

Posted on by

photo by Jorge Barrios

Realtor.com quoted me in Could This Marijuana REIT Make Millions, or Are They Just High? It opens,

Investing in real estate just got waaay more interesting, dudes! That’s because amid all that stuffy stock-market buzz, a wacky new REIT (real estate investment trust) has just gone public—and it’s the first in the country to focus on funding marijuana growers.

REITs, for you rookies out there, are funds that specialize in real estate. So, they use their investors’ money to build shopping malls, hotels, and condo complexes with the hope that their value will rise over time. This new pot-friendly REIT, owned by San Diego investment firm Innovative Industrial Properties (IIP), works exactly the same way, only by investing in facilities that grow, store, and distribute cannabis.

Granted, IIP is concentrating exclusively on medicinal marijuana facilities—so no one’s getting high for fun off investor money.

Nonetheless, this REIT could provide a much-needed infusion of capital for marijuana growers. Currently, although cannabis is legal for medicinal purposes in 24 states and for recreational use in four (which could rise to nine after Election Day), under federal law, marijuana is still illegal—and that keeps most banks from loaning these companies money.

REITs, however, aren’t bound by the same strict principles as big banks. So, IIP can shower ganja growers with cash—and could stand to make huge piles of money for its investors, right?

It could … but this whole scheme could also implode in a funky cloud of smoke.

“With limited information due to the newness of cannabis legalization, there’s not much of a track record or history to determine a cannabis REIT’s future performance,” says real estate and economic advisor Jack McCabe of McCabe Research & Consulting. McCabe also concedes that he hasn’t scrutinized this particular firm’s investment criteria, methodology, or fees.

“The early results show a new and flourishing industry,” McCabe says. “My opinion is that marijuana REITs and investors could see triple-digit profits and growth that could be historic and surpass profits generated by most all established industries.”

Whoa, triple-digit returns! That’s pretty impressive performance for any investment.

“A typical REIT is viewed as a fixed-income vehicle that competes with bonds,” says Paul Habibi, a real estate entrepreneur and professor at UCLA. “The range of REIT dividends are in the mid-single digits, like 5% to 6%.”

But there’s another caveat: No one knows how the federal government might decide to deal with semilegal cannabis down the road.

“Given medical-use marijuana is illegal under federal law, how could that play out with federal regulation of IIP?” points out David Reiss, a professor of Law at Brooklyn [Law School] and editor of REFinBlog.com.

The IIP (which could not comment), admits that much is still unknown in one of its SEC filings:

“Although the federal government currently has a relaxed enforcement position as it relates to states that have legalized medical-use cannabis, it remains illegal under federal law, and therefore, strict enforcement of federal laws regarding medical-use cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans.”

Just a Dude Fixin’ Cars

Posted on by

car-lift

Realtor.com quoted me in Neighbors Sue Man for Tinkering With Cars in His Own Garage. It opens,

Charles Williams loves working on cars, a hobby he’s continued even after losing his legs in 1993 in a freak construction accident. So in 2007, he poured $65,000 into building a nearly 2,000-square-foot four-car garage next to his house in Harbeson, DE. The place—which has vintage license plates covering the walls and lifts so he and his buddies can tinker to their heart’s content without lying on the concrete floor—is a car nut’s fantasy. At least, it was, until some of Williams’ neighbors—apparently offended by the sight, smell, and sounds of guys doing guy stuff—decided to sue Williams for repairing cars in his own garage.

In 2014, three of Williams’s neighbors—Margaret Foulke next door and John and Carol Kane, who live 800 feet down the road—filed a lawsuit against Williams saying that the garage was a noisy, stinky nuisance and must be torn down, according to The Cape Gazette. In June, a judge ruled in favor of Williams, explaining simply, “Mr. Williams has a not-uncommon hobby—working on cars—that he pursues with an uncommon vigor.”

Nonetheless, the neighbors plan to take their case up the chain to the Delaware Supreme Court.

Williams says he’s spent $30,000 defending himself from his accusers, who also claim he built the garage without permits and runs it as an illegal business. But Williams denies these allegations as well, saying he received the proper permission to build and has never accepted money in exchange for repairs. In fact, he has even fixed vehicles owned by the very people are demanding that he tear down his garage!

