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

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
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Showing posts with label income. Show all posts
Showing posts with label income. Show all posts

Monday, October 28, 2024

Appraising Homes with Solar Power Systems Class AjO by Mary Cummins


I just took the Solar PV: Technology and Valuation class offered for free by AjO Classes and sponsored by CA IOUs (California's Electric Investor Owned Utilities). It was very interesting and I learned a lot. They of course explained everything we should know about inspecting and appraising the value of a solar power systems. Then they went into using the three different approaches to value, i.e. sales comparison, cost and income. 

You need a bit of data in order to determine the value. That data isn't always readily available for the comp properties. You can use cost or income approach if there's isn't enough market data in your area. If you give most weight to sales comparison approach, cost and income data are only supportive so ...

In order to calculate the value of a solar power system (not solar thermal for heating water) you need to know if it's owned versus leased, power of the system size in kWh and age. Assume 25 year life. Leased systems add no value. You'll need to collect data such as contract with power size, original price, current price of similar new system and maybe power rates. There are free online calculators available. 

I'm pretty sure the solar people got together to try to help educate the agents and appraisers about the value of solar systems in home values. Most don't mention it or include data or value. This upsets sellers and solar companies. They want people to see the value in the systems. I was always taught to do regression analysis to see if there is a market reaction. Issue again is sufficient data. 

A few takeaways. You need a bit of data to appraise the value of a solar system. You need to know power, age of solar system of comps. As rates continue to rise the value of solar systems will increase. The cost of new solar systems has come down dramatically. If you depreciate an older system, it will probably be higher than buying new. Use the lower of the two values. People buy homes with solar systems for more than just energy cost savings. I highly recommend the class. 

"Appraisers and Realtors will advance their credibility and competency to better serve their clients with solar-powered homes.

Newly constructed homes have been required to have solar as of 2020 and existing home installations remain on an ongoing upward trend.

How much value does solar add?

What is the most essential number we need related to valuation?

While saving money is the primary motive for homeowners to invest in solar, CA building codes and energy policies are key market drivers as goals prioritize decarbonization; all-electric buildings powered by solar.

Attendees will be better equipped to represent solar assets accurately in sales, competently determine value, and be credible guides for buyers and sellers.

Course Highlights

The first question to ask about solar systems

The most important number to obtain related to valuation

How to determine value of solar PV: 3 appraisal approaches

Key points to include in listings and appraisal reports

How utility rates impact purchasing decisions and value

Components of solar systems and what to look for during inspections

Context: CA energy policy

Resilience: Solar plus storage to leverage TOU rates and power through extreme events

Future influencers: Evolving challenges in managing our power grid

Access to free online tools to inform and improve professionalism

Learning Objectives

Answer essential questions regarding the valuation of a solar system

Indentify components of solar systems

Be aware of variations in utility rates and their impact on value

Understand motives and market influencers of homeowner decisions

Determine the value of solar PV systems: 3 appraisal approaches

Accurately represent solar in listings including vital points to inform value

Stakeholder’s shared pool of knowledge to support fair valuations

Target Audience:

Real estate appraisers

Agents

Lenders

Related associates

Learning Level: Intermediate

*Course is designed for those familiar with valuation principles

Continuing Education Credits: 3 hours continuing ed. BREA, DRE, BOE "

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

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Saturday, October 12, 2024

Cause of Lack of Trees in South Los Angeles, Mary Cummins, Real Estate Appraiser

I just read the LA Times article "Study reveals attitudes about lack of trees in South LA." FTR I live in South Los Angeles in an area that has both a lot of trees and no trees. I choose my walking route based on the streets that have trees that can provide me with sun protection and protection from the summer heat. I can feel the huge temperature difference when I walk the two blocks with no trees to get to the one block with trees. The areas in SLA with trees have nice well maintained homes. The areas without trees have less well maintained homes, apartments, commercial and industrial buildings.

