Where Are Rents Headed?

When deciding whether or not to buy a home, one consideration will be the cost of alternative housing options. Renting an apartment is one such alternative. Where are rental prices heading over the next few years?

Rental prices usually increase by about 3 percent annually. Trulia just released their Trulia Rent Monitor where they revealed that rental prices have increased dramatically in the last year.

“Nationally, rent gains continued to outpace home price increases in October, rising by 5.1 percent.”

Based on the concept of supply and demand, we believe rental prices will continue to substantially increase over the next few years. The long-run 30-year average increase in multifamily rental households is 200,000 each year. Over the next few years, those numbers will more than double to over 500,000 each year. Freddie Mac in their latest report, Multifamily Research Perspectives, projects housing demand going forward.

“Given assumptions consistent with economic growth slightly slower than long run averages, multifamily demand is likely to be in the range of 1.7 million net new renter households between now and 2015.”

The cost of owning a home will begin to increase as both prices and mortgage rates are expected to inch up in 2013. Perhaps now is the perfect time to lock in your long term housing expense by purchasing your own home.

Embellish a Plain Dresser with Paint

Give a nursery or kid’s room a fun burst of color. Update a boring dresser by covering the drawer fronts with paint and kid-approved stencils.

 

Step 1: Sand the drawer fronts with 220-grit sandpaper and then wipe off with a clean cloth. Apply primer to drawer fronts using a cabinet and door foam roller. Be sure to prime the edges of the drawer front. Allow the drawer fronts to dry for two hours.

Step 2: Paint drawer fronts and edges in Kiwi Splash using a foam roller. Follow the label’s instructions for allowing the paint to dry completely. Apply a second coat of paint, let dry. Make sure to cover the sides as well as the fronts. Apply additional layers as needed to reach your desired color. Allow the final coat to dry overnight. Tip: Speed up the drying process by directing a fan at the drawers.

Step 3: Download the animal and number patterns. Enlarge the patterns to approximately 5” tall. Take the patterns to a local copy or office supply store to have them laminated.

 Download Number and Animal Patterns

Step 4: Use a utility knife or crafts knife to cut out laminated patterns to create stencils. Be sure to place a layer of protection over your cutting surface, such as a stack of newspapers or a cutting mat. 

Step 5: Stand the drawers on their backs so the fronts are facing up. Spray the back of a stencil with one coat of spray adhesive. (Follow the manufacturer instructions for a removable bond.) Choose a location and place stencil, sticky side down, on a drawer front. 

To fill in the stencil, dip the paintbrush in a small amount of white paint. Apply paint by moving the brush up and down in a pouncing motion. Add additional layers of paint until the shape reaches your desired color. Allow each coat to dry completely before applying the next layer. Repeat with additional stencils. Use this same technique for drawer fronts two and three.

Good to Know: Apply multiple stencils at once so you can fill in a different stencil while waiting for another to dry.

Step 6: Once the painted drawer fronts have completely dried, seal them with a clear satin poly-acrylic spray sealer.

DIY Paint Can Lights

Decorative paint containers plus candles equal a beautifully in-can-descent effect.

 

INSTRUCTIONS:

Step 1: For a paper pattern like the one shown, first draw a 13-1/4"x4" rectangle on a piece of legal- or tabloid-size paper; then draw three lines to divide it into four equal sections 3-5/16" wide. Draw an “X” between the corners of each section. Lay a ruler on both diagonals of each “X”, and mark the lines every 3/8" from the center to the corners.

Step 2: Cut the 13-1/4"x4" pattern to size. Using transparent tape, fasten the pattern snugly on the can. Now rest the can in a shoebox with one end removed to collect the metal fragments as you drill. This also lets you hold the lantern with one hand to steady it.

GOOD TO KNOW: If you plan to craft several lanterns, make photocopies of your finished pattern. You can even scan it to save as a computer image file and print as many patterns as you need.

Step 3: Wearing safety goggles, drill the pattern into the can using a 3/8" drill bit. (Adjust drill bit size to suit your taste.) This can be tiring and is best done half a lantern at a time. 

