Why I’ll vote “NO” on the rent control ordinance

There will be a vote this fall on a rent control ordinance in St. Paul. I am not against rent control but am against the ordinance. It is an across-the-board 3% cap on rent increases in any 12 month period. Current rents will not be changed.

The 3% cap even applies if the property is vacant and waiting for new tenants. The 3% isn’t tied to inflation or to anything else.

There are exceptions where owners can get a variance if property taxes go up or if money is needed for repairs. There isn’t any system in place to handle those variances and the process will be expensive for the city which means more property tax increases. Property taxes make renting and owning more expensive and they keep rising.

Under the proposed ordinance all rental properties are treated the same. Properties large and small and luxury rentals too. New construction and existing construction. Properties owned by individuals, small businesses, and large corporations alike. There isn’t a rent control ordinance like it anywhere in the world.

I am in favor of affordable housing and rent control could help but the way the law is written I have to vote against it.  The main reason why we don’t have affordable housing is capitalism.

The rent stabilization question as it will appear on the ballot:
Should the City adopt the proposed Ordinance limiting rent increases? The Ordinance limits residential rent increases to no more than 3% in a 12-month period, regardless of whether there is a change of occupancy. The Ordinance also directs the City to create a process for landlords to request an exception to the 3% limit based on the right to a reasonable return on investment. A “yes” vote is a vote in favor of limiting rent increases. A “no” vote is a vote against limiting rent increases.

Just vote no. A yes vote isn’t going to lower rents or make housing more affordable.

On a related note:

Remember the St. paul tenant protection ordinance?  It was/is the strongest tenant protection law anywhere. “On April 19, 2021, a federal judge temporarily enjoined enforcement of Saint Paul’s Tenant Protections Ordinance.  As of April 19, 2021, and until further notice, the City will temporarily cease enforcement of the ordinance’s requirements, including any rules previously posted

Frost aster, seedum and bees

It is Friday and Fridays are for fun. It is late summer and fall starts next week. I have been enjoying the bees that flock to the frost aster and the sedum growing in my flower beds.  I have seen more honey bees in the last week than I saw all summer. The asters are native plants but the sedum isn’t and it attracts all sorts of bees.

I am looking forward to cooler weather and I am not looking forward to cooler weather. I do like living in a place where there are seasons.  Have a wonderful weekend and enjoy the weather.

fall blooms
Frost aster and sedum

Keeping low mortgage rates in persective

Mortgage interest rates have been kind of flat and below 3% on thirty-year fixed-rate mortgages. I grabbed this chart that shows mortgage interest rates over the past ten years. When I first started in real estate 7% was considered a good rate. It was exciting when they went below 6% and the excitement continues at 2.88%. When I bought my first house 9% was common. Before that interest rates were in the double digits which took homeownership off the table for many.

Rates vary and the best rates go to borrowers with the best credit ratings and who have enough income to pay back the loan.

We don’t know when interest rates will go up again.

mortgage rates
Freddie Mac mortgage rate survey

The pandemic and early retirement

Early retirements are way up because of the pandemic. On average, 2 million boomers have retired each year since 2011, according to an analysis by Pew 3.2

.

million people retired in 2020.

I know several people who retired early and in the last 18 months because of the pandemic. Some were already 70 or older and others were between the ages of 60 and 65 at retirement.

The homeownership rate among baby boomers is 74 to 82% depending upon the age of the boomer. Baby boomers are mostly hanging on to their real estate due to the lack of suitable or affordable housing. It is actually less expensive to live in a larger house than it is to buy a smaller house, at least for now.

Almost 38% of homeowners between the ages of 65 and 74 have mortgages which is way up from 1989 when it was closer to 21%. Almost 28% of homeowners who are over 75 have a mortgage.

Retirement will be easier without a mortgage. We used to worry about paying mortgages in old age but now that seems easy compared with paying for health care and or long-term care.

On the other hand without mortgage payments, there is more money for medical expenses. I have read a few articles that discourage borrowers from paying off their mortgage early. I don’t agree with most of the articles which are usually written by people in the mortgage industry.

My advice to anyone who is considering early retirement is to pay off the mortgage first unless of course, you have a lot of money and a large retirement fund.

There are terms and there are terms

If you are buying a house you need to know that a good offer is about more than money and in some situations other terms will win out over more money.

old brick building and new apartment building
Panama Flats and Irvine Exchange apartments

Here are some things to consider:

  1. Closing date – having the flexibility to choose a closing date that works well for the sellers.
  2. Down payment – Yes downpayment matters. It doesn’t have to be 205 but a higher downpayment makes an offer more attractive because the house is more likely to appraise for at least the loan amount.
  3. Agreeing to take on repairs.

Those are the top three but also consider offering to let the sellers leave anything behind that they don’t want.  Such an offer may be especially attractive to older homeowners who are downsizing or in situations where the house is part of an estate.

Ideally, buyers agents should ask what the sellers are looking for when it comes to the closing date and if there is anything else the buyers can do to make the offer appealing to the sellers.

Buyers should not expect sellers to pay their closing costs. In a multiple offer situation that is almost always a deal killer.

The numbers are in from State Fair attendance

Over all attendance at the Minnesota State Fair was 1.3 million this year. Attendance in 2019 was 2.1 million. The fair was canceled in 2020 due to the pandemic.

There are several conferences coming up this fall for real estate agents and industry professionals. Minnesota Realtors (the state association of Realtors) is having a conference in St. Cloud this October.

The Minnesota association has stated that they are not responsible for anyone who gets Covid-19 because they attended the conference. I disagree. I think we are responsible for each other and we should do everything we can to stop the spread of Covid-19.

There are people who will not attend an event if vaccinations and masks are required.  There are more people who will not attend events that do not require masks or vaccinations.

It will be interesting to see how it all shakes out. There are people who will not attend conferences being held in cities where there are high rates of Covid-19 and where the hospitals are filled to capacity.  I’ll admit it is hard to plan ahead. The safest bet is to hold a virtual conference this year or one that can be attended in person or virtually.

If the state fair is an indicator expect low attendance at events in Minnesota where masks and vaccinations are not required.

state fair ride
Taken a the Minnesota State Fair