My first issue with the article is it starts off with a very racist comment by an alleged community leader. It's as follows: "Our lack of trees is not an accident or coincidence. It is a result of historic patterns of discrimination, disenfranchisement and racist planning practices." This is false. There is a lot more to the history of South LA and trees. Yes, racism and discrimination exist in Los Angeles but there has never been a policy where no trees were planted in areas because of race.When you automatically accuse everyone of racism and discrimination they are less inclined to want to help. You are attacking the people from whom you are asking for help which makes no sense.

First some history. Originally this land belonged to Native Americans for tens of thousands of years. Later the Spaniards stole the land from the Native Americans calling it New Spain in 1542. Spain claimed the specific area of California in 1769 and Los Angeles was established in 1781. Mexico got their independence from Spain in 1810 and controlled the land. California became a nation in 1846 independent from Mexico. In 1850 California became a US state. California was a free state and didn't have slavery but did have Native Americans and Mexicans.

Southern California was mainly rolling hills with sage scrub and grassland. Most of South Los Angeles didn't have a lot of trees naturally. The area is mainly flat land. It was used for farming because it was flat with few trees. The few trees were near creeks and rivers or in the higher hills. We are in Sunset Climate Zones 18–24. Only very hardy small trees, shrubs grow in the flat areas naturally though we have larger oaks, sycamores, pine trees, fan palm trees... near areas with more water. We are not a forest but a drier desert area without a lot of natural trees.

Around 1880 they started building a lot of homes. Most developments cut down native plants, trees then planted a lot of non native trees around the homes and lining the streets on the parkways. Some still exist today but sadly trees don't live forever so many have died. Many trees were not good choices for our climate, drought conditions so they died. 

From 1880 to 1940 most of South LA was middle class to more affluent. Around 1900 some more expensive developments didn't allow blacks, Mexicans, Indians... The LA Sugar Hill case ended housing segregation in 1945. School segregation ended 1947. Fair Housing Act was 1968. This happened all over the entire US.

Starting around 1945 some people left South Los Angeles and moved to more affluent newer areas. The reasons are because the housing stock was getting older and dilapidated as most homes were built 1880-1920. It was caused partly by the real estate cycle of decline. People wanted to move to newer developments. It was also caused by scaremonger tactics from real estate investors who scared some white people causing "white flight." They were told their properties would be worth pennies once other people such as blacks lived near them. Property values went down and continued to go down as the area fell into disrepair which is called decline in real estate cycles. People weren't maintaining the homes or the trees.

As the property values went down making it more affordable the percentage of blacks, Latinos went up. There is a correlation between income and race. Whites make more money than blacks, Latinos. People who make more money have more money and buy more expensive homes in more expensive areas. This has nothing to do with the Planning Department. Over time more POC lived in these more affordable areas of South LA. Over time the population has become mainly Latino then white then black. LA City Census shows 64% Latino then white, black equally. It varies by poll type and specific area. Little Honduras is more Latino. 

Lower income people tend to live in cheaper smaller homes, duplexes and apartments. For this reason there is a higher density of people in lower income areas. Because of income correlation this means there are more blacks, Latinos in these areas. People buy what they can afford. There are also lots of poor whites here. This explains the people to tree ratio in the Times article. It's not racism but economics 101.

Some people, neighborhoods, cities, organizations would plant new trees as older ones died from age, bark beetles, drought, damage from utility line tree maintenance programs... Those are generally middle income areas and up in Los Angeles. Many times the homeowner, property owner planted a new tree to replace dead ones in front of their property. Legally property owners are responsible for maintaining the parkway and trees in front of their property. That is the little strip of land between the street and sidewalk. People are supposed to maintain the city trees on their parkway though the city will trim it. Many in lower income areas do not maintain the trees on the parkway. Most people are lower income tenants in these areas. Tenants don't maintain anything. Landlords don't live there and don't really care. Not as many are owner occupied homes. Property owners are the main reason there are no living trees on the parkways in those areas. 

Property taxes from specific areas generally pay for city repairs and improvements in those specific areas. These areas have lower values so they have less revenue from property and other taxes. They have less money in their budgets for tree planting. Generally politicians will pass new programs based on what the constituents want. They take polls. The people living in the areas wanted more police protection, general clean up, affordable housing, parks, school improvements... They did not want the few city dollars spent on new trees. It's what they wanted. Tenants and landlords vote equally.

