Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
WEBSITE       RESUME       CONTACT       FACEBOOK        LINKEDIN       
Showing posts with label 2019. Show all posts
Showing posts with label 2019. Show all posts

Friday, January 10, 2020

Construction process, costs today are exponentially higher than 1900's, 1950's - Mary Cummins

Real estate construction costs, rising, permits, survey, architect, land costs, labor, materials, utilities, mary cummins, real estate, appraiser, appraisal, Los Angeles, California
Many people today have no idea how much it costs to build a new housing unit. Some are aghast at the $500K/unit estimate given to build housing units for the homeless or anyone. People also have no idea how long and difficult the process is today. Back in 1900 all you had to do at most was submit a two page form to the city and pay for the permits. You didn't need an architect, survey, soils, geological, engineer or even a drawing. You didn't need approval from your neighbors, other city departments, historical overlay zone committee members, building and safety, zoning and planning, dept of transportation... The cost today to build a unit is easily 100x what it was back in the day. It's also exponentially more difficult today. Today because there is no vacant land you have to demolish an existing structure and pay millions for the land. Then you have to deal with even more agencies and people. This article should explain some of the changes and challenges we face today.

Below is a complex building permit application which was approved. It's a two story 1906 very good quality home in Los Angeles. It cost $3,000 to build about 3,000 sf or $1/sf. This included everything for this high quality home. This was very, very expensive in 1906. This home exists today.



This home was built in a more rural area of Los Angeles in 1934. 672 sf for $1,000 or $1.40/sf. Look at this form. No architect, engineer, contractor. You could built it yourself. You didn't need a licensed contractor, plumber, electrician. There were no building and safety regulations or planning and zoning and no inspections. You want to build a house or school right next to a liquor store, highway, industrial plant? Okay.


This home was built in 1952. Again, no architect, engineer but there's a contractor because this person doesn't want to build it himself. Can you imagine no building and safety regulations? This time there is a little sketch. 2,200 sf built for $8,300 or $3.77/sf. That's it.

Below is the budget for a four-plex in the city of Los Angeles. This is the actual budget. Again, not my client. They paid $1.1M to buy a tear down home on an R2 lot. It cost $2,000,000 to build four units or $500,000 per unit. This developer is highly experienced. This soon to be property is in a not so good area of Los Angeles. This doesn't include a lot of other costs such as selling commission, transfer fees, property taxes...if they sell it. These people hold property and don't sell it. They'd have to sell over $2,000,000 to make a profit. We appraisers figure in a 20% profit so they would most likely sell it for $2,400,000 which seems about right based on the area. These are not luxury units. They are bare bones basic minimum requirement units. They're built dormitory style as if for students.



Cut to the chase today, 2020. It easily costs $175/sf to build an average low quality home. The amount of paperwork involved would be at least 3-5 feet tall not including plans and surveys. This cost doesn't include architect, survey, engineer, geo, soils, grading, utility hookups, appliances, finishes... It also doesn't include time, effort and money getting approvals from building and safety, planning and zoning, neighbors, NIMBYs, neighborhood lobbyists/extortionists, HPOZ Committee, transportation... It doesn't include mortgage payments, insurance during pre-contruction and during construction. It doesn't consider that you can only choose a piece of property with a very specific zoning in a very specific area. It can easily take two years from permit application to breaking ground. That's two years of holding costs just to do nothing. After you break ground it could take another year to have building and safety inspect the electrical, plumbing, mechanical... elements of your home so you can continue to the next step. It could take up to two more years getting a Certificate of Occupancy. All of these things take a lot of time and money.

This is why Mayor Eric Garcetti can fund a housing a project and not have a grand opening for at least two to five years. I was on the Prop F Committee to build the new animal shelters and fire stations. I've gone through the process over years with the City Committee. They actually did a really good job staying on top of things even when issues arose. Still, it took years and wasn't cheap.

The high cost of land, construction materials/labor, excessive red tape, NIMBYs dragging out the costly process is why we have a housing crisis. This is why we need housing for homeless, low income and even low middle class people today. Because of all the obstacles to building new units not enough units have been built over the past 30-40 years which is why rents are so high. It's a basic supply and demand issue. Rent control made the situation worse as landlords left the rental market and few new units could be built.

Some say "developers are just greedy." No, they're not. They're developers. Their goal is to build a project and make money. As an appraiser we figure in 20% developer profit. Many times they don't make 20%. They can end up losing their entire investment because building projects is extremely risky. Other people sell cars, clothing, medical services. They also expect to make a profit. It's just economics.

I've offered many solutions to these problems in my many articles about the housing crisis and solutions. The main solution is to limit NIMBY's power to stop projects. Some cookie cutter 2-8 unit projects should be automatically approved and need no further approvals from neighbors or NIMBYs. I just wrote this quick article so people can see how much it costs and how difficult it is today to build housing. People are yelling at Mayor Eric Garcetti like he is intentionally stalling on building new housing. He is doing everything in his power to build new units. He is stymied by NIMBYs.

Recently there was a project to build 250 units on vacant land with units for homeless, very low income, low income and market rent units. People fought it because they wanted more units for very low income. This was a private developer offering to build low income units when there is no law that states he must build super low income. NIMBYs  killed the project. A low income housing unit in the hand is better than two in the bush. NIMBYs are one of the biggest causes of the housing crisis.They have a place to live so eff everyone else.

