Government Restrictions Eased on Secondary Housing Units

Throughout California, but especially in the Los Angeles area, housing opportunities are getting very limited. There simply isn't enough space to provide housing to the thousands of current residents and the hundreds of new people looking to find somewhere to live. Los Angeles has plenty of draws: the nice weather, the variety of shops and restaurants, and a wide array of employment opportunities. However, as more people look to come to California, the market shifts accordingly. Currently, even for those who can afford to buy a house or rent an apartment in the rising housing market, there is little room for being picky based on location; you just take what you can get. Fortunately, as Liam Dillon and Andrew Khouri describe in their L.A. Times article, California lawmakers are working on a way to address the major housing issue.

New construction of homes or apartment buildings could provide housing opportunities. Unfortunately, all available vacant land has also been growing scarce. Until recently, getting the required approvals and permits for construction was such an arduous process that it made it nearly unfeasible for most people to even try. Now, due to the push from Governor Jerry Brown and LA mayor Eric Garcetti, legislators are relaxing regulations, making it easier for homeowners to build "granny flats" in their backyards, thus converting empty space into housing.

Just a few years ago, any homeowner that wanted to convert a garage into an extra room or add an extra freestanding structure in their backyard had to face the seemingly endless trials of the governmental bureaucracy. In the end, many who tried to add on to their property, whether for guests, for family, or as a rental to bring in some extra income, inevitably failed or at least had to go through months of stressful negotiating with the city of Los Angeles. Now that the restrictions are being relaxed, at least to some extent, homeowners may help California as a whole to keep up with growing demand. Statistics show that Los Angeles needs to add at least 100,000 new units each year in order to keep up with the market, and retired individuals may benefit the most from this opportunity.

Some, like 78-year-old Rochelle Ventura, tried previously to submit plans to the city for backyard additions, but the strict regulations led to their ultimate rejection. Since 2005, so few units have been approved that only 347 have been completed in the Los Angeles area. Some of the regulations seem unnecessary to most, especially if the secondary unit will be used by family members. One of the new bills is overturning a restriction that required secondary units to have uncovered access to a public street. Since that is no longer a necessity, under the new rules, more property owners may find it economical again to take a crack at expanding into the territory of secondary units. Hopefully, the new legislation will help to solve problems for those trying to find housing as well as those trying to gain a little bit of extra income by providing the sought after housing.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

ZestFinance to Use Search Data in Calculating Credit Scores

Traditionally, a credit profile is derived by looking at a potential borrower's history of paying back loans. Whether from car loans, credit card usage, or a mortgage on a home, the more an individual can show that they have paid back borrowed money in the past, the lower their interest rate will be on a new loan. However, there is the issue of the Catch-22 of credit: without any credit history, it is very difficult to get your first loan on the path to a good credit profile. Some companies have started including monthly rent payments in their calculations. In partnership with Chinese search engine Baidu, Hollywood credit firm ZestFinance will be using a potential borrower's internet search and shopping history to calculate their credit score, as described in James Rufus Koren's L.A. Times article.

Nontraditional means have been used in the past to calculate a potential borrower's credit, especially when that borrower has never borrowed money, but this will be the first time using search data. ZestFinance has focused on borrowers with little credit history from the very beginning and is confident that the sheer size of Baidu's engine will make them succeed where no one has ever dared venture before. The company will be breaking out in both the US and China, underwriting loans through the companies Basix and JD.com, respectively.

In addition to using the search data in calculating credit profiles, behavioral data gained from analyzing search history can help the company to avoid fraudulent customers. With enough data, ZestFinance believes they will be able to statistically determine the likelihood of a borrower paying back their loan in a certain time frame. One example they give is that for some reason, potential borrowers who fill out their loan application with proper capitalization are more likely to pay back their loan than a borrower who writes in all capital letters. They aren't sure exactly why this correlation exists, but they believe that enough research will enable them to create fair assessments of a borrower's credit profile.