After many years with no new trees planted and older ones dying there are fewer trees in South LA today. Some nonprofits and neighborhood organizations started fundraising to buy and plant trees in South LA. They planted some trees. Many were not watered or cared for and they died. Some were stolen. Others were vandalized. I've seen all of this first hand. I'd replant the ones ripped out by vagrants. I'd water some. I picked up two that were knocked over by cars, replanted and restaked them only for them to later be stolen. I saw someone load one in a truck but he had no license plate so I couldn't report it like that would have done anything anyway.

Some see new trees as a sign of "gentrification" so they destroy the trees which is crazy. Gentrification is just the real estate cycle of revitalization. It's been happening all over the world since the beginning of time. People get pushed out of more expensive areas so they move into adjacent areas which are more affordable. This causes home prices and rents to go up in those areas. Some existing tenants will have rent increases as the area improves. I've found in my area which is mainly Latino that more affluent Latinos are replacing less affluent Latinos. It has nothing to do with race or color but money. It's based solely on economics. In one case middle income Latinos moved into an area of lower income Latinos. The lower income Latinos broke windows, graffiti'd the businesses of the middle income Latinos because they didn't want their rent to rise. What really gets me is the lower income people who own the property are happy as hell to sell for 10x what they paid for it. It's only a few tenants who complain. Since the beginning of time people would just move to another area they can afford but today they protest and blame others and call people racists.

All that said we do need more trees in South Los Angeles and other areas with few trees. The City of Los Angeles has had tree planting programs called "City Trees," "Million Trees LA" for years. They give away free trees all the time. In 2006 the goal was to plan a million trees in a few years. It was not that successful because people didn't care for the trees and they died. They were also not the best trees. I saw one which was a purple potato vine bush pruned into a tree. They are ugly if you don't prune all the time and they provide no shade. I think the tree provider just wanted to make a lot of money off the city.

Any program for new trees must work with the community where they will be planted. People need to sponsor and volunteer to maintain the trees block by block. I can only handle the blocks I walk which is two miles a day. It should probably be a paid group of tree guardians which would also provide some jobs to locals. They need to talk to the homeowners and the homeless people living around the trees. The city, block club, tree group, community organization...can all work to plant and cultivate the trees but if homeless people, vagrants, others steal and destroy them, there will never be enough trees. As areas are revitalized there will be more successful tree plantings.

After I wrote this I took a walk in my area of SLA. I noticed trees were dead in front of apartment buildings, commercial buildings more than homes. Apartment and commercial building owners don't generally live at the property they own. They don't care about trees. They also probably don't realize it's their responsibility to maintain the parkway. No one enforces maintenance of the parkway or trees. One idea to aid in enforcement would be using Google maps street view. You can clearly see if there are trees just looking at the maps. They now even have green colored areas for trees on the maps. Sure Google would write a quick script to get addresses that don't have trees so notices about free trees could be sent with their property tax statements. Or maybe the city can instead of giving away free trees for people to plant on their private property they can go plant some on the parkways where they are missing. They will need to maintain them and should be drought tolerant, hardy and a type of tree people won't want to steal. No one waters the parkway in lower income areas. 

An education campaign about maintaining the parkway might help. Another idea would be to make it mandatory to have a tree of certain species on parkways every so many feet maybe 25'. Average lot is 50 wide so two trees in front of each house away from street signs, utility wires sounds good. One would just have to enforce the tree mandate. If someone doesn't plant or request to have a tree planted by the city or doesn't maintain a tree, they can be fined, have a fee added to their property tax. A professional organization can then be paid to plant and maintain trees. At the last house I owned I added a sprinkler system to my parkway. I also paid an arborist to give me advice to make my tree healthier. 

The problem with my idea is that lower income people will complain about having to pay a fine or do work to plant or maintain a tree. They will scream discrimination and blame it on the "racist" city. I have no faith that anything can be done because the people complaining about lack of trees don't want to do anything about it. They don't even want to maintain the parking strip which is their legal and financial responsibility. After following the tree issues for years I throw my hands in the air on this one.

