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Rent Inflation in OC at a 12-Year High

Rent Inflation

Rent inflation in Los Angeles & Orange counties is at 5.4%, a 12-year high. This is the highest April reading since 2007, when the rate was at 6.4%. Rent inflation in L.A. and Orange counties ran at a 12-year high in April.

The U.S. Bureau of Labor Statistics’ Consumer Price Index for the 2 counties shows the cost of local renting was up at a 5.4% annual rate in April vs. 5.1% a year earlier. The CPI tracks rental costs by polling consumers vs. other rent measurements that come from surveys of landlords. So far this year, this L.A.-O.C. rent index rose 5.6% compared with 5.2% in 2018 and 4.9% in 2015-2017. Between 2009 and 2014, local rents rose on average 2.5% a yr.

Local rents have surged as vacant apartments became more scarce during an economic recovery that’s created 1.19 million jobs and nowhere near enough housing options in Southern California since 2010. Housing eats up the biggest share of local household budgets. By CPI math for April, overall housing costs in L.A.-O.C. rose 4.6% in 2018.

Overall inflation in L.A. & Orange counties was rising at a 3.3% annual rate in April vs. (1) 2.7% a month earlier; (2) 4% a year earlier; (3) 2% nationally; & (4) 2.9% in Western states. Without the cost of shelter, local inflation would be at a 2.3% annual rate.   So far this year, L.A.-O.C. averaged a 2.85% inflation rate. Last year, inflation rose 3.8% in the two counties, according to the index.

In 2009-2017, inflation averaged 1.4% annually after running 3.4% in 2000-2008. The CPI for Riverside & San Bernardino counties showed an inflation rate for March at a 2.8% rate.

Here are eight other L.A.-O.C. inflation trends you should be watching …

1. Gasoline cost 10.8% more in the last 12 months, by CPI math. Household energy cost 0.9% more.

2. Food costs rose 2.2% in a year. Eating out expenses rose 5.0% ; food-at-home fell -0.4% in 12 months.

3. Medical bills were rose 0.9% in the year.

4. Costs of all services were 4.1% above a year ago.

5. Apparel prices were -3.3% lower in the year.

6. The cost of big-ticket “durable goods” (such as appliances and furniture) were -0.2% lower over 12 months.

7. Big cities in Western states saw consumer prices in April up at a 3% annual pace. Smaller Western cities? 2.7% inflation rate.

8. Elsewhere in the West: Bay Area inflation? 4% while Seattle had 2.4% and 2.3% for Phoenix

CA Rent Control Moving Forward?

Rent Control

Gov. Newsom signaled on April 24, he wants to sign a housing “affordability law” just after a controversial rent control proposal cleared its first committee in the Legislature.

He released his statement hours after a bill that prohibits landlords from raising rent by more than 5% above the Consumer Price Index passed the Assembly’s Housing & Community Development Committee by a 6-1 vote.

Critics say Assembly Bill 1482  could upset market stability, stymie development, and financially hurt property owners. California voters in November rejected Proposition 10, a statewide rent control initiative. However, the bill’s author, Assemblyman Chiu, D-San Francisco, said lawmakers must act to protect renters from “egregious rent increases” in the future.

The night before the committee hearing, Newsom’s chief of staff Ann O’Leary talked with rent control supporters & people struggling to afford rent in the lobby of his offices. She said Newsom told lawmakers he wanted the Legislature to work toward a legislative deal to help California renters.

Opponents showed up in force, too. Those against AB 1482 included landlords, small property owners, and multifamily housing residents who called the proposal an “ill-conceived housing-killer bill.”

While campaigning for governor, Newsom said he opposed last year’s rent control measure, but Newsom has also said he supports expanding rent control in theory and wants the Legislature to craft new laws.

A companion rent control bill, Assembly Bill 36, was pulled by its author, Assemblyman Richard Bloom, D-Santa Monica, ahead of the hearing. Bloom’s legislation would have reformed the Costa Hawkins Rental Housing Act, a law preventing local governments from imposing rent control on apartments built after 1995.

Kurt Galitski Real Estate and Property Management.

Appealing Your Property Taxes

Property Taxes

With spring in the air comes the opportunity to appeal your property taxes. Not everyone needs to do this and, of course, you should weigh the costs vs the payoff, but if it can save you thousands, it may be worth the fight. If you feel like your most recent tax assessment was abnormally high, that may be because it was. Sometimes incorrect information on your tax records can negatively affect your property tax assessment.