Some believe that this system will be unfair, because how can anyone really tell if someone will pay back a loan based on what they look up online? However, if this is the system that enables the majority of those people who were previously refused loans to start down the road to good credit, then it may be worth it. In fact, ZestFinance believes their system will be fairer than current non-traditional calculations in that it can allow people with no credit history to have a decent interest rate, whereas before, they had to choose between paying exorbitant rates or missing out completely on the chance to develop their credit profile. As Douglas Merrill, a ZestFinance executive, says, three out of four Chinese citizens lack the financial history to have a fair credit profile. In exchange for a small, carefully limited, loss of privacy, credit could be gained more easily by everyone, and for most, that's a pretty simple trade.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

Long-Term Government Bonds Seen as "Safest" Investment

Although the global economy's struggles have made success more difficult for investors this year, many are trying new, riskier methods to multiply their money. Some, however, have decided to take the safe route, since very few investment opportunities remain with high payouts. So, the majority of "safe" investors have been going after utilities and bonds, which have the most stable profits, albeit slow ones. Tom Petruno, in his L.A. Times article, discusses some of the options that investors have been left in an economy with ever-dropping interest rates.

Options like utility stocks provide at least some semblance of "certainty," which has investors paying higher prices than they would expect to earn back in the short-term. All appearances seem to point to many investors playing the long game, more willing to take less profit than risk losing money. Additionally, because many investors have been focusing more on high-yield bonds as a safe haven for their money, government-backed bonds have been suffering. In about half a year, the US Treasury note yield has dropped from 2.27% to 1.37%.

Even in Japan and several countries in Europe, government bonds, which are known for being safer than most investments, have taken a hit. The market is so shaky in those countries that yields on bonds are somewhat negative, which means a bond owner is losing money on their investment. Because of this phenomenon, Japanese and European investors are looking to US bonds. While the American bonds only have a rate of 1.5%, it's better than losing money, so investors are rushing in.

According to economists, owning bonds is a representation of an investor's belief that the economy is improving. By holding onto one's bonds, an investor can be suffering through low-yield years in order to benefit greatly in the long run. Long-term bonds are described as an "insurance policy," no benefits for years, but great to have at the end of the road. Stocks have begun recovering again, and while stocks may hit all-time highs in the coming months, some companies fear that profits will still take a while to get back to normal levels.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

U.S. Takes Second Place in World Oil Reserves

The top oil-producing countries in the world are Russia, Saudi Arabia, Canada, and the United States. A few short years ago, the US was dead last in that hierarchy based on estimates of total recoverable oil throughout each country. As shown in Rob Nikolewski's L.A. Times article, a recent study by Rystad Energy has shown that the United States has beaten out some of its former competition, taking second place behind Canada as one of the world's top oil producers.

The amount of "recoverable oil reserves" is calculated based on how much of a country's oil is both technologically and economically feasible to extract. In other words, if it is too deep to get out or will cost more money to mine than can be earned in the market, then it isn't calculated in the country's total reserves. Leaders in the oil industry have determined that the United States' improved position in the market is likely due to technological advancements, especially those that enable the procurement of shale oil.

Shale oil is a type of oil found in some sedimentary rocks that can be extracted pressurized drilling. It is a type of oil that was previously ignored or not considered useful because it was harder to extract. However, since much of the "easier to access" oil has been extracted and used up over decades of drilling, the technology advanced to keep up with demand. Additionally, other forms of drilling technology, such as hydraulic fracturing, or "fracking," which involves the pumping of pressurized fluid into otherwise-empty oil well in order to force any remaining oil out have added to US reserves. Texas by itself has over 60 billion barrels worth of shale oil, an amount comparable to the total oil reserves in the entire country of Mexico.

The Rystad study concluded that there are approximately 2.1 trillion barrels of oil globally, from over 60,000 oil wells. Over half of the reserves in the US are shale oil deposits, which, since they are more difficult to extract, can incur extra costs. Right now, oil prices are very low, which might seem like a good thing to the average consumer. However, when prices stay low for too long, producers can;t extract more oil in an economical manner, which reduces the total amount in the market, which can cause prices to shoot up.