Here is the LA Times link or you can read it for free via Yahoo news by searching the title. 

https://www.latimes.com/environment/story/2024-10-11/there-is-no-easy-fix-study-reveals-attitudes-about-lack-of-trees-in-south-l-a


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Sunday, June 26, 2022

Wealth gap, income gap, home value gap, race, gender, marital status and Roe v Wade by Mary Cummins

Research has unequivocally shown there is an income and wealth gap between whites and blacks, Latinos. This is why homes owned by white people are worth more than homes owned by blacks, Latinos. People buy the homes they can afford and whites can afford to buy more expensive homes. Appraisers aren't appraising them differently. 

We also know there is a wealth, income gap among men and women, married verses single and especially single mothers with children under 18. Research has also shown that poor, black, Latino women were more likely to get abortions than white women. https://abc7.com/abortion-cdc-data-women/11815941/ 

The reversal of Roe v Wade forcing poor women especially of color to have babies is just going to make the wealth, income gap that much worse. It's also going to cost the states money in welfare, Section 8 housing, Medicare, EBT.... I don't think the GOP really thought about the repercussions of banning abortions. White Supremacists who tow the GOP line including anti-abortion will only have themselves to blame when POC actually do replace them via a higher birth rate. That's already happening but banning abortions will make it happen faster. 

Here's a great article to share with lots of pictures for those who don't care to read.

https://www.vox.com/the-highlight/23182150/abortion-rights-economic-justice

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Friday, February 4, 2022

What is the Appraisal Institute? AI is a private non-profit organization and not part of government by Mary Cummins


Many are under the false impression that the Appraisal Institute (AI) is part of the government that oversees and regulates real estate appraisers. That is absolutely false. They are NOT The Appraisal Foundation (TAF). The Appraisal Foundation is "Authorized by Congress as a source of appraisal standards and qualifications." TAF worked with some private appraiser organizations one of which was AI until 2010. TAF stated AI resigned instead of being suspended for violating the Foundation’s Code of Conduct for Sponsoring Organizations. Here's an article I wrote on who actually regulates appraisers and the appraisal industry. 

The Appraisal Institute is instead a private non-profit organization 501 6 c FEIN 36-3739643 formed in 1992 whose mission is to promote real estate appraisers and the business of appraising, IRS code S41 "promotion of business." Their real mission is to sell memberships, classes, publications and their own designations such as MAI... They are primarily focused on commercial appraisers and not really residential. Many feel they are just a private white male commercial appraiser club that promotes itself and not appraisers or the industry as a whole. It costs $15,000 to become an AI MAI appraiser so it's not cheap. Only General Certified Appraisers can become MAI Appraisers. 

Below is their most recent tax return which is their 2019 990 tax return from their Guidestar profile https://www.guidestar.org/profile/36-3739643 . All info came from this public document. Their income was $20,589,361. They allegedly had almost 17,000 members which includes retired, candidates, honorary and affiliates in 2019. In 2007 they stated they had 21,000 members so they lost members?

https://pdf.guidestar.org/PDF_Images/2019/363/739/2019-363739643-202013159349304521-9O.pdf

They state their mission is "THE APPRAISAL INSTITUTE'S MISSION IS TO ADVANCE PROFESSIONALISM AND ETHICS, GLOBAL STANDARDS, METHODOLOGIES, AND PRACTICES THROUGH THE PROFESSIONAL DEVELOPMENT OF PROPERTY ECONOMICS WORLDWIDE."

They have 98 employees and 198 volunteers. Their main income is selling classes, memberships for $18,000,000. Broken down it's $11,000,000 membership dues, $5,800,000 education, $557,000 publications/books, $507,000 admission, grading, $49,000 periodicals. They spend $10,000,000 on salaries. They have about $23,000,000 in assets. $11,000,000 net assets.

Their main employees and salaries, wages are below. Doesn't include bonuses, retirement, health insurance, other items which may be considerably more. AI sometimes pays for travel expenses of spouses. 