Step 4: To paint the lanterns, prime with the spray primer, then apply a base coat in the colors shown with a small flat 2" paintbrush. Re-coat if necessary and allow to dry overnight or at least 4–6 hours before using. 

Step 5: Place a glass votive candle or tea light inside the can -- and let it shine!

Understanding Withholdings on Real Estate Sales

When did withholding start for California residents? The withholding law applies to dispositions of California real estate by both residents and non-residents which close on and after January 1, 2003. Previously, withholding was only required of non-resident sellers.   Why was this withholding law enacted? As part of attempting to balance the state budget, this withholding provision was added to legislation on the last day of the Legislative session in 2002.  It was estimated to accelerate collection of $285 million in additional state revenue.   Who is responsible for withholding? The law requires the buyer (called the transferee) to withhold from what would otherwise be paid to the seller.   What unit at the Franchise Tax Board handles the withholding? The Withholding Services and Compliance Section handles the withholding.  The phone number is (888) 792-4900.   You may check the Franchise Tax Board website both to see how the process currently works and for any updates.  The Franchise Tax Board website currently has guidelines which include over 100 questions and answers.  See FTB Pub. 1016.   How much is the withholding? The withholding is 3 1/3% of the gross sale price.  It does not take into account costs of the sale such as real estate commissions or other settlement costs. Withholding is currently due by the 20th day of the calendar month following the date title is transferred or may be remitted on a monthly basis in combination with other transactions closed during that month.  California Forms 593 and 593B are used to report and a remit copy must be provided to the seller to attach to their tax return.   What exemptions apply? If you are an individual selling property, the buyer will not have to withhold from your proceeds if the sale price is less than $100,000, or you are selling your principal residence or if you are selling at a loss.  Other exemptions are for tax deferred exchanges and involuntary conversions of property.   Does the seller have to do anything to qualify for exemptions? Yes.  The seller will be required to sign a statement under penalty of perjury to establish eligibility for the exemption.   Can the seller apply to the Franchise Tax Board for an exemption? The law allows applications for reduced withholding and waivers but not by individuals, only by corporations and other entities.   What happens if there are several sellers on title? If the total purchase price exceeds $100,000.00, withholding rules apply.  To determine the amount of withholding, each owner is considered separately and the withholding is calculated on each owner's pro-rata share of sales proceeds. It is possible for the transaction to be exempt for one seller but not for the other part owners.   How do I know if the property qualifies as my principal residence? The rules incorporate Internal Revenue Code Section 121 to determine whether the property qualifies as a principal residence.  There are two separate exemptions under California law which relate to the use and ownership tests under Section 121.  Generally, the seller will either have had to have owned and lived in the property for two of the previous five years or the last use will have to have been as the seller's principal residence.  Note that the two year period may be made up of different blocks of time which add up to two years over the five year period.  A seller who lived in the property for one year, then rented it out for a period of time followed by another year of residency in the property would qualify for the exemption.   What is the role of the escrow holder regarding withholding? The law requires the escrow holder to provide a notice of the requirements.  The escrow holder cannot make a legal determination as to whether any exemption applies.   Will the escrow agent do the withholding of the seller's money on behalf of the buyer? The escrow agent may withhold and remit to the Franchise Tax Board if the parties agree.  The fee for this service may not exceed $45.00.   How will a seller get the withholding returned? The only way to recover the withholding is by filing a California State Income Tax Return for the year in which the sale occurred.  The seller will be entitled to a refund in the amount that the withholding exceeds the amount of capital gains tax due by reason of the sale.   Does it matter if the seller lost money on other real estate or non-real estate transactions? No.  Each transaction is considered separately.   What happens if the property is held in trust? If the trust is revocable, then the rules apply as if the seller was the individual who has the power to revoke the trust.  If the trust is irrevocable then the trust itself is treated as the seller and withholding may be required if there are no exceptions.   What type of real estate is covered by the law? All real estate interests are covered unless one of the exemptions applies.  This means the sale of fee title or easements or other interests may be subject to withholding.

Cupcake Stand

Mom’s delicious cupcakes take center stage with this super-cute dessert stand. What A Great Idea!