“I’ve fixed their lawnmowers, I’ve fixed their tractor, I’ve fixed their golf carts… I did everything for them, anything they asked, since that’s what neighbors do,” says Williams.

At first glance, the plaintiffs seem like candidates for a “worst neighbors” award. But we had to wonder: Is there anything to this case? Is it ever illegal for to tinker with  cars in your own garage?

While local laws vary by area, as a general rule, David Reiss, a professor of Law at Brooklyn University and editor of REFinBlog.com, thinks the neighbors are spinning their wheels.

“The facts sure don’t seem to be on their side, at least as this article portrays them,” says Reiss. Here’s a rundown of the neighbor’s complaints about the garage, and why Williams appears to be in the clear.

Noise complaints

“There are a lot of loud things in and near homes,” points out Reis. Compare a vacuum cleaner at 10 feet (70 decibels) to a lawnmower (as high as 90 decibels) to a train (100 decibels).

“Many localities have restrictions on the decibel level of noise that can come from a property, but those levels can be pretty darn high,” Reiss explains. “New York City, for instance, limits garbage trucks to 80 decibels from a distance of 35 feet when they’re not compacting. It limits music from commercial establishments to 42 decibels when measured from inside a neighbor’s home.”

In other words, the sound of a few motors running or rock music probably aren’t loud enough to write home about—or to sue over.

Noxious fumes and other nuisances

Sure, these neighbors could claim that the eau de motor oil emanating from William’s garage is a “nuisance.” It’s just that they would have to be deemed “unreasonable in the context of their residential neighborhood,” says Reiss.

“The neighbors could also argue that the increased traffic that resulted from this use was a nuisance too, but that also seems like a major stretch,” says Reiss.

Illegal activity

“The neighbors could claim that Williams is running a commercial establishment in a residential neighborhood, but it sounds from the article like the facts don’t support this claim,” says Reiss. So unless the neighbors catch a huge wad of cash passing hands, Williams is just a regular dude who digs cars.

Banned from Their Land

Posted on by

photo by MIKI Yoshihito

Realtor.com quoted me in Family Told They Can’t Live on Their Own Land (and You Won’t Believe Why). It opens,

One of the best perks of owning property—in fact, the main perk—is that you get to live on it. Or so we thought until we learned of a homeowner in Colorado who was told flat-out that her family can’t live on their own land. What’s going on?

Here’s the backstory: In June, an electrical fire left the Lafayette house of 70-year-old Marilyn Minor uninhabitable. Minor began repairs to her home so it would pass city inspections. But lacking the cash for a hotel or other accommodations, she and her home’s other residents—her son Wayne, daughter Charity, and Charity’s two kids—had nowhere to live. So they moved into their van, parked on their own land. It sounds reasonable enough, right?

Wrong.

Their living situation didn’t sit well with some neighbors, who alerted Lafayette city officials, who came back to Minor and told her that vacating her home wasn’t enough. Nope, until her place passed all inspections, the Minor family weren’t allowed to live anywhere on her property at all.

Why? That’s a question Minor is dying to get answered.

“Why can’t I live on the property that I pay taxes for and where I pay the mortgage?” she asked during an interview with Denver7. “I’ll go down fighting. This is my home.”

Although Minor anticipates her house will be fixed up in a few weeks, she’ll be dragged back into housing court next week and could face substantial fines if she remains on her property. And while some of her neighbors clearly disapprove, others are sympathetic.

“They shouldn’t have to be anywhere else,” one neighbor told Denver7. “This is their house.”

True, it’s their house, their land, their home. But according to experts we spoke to, that doesn’t mean they can live there however they please.

“Until the modern era, the common law was based on the understanding that, in many ways, every man’s home was his castle,” says David Reiss, a professor of law at Brooklyn Law School and academic program director at the Center for Urban Business Entrepreneurship.

“But for well over 100 years now, courts have acknowledged that governments have many legitimate reasons to restrict how property owners use their property. For instance, local governments regulate fire safety and sanitation issues, among other things, for the benefit of property owners themselves as well as their neighbors and the broader community.”