Jim Amorin $435,000 50 hrs
Beata Swacha $223,000 50 hrs
Jeffrey Liskar $307,000 50 hrs
William Garber $225,000 45 hrs
Evan Williams $175,000 45 hrs
Stephanie Coleman $179,000 37 hrs
Robert Borst $160,000 37 hrs
Christina Mitakis $151,000 37 hrs

Officers/Directors

Stephen Wagner $164,000 40 hrs/week
Jefferson L Sherman $102,000 20 hrs/week
Rodman Schley $89,000 20 hrs
James Murrett $91,000 20 hrs

Independent Contractors

Heidi Korthase $122,000
Rich Feuer Anderson $120,000
Craig Harrington $100,000

There is an Appraisal Institute PAC Political Action Committee to which AI gives $101,000. They spent $574,000 in lobbying costs. 

PAC disclaimer: APPRAISAL INSTITUTE PAC (AI PAC) PROVIDES A MEANS FOR DESIGNATED MEMBERS, CANDIDATES, AND PRACTICING AFFILIATES TO PARTICIPATE IN THE POLITICAL PROCESS ON A NATIONAL LEVEL. CONTRIBUTIONS CAN BE MADE BY INDIVIDUAL DESIGNATED MEMBERS, CANDIDATES, AND PRACTICING AFFILIATES OF THE APPRAISAL INSTITUTE AND THEIR FAMILIES, AS WELL AS BY APPRAISAL INSTITUTE EMPLOYEES. CONTRIBUTIONS FROM AI PAC SUPPORT THE PRIMARY AND GENERAL ELECTION CAMPAIGN EFFORTS OF CANDIDATES FOR THE U.S. CONGRESS WHO SUPPORT AND PROMOTE THE PRINCIPLES OF THE APPRAISAL PROFESSION. AI PAC DOES NOT CONTRIBUTE TO POLITICAL PARTIES, TO PRESIDENTIAL CANDIDATES, OR TO LEADERSHIP POLITICAL ACTION COMMITTEES.

They received grants $87,000 and paid about $664 in grants. All this money and almost no grants to women, POC or people with less money. Makes it hard to believe they are behind the new grants program for women, POC or people with less money. They basically waited until they were forced to do it. Not only that but they say you must pay to join their club just to apply for a grant. On the flip side they have no problem receiving grants from others such as a PAREA grant from TAF

Most in the organization are older white males who are commercial appraisers. There are very few women and fewer POC and residential only appraisers especially on the board or as employees, consultants. 

Below is an article by someone with a lot more knowledge about AI than myself. They had over 25,000 members and now they have about 17,000. It also talks about the loss of education revenue due to online and virtual education. In 2016 main AI started taking the Chapter's money. During this decline in members there has been a great increase in salaries, wages and travel expenses. 

https://www.millersamuel.com/epic-fail-the-appraisal-institute-irs-990s-show-they-needs-to-do-a-180/

Below is a pic of the 2021 BOD. I see a few female tokens and the rest are older white men. 



#appraisalinstitute #AI #TAF #theappraisalfoundation #appraiser #appraisal #appraisalindustry #regulatory #enforcement #appraisalsubcommittee #appraisalinstituteorg 

http://www.linkedin.com/company/appraisal-institute

https://www.youtube.com/channel/UC6mGHNrWBOD12iqKCHqxmZw

https://www.facebook.com/AppraisalInstitute

https://twitter.com/AI_National @AI_National

https://www.appraisalinstitute.org/rss/news.aspx?CategoryId=1

http://blog.appraisalinstitute.org/

https://en.wikipedia.org/wiki/Appraisal_Institute


Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html

Tuesday, September 7, 2021

Gentrification and Urban Renewal, the issues and solutions for an improved community. Mary Cummins


The article linked below is an interesting read about "gentrification." The article states people should be more upset about the areas not being revitalized but they're not.

