Trust This. August 18. 2023.
 Happy Friday! August just happens to be both National  Dog  Month and [...]
 Happy Friday! August just happens to be both National  Dog  Month and â Happiness  Happensâ Month. Coincidence? I think not.
A recent study reports that about 11% of âbrownâ office buildings could be converted cost-effectively to affordable âgreenâ housing thanks to COVID-19 and the Inflation Reduction Act.
Why it matters:Â If true, it could solve two problems: a lack of affordable housing and the negative feedback loop many urban cores face.
By the numbers: Some estimate that the housing shortage in the U.S. is as high as 6.5 million homes.
Housing shortages are most acute in urban areas.
Spending 30% of income on rent is the new normal.
According to the report, average rents increased 43% between March 2015 and April 2023, while personal income growth was up only 34%.
As we wrote back in June, commercial real estate occupancy rates and rents are down, with the potential for a default crisis in many metro areas.
Renovation of Class B/C office buildings to residential use requires 50-75% fewer carbon emissions than building new housing.
State of play:Â The pandemic drove workers from daily office building occupancy to remote and hybrid work. This has depressed the office buildingsâ values and their sales prices, making them attractive for market-rate housing renovations.
The Inflation Reduction Act created tax incentives to encourage using green, energy-conserving technologies in new construction.
Part of that is the EPAâs $27 billion Greenhouse Gas Reduction Fund that must be spent by September 2024.
The report used an example of a conversion project where a subsidy of $40 per square foot helped make the project green and affordable for renters.
Unfortunately, other such conversions from office to residential or mixed-use have created buildings where the newly-created housing is definitely not âaffordable.â
The bottom line:Â The report clarifies that cities must think creatively to permit such brown office conversions to green residential uses quickly.
Coupling local creativity with state regulations like Floridaâs new âLive Local Act,â and funds from the Inflation Reduction Act could go a long way toward closing the gap for affordable housing in urban areas.
Buyers are so happy to find an affordable property theyâre closing on while a tenant’s lease is still in place, inheriting that tenant from the seller.
Why it matters:Â Depending on the tenant, the buyerâs new journey with them can be happy or disastrous. The key is paperwork details.
If the tenant is the seller who wants to remain in the property after closing for a short period of time until they can move into their new home:
The parties should have a âpost-occupancyâ agreement that spells out which party is responsible for what repairs after closing.
The agreement should detail the seller’s payments to the buyer for the privilege of remaining in the home.
It must clarify who will pay the HOA dues, utilities, and lawn or pool maintenance.
The buyer should obtain a landlord policy, while the seller should switch to a tenant contents coverage policy for hazard and liability insurance.
Finally, if the buyer is obtaining bank financing, they should ensure that the term of the sellerâs stay isnât so long that it classifies the purchase as an investment purchase rather than a primary residence.
If the tenant is âinheritedâ from the seller, the buyer should not only review the lease between the seller and the tenant but should also try to speak with the tenant to verify the lease terms.
Check court records to see if there is any history of litigation with the tenant.
If possible, buyers should purchase the property inside of a land trust at least until the tenancy ends. If the tenant is litigious, theyâll name the trust as a defendant rather than the buyer.
Review the property management agreement, if there is one, to determine whether it comes with the property (tenant) or not.
Watch out for short-term leases if the property has been listed on Airbnb or other short-term rental site. Clients have been stuck with properties subject to monthsâ worth of future bookings and onerous property management agreements.
The bottom line:Â While most purchases with tenants in place after closing go off without a hitch, weâve seen our share of disasters that could have been avoided by having a lawyer review and draft the paperwork before closing.
State of play: Floridaâs notice provisions relating to terminating tenancies changed last month, which could catch new buyer-landlords off guard.