In fact, one of the most common reasons properties are improperly taxed is due to incorrect information. Problems may arise when a property is listed with more square footage, bedrooms, or land size than there actually is. Older homes particularly struggle with this problem because of the number of people that have had their hands on these records. The more these records are updated and passed along, the easier it is to see 2300 square feet be transposed to 3200 square feet. The key to successfully fighting your property taxes is to know what your tax assessor thinks. If the assessor’s office believes there to be extra square footage that definitely does not exist, it shouldn’t be a difficult battle to win.

An important item to note is the time period in which you have to appeal. Each county has its own window; you can’t just appeal on a whim. You’ll need to pick up the phone and make live contact with your tax assessor because only they are the ones that can tell you about any changes in the way taxes are being handled that year and what deadlines you’ll need to meet.

Keep in mind, certain people have earned the right to reduced property taxes. A few ways you might already qualify for an exemption are:

Homesteading – in some places, simply living in your home is reason enough for an exemption.

Seniors and disabled people – many high tax areas specifically have rules protecting seniors and the disabled.

Veterans – Vets who have surved during wartime often qualify for a property tax exemption (provided they were honorably discharged).

Remodeling – some areas are willing to let you work your way to an exemption.

Green housing – some (environmentally-friendly) areas will happily exclude the value of your green improvements from your tax assessment.

So what if you don’t qualify for an exemption and you haven’t found any errors in your tax records, but you still feel your tax bill is unreasonably high?

You can still fight. Be advised this is a much more difficult war to wage and you’ll need to come armed with a current appraisal, comparative market analysis, and documentation of any damage done to the home since the last assessment.

Once you’ve submitted and/or presented your case, don’t expect an answer right away. This is the government we’re talking about. Be prepared to wait several months before hearing an answer. Keep copies of all documentation provided and hold on to your patience. Keep in mind, what you’re appealing isn’t your tax rate; it is the assessed value of your home. The same tax rate applies, just to a lesser valued property. So while this may help you pay less in taxes, it can also hurt your ability to sell your home or refinance.

Over 13% of renters in CA can afford to buy a home but don’t know it

buy a home

Though affordability has been the largest obstacle for renters seeking to be homeowners here in Southern California, we shockingly discovered that 14 percent of renters actually can afford to buy a home they just lack the financial knowledge to do so. According to the California Association of Realtors, of the 6 million California renters, 826,000 could qualify to purchase a median-priced home within the counties they reside in.

Unfortunately, a lack of financial literacy has been their greatest barrier to entry. In a poll, nearly 75 percent of renters believe a down payment must be a minimum of 20 percent. They are entirely unaware of the fact that other mortgage programs exist in which they can put as little as 3 percent down. 69 percent of renters said they would buy if they could put less than 20 percent down.

These numbers are astonishing! Yes, affordability has caused the American Dream to fizzle for many, but it’s not entirely dead. Nearly 70 percent of renters in California still want the pride of homeownership and the sad part is, they don’t even know that it is attainable. Over 800,000 renters make enough income and have good enough credit to qualify for a mortgage with a lower down payment, but because of their misconceptions of what it takes to buy a home, they have not even looked into it.

Prospective first-time buyers should be aware that there are many different loan options out there, many of which allow for far-less than 20 percent down and some even offer down payment assistance. If you’re currently renting and unsure if you qualify, step one is to contact a trusted agent who can connect you with a reliable mortgage broker. They will shop different loans for you to find you the most suitable program that meets your needs and down payment abilities.


Seniors Renting Jumps 43% in 10 Years

Seniors Renting

We all know that the Millenial and Gen Z generations are prolonging their leasing years, but did you know more seniors are also choosing to rent? Data from RentCafe shows seniors are renting at rates exceeding younger generations! It showed that in the last 10 years, the number of renters ages 60 plus has increased 43 percent.

While the median age for renters is still younger than their owner counterparts, renters ages 60 and over grew to 9.37 million in 2017, outpacing their younger counterparts. Older owner households grew only 31 percent compared to the 43 percent increase in older renters.