"What we talk about when we talk about gentrification. The worst problems are in the neighborhoods that aren’t gentrifying." By Jerusalem Demsas@JerusalemDemsas  Sep 5, 2021.

https://www.vox.com/22629826/gentrification-definition-housing-racism-segregation-cities

The term is not even American. It was coined in 1964 by a British sociologist to describe the British "gentry" moving into working class areas. It has to do with affordability. It's not the racial issue that it's become here in the US starting in the 1990's. "Gentrification" is not a dirty word as stated by today's US media and some local community groups. 

The article states "But the core rot in American cities is not the gentrifying neighborhoods: It is exclusion, segregation, and concentrated poverty." I agree with this. The article goes on to state the exclusion, segregation and concentrated poverty is caused by unequal income. Poor people live in less expensive areas they can afford. It would make more sense to help them make more money so they can afford an apartment, living expenses, education ... This concept goes hand in hand with the recent false articles about appraisers appraising homes owned by black people for less than homes owned by white people. POC are more likely to have less money and buy less expensive homes in less expensive areas. The homes used in the data weren't even appraised by appraisers but by robots. 

The article stated "Gentrification as the juxtaposition of the haves and have-nots." I see this every day. Someone with less money moves into an area with less expensive rent. Over time the city, businesses, neighborhood groups improve the blighted area as part of urban renewal and revitalization. New parks, streets, stores open as the area is cleaned up and improved. Sometimes the people demanding that the city improve the area are the ones who end up complaining about the improvement which increases property values and corresponding rent. Long time resident property owners are happy but not the tenants. Those tenants originally drawn to the blighted area for cheap rent now may have to pay a higher rent or move. This upsets them and causes them to protest, attack new businesses and new neighbors falsely claiming the new people are intentionally destroying their culture, history and language. The renters actually just want the money, homes and stores the new people have. 

From the article, "It’s no wonder that people who have faced centuries of disinvestment grow angry as public and private money flows into their neighborhoods only after high-income, college-educated people choose to move there. Even if those people are not wholly responsible for the inequality, the blatant injustice is hard to ignore." 

This is why some Latinos in Silver Lake attacked new white owned businesses and residents. What's ironic is in that area Latinos replaced Jewish people who replaced Asians who replaced Mexicans who replaced Spaniards who replaced Native Americans after stealing their land. Which one is the bad gentrifier? At least the people who came after the Mexicans bought the land and didn't steal it. 

I'm positive that if you offered the current lower income tenants to either stop the revitalization and let the area become a more blighted but affordable slum or increase their income so they can afford a nice apartment in an improved area they would prefer to increase their income. This is the no brainer solution to the conflict. Help lower income people increase their income. The solution is not to stop urban renewal and revitalization. That would mean encouraging blight, crime and loss of housing units. From the article, "As George Washington University professor Suleiman Osman wrote in his 2011 book The Invention of Brownstone Brooklyn: “Stories abounded of renters [in Brooklyn] being pressured by landlords to leave revitalizing areas. But non-revitalizing blocks with high rates of abandonment and demolition saw rates of displacement that were just as high.”

The people moving into these less expensive areas don't just have more money. They are also more educated and different in other ways. This can cause friction with some people similar to what's happening in Texas with the California tech industry relocation. In Texas things are even worse because property tax goes up based on current market value. This means an elderly person who has lived in a house a long time now has to pay very high property taxes. They generally are forced to sell and move. At least in Los Angeles we don't have the same property tax issues. 

Gentrification isn't always about people of color being displaced by white people. Again, Austin, Texas is one example, another is England. The tech industry is more diverse. People of color and wealthier more educated white people are displacing less educated, less wealthy white people in Texas. It's not a race issue but a wealth issue. Obviously the more wealth a family has the better education the children can receive. 

A main issue of people who cry “fire, fire, gentrifier” is increased rent. That's not always the case. In Los Angeles, California we have rent control which prevents most of this. I've seen people who have stayed in their same cheap apartment since the '70's for this reason. During that time they've even bought homes which they rent to other people which doesn't really support the purpose of rent control.

"Overall, the research literature leans toward the view that gentrifying neighborhoods can lead to displacement, but they don’t have to. Gentrification can bring with it the promise of integration and sorely needed investment that can increase residents’ quality of life — but only if disadvantaged residents are set up to take part in the benefits of increased investment."