Eight-five percent of newlyweds who created a wedding registry in the past two years have said they would have preferred to receive cash toward the downpayment on a new home rather than blenders, toasters, and silverware. Axios
Housing affordability is the lowest itâs been in nearly 40 years with high interest rates pushing buyers away. Buyers with low credit scores are seeing mortgage quotes that start with an â8.â Bloomberg
This is probably why 82% of those asked said that this is a bad time to buy a home, according to Fannie Mae. MarketWatch
However, in these 10 areas, housing prices are expected to drop by 5% or more over the next decade. Go Banking Rates
Floridaâs teachers, whos pay ranks 48th lowest in the U.S., are unable to afford housing close to the schools where they work, exacerbating Floridaâs teacher shortage. Axios
While chances of a recession are dissipating, we might be in the middle of a ârichcession.â CNBC
In July, foreclosure filings were down (for the first time in three months) 9% from June, but up 5% from last July. The Title Report
Iâm in Richmond, Virginia, for the last part of the week and weekend. Richmond is known for its numerous water towers and reservoirs. Although it sits on the James River, the water must be treated and stored throughout the area before it can end up in homes.
Richmonders have a love-hate relationship with the James River. The city got its name because its view of the river from the city is similar to the view of the Thames from Richmond Hill in England.
It makes Richmond the only city with urban class IV rapids running through it.
Homes and condos along its banks are coveted for their views and sounds of the rapids.
Yes, but:Â in 1972, it flooded the city when Hurricane Agnes swelled it to 36.51 feet, destroying much of the lower part of downtown Richmond.
Much like Hurricanes Floyd and Ian, Agnes is known more for its flooding rain than for its winds.
It caused over $3.1 billion in damages and 117 deaths as it trekked from the Yucatan Peninsula northward across the Florida panhandle, then back out to the Atlantic and back west across Virginia, Pennsylvania, and New York before dying in Canada.
A giant flood wall with locks was constructed to protect the lower section of the city, and it is odd to observe the condominium and office high rises on the river side of the wall, knowing that â someday â they could flood again.
Go deeper:Â UVA Disasters
We hope you found this helpful â any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Was this email forwarded to you? Subscribe here.
Have an idea or issue to share? Email us.
Follow MyLandTrustee and Joseph E Seagle PA on LinkedIN,
Be on the lookout for our next issue!Â
 Happy Friday! August just happens to be both National  Dog  Month and â Happiness  Happensâ Month. Coincidence? I think not.
A recent study reports that about 11% of âbrownâ office buildings could be converted cost-effectively to affordable âgreenâ housing thanks to COVID-19 and the Inflation Reduction Act.
Why it matters:Â If true, it could solve two problems: a lack of affordable housing and the negative feedback loop many urban cores face.
By the numbers: Some estimate that the housing shortage in the U.S. is as high as 6.5 million homes.
Housing shortages are most acute in urban areas.
Spending 30% of income on rent is the new normal.
According to the report, average rents increased 43% between March 2015 and April 2023, while personal income growth was up only 34%.
As we wrote back in June, commercial real estate occupancy rates and rents are down, with the potential for a default crisis in many metro areas.
Renovation of Class B/C office buildings to residential use requires 50-75% fewer carbon emissions than building new housing.
State of play:Â The pandemic drove workers from daily office building occupancy to remote and hybrid work. This has depressed the office buildingsâ values and their sales prices, making them attractive for market-rate housing renovations.
The Inflation Reduction Act created tax incentives to encourage using green, energy-conserving technologies in new construction.
Part of that is the EPAâs $27 billion Greenhouse Gas Reduction Fund that must be spent by September 2024.
The report used an example of a conversion project where a subsidy of $40 per square foot helped make the project green and affordable for renters.
Unfortunately, other such conversions from office to residential or mixed-use have created buildings where the newly-created housing is definitely not âaffordable.â
The bottom line:Â The report clarifies that cities must think creatively to permit such brown office conversions to green residential uses quickly.
Coupling local creativity with state regulations like Floridaâs new âLive Local Act,â and funds from the Inflation Reduction Act could go a long way toward closing the gap for affordable housing in urban areas.
Buyers are so happy to find an affordable property theyâre closing on while a tenant’s lease is still in place, inheriting that tenant from the seller.
Why it matters:Â Depending on the tenant, the buyerâs new journey with them can be happy or disastrous. The key is paperwork details.
If the tenant is the seller who wants to remain in the property after closing for a short period of time until they can move into their new home:
The parties should have a âpost-occupancyâ agreement that spells out which party is responsible for what repairs after closing.
