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Over 40m people carry student debt, so what are the practical impacts of forgiving this debt? How will student loan forgiveness affect the real estate market?

How Will Student Loan Forgiveness Affect the Real Estate Market?

Student loan forgiveness isn’t just an idealistic concept anymore — it’s becoming a reality for millions of Americans. 

Soon, applications will open to forgive as much as $20,000 of student debt per borrower. It’s a bold plan, and one that’s inspired much speculation on how it will impact the broader economy. 

Homeowners, especially property investors, are certainly watching. Over 40 million people carry student debt, second only to mortgage debt. What are the practical impacts of changing so many people’s financial standing in this way — and how will it affect the housing market? 

Some homeowners might be eagerly awaiting a rush of newly debt-free buyers, while others might see it as an unjustifiable cost, not worth its potential benefits to the economy. 

It’s a complex question, but let’s try to unpack it. How are student loan forgiveness and the housing market related? 

Currently, the Biden administration plans to forgive up to $10,000 of student debt per borrower, and up to $20,000 for Pell Grant recipients. Loan forgiveness will be available to borrowers whose yearly income is under $125,000. 

In the United States, most people with student debt owe around $25,000. By various estimates, forgiveness of $10,000 would completely erase the debt of 33% to 50% of these borrowers. 

And there’s more to the plan than just canceling debt. Thanks to new, income-based repayment standards, those with loans remaining after forgiveness will see their monthly payment cut in half.

Low-income households stand to benefit the most from student loan forgiveness. Nearly all Pell Grant recipients come from households earning under $60,000, and are significantly more likely to be Black, Hispanic or Indigenous. 

Together, these measures have the power to free up a significant amount of discretionary income — especially for Millennials, Gen Z, and people of color, who made up the largest proportion of Pell Grant recipients.

How debt, forgiveness, and the housing market are related

Two things are necessary to enter the housing market — an available down payment, and eligibility for a mortgage. 

Student loan debt can affect both qualifiers. In fact, student debt is one of the most commonly cited factors that hold people back from buying their first home. 

Monthly loan payments can eat up disposable income, making it harder to save up for a down payment. Lenders also consider applicants’ debt burden when considering them for a mortgage, with large loans seriously holding back what they’re able to qualify for. 

Eliminating or reducing that debt load could allow borrowers to save more money for a downpayment, as well as increase their purchasing power and get approved for a larger mortgage. 

In theory, that could release an influx of eager buyers into the housing market. That increased demand could drive home prices higher, creating what’s known as a seller’s market. 

Imminent housing market changes — what to expect? 

But in reality, of course, things are rarely so simple. In practice, it’s unclear if Biden’s plan would affect the housing market this dramatically — or indeed, create a noticeable effect at all. 

First of all, demand for housing already outstrips supply in much of the United States. While of course, markets vary by region, most homeowners are not struggling to sell. 

This reality is reflected in the rising problem of housing unaffordability in the US, with over half of Americans considering it a major problem in their community. 

Debt cancellation also doesn’t realistically translate into the immediate ability to buy a home — at least not for the majority of borrowers. 

Even in a best–case scenario, would-be homeowners would need time to save up a down payment with the newly freed-up funds. That means it would take at least 12 to 18 months before this new influx of buyers hit the market.  

In many cases, student loan forgiveness won’t even result in extra spending money. Most loan repayments have already been frozen for the last two years. Borrowers have likely allocated those funds elsewhere, such as to keep pace with rising gas and grocery prices. 

Nor is student debt the only factor keeping new buyers out for the market. For example, mortgage interest rates are sky-high right now — recently hitting their highest since the 2008 financial crisis.

Any changes in the housing market would take a while to become apparent after loan forgiveness is introduced. While there’s the potential to unleash major demand, in practice these effects could be limited. 

But overall, student loan forgiveness should be seen as a positive for homeowners. 

What does look fairly certain is that loan forgiveness will not outright harm the housing market, especially in active urban areas. There are already plenty of buyers looking for homes, and forgiveness would likely exaggerate forces already at play, rather than transforming the real estate market entirely. 

Depending on your region, owners may opt for a ‘wait and see’ approach, anticipating an influx of demand from newly debt-free buyers. In the meantime, renting out your home is a savvy move in many markets, allowing owners to generate passive income while their property rises in value. For a detailed outline of the factors to consider when determining whether to rent or sell, check out our e-book.

If you’re interested in renting out your home, but intimidated by the time and effort that goes into being a landlord, check out Belong. We’re a modern alternative to property management companies, making renting magical for homeowners and residents. 