According to one economist, if oil prices stay below $50 per barrel, miners will not put in the investment to tap shale oil reserves. If prices get closer to $100, he predicts that the US will provide a significant portion of the oil market over the next few years. So, even though the US has plenty of oil deposits in Texas, California, South Dakota, and Alaska, and technology can help the mining along, prices will have to go up in the short-term in order to keep gasoline prices steady in future years.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

Global Economies Stabilizing After Downturn Caused by Brexit

Although the Brexit Referendum sent economies around the world into a steep dive, they seem to be rebounding much more quickly than expected. Investors have been buying more than selling this week. driving the US stock market higher three separate times. However, analysts have also noticed that US bond prices have surged, which indicates that investors are less anxious about Brexit in the short-term, but still worried about its implications down the road. The members of the Associated Press of the LA Times describe in their article some of the ways in which the economy has shifted since Brexit, and what that may mean for the future.

Britain's departure from the EU, which dropped the value of the euro by over 10%, left economists worried that economies around the globe would quickly follow suit. Fortunately, after a significant downturn, most of the economies are bouncing back quickly. While the amount of investment in the US economy seems to be the same before and after Brexit, there has been a shift as to where investors are putting their money. Oil prices went down. Consumer staple companies and utility stocks, which are known as low-risk investments, have had increased demand.

Investors believe that Brexit in and of itself will not have enough of an effect on the US economy to be significant. However, they worry that if the trend becomes contagious, it will be difficult to combat the negative effects of several countries leaving the EU at once. Overall, though, the economy seems to be on track. The Nasdaq and Dow Jones both increased by 1.3%, and the stock market did well this quarter. Even the S&P 500 improved by 1.9% in the period between April and June. Analysts believe that most of the improvement comes from energy stocks, utilities, and telecom companies.

On Thursday, stock trading started slowly but soon began to rally at normal levels, which may signal that investors have decided to stop worrying about Brexit's effects, at least for the time being. Even the UK's stock market has recouped many losses since last week, due mainly to overseas companies benefiting from the reduced value of the local currency. Around the globe, economies are doing well, or at least not being significantly affected by Brexit. The pound and the euro are still losing value, with the former at faster rates than the latter, but both seem to be slowing. It could be that economists were right: if handled correctly, Britain leaving the EU might only have negative repercussions in the short-run, with unknown benefits in the long-term.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

Britain's Exit from the EU and its Effects on the Global Economy

This week, Great Britain voted on a referendum that concluded with their decision to leave the European Union. With that decision, the international financial markets became a sea of confusion and the pound hit its lowest value since 1985. The European Central Bank is worried about the negative consequences this landmark decision will have on the general population as the devaluation could cause a nation-wide panic. Jonathan Kaiman, Don Lee, and Julie Makinen discuss in their latest L.A. Times article some of these potential effects, not just to Britain's financial future, but to the world.

Early this morning, the voting results had begun to show a not insignificant push for the "leave" camp of British voters: 52% had voted for the United Kingdom to leave the European Union. While the difference of 4% between the two sides may seem small, it represents a shocking turn that many policy-makers didn't expect.  Apparently, the general populace would prefer to be independent, no longer under the rule of the EU. Why are the British people so adamant about leaving the European Union?

The "Brexit" (British exit) is based on three main issues: economics, immigration, and identity. Under current practice, the members of the EU have a common market with a shared form of currency that makes the economy run smoothly. However, the UK is forced to send a sum of money to Brussels (the headquarters of the EU) each year, where the money gets redistributed to other member states, which can help to stabilize their economies and hopefully induce growth. Many of the "leave group" don't want to pay extra taxes to support another country other than their homeland.

The immigration argument comes down to the fact that anyone from an EU-member country is legally able to move to the UK and get a job without needing a work visa. According to economists, this is good for the economy, filling necessary jobs and helping the local housing market. Many UK citizens are against the free immigration, however, because they believe that non-citizens are coming in and using up already limited public resources. Finally, many voters in Great Britain don't see themselves as "European." They prefer to identify themselves as British above all else and dislike many of the laws and regulations that come with being a member of the EU. In all, those supporting the Brexit do it because they want Britain to have control over its own governance again.