The agreement should detail the seller’s payments to the buyer for the privilege of remaining in the home.
It must clarify who will pay the HOA dues, utilities, and lawn or pool maintenance.
The buyer should obtain a landlord policy, while the seller should switch to a tenant contents coverage policy for hazard and liability insurance.
Finally, if the buyer is obtaining bank financing, they should ensure that the term of the sellerâs stay isnât so long that it classifies the purchase as an investment purchase rather than a primary residence.
If the tenant is âinheritedâ from the seller, the buyer should not only review the lease between the seller and the tenant but should also try to speak with the tenant to verify the lease terms.
Check court records to see if there is any history of litigation with the tenant.
If possible, buyers should purchase the property inside of a land trust at least until the tenancy ends. If the tenant is litigious, theyâll name the trust as a defendant rather than the buyer.
Review the property management agreement, if there is one, to determine whether it comes with the property (tenant) or not.
Watch out for short-term leases if the property has been listed on Airbnb or other short-term rental site. Clients have been stuck with properties subject to monthsâ worth of future bookings and onerous property management agreements.
The bottom line:Â While most purchases with tenants in place after closing go off without a hitch, weâve seen our share of disasters that could have been avoided by having a lawyer review and draft the paperwork before closing.
State of play: Floridaâs notice provisions relating to terminating tenancies changed last month, which could catch new buyer-landlords off guard.
Eight-five percent of newlyweds who created a wedding registry in the past two years have said they would have preferred to receive cash toward the downpayment on a new home rather than blenders, toasters, and silverware. Axios
Housing affordability is the lowest itâs been in nearly 40 years with high interest rates pushing buyers away. Buyers with low credit scores are seeing mortgage quotes that start with an â8.â Bloomberg
This is probably why 82% of those asked said that this is a bad time to buy a home, according to Fannie Mae. MarketWatch
However, in these 10 areas, housing prices are expected to drop by 5% or more over the next decade. Go Banking Rates
Floridaâs teachers, whos pay ranks 48th lowest in the U.S., are unable to afford housing close to the schools where they work, exacerbating Floridaâs teacher shortage. Axios
While chances of a recession are dissipating, we might be in the middle of a ârichcession.â CNBC
In July, foreclosure filings were down (for the first time in three months) 9% from June, but up 5% from last July. The Title Report
Iâm in Richmond, Virginia, for the last part of the week and weekend. Richmond is known for its numerous water towers and reservoirs. Although it sits on the James River, the water must be treated and stored throughout the area before it can end up in homes.
Richmonders have a love-hate relationship with the James River. The city got its name because its view of the river from the city is similar to the view of the Thames from Richmond Hill in England.
It makes Richmond the only city with urban class IV rapids running through it.
Homes and condos along its banks are coveted for their views and sounds of the rapids.
Yes, but:Â in 1972, it flooded the city when Hurricane Agnes swelled it to 36.51 feet, destroying much of the lower part of downtown Richmond.
Much like Hurricanes Floyd and Ian, Agnes is known more for its flooding rain than for its winds.
It caused over $3.1 billion in damages and 117 deaths as it trekked from the Yucatan Peninsula northward across the Florida panhandle, then back out to the Atlantic and back west across Virginia, Pennsylvania, and New York before dying in Canada.
A giant flood wall with locks was constructed to protect the lower section of the city, and it is odd to observe the condominium and office high rises on the river side of the wall, knowing that â someday â they could flood again.
Go deeper:Â UVA Disasters
We hope you found this helpful â any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Was this email forwarded to you? Subscribe here.
Have an idea or issue to share? Email us.
Follow MyLandTrustee and Joseph E Seagle PA on LinkedIN,
Be on the lookout for our next issue!Â
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Happy Friday! The Friday before Fatherâs Day is National #WearBlue Day to support menâs health.
The âfour horsemenâ of death for most humans are cancer, neurodegenerative decline, diabetes, and coronary disease. Most of these can be prevented or cured if detected early like during an annual checkup. But men are more likely to skip health checkups than women. At the same time, they are more likely to take chances with their health choices. Today is a day for men and those who care for them to take stock of their health and examine their choices to ensure they have the longest health span possible. If a man in your life is important to you, wear blue and remind them to have a checkup this year if they havenât already.