What does this tell us? Well, we do know that this trend is across the board. Older owner households are increasing at a faster pace than younger owners and here’s why. Two words…Baby Boomers. With Baby Boomers now in their 60’s and most of them empty-nesters, they are downsizing. Either they are selling and buying smaller or renting. Homeowners ages 34 and under saw a decrease of 19 percent while owner households between the ages of 35 and 59 only decreased 12 percent.

It’s safe to say that as the older generations are losing their enthusiasm about homeownership, the younger generations are losing their value in the out-of-reach “American Dream” and this has therefore resulted in a surge in rental prices.

Airbnb Loses Court Battle


Wednesday’s ruling by a 3-judge panel of the 9th Circuit Court of Appeals is a setback for the home-sharing platforms in their effort to avoid regulation by cities. Cities blame the rapid proliferation of short-term rentals for a shortage of affordable housing & disintegration of residential communities.

The Santa Monica ordinance holds home sharing companies are legally responsible for the booking of rentals residences not licensed by the city. Editor’s Note and “in plain English”: In the past home-sharing companies have sought to claim immunity from prosecution for violations of city ordinances restricting home-sharing. Instead they shrugged their shoulders & tried to pass responsibility to the home owners.

That’s appears to be about to change – particularly in California which is in the 9th Circuit Court of Appeal’s jurisdiction. The court agreed with the city that the restriction doesn’t violate the U.S. Communications Decency Act of 1996, which shields online services from liability for the content that their users post on their sites.

In January, Airbnb and other short-term-rental sites won a ruling granting a temporary reprieve from a New York City law that compels them to turn over renter data, a requirement threatening to cut bookings in the city by half. Airbnb is also fighting in Paris, where it faces as much as $14 million in fines for allegedly posting illegal advertisements.

The courts’ interpretation of the 1996 law and the protection it affords”interactive online businesses” have become a central theme in legal challenges to Airbnb and its rivals. Federal judges in Los Angeles and San Francisco have found that cities can hold the companies liable for processing transactions, as opposed to simply listing information from users.

Airbnb and HomeAway argued the Santa Monica ordinance makes it impossible for them to operate, particularly if other municipalities adopt similar laws, because it would require them to monitor and remove listings for unregistered residences. If they don’t, users would be stuck looking at listings that they won’t be able to book, according to the companies.

The 9th Circuit panel concluded that Santa Monica’s statute puts only an“incidental” burden on the companies’ constitutional right to free speech. “Even assuming that the ordinance would lead the platforms to voluntarily remove some advertisements for lawful rentals, there would not be a ‘severe limitation on the public’s access’ to lawful advertisements.

Santa Monica said in a statement “the unanimous ruling confirms the city’s right to regulate home sharing to protect its limited housing stock for residents”.  “This is a big win for Santa Monica residents and our residential neighborhoods.”

Meet Kurt Galitski Real Estate Group.

KREG Featured in Forbes Magazine

We are pleased to announce Five Star award winner Kurt Galitski’s appearance in Forbes magazine in a special section for February 28, 2019. By earning this honor, Kurt has shown an outstanding commitment to clients. Please look for Kurt in Forbes magazine, and offer your congratulations on this recognition. The Five Star Real Estate Agent award is based on objective research criteria. Five Star Professional’s research team evaluates candidates from across major markets annually on ten criteria associated with outstanding service. Each of our award winners has shown a commitment to clients, strong industry credentials and has been evaluated on the quality of his or her practice. Kurt Galitski has met these criteria and has been honored with the Five Star Real Estate Agent award.


Jonathan Wesser | VP, Operations Five Star Professional

HUD Slashes Advanced Notice for Public Housing Inspections

Public Housing Inspections

According to HUD, its Real Estate Assessment Center currently provides as much as 4 months advanced notice before inspecting any multifamily units or any HUD privately owned apartment buildings to ensure the units  “decent, safe and healthy.”

The Real Estate Assessment Center is responsible for inspecting properties owned and operated by approximately 3,700 local public housing authorities in the nation. But HUD is cutting that lead time from as much as four months to 14 days. Beginning 30 days from now, on March 22, HUD will notify landlords and property owners 14 calendar days before an inspection is to take place.

