Real Estate Crash thread

[altasnob]

Sounds like that Aspen couple had loose lips and didn't set up their LLC correctly (properly hiding home ownership by using a third party address and registered agent; also using this third party to list as STR). Otherwise, I think they would have gotten away with this indefinitely. Ultimately, these programs rely on the honesty of the home owners promising they are following the rules. Since half of them are cheating on their taxes I don't know how honest these people are.

The Summit County deed restriction says if you get caught breaking the rules, you have 30 days to get into compliance and then no harm, no foul. So you can play with fire and hope you don't get caught and if you do get caught, just get back into compliance with no penalty. Suing people to force compliance is a major PITA for the city/county. And the homeowner can drag out the law suit to buy them time. The deed restriction says prevailing party gets attorney fees so there is some incentive for the home owner to try to avoid a law suit.

These deed restricted housing ideas sound like they were cooked up by some land use attorney looking for full employment

[alpinevibes]

You have an asset number up there? Here, someone could retire from a tech career in the bay area with $10M in stock options, move here and work 1 year washing dishes at night, and qualify for affordable housing with no problems at all.

Yes, absolutely. Pretty cut and dry here: https://www.apcha.org/341/Maximum-Income-Assets

But once you're in you're in [as long as you still work and live locally] regardless of your income and/or assets appreciating.

[fastfred]

The good news is we don’t even have to pay for his legal take - I’m sure he will even dumb it down for us. All the while he is billing some poor asshole several hundred dollars an hour to enlighten us.


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post of the day

[summit]

If you were offered 15% of your home value to put a deed restriction on your home would you do it?

Appreciation capped? Hell fucking no.

[Name Redacted]

Appreciation capped? Hell fucking no.

Pretty sure it isn't appreciation capped. Just rental to local workers 30+ hrs a week, no STR, and probably a few other stipulations. I didn't really look into it that closely. But it would definitely reduce the salability and therefore the value when you go to sell it.

ETA: looked a little closer. It is basically RFR to the county if they want to purchase it and what I wrote above. You can stay there if retired. If you rent it has to be to someone who qualifies.

[rideit]

I think I’m going to get this as a full back tattoo to honor what’s going on in the Tetons.

[altasnob]

Yes, absolutely. Pretty cut and dry here: https://www.apcha.org/341/Maximum-Income-Assets

But once you're in you're in [as long as you still work and live locally] regardless of your income and/or assets appreciating.

So the net asset requirement is only on day 1? Then as your wealth increases, there are no net asset restrictions?

How do they verify total assets? Is it just on your honor? Stock options wouldn't count. Neither would a trust fund set up so that you don't get the money until a later point in time. Do 401k and deferred compensation programs count?

Do people include their sprinter van, $4k mountain bike, and dynafit setups in their total assets? I have this vision of half the people taking advantage of Aspens' subsidy as growing up rich, paying off student loans (so maybe they are not rich yet), but they will be rich soon, and then they will inherit from their parents at some point. That couple who got caught with the airbnb was planning on gifting each of their kids a fully paid off townhouse in Aspen as a graduation gift. Sounds exactly like the people who need a free government hand out, right?

[altasnob]

the only real "losers" in your argument against the larger scope of the "experiment" here are 1% and .00001%ers. Are you really going to continue to simp for them and share their tears? Do you see yourself having something to gain if the "experiment" weren't happening?

All these taxes and fees imposed by places like Aspen and Summit County not only make the overall housing more expensive, they make lodging more expensive, and they make eating out more expensive. So someone like me, who might want to stay in a hotel and eat out in these communities, has to pay for all of this as well. So it's not just the 1%ers living in Aspen paying for it. No wonder the slopes in Aspen are so empty. Who in their right mind would go there for a vacation. So much better value available elsewhere where you are not subsidizing trust funders living in public housing.

[Core Shot]

Many years ago (20+) some deed restricted condos (maybe 8-10) were built in our hood and our good friends got one, as Snapper is self employed with shitty looking tax returns. The appreciation was split it if sold before 15 years had elapsed or get it all after 15 years. They are moving soon and are pretty stoked on their good fortune.

That’s fucked. Worker housing subsidized by the taxpayers should remain affordable.
Let the next owner win a lottery drawing and be blessed.

[ötzi]

Was that the only restriction, that they only got half the appreciation if they stayed less than 15 years? Can it sell at market rate now?

