Tag Archives: Judy Dutton

Silicon Valley’s Housing Crisis

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photo by Smitha Murthy

Drop in the Bucket?

Realtor.com quoted me in Could There Really Be Relief Ahead for Silicon Valley’s Housing Crisis? It opens,

Finally! A glimmer of hope has appeared in Silicon Valley’s housing crisis. Amid gloomy and downright terrifying stories about astronomical home prices and tighter-than-tight inventories forcing well-paid tech workers to live in vans, pay $2 million for a tear-down shack, or ponder commuting to work from Las Vegas, there seems to be some good news for a change: City Council members in Mountain View, CA, approved plans to build 10,250 new homes in the area.

Given that Mountain View has only about 32,000 homes total, this will increase its housing inventory by a whopping 32%—all purportedly within “walking distance” (possibly a bit of a long walk) of tech giant Google, which has long been lobbying on this front and will no doubt break out the Champagne once developers break ground. Sure, it may be years before these homes become a reality, but even the idea of them may have many locals (or those moving there) daring to dream. Might this new influx of housing cause home prices to drop within reasonable reach?

As logical as this renewed optimism about Silicon Valley’s housing market might seem, experts aren’t so sure home prices will budge all that much.

“This news in itself will not drive down prices much,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “While a 10,000-unit commitment is significant, Silicon Valley as a whole has about 3 million people living there.”

So if you consider the population of the entire area—many of whom would likely kill to move to Mountain View—10,000 new houses would house only 0.3% of these people. For you math-challenged, that’s less than a measly half-percent! 

And even though the number of homes may be edging upward, so are the number of people moving there.

“Silicon Valley remains a booming economy, so it’s likely that the population will continue to grow, further driving up prices,” Reiss continues.

As further evidence that more homes doesn’t necessarily lead to cheaper home prices, Florida Realtor® Cara Ameer points to another historically hot market: New York City.

“In New York, more new buildings has had no impact on housing prices or rents,” she says. If anything, the only change New Yorkers noticed is their neighborhood got a lot more cramped. The same will likely be true for picture-perfect Mountain View.

“The biggest thing people will see is increased congestion,” says Amer, “with many more residents, cars, and the need for schools and additional services.”

In fact, fears of overcrowding might even galvanize current homeowners in the area to show up en force at future City Council meetings to fight the greenlighting of additional developments—that is, unless they’re out-muscled by employee-hungry firms such as Google.

“As key businesses realize that the lack of housing is hurting their ability to recruit and retain good employees, it is possible that Mountain View’s decision is a harbinger for more pro-development decisions throughout Silicon Valley,” Reiss explains. “Current homeowners, called ‘homevoters,’ tend to make their anti-growth views known to local officials, but once the interests of local businesses focus on the lack of workforce housing, it can change the dynamics.

“These are powerful companies. The result is that those decisions can become more pro-growth than is typical for suburban communities.”

Your Neighbor’s Dog

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SheltieBoy

Realtor.com quoted me in Salma Hayek’s Dog Shot by Neighbor: Was He Right? It reads, in part,

Actress Salma Hayek is mourning the death of her dog Mozart—a dog she nurtured from birth, according to her Instagram post. The 9-year-old pooch, a Belgian Malinois, was found dead on her Washington state ranch on Friday with a visible wound close to his heart. And this sad story only got worse once police discovered the culprit: Hayek’s neighbor.

According to TMZ, the neighbor was sick of Hayek’s dogs, several of whom regularly trespassed on his territory and attacked his dogs. So on that fateful Friday, this neighbor responded to a dogfight in his garage by shooting an air rifle just to scare off the one attacking his dog, the Associated Press reports. Mozart, who was hit, ran off and died from internal bleeding. In fact, the shooter’s wife Kim Lund told the AP, “We didn’t even know we killed a dog. I’m in shock.”

Claiming a pellet gun would normally not be deadly, the police ruled the shooting justified, but plan to send the case to prosecutors for additional review.

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According to “When Killing a Dog Is Legally Justified” on Nolo.com, most state laws do not allow homeowners to shoot dogs that are merely running loose on their property. And even if they’re attacking your own dog or cat, you’re not off the hook.

“Someone who does injure a dog that’s chasing another dog … may be liable for damages to the dog’s owner,” writes . “And the killer may also be guilty of cruelty to animals.”

In other words, Hayek’s neighbor could pay for pulling the trigger. Plus there’s the bigger picture, points out David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School: “How’s it going to be to continue living next door to your neighbors after you shot their dog?”

Imagine how awkward it will be for this guy to run into Hayek from now until the end of his days there. Maybe he could have tried to fix the problem earlier with something other than rubber bullets.

“There certainly are steps you could take before shooting the dog,” Reiss says. “You could call animal control or law enforcement. In some places, if a dog owner has received a warning about his or her pet, he or she could face liability for allowing it to roam free.” 

Bottom line: Talk first, shoot only as a last resort. 