Curious to see if your home qualifies? Reach out and schedule a consultation today.

11 rental regulations property managers must abide by

Are Property Management Companies Regulated? 11 Renting Regulations to Know

Renting out your property is so much more than a business transaction. You’re sharing a place you care about, and you want to see it protected. But you’re also providing your residents with something very important — a home.

That’s why property management, and landlordship, is so tightly regulated in the United States. These rules ensure that residents get a safe, peaceful place to live, and that the home you’ve invested in is well taken care of. 

If you’ve ever wondered, “Are property management companies regulated?”, the short answer is yes. Property management companies (and self-managing property managers) are subject to laws governing both landlords as well as all businesses operating in the United States. Regulations vary a lot from state to state, but here are some of the most important federal regulations to know. 

1. Prospective residents are protected from discrimination

Passed in 1968, the Fair Housing Act prevents choosing — or denying — residents the opportunity to rent a home on the basis of: 

Hopefully, this is common sense for most property managers in 2022. But it’s still one of the most important rental regulations in the United States. Belong ensures all residents are given a fair shot at a home by approving qualified renters on a first-come, first-served basis. 

2. Residents must be informed if they were rejected due to their credit history 

Access to credit information is important to help you find reliable, financially secure residents. But this sensitive information should ideally be used with applicants’ full, informed consent. 

Under the Fair Credit Reporting Act (1970), landlords do not technically need tenants’ permission to access their credit reports and scores. However, getting permission is more considerate, and generally appreciated by renters. Regardless, property managers will need to let residents know if they were rejected for tenancy because of their credit history. Belong communicates directly with prospective residents on the homeowner's behalf, so homeowners can rest assured that all regulated communications are happening automatically. 

3. Service animals must be allowed in rental homes 

When it comes to the question, “Are property management companies regulated?”, the answer is straightforward when it comes to allowing animals in a property. You don’t need to allow pets in your rental home. But according to the Americans With Disabilities Act (1990), you do need to allow service animals, like guide dogs.

As long as the animals comply with local laws like licensing and vaccinations, property managers cannot preclude residents who rely on these important furry friends. 

4. Property managers cannot restrict children in a home

As part of the Fair Housing Act, managers cannot discriminate against applicants with children when looking for residents to live in your rental home. 

Not only are you unable to limit families with children from renting your home, but you also can’t keep certain rooms off limits and restrict children to specific areas of your rental. So, if you have any valuable or breakable items on the property, you’ll likely want to put those in storage before residents move in.

5. Property managers can choose renters of their own free will 

As long as they aren’t discriminating against protected groups, property managers can choose residents at their own discretion. That includes following whatever criteria they like, such as employment history, rental history, or income level. Typically, as long as your standards are reasonable and grounded in reducing financial risk, you don’t need to worry about discrimination.

Belong works hard to find quality residents that meet income and credit thresholds, then takes care of those residents from day one, ensuring they treat your property like home. 

6. Property managers may charge a security deposit of their choosing

While this is not a federal regulation, property managers are allowed to charge a security deposit in every state. Belong's required security deposits vary by market. 

7. A legal eviction process is required to remove a renter

No matter how late on rent a resident is, or how much they’ve damaged your property, you can’t simply change the locks or tell them to vacate the home. This is considered “taking the law into your own hands,” rather than going through proper, legal channels. 

Instead, you will need to follow your own state’s established processes for eviction. Any experienced and trustworthy property manager will agree. If the need to evict a resident from a home managed by Belong, we will work with you to make it as painless and fair of a process as possible. 

8. The home must be in safe, clean, livable condition

When asking the question, “Are property management companies regulated?”, regulations around the condition of a home should really be common sense. Your residents are looking for an enjoyable living space, and as a landlord or property manager, it’s your job to provide that. 

Belong makes this easy for homeowners, because all Belong homes are maintained by full-time, in-house Belong Pros that are on-call 24/7 to handle maintenance emergencies and ensure your residents are well taken care of. 

9. Tenants have the “right to quiet enjoyment”

Your property manager will likely need to visit your rental home on occasion. But they’ll need to give your residents plenty of notice, and they can’t show up without a good reason. 

10. Property management companies and landlords must be properly licensed 

Just like any other business, property managers need to comply with their state and region’s licensing regulations. In some states, that could mean a property management license, and in others, a real estate broker’s license. 

11. Property management companies must follow state and federal business regulations

Every business in the United States needs to follow certain rules to operate ethically — and that includes property management companies. A few of the most important are paying your taxes, complying with labor laws, and registering for an Employer Identification