FYI I have nothing to do with any of the homes listed above which is why I used them. I have never appraised, inspected, sold them. I just pulled some random buildings of specific ages.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit
Posted by at No comments:
Labels: , , , , , , , , , , , , , , , , ,

Tuesday, June 18, 2019

Here is the real cause of increase in homelessness in Los Angeles 2019 - by Mary Cummins

cause of homeless increase in los angeles california is the recovery from the real estate recession, mary cummins, real estate appraiser, appraisal, mayor eric garcetti,
There has been a significant increase in the number of homeless people in Los Angeles and the entire state of California. One of the biggest causes besides stagnant wages and 30 years of not building enough units is the recovery from the real estate recession that began in late 2007. If you look at the chart there is a direct correlation between the rising price of homes, 2-4 units and apartment buildings and homelessness.

I've been a real estate broker, appraiser in Los Angeles since 1983. My specialty is apartment buildings. I have gone through three boom and bust real estate cycles in Los Angeles as a broker, appraiser. While I've always been concerned about the homeless I've never lived in an area with homeless people previously. I'd only see them doing appraisals in South LA or downtown. I now live in an area with homeless people.

The great recession started in the fall of 2007. By 2009 some properties had dropped 35%. Some new DTLA lofts dropped by 50%. HOA were going bankrupt. Entire loft buildings were in foreclosure. During this time people who could afford to hold their property held and rented it out. By 2010 prices started to rise a little. By 2014, 2015 some values were almost close to what they were fall 2007. Some people started to sell in the bull market while prices continued to rise. Prices continued to rise until fall 2018. We are now in the beginning of a real estate recession though apartment buildings are still doing well because of lack of sufficient units.

By 2016, 2017, 2018 people started selling their properties. They sold homes and 2-4 units, apartment buildings. Most of the homeless came from 2-4 units and apartment buildings though some may have come from homes which were group rented. As these properties sold the tenants were evicted for many legal reasons. You can pass through major renovations to tenants. As most landlords were not properly maintaining their units during the recession these properties needed work. They were class C buildings. Class A buildings are luxury new. Class B buildings are renovated and rented for market. The tenants were not able to pay the increase in rents. They became homeless. They couldn't afford to move or store their possessions so they left most of them. Landlords, contractors dumped the items on the street or maybe dumped it a few blocks away. This is where a lot of the trash comes from. You can tell it's eviction trash when it includes mattress, clothing, household items... Construction trash and business trash looks very different.

The best way to make money as a real estate investor in Los Angeles is to buy run down units with below market rents. Get rid of the tenants, renovate the building and re-rent for market rent. This provides the best return on investment. It's just a business deal like buying a car for $5,000, fixing it up for $1,000 and selling it for $7,500. Investors aren't trying to make people homeless. Homelessness is just collateral damage.

I will now focus on an area of which I'm very familiar, the area around USC. Rents around colleges and universities are generally higher than the rest of the city. From 2015 to today I'd say at least four run down apartment buildings per block have been sold, renovated and re-rented for market rent. The rate of sale of these buildings increased drastically since 2013 and mainly 2015. Some of these properties were old large homes converted to units with and without permits back in the 1980's when the area was very run down.

The poor tenants and their poor friends who stayed with them were all evicted. With some of these properties people were living in garages, carports and patios. In some apartments every room was turned into a bedroom including the living room, dining room, pantry. Some rooms were divided with a hanging sheet into two bedrooms. The tenants appeared to be Latino, some black, a few white day laborers, maids, restaurant workers, construction workers... low wage people. They were not Section 8 tenants.

The rebound of the real estate market happened in Los Angeles alongside the revitalization cycle of real estate of some poorer parts of the city. Some call it gentrification. This causes an increase in renovation and new developments which bring money, tax income, jobs, businesses which help the community, city and state at the cost of an increase in number of homeless. Here is one property which I watched as poor tenants were evicted, their possessions were dumped on the street, property was renovated and they're now trying to rent it. I can give you many more addresses where the same exact thing happened. Most were just poor working people who were evicted.

http://mary--cummins.blogspot.com/2019/06/flop-houses-in-shitty-areas-sold.html

The other causes of the rise in homeless is stagnant wages. Even if you made $15/hr, you still couldn't rent a one bedroom in Los Angeles with your take home pay. You need two people making $15/hr to rent a cheap one bedroom.

The most significant cause of homelessness and the housing crisis in LA is lack of development of housing units over the last 30 years. The cause is/was rise in cost of land, cost of construction, development red tape and NIMBYs. Here are a few ideas from others and some of my own about how to deal with the housing crisis.

http://mary--cummins.blogspot.com/2019/04/ideas-to-help-solve-housing-crisis-here.html

FTR Mayor Eric Garcetti did not cause this problem. He inherited this problem. The rise in homelessness is caused by the rebound from the housing recession, developer red tape, stagnant wages, insufficient development of new units and NIMBYs. Garcetti is doing what he can to try to fix the problem. Instead of trying to house the homeless as a way out of this mess we need to look at the causes. In domestic animal rescue we state you can't adopt your way out of pet over population. You have to work on the causes of pet over population. The same applies here. LA can't afford to build housing for all the homeless. We need to keep people from becoming homeless in the first place. We need to get the homeless back into productive jobs so they can pay for housing on their own.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit
Posted by at 1 comment:
Labels: , , , , , , , , , , , , ,
Subscribe to: Posts (Atom)