The article goes on to summarize the situation as "City by city, the message is clear: Segregation and concentrated poverty are the true blights of urban life, despite our fascination with gentrification." They're talking about segregating people with less money and not race. Here in Los Angeles and most of the US there is a correlation between people of color, immigrants and having less money. That's not the case in Texas, England ...

The article offers a solution to the real problem, "How to ethically create integrated neighborhoods. First, the economic literature is clear that increased housing production reduces rents. Second, tenant protection policies could help forestall some evictions. Third, rezoning of wealthy white segregated neighborhoods could slow the speed at which gentrifying neighborhoods change, and help tackle segregation. These types of interventions can provide a roadmap for how to ethically integrate urban neighborhoods."

By rezoning they mean allowing 2-4 units in some residential single family zones near public transportation. They're not talking about turning Beverly Hills estate neighborhoods into huge apartment buildings with only cheap studio units. Limiting homes to single family only zones is a more recent development in cities. Years ago in Los Angeles you could almost build whatever you wanted anywhere. By the 1900's the first developers and then cities limited zones to single family, 2-4 units, apartment buildings, commercial, industrial.... because that is what home buyers wanted. Some early examples are housing developments which had deed restrictions starting in 1903. The deed restrictions didn't have to do with race, color or nationalities but with the type of properties that could be built in the development. Some restrictions included quality, styles of homes, set backs, height, size... Only homes could be built in those residential developments. 

The article ends with this, “Gentrification is a cultural sphere to work out feelings of resentment around inequality. ... Those feelings aren’t to be discounted,” Gottlieb argues. “This is a manifestation of a long-running sense of ‘I am not welcomed in the city, I don’t have a right to the city.’ Sometimes those feelings can be worked out in the cultural terrain of gentrification, even indeed if the people moving in aren’t the proximate cause for them leaving.”

We need to deal with the issue of "gentrification" for what it actually is which is revitalization. People pushed out of more expensive areas move into less expensive areas. The city, businesses and community improve and revitalize those areas. The revitalization must just be done ethically while still attracting new business investment to the area. Most importantly we must help people with less money improve their financial situation. This would help all of us and our community by solving the disparity of income, home ownership rates and home values among wealthy and less wealthy people. It's not a race but a financial issue. Fighting, NIMBYism and trying to stop all development is not the answer. That would just make the situation even worse for everyone.

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin

Sunday, July 4, 2021

Main reasons home loans, mortgages are denied. It's not the appraiser. - by Mary Cummins

main reasons mortgage home loans denied, mary cummins, los angeles, california, real estate, home loan, 

Here are the main reasons mortgage loans are denied. It's not the appraiser or appraisal. 

1. Debt to income ratio (37.2% denial rate).

Your debt to income ratio (DTI ratio) should be no great than 43%. You can improve this by paying off debt, reducing interest rate on debt or renegotiating debt to lower the monthly debt payments. Your net assets (total assets minus liabilities) still factor into the loan so make sure the debt balance doesn't increase too much when you lower the rate or payment. 

Another thing they consider is your monthly housing cost ratio which is (monthly housing costs / monthly income). "The top ratio is calculated by dividing your new monthly mortgage payment by your monthly gross income. Typically, this ratio should not exceed 28%. The bottom ratio is equal to your new monthly mortgage payment plus your monthly debt divided by your gross income per month. Typically, this ratio should not exceed 36%." 

As a rule of thumb your monthly rent, utilities or mortgage, taxes, insurance, home maintenance, utilities should not exceed 30% of your gross monthly income. If your housing cost is over 30%, you are considered cost burdened and have a high risk of not being able to pay your rent or mortgage. All poor people, people making minimum wage, moderate earners are cost burdened paying over 50-70% of housing costs if they live in Los Angeles or similar areas. Median rent for an average one bedroom is $2,100/month here. Two minimum wage earners working full time can barely afford that if they don't eat much. You should not be buying a home at the moment. Work on increasing your income. I know it's a "let them eat cake" thing to say and I agree. It's not easy for most people.