[Percy Rideout]

All these taxes and fees imposed by places like Aspen and Summit County not only make the overall housing more expensive, they make lodging more expensive, and they make eating out more expensive. So someone like me, who might want to stay in a hotel and eat out in these communities, has to pay for all of this as well. So it's not just the 1%ers living in Aspen paying for it. No wonder the slopes in Aspen are so empty. Who in their right mind would go there for a vacation. So much better value available elsewhere where you are not subsidizing trust funders living in public housing.

After reading a few pages of drivel, AS does have a point here RE: everybody partially shoulders the burden of the extra tax, not just the 1% and .01%.

[alpinevibes]

All these taxes and fees imposed by places like Aspen and Summit County not only make the overall housing more expensive, they make lodging more expensive, and they make eating out more expensive. So someone like me, who might want to stay in a hotel and eat out in these communities, has to pay for all of this as well. So it's not just the 1%ers living in Aspen paying for it. No wonder the slopes in Aspen are so empty. Who in their right mind would go there for a vacation. So much better value available elsewhere where you are not subsidizing trust funders living in public housing.

Wrong. Employee housing, here, is funded through the Real Estate Transfer Tax; there isn't a crossover to lodging/sales/food taxes. The people who come here for vacation DGAF about a lodging, food or sales tax like you. They're paying $1000/day to have their kid ski with an instructor so they can go do the same, or party or whatever. Stop trying to conflate your POV with the detached reality of the super wealthy.

So the net asset requirement is only on day 1? Then as your wealth increases, there are no net asset restrictions?

How do they verify total assets? Is it just on your honor? Stock options wouldn't count. Neither would a trust fund set up so that you don't get the money until a later point in time. Do 401k and deferred compensation programs count?

Do people include their sprinter van, $4k mountain bike, and dynafit setups in their total assets? I have this vision of half the people taking advantage of Aspens' subsidy as growing up rich, paying off student loans (so maybe they are not rich yet), but they will be rich soon, and then they will inherit from their parents at some point. That couple who got caught with the airbnb was planning on gifting each of their kids a fully paid off townhouse in Aspen as a graduation gift. Sounds exactly like the people who need a free government hand out, right?

Assets are verified when you submit your packet to become eligible to bid in the system, along with your employment verification. The office does their legwork - with a credit check and checking taxes, but ultimately the accuracy is based on an applicants honesty. They go through everything (including retirement, trusts, etc): https://www.apcha.org/DocumentCenter...lation20201118 then give you a category level based on the numbers. You have to update your packet every year or two as you continue to bid on units, but once you were to win something (for most people that's a 5-10+ years of bidding and losing) you wouldn't have to resubmit anything unless you wanted to bid on a different unit.

Yes, vehicles are accounted for but a used, depreciated "deenafit" setup is not. I know a lot of people in the system and my sense from that is that there are not a particularly high percentage of people hiding major assets and trying to sneak in. I realize it's easy to continue to paint the whole situation here as a Welfare Queen scam, but I haven't experienced it that way. The unlikely reality of winning something is a relatively high barrier for people to continue attempt to cheat their way in. Most people with reasonable assets, trust funds, etc are just going to buy a free market place and take advantage of the much more appealing appreciation from those properties. Obviously there are some/many outliers and abusers, but your continued hangup about how this all works remains off-base.

[altasnob]

Wrong. Employee housing, here, is funded through the Real Estate Transfer Tax

That's not what APCHA says:

"the City funds its subsidy from one or both of its dedicated housing funding sources, a Real Estate Transfer Tax (RETT) and a small portion of sales tax."

https://apcha.org/FAQ.aspx?QID=74

And the Aspen Times:

"The city generates tens of millions of dollars annually through real estate transfer and sales taxes and is a major provider of affordable housing in the valley."

https://www.aspentimes.com/news/pitk...dable-housing/

So appears the county is not using sales tax to fund affordable housing but the city is.

Anyway, thanks for the info. I really am curious about it because as far as I know, we don't have deed restricted low income housing in Washington state. We also have a ban on rent control, unlike CA. It's interesting to see how different parts of the west are dealing with exploding real estate prices. Seattle is trying to learn from San Francisco's mistakes and has been building like mad for the last decade. Some would say it is not working but we are still quite a bit cheaper than the Bay Area. There's also a shit ton of new housing currently under construction here (even a shit ton in Tacoma).