Unfortunately, many economists believe that the Brexit will lead to massive, irreversible economic downturn around the world. Already, the pound's value has gone down by over 10%, the price of oil has taken a dive, and even stocks in Asia have suffered. Investors throughout Europe and the US are preparing for the worst. As everything unfolds in the UK, even countries as far as Singapore are feeling the effects due to the high degree of uncertainty as to what will happen next. No one knows for sure, but economists believe that Britain will not be able to avoid a hard recession with economic output dropping by 1-6% in the coming years.

The abounding fear and uncertainty have more strongly affected Asian markets than anywhere else so far. Japan's Nikkei index dropped 7.5%, Hong Kong's 4.7%, and Shanghai's 2%. All of Asia's markets have been feeling the significant effects caused by the upcoming Brexit. Fortunately, analysts believe that the worst of the Brexit will negatively affect the Chinese economy, but only in the short-term. In fact, economists believe that the financial instability will benefit China in the long-run. As Britain leaves, the power of the euro will decline, which could give the Chinese renminbi (RMB) a chance to replace the euro as the world's second-most-powerful form of currency. However, as a whole, it is expected that the global economy will not do well over the coming months and years. Only time will tell how things will end.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

How to Make a Successful Retirement Plan

Even for those people who love what they do, retirement is one of those things that constantly stays in the back of everyone's mind. To determine when you'll be ready for retirement, there are a variety of factors that have to be weighed. What percentage of your income can you be comfortable living on? Do you plan to retire completely or try out a new career? These questions and more help to determine how long you would have to work before retiring. Dave Rowan's L.A. Times article sums up some of the major points made by financial planning expert Craig Israelson on the finances behind a successful retirement.

The first topic he mentions is known as the "4% Rule." According to this rule, it is possible to withdraw 4% of one's retirement savings from an investment portfolio each year without ever running out of money. Financial planners set the optimal amount at 4%, but some retirees have to withdraw less, while others who have saved for longer are able to withdraw more without running out. This concept, however, doesn't really help people in their 40s or 50s, who are planning for a retirement in the distant future. For those closer to retirement, the 4% Rule helps because it allows them to determine if they have enough money in savings to combine with other sources of retirement income and have enough money to cover a projected budget.

Israelson has a different method called "RAM" that allows younger people to plan for retirement far down the line. This method involves a lot more mathematical calculations but gives future retirees a way to calculate how financially stable they would be at each age. RAM, or retirement account multiple, calculates the probability that a retiree would never run out of money if they retired at 65, lived to 100, and withdrew half of their final yearly salary (the salary being earned at 65 based on inflation rate of 3%) as an addition to other retirement income like Social Security. Based on Israelson's calculations, a RAM value of 7 or higher means that the retiree is in good shape and will have over 70% likelihood of never running out of money if they live to 100 years old. A RAM value of 18 or higher means that the retiree will never run out of money, no matter how the economy changes.

The RAM is calculated as follows:

First, the retiree's final salary is calculated based on a 3% inflation rate.

Final Salary = Current Salary x (1.03)^(65 - Current Age)

Next, the total amount the retiree will have in savings is calculated based on an average value of 7% as the increase in the value of their retirement portfolio.

Final Retirement Savings = Current Savings x (1.07)^(65 - Current Age)

Finally, the RAM value is calculated using those two values.

Projected RAM = Final Retirement Savings / Final Salary

The more you are able to save now, the better off you will be in the long run. However, it depends on the person. Some people are comfortable with spending money now to enjoy a higher standard of living, even if it means they will have a RAM score closer to 7. Others look for any way to reduce expenditures today in order to get a RAM closer to 18, to ensure that they won't have to worry about their future finances. Additionally, the previous RAM calculations didn't include additions to the retirement portfolio. If someone were to continuously save and invest more money toward retirement, they would find their RAM value increasing, based on the following calculation:

Extra Retirement Savings = [(Current Salary + Final Salary) / 2] x (Savings Rate) x (65 - Current Age)

Of course, these calculations aren't perfect, since the economy is constantly fluctuating and many assumptions have to be made about future income and changes in saving patterns. However, it should be able to give savers a good look at how well off they will be in their retired years. The RAM is simply an approximation method, not an exact science, but it should give people a sense of whether they will retire successfully and how long they may have to wait to do so. 

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************