According to HUD, its current system allows for property owners to use the lengthy lead time before an inspection to make “cosmetic, just-in-time” repairs to their properties, thereby ensuring that the pass inspection but not sufficiently sustaining proper maintenance throughout the year. “It’s become painfully clear to us that too many public housing authorities and private landlords are essentially gaming the system,” HUD Secretary Ben Carson said in a statement.

If the property owner declines, cancels or refuse to let an inspector review a property, HUD will record a presumptive score of zero. If a second inspection attempt results in a valid inspection within 7 calendar days, the resulting score will be recorded for the property in question. To read HUD’s full notice on the new inspection plan, click here.

Additionally, HUD said it is planning a series of listening sessions to gather input from the public and HUD stakeholders about a planned pilot program to test “innovative new approaches to inspecting HUD-assisted properties.” According to HUD, the initial listening sessions are planned for Philadelphia, Fort Worth, Atlanta, Detroit and Seattle

Orange County Multi-Family Report for Q4

Multi-Family Report 2018

Q4 has come to a close. As we look back on the successes of 2018, we reflect on the multifamily market which impacts so many of our property owners. We’ll start on a macro scale and hone in on the micro aspects of the market. Here is our 2018 Q4 multi-family report recap:

  • Orange County’s economy grew at a rate of 3.6%
  • The population of OC has grown over 3% in the last 6 years
  • Unemployment was 2.8% as of November 2018
  • The occupancy rate measured 96.2%
  • Average cap rate stood at 4.55%
  • Price per unit averaged $342,000 for 5+ units
  • Price per square foot rose to $341
  • Sales volume is down 29% year-over-year
  • Rent increased by 2.6%

As a property management company, we are proud to say our growth in 2018 has exceeded our previous years. Managing over 50 doors throughout Orange County, we strive to provide the highest level of customer service to our clients. In doing so, we’re expanding rapidly! With 17 years in business, our reputation speaks for itself. Just read our Yelp reviews.

Congress to Vote on Section 8 Housing Voucher

Section 8 Housing Voucher

As housing affordability continues to decrease nationwide, an effort is underway at the local and federal level to prevent landlords from discriminating against those who pay for housing using government subsidies, such as Section 8 vouchers.

On Jan. 3, Congresswoman Nydia Velázquez, a Democrat from New York, started the 116th Congress with a H.R. 232, the “Landlord Accountability Act,” to amend the Fair Housing Act to prohibit discrimination at the federal level based on use of housing vouchers, including Section 8 vouchers.

Addressing the problem of landlords allowing Section 8 units to fall into disrepair and therefore no longer qualify for a voucher, the bill would also fine landlords up to $100,000 for taking actions or neglecting to act with the intention of disqualifying units from federal housing programs, Velázquez said in a press release.

Moreover, landlords could face a second set of fins of $50,000 that would go to “aggrieved tenants,” she added.

The bill would also create a new Multifamily Housing Complaint Resolution Program to investigate and try to resolve disputes through mediation and would make complaints publicly available.

A new $25 million grant program included in the bill would also support agencies that provide tenants with assistance and legal advice.

U.S. Senators Tim Kaine, and Orrin Hatch, a Republican from Utah, introduced a bill — the Fair Housing Improvement Act of 2018 — in November to expand the Fair Housing Act to prohibit housing discrimination based on lawful source of income or veteran status.

The bill was referred to the Senate banking committee, but failed to proceed before the end of the 115th Congress.

Washington, Oklahoma, Vermont, Utah, North Dakota, Connecticut, Maine, Massachusetts, New Jersey, Oregon, and Washington, D.C., already have such laws in place and more than 50 cities and counties prohibit discrimination against voucher households, according to the Center on Budget and Policy Priorities.

California, Delaware, Minnesota and Wisconsin have laws that ban discrimination based on source of income but do not include housing vouchers and Indiana and Texas have laws that actually prohibit local governments from protecting housing voucher recipients.

In a press release, the senators said the federal legislation would give more families access to affordable housing& a shot at economic mobility. More than 2 million vets and low-income families use housing vouchers.

In August, the U.S. Department of Housing and Urban Development (HUD) kicked off a campaign to encourage more landlords to participate in Section 8 after finding “most” landlords do not accept voucher holders.

The Section 8 Housing Choice Voucher Program has been “plagued with inefficiencies, onerous regulatory requirements and a flawed funding system for years,” the National Multifamily Housing Council said in a statement about the proposed bill.


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