Best Realty's Lake Oroville Real Estate Blog » property

There Goes The Neighborhood?

Mark Wisterman — Tue, 18 Oct 2011 19:51:00 +0000

In the nearly 18 years that I have been actively negotiating on behalf of buyers and sellers in the Lake Oroville real estate market, I have been involved in numerous transactions involving property located in the Kelly Ridge Subdivision.
For those of you unfamiliar with Kelly Ridge, it is a nice community overlooking Lake Oroville and Bidwell Marina; with a 9 hole golf course intertwined among many of the homes. For the most part it is a quiet neighborhood and pride of ownership is evident as you drive through the community’s winding roads.
As with nearly all subdivisions of this nature, there is an active homeowners’ association (HOA) there, as well as a document called Conditions, Covenants, and Restrictions. (CC&R’s) recorded on each lot in the subdivsion. These CC&R’s are basically a set of rules established as a means of insuring a certain conformity among the homes in the subdivision, which in turn protects the integrity of the subdivision and helps in maintaining property values. For example, most CC& R’s that I have read over the years set minimum lot sizes, minimum square footage requirements, prohibit livestock, require that your RV be parked out of view of the street, and so on. For the most part, the CC&R’s in this area are not as restrictive as they are in the more urban areas, but are just restrictive enough to do the job they were intended to do.
The enforcement mechanism in these CC&R’s is generally the homeowners of the subdivision. If a homeowner notes a violation then he/she can normally take action to enforce the correction of the violation. In cases where there is also a homeowners association in place, the association itself can usually act to enforce the CC&R’s. If the violator fails to take corrective action, the complaining party, through a civil action, can ask a judge to force the violator to comply. As human nature would have it, there are sometimes instances in associations such as these where some get “too big for their britches, ” (as my parents used to say) and, in their own mind, become “Mayor” of the subdivision. Fortunately for the Lake Oroville real estate market, there are not many HOA’s in the area, but the 2 or three that we do have, have demonstrated, for the most part, a fairly reasonable approach in the administration of their duties.
But, as they say, the times they are a changin’.
The most recent newletter published by the Kelly Ridge Estates Owners’ Association (KREOA) contains what I view is a very disconcerting column regarding a new enforcement program they are implementing to address CC&R violations.
Now, before I continue, I want to be clear here that I am in total support of homeowners that want to see their neighborhood properly maintained. It is, after all, in everyone’s best interest that this be so. I just think this may be a heavy-handed approach that has the potential of causing a lot of unnecessary strife.
According to the newsletter, KREOA,

“……will contract with a person who will do as complete exterior inspection as possible,” to “identify CC&R violations on homes listed for sale and foreclosed homes owned by banks.”

“Both buyer and seller are to be notified that escrow will not close until corrections are complete.” “…..the notification letter will be sent to the escrow company handling the sale advising that they are not to close until we verify that corrections have been made.”

Sounds harmless and reasonable you say?
Maybe it is. But I do not think so.
Look who KREOA is targeting with this: “homes listed for sale and foreclosed homes owned by the banks.” Why are they not targeting ALL violators? Why are they engaging in discrimination in their enforcement of their rules? I will tell you why….because it is an easy target. But will it accomplish their goal or just prolong the process of getting the neighborhood in compliance?
For example:
What happens to the elderly widow who is trying to sell her house in order that she can move to an assisted living facility and needs every penny she can get out of her home in order to pay for her care? Let’s say she has her house on the market and has a buyer for her home who is willing to comply with any repairs that KREOA insists on being done. Because it is inadvisable that a buyer make repairs to a home that the buyer does not yet own, and the seller simply has no funds to pay for the required repairs, the repairs can’t get done and the house cannot sell. So the transaction dies, the widow takes the house off the market, and because the focus of KREOA is only homes listed for sale, the repairs never get done! Are you following me on this???
Here is another thing that KREOA is getting ready to do: They intend to hire someone to go out to the County of Butte Building Department and research building permits to see which homeowners have not pulled the proper permits when repairing their homes. Shades of Big Brother??????
It seems that KREOA has decided it is in the best interest of the neighborhood if they establish their own informal Kelly Ridge Association Patrol force (my words, not theirs)
Over reaction you say? I thought that too when I first reacted to the newsletter. Until I read this sentence in the newsletter that I think portends a coming conflict:

“If you have a problem with a neighbor leave a message at 589-**** and it will be handled by one of the Directors.”