Create this sweet cupcake stand from basic metal hardware.
Instructions
1. Using an all-purpose adhesive, attach the cup pulls to each end of the flat straps. Let dry.
2. Place the threaded rod into the center of the post base. Use two hex nuts to secure.
3. Thread the three 18-inch straps on the rod for the bottom tier. Evenly space the straps and secure with a hex nut. Screw a hex nut midway down the rod for the middle tier, followed by the three 12-inch straps. Evenly space and secure in place with a hex nut. Repeat for the top tier using the 9-inch straps.
4. Make sure all the tiers are tightly secured. Place the stand on newspaper and spray paint; add a second coat if needed. Let dry and enjoy!

Interest Rates: A history

We’re Building Houses Again!

There are growing signs of a housing recovery, and that’s great news for the economy.

By Matthew Yglesias

 

he U.S. economy got a solid piece of news Tuesday morning when the Census Bureau reported a 15 percent increase in new housing starts in September relative to August, a 34.8 percent increase from a year ago. That doesn’t mean we’re in a construction boom or that one’s likely to start anytime soon. But when it comes to job-creation, rates of change matter more than levels, and even a return to a merely average level of construction could be a huge win for the economy.  

But how reliable are the numbers? It turns out that estimating the total number of housing starts across the country is hard, so the data come with huge margins of error. On its face, any monthly swing in housing starts could be nothing more than statistical noise and sampling error. But there is a second set of data that are more reliable: building permits. Permits aren’t identical to starts, since some jurisdictions don’t require them and some permitted projects get delayed or canceled for one reason or another. But the two series move in the same direction—if lots of permits to start building are being issued, you can count on a lot of projects launching. And the margin of error for permitting data is much smaller and paints the same picture—permits rose 11.6 percent month-to-month and 45.1 percent on a year-to-year basis.

Housing is one of the key sectors that helps lead an economy out of the funk. That’s because home sales and home building are much more sensitive to interest rates than grocery sales or doctors’ visits, which are driven by immediate needs.

 

luggish home construction is sometimes attributed to “overbuilding” during the pre-crash boom years. Former Obama administration economist Christina Romer, for example, recently wrote that “we just built an awful lot of houses in the mid-2000s” and as a result “we are unlikely to need to do much residential construction for quite a while.” That’s become the conventional wisdom, but it doesn’t stand up to scrutiny. On a per capita basis, we’ve had at least three construction booms larger than the mid-aughts boom, but nothing even remotely comparable to the bust over the past five years.

The issue is actually slightly different. The problem is not that America has too many houses. It is that our houses are too big. Twentysomethings having trouble finding a job or suffering through low-paid internships may not want to live at home with their parents, but the physical space to accommodate them exists. And many of those children now have the financial capacity to live on their own, but only in apartments. A decade ago, young people or people with poor credit who might be doubling up with their parents were offered mortgages by a finance industry that thought it had eliminated risk. In retrospect, this was a mirage, and those homebuyers couldn’t actually afford the houses they bought. So part of the reason housing is slowly rousing itself from the doldrums is that we’re going back to building apartments. The share of new units that are in single-family structures is still higher than it was in the mid-80s or early ‘70sseventies, but it’s steadily falling. Some people own condos (I do) and others rent single family homes, but generally big structures are for renting. That trend toward multifamily construction will probably have to continue to get people out of mom’s basement and into their own rentals.

Clearly, nobody should expect residential investment to return to its 2005 peak level anytime soon. But if over the course of 2013 it merely converges to its long-term average level, that could add 1.7 percentage points of growth to next year’s GDP—great news for the economy.

That said, to many Americans a “housing recovery” means not a return of construction activity and jobs but a recovery of the housing wealth they lost in the aughts. Here the outlook is a good deal worse. The vast nationwide run-up in home prices was a genuine bubble unmoored from the fundamentals. It’s true that investors in particular locations may make money because some underlying change (better schools, new weather patterns, the rise and fall of industries) makes it more desirable. But the country as a whole has plenty of space to add new houses in response to demand for housing. In other words, the very same increase in construction activity that could boost GDP and slash unemployment should stop the typical house from increasing much in value.