Hefner’s Life “Estate”

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Plan of Playboy Mansion Pool and Grotto 2 by Ron Dirsmith

Fox News quoted me in Playboy Mansion for Sale — With One Tenant for Life. It reads, in part,

We called it: In October, we revealed that the Playboy mansion — home to Hugh Hefner and the site of epic parties back in the day — is in need of major renovations. Now, if a new report from TMZ is to be believed, it looks like Hef is finally ready to throw in the towel: Within a month, the crumbling 6-acre estate will be up for sale.

In spite of the 29-room (six-bedroom) Beverly Hills mansion’s decrepit condition, its owner, Playboy Enterprises, hopes to sell it for north of $200 million. Plus, the buyer will have to grapple with another huge catch: According to TMZ, the buyer will have to grant 89-year-old Hef a “life estate,” which means he can continue living there until death parts him from his beloved bachelor pad.

Ummm … who the heck wants to buy a home with someone living in it? Strange as it may seem, “life estate” arrangements are as old as the hills.

“Life estates go way back to the earliest roots of the common law, and they are great for providing for someone to live in his or her own home until death,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “Effectively, a life estate grants the [original owner] many of the indicia [characteristics] of full ownership for the rest of his life. Upon death, complete ownership of the property can pass to another. A common example would be where a husband bequeaths a life estate in the home to his wife, with the remainder to his children upon her death.”

But Hefner’s deal differs in one key way: He’s not bequeathing his home to family members or even a deserving Playboy bunny, but to an as-yet unknown third party who’ll be forking over millions to move in once Hef passes on.

 “This seems like a version of a reverse mortgage, because it frees up equity in the home during the owner’s lifetime without interfering too much with his use and enjoyment of the property,” Reiss continues.

But this privilege will likely drag down the asking price, a lot. While the listing price may be $200 million, most experts say that $80 million to $90 million is more realistic.

“The life estate would likely significantly reduce the fair market of the property, because the purchaser must defer taking possession as well as other aspects of ownership — renovating it, for example — until the death of the life tenant,” Reiss says. “Moreover, the purchaser must deal with the uncertainty of the life estate: Will it end in a year or in 10 years?”

And aside from these uncertainties, there’s the question of liability. Without adequate legal protection, the owner could be responsible for any damage to the property or its inhabitants. Granted, Hef is 89 and probably passes his days playing chess, but if Playboy bunnies continue to hop in and out, anything could happen.

“What if there’s a fire and the place burns down? What if Hefner falls down and breaks his hip?” asks Wendy Flynn, a Realtor in College Station, TX. “After all, it is known as a party house.”

All in all, if you’re salivating for a piece of Playboy history, make sure to man up your legal team to protect you from all that could go wrong before you’re able to take possession. And even though the mansion is a decent candidate for a tear-down, “don’t start spending money on plans for the property,” Reiss adds.

Even though Hef is already past the average U.S. male’s life expectancy of 84.3, “a lot can happen before possession of the property is actually conveyed.”

Paid off Mortgage in Three Years

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Sean Cooper

Sean Cooper

Realtor.com quoted me in Why the Guy Who Paid Off His Mortgage in 3 Years Isn’t as Smart as You Think.  You’ll want to read about this guy:

You’ve gotta hand it to Sean Cooper: In a mere three years, this Toronto homeowner made epic sacrifices to pay off a $255,000 mortgage on his $425,000 house. His reason: “For a lot of people, their mortgage is like a life sentence,” the 30-year-old explained to the press. “I just wanted to not have a mortgage hanging over my head.”

After his story broke in publications such as the Toronto Star and The Hamilton Spectator, thousands applauded this as a feat of frugality.

But some experts say the opposite—that Cooper made a colossal mistake.

Forget the fact that to pay off his mortgage this pension analyst took on two extra jobs (including in the meat section of a supermarket even though he’s a vegetarian) and worked over 100 hours per week. Let’s also set aside the fact that he stopped using his car and claims Kraft dinners were his “best friend” (because clearly his real friends stopped hanging out with him). No, experts argue that Cooper’s extreme mortgage-paying regimen may have actually damaged his financial health.

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“Having a mortgage is not really such a bad thing,” says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “When you think about what a mortgage is, it makes sense to pay it off over a long period of time. You use a mortgage to buy something that will last a long time—a home—so you would probably want to spread the payments for that expensive thing over the whole period you’re using it, just as you would with a car. [Cooper’s paying off his mortgage quickly] may work for him, but not for the typical person.”

So if you’re inspired to follow in Cooper’s footsteps, think twice and consider less drastic measures.

“There are less extreme ways of doing this,” Reiss says. “Some people make payments every four weeks instead of every month. This results in one extra payment every year and does not seem so painful. Others will put extra payments into their mortgage—a tax refund, a bonus, money from a consulting gig. This is also less painful because you were probably paying your regular expenses without that money already.”

Bottom line: Don’t beat yourself up for having a mortgage. Embrace the benefits, relax, and live a little. Cooper, for one, is now playing catch-up. Now that he’s debt-free, he’s moved on to his next goal: He’s looking for love. Because let’s face it, most bachelorettes aren’t into eating mac ‘n’ cheese on a date.