The Fed skipped raising its benchmark rate this month, the first time itâs paused its rate hikes since it started raising them in March 2022.
Why it matters: The Fed believes its hikes have effectively cooled the economy that was on fire after exiting the pandemic-induced recession of 2020 as inflation eases back toward the target of two percent.
What does it mean for the real estate market? Nothing and a lot at the same time.
The Fed rate does not directly affect mortgage rates, which instead track the 10-year Treasury yields.
Mortgage rates tend to follow the âfeelingâ of the market, and the Fedâs raising or lowering its lending rate tends to affect the market sentiment.
Mortgage lenders and investors closely watch the Fed, and the mortgage marketâs interpretation of the Fedâs actions affects overall mortgage rates.
What theyâre saying: Jerome Powell, at this weekâs press conference on the rate hike, said of the housing market, âItâs one of the first places that is helped by low rates or held back by higher rates, and we certainly saw that over the past year. I donât know that housing will drive the rateâs picture, but it’s part of it.â
Yes, but: Mortgage rates arenât the only factor that affects the housing market. Families grow and shrink, sometimes having to move for work or other reasons. So life events push consumers to buy and sell regardless of what the mortgage rates are doing.
Remember the housing bubble from 2004 to 2007? Rates were higher then than they are now.
The bottom line: Many economists expect the average 30-year mortgage rate to return to sub-6% by the end of this year. So, as Iâve written in the past, we may just be returning to a normal market after the overheating of the previous two years.
Whatâs next: Two more Fed rate hikes before the end of the year is what many are saying.
Iâm a lawyer. Iâve sued and been sued often. But I usually know whatâs happened, leading up to the suit. In this case, I had no idea what the case was about.
I had never met the person suing me or even heard his name.
It had been years since I had stepped foot in the county where I allegedly trespassed on his property to poison and kill his tree.
I know nothing about how to poison trees.
I, or one of my companies, have been named in countless lawsuits across Florida because â well â anyone who has been in business for any length of time will find themselves in court eventually.
But when youâre the owner and officer of companies that hold title to more properties in trust than anyone else in the state, you tend to often arrive in the office to see a stack of pleadings on your desk.
However, when itâs your personal name on the âDefendantâ line in the caption, it tends to give you a knot in your stomach that rises to an esophageal reflux of rage as you read and realize that the plaintiff has screwed up, naming the wrong person in their lawsuit.
The rage turns to irritation and dismissiveness, knowing that it will be a distraction and waste of your time and money until you can âmake it go awayâ through a few phone calls, e-mails, and maybe a motion with affidavits.
This is what weâve signed up for, though. Weâre trustees. We put our name, reputation, and time on the line so our beneficiariesâ and clientsâ names donât appear on that âDefendantâ line in the caption.
The bottom line:Â To save money, some people use their own LLC to be trustee, or other professionals who dabble in being land trustees, or â worse â family members who agree to be a relativeâs land trustee.
Unfortunately, those non-professional trustees donât understand the strong likelihood that their individual name will eventually be on the line in a lawsuit â whether or not it should be.
Contrary to last weekâs newsletterâs BFD, donât worry about commercial real estate in the long term. Axios Markets
The top 10 cities where home buyers can find the best deals this summer. Realtor
More sellers are making concessions now than they were a year ago. The Title Report
US home mortgage borrowers saw their first small equity loss since 2012 in the first quarter of this year. Corelogic
Why do economists think that housing inflation will start to fall sooner rather than later? CNBC
In case you canât see it, I circled the giant daddy turtle that was near our lake shore chowing down on eel grass earlier this week. At three-feet long by two-feet wide, he was rockingâ the âdad bod.â
Quotes of the week:
âExpect what you inspect.â – Dad
âBoy, you do that again, and Iâm gonna jerk a knot in that tail!â â also Dad, but many many decades ago.
And now, for one of the worst Dad songs (the dad is the worst; not the song) sung by what appears to be a pretty great dad along with his sons âŠ.
We hope you found this helpful â any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
Have an idea or issue to share? Email us.Â