2. Credit history 34.8%. 

You need a FICO score of 580 to 620 absolute minimum to get a home loan. You can improve this by always paying your bills on time. Make sure you have some little loans like a small balance on a credit card, gas card, department store card...to build credit. Start that at least two years before you try to buy a home. Start with one card only and make payments. After a year add another. Don't apply for a lot all at once. You'll be denied and end up with many inquiries on your credit report which is a big red flag for denial. And remember, the lower your FICO score, the higher the risk to the lender and the higher borrowing rate for you. Get your score as high as possible so you can save money. It's doesn't make sense that poor people pay higher interest rates but it's related to the higher risk for the lender. 

3. Collateral 19.7%. 

Generally the home is the collateral for the loan. You can also use other real estate or assets such as bonds, life insurance or investments. Your parents could cross collateralize their home for your home loan if they love you more than life itself. The total loan to value ratio should be about 80%. This would be about a 20% down payment. If you want to only put down 5%, the risk and cost goes up and you're much more likely to be denied. 

It's possible that the issue was not the appraised value but the fact it needs repairs, has broken windows, is in a flood, wildfire, landslide, hurricane, tsunami ... zone, has unpermitted additions, is over 150 years old, is next door to an oil refinery... If you are doing a low down payment loan, don't buy a fixer. You're more likely to be rejected because you'll need down payment money and the money to fix it. 

4. Other 12.9%

Everything other than what is listed here. The lender just can't discriminate against you based on race, religion, gender... The lender can deny you the loan based on credit, income, assets, liabilities and everything else in this article. That is legal. 

5. Credit application incomplete 8.9%

You'd think this would be a no brainer but it's not. People either don't want to complete the application or just don't. This is only for loan applications which were submitted and not for loan applications which were started but never submitted.

6. Unverifiable information 6.7%

Unverifiable information arises from inaccuracies in an applicant’s employment history or tax records or discrepancies between the application and credit report. This could be from unreported income that doesn't show up on taxes, tax returns which show no real income for years, bank statements which don't match stated income, a loan you paid off which isn't on your credit report, bills you paid which weren't reported or the person is just plain lying on the application or their taxes or both. 

7. Insufficient cash 4.0%

You must have sufficient funds to cover the down payment and closing costs and fees or lenders may deny their application. You generally can't borrow the down payment or fees. Research has shown if someone can't even save for a down payment, they are not credit worthy and there's a higher chance of the loan going under. If you haven't saved enough for a down payment, you're not ready to buy a home. Work on your debts, budget, income and save some money. You should have a 20% down payment and six months worth of monthly expenses saved before you buy a home. You should also meet all the other requirements I've listed here.

8. Employment history 1.8%

Lenders want to see that applicants have worked in the same job for at least two years. They want a stable, steady earner. This also means you can't just get your Uncle Benny to lie and state you worked for him for two years. They need an independent way to verify it usually with W2s, 1099's, bank statements, cashed checks, verifiable tax returns... In the 1980's to 2009 mortgage brokers actually forged tax returns, W2s, 1099's and bank statements or they did no document loans which didn't require them. Those are a few reasons we had three real estate busts during that time. Thanks to Obama and Dodd Frank we are less likely to have another bust because the borrowers are more creditworthy today due to independent verification. 

9. Mortgage insurance denied .1%

"Mortgage insurance protects the lender and allows borrowers making a down payment of less than 20% to still qualify for a home loan. Applicants who are denied mortgage insurance that need it are also likely to be declined for their loan." Mortgage insurance is insurance to pay the monthly Principle Interest Taxes Insurance (PITI) payment if the borrower can't make the payment. It's added to the monthly mortgage payment. As it is mortgage insurance is for high risk borrowers. To be denied that means you are a super crazy high risk borrower. If you're denied mortgage insurance, you are not credit worthy or ready to buy a home. Go work on yourself. Work to increase your income, reduce your budget and expenses, increase your savings and try again much later. 

https://constructioncoverage.com/research/top-reasons-mortgage-loans-are-denied-2021

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.


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