I thought this comment from that Aspen Times article was telling:

“I wonder sometimes if APCHA has gotten so big that we are becoming a company town, and I don’t like the smell of that."

That seems to be the end result of this to me. Free market Aspen will continue to become even more expensive and the only way for a middle or lower income person to be able to live anywhere remotely close is to score a place with APCHA. I'm sure there are plenty there that are ok with that. The high prices will keep Aspen from getting ridiculously over crowed, and the community can utilize APCHA to "throttle" the amount of worker bees they need to keep things humming along.

[Dshack89]

Just to throw out an anecdote, I'm in the process of buying a new house and am shocked by how much variance there is in rate quotes right now. The mortgage broker my agent initially set me up with quoted me a 7.5% par rate w/ 1% orig fee, and after shopping around myself I just got quoted a 5.375% par rate w/ 0% orig fee. There is no logical explanation for that big of a spread (other than that first broker is greedy and my agent was getting a kickback).

Moral of the story = always shop around

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[lowsparkco]

Just to throw out an anecdote, I'm in the process of buying a new house and am shocked by how much variance there is in rate quotes right now. The mortgage broker my agent initially set me up with quoted me a 7.5% par rate w/ 1% orig fee, and after shopping around myself I just got quoted a 5.375% par rate w/ 0% orig fee. There is no logical explanation for that big of a spread (other than that first broker is greedy and my agent was getting a kickback).

Moral of the story = always shop around

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100%

I’d lock that 5 and 3 eighths pronto.

I’m hearing a lot of 6.5% on 30 year fixed conforming notes, less on Jumbos and FHA products.

Edited to add: relationships between real estate and mortgage professionals is highly regulated and it is expressly forbidden for a real estate agent to receive monetary compensation for a referral to a preferred lender. I know some unscrupulous real estate agents but none that would ever admit to taking a kickback from a lender. Any time you get a professional referral it should be at least 3 providers.

[liv2ski]

Was that the only restriction, that they only got half the appreciation if they stayed less than 15 years? Can it sell at market rate now?

Ice, I don't remember anything about appreciation being reduced if they sold it. So what once started as a helping hand to those not showing much on their tax returns has turned out ok for them. They played by the rules, so why be pissed Core Shot? It was not "worker" housing, just low income and after 20 years they are cashing in. Big deal.

[Dshack89]

100%

I’d lock that 5 and 3 eighths pronto.

I’m hearing a lot of 6.5% on 30 year fixed conforming notes, less on Jumbos and FHA products.

Edited to add: relationships between real estate and mortgage professionals is highly regulated and it is expressly forbidden for a real estate agent to receive monetary compensation for a referral to a preferred lender. I know some unscrupulous real estate agents but none that would ever admit to taking a kickback from a lender. Any time you get a professional referral it should be at least 3 providers.

Interesting, I didn't know that on the regulation but makes sense!

And yep I locked that rate down ASAP. To be fair, I got my rate lowered by .25 for having my business checking at this bank for a while. And Im doing a 7 ARM jumbo. So I've got the ideal scenario for the best rate.

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[MCS5280]

i know that but

from what I read apcha could care less about anything but following the rules

https://www.aspentimes.com/news/coup...north-40-home/
feel free to give us your legal take on it all

Every single time it's some scumbag realtor that gets caught gaming the system.

[Core Shot]

Ice, I don't remember anything about appreciation being reduced if they sold it. So what once started as a helping hand to those not showing much on their tax returns has turned out ok for them. They played by the rules, so why be pissed Core Shot? It was not "worker" housing, just low income and after 20 years they are cashing in. Big deal.

Whether it’s low income or worker, it’s subsidized to help the local economy.
If you can sell it at market rate, it’s gone.
If you restrict it to be resold only to similarly situated buyers, then it stays in the pool forever.

They’re playing by the rules. But those rules suck.

[liv2ski]

None the less, a deals a deal, so maybe next time the city does this (ya right) they think it through better and get your guys input so nobodies upset.

[lowsparkco]

Interesting, I didn't know that on the regulation but makes sense!

And yep I locked that rate down ASAP. To be fair, I got my rate lowered by .25 for having my business checking at this bank for a while. And Im doing a 7 ARM jumbo. So I've got the ideal scenario for the best rate.