In other words, if you don’t like something your neighbor is doing, like, as the newlstter says, leaving, “excessive amounts of dog poop in a yard constituting a health hazards (and driving neighbors off their decks to in homes with windows shut), call what I am now calling the Kelly Ridge Association Patrol People (K.R.A.P.P.) and it will be handled- whatever that means!
I wonder if all of the Director’s homes are in compliance? If not, I wonder how they are going to ”handle” it when they find K.R.A.P P. on their doorsteps. Or do they only intend to send a bunch of K.R.A.P.P. their neighbors way!!!!!
There goes the neighborhood? I certainly hope not!

RENTING VS. BUYING

Robin Anderson — Sat, 09 Jul 2011 18:43:00 +0000

For all of those who are renting and may be considering buying a home..this article, from California Association of Realtors, has very good information in it. If you are looking for real estate in the Lake Oroville – Oroville area, there are some awesome deals right now making it more affordable to own your own home than to rent.
Renting Versus Buying: 2011
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This year California housing market conditions make a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California). This assumes the buyer is making a 20 percent downpayment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year.
                        click on graph for larger view
In addition, existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. For example, compare the tax implications for two households both earning $63,430 a year, the minimum income required to purchase the statewide median-priced home of $301,430.* The household that purchases the home with a 20 percent downpayment and finances the mortgage at the current rate of 4.62 percent will receive a tax deduction of over $14,000 in the first year of ownership. The renter household will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts. The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.
                         click on graph for larger view

The mortgage rate is a significant factor in determining just how much a homebuyer can afford. Today’s low mortgage rate environment tips the scale—for some—in favor of buying versus renting. For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.
                       click on graph for larger view

Of course, there are many other socioeconomic benefits that homeownership brings to communities. And there are other costs associated with homeownership above and beyond the downpayment and monthly PITI. So as long as one has considered all of the costs and benefits of owning a home and is in the financial position to do so, there are some pretty compelling reasons to strive for the “American Dream.”
Other resources you may find useful for your clients:
NY Times Interactive Rent versus Buy calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
Bankrate.com’s questionnaire for potential homebuyers on whether or not to buy a home:
http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx
The National Association of REALTORS® resources for clients on renting versus buying:
http://www.realtor.org/library/library/fg301

*Assumptions:
1. Underlying assumptions for the Mortgage Interest Deduction and Property Tax (1 percent of the purchase price) deduction are based on the Traditional HAI Q4-2010 assumptions of: The prevailing median price in the 4th quarter 2010 (Median Price $301,430), effective FRM interest rate of 4.62%, a 20% downpayment, and a $241,144 loan amount.
2. Incomes are based on the underlying assumptions for the Traditional HAI. The same income is used for both Renters and Buyers and is assumed to be the Minimum Qualifying Income needed to purchase a median priced home in the 4th quarter 2010.
3. Tax rate based on 2010 IRS Schedule Y-1 Married Filing Jointly in 15% tax bracket (latest available from the IRS) assuming no changes over the 5 year horizon
4. Interest deduction based on the Traditional HAI Q4-2010 underlying effective FRM interest rate
of 4.62%, a 20% downpayment, and a $241,144 loan amount.
5. Property taxes are assumed to be constant over this 5 year analysis, thereby assuming the underlying market value remains unchanged. If the home value were to increase, under Proposition 13, the property tax assessment would increase at a rate of 2 percent per year. Along these same lines, income is also assumed to be constant over this 5 year analysis in order to keep the analysis simple and determine the basic 5 -year tax benefit of buying a home in 2010.