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There’s a little bit of a workaround where lenders and licensed real estate brokers can share the expense of marketing platforms. So in essence, say you used a big “team” broker and they have a huge website where they’re paying for a bunch of google SEO and paid ad.’s…. they can pass some of that (or maybe all of it?) on to a lender partner as paid advertising by promoting them on their website and sending referrals. They still open the door for a violation of “steering” the customer to a less competitive partner due to this relationship. Some states take these kinds of conflicts seriously and some don’t. Most real reputable brokers are pretty careful about where they fall on the issue. I think in all likelihood you get a referral to an expensive lender because a lot of clients don’t get multiple estimates and the expensive lenders are easy for the real estate broker to deal with during the transaction. Full service (expensive) mortgage brokers may have more staff and a higher percentage of early closings and less likelihood that the deal falls apart due to the financing.

[Toadman]

Recent RE metrics -

The median home sale price was $348,000, essentially flat (+0.1%) from a year earlier. That’s the smallest increase since at least 2015. The next-smallest increase was when prices rose 0.3% year over year in June 2020.
Median sale prices fell in 21 of the 50 most populous U.S. metros, with the biggest drops in Oakland, CA (-9.7% YoY), Austin, TX (-9.5%), Sacramento (-7.1%), Phoenix (-6.6%) and San Jose, CA (-6%). Prices increased most in Columbus, OH (+12.2%), Milwaukee (11.9%), West Palm Beach, FL (9.8%), , Miami (9.3%) and Indianapolis (8.5%).
The median asking price of newly listed homes was $381,561, up 1.1% year over year, the smallest increase since May 2020.
The monthly mortgage payment on the median-asking-price home was $2,486 at a 6.5% mortgage rate, the current weekly average. That’s just $20 (-1%) below the October 2022 peak. Monthly mortgage payments are up 26% ($513) from a year ago.
Pending home sales were down 17.4% year over year, the smallest decline in over five months with the exception of the prior four-week period.
Among the 50 most populous U.S. metros, pending sales fell most in Las Vegas (-55.6% YoY), Austin (-49.4%), Nashville (-46.8%), Riverside, CA (-46.4%) and Phoenix (-45.9%). Pending sales rose in one metro: Chicago (18.2%).
New listings of homes for sale fell 18.8% year over year. New listings declined in all 50 of the most populous U.S. metros, with the biggest declines in Sacramento (-43.2% YoY), Oakland, CA (-42.5%), San Jose (-38.9%), Portland, OR (-38.4%) and Seattle (-37.7%).

[Core Shot]

Tiny Idaho

https://www.cnbc.com/2022/12/13/ivan...nb-income.html

[Mazderati]

Recent RE metrics -

It's a housing desert. A theme consistent since the end of 2020 and one that has only gotten worse.

[alpinevibes]

That's not what APCHA says:

"the City funds its subsidy from one or both of its dedicated housing funding sources, a Real Estate Transfer Tax (RETT) and a small portion of sales tax."


And the Aspen Times:

"The city generates tens of millions of dollars annually through real estate transfer and sales taxes and is a major provider of affordable housing in the valley."

So appears the county is not using sales tax to fund affordable housing but the city is.

Touche, indeed, there is a .225% of the City sales tax that is dedicated to housing. In 2022 that raised $2.7M, versus the $17.1M from the RETT.

I thought this comment from that Aspen Times article was telling:

“I wonder sometimes if APCHA has gotten so big that we are becoming a company town, and I don’t like the smell of that."

That seems to be the end result of this to me. Free market Aspen will continue to become even more expensive and the only way for a middle or lower income person to be able to live anywhere remotely close is to score a place with APCHA. I'm sure there are plenty there that are ok with that. The high prices will keep Aspen from getting ridiculously over crowed, and the community can utilize APCHA to "throttle" the amount of worker bees they need to keep things humming along.

The advent of STR's, to me, is what has tipped this scale too much here in separating the "working class" from the super wealthy. Many long-term rentals, both cheap and expensive, have dissapeared from the market - either by existing owners capitalizing on greater revenues from STR opportunities or from the massive valuation increases of the last few years that have pushed existing landlords to cash out. Either way, anyone with less than $4,000/mo for housing is in a tough spot to find options.

The challenge with your concept of the "community utilizing APCHA to throttle" things is the very low turnover in APCHA owned units and the lack of newly built units that actually roll out. Without consistent turnover the community and businesses will continue to struggle to find workers who can stick around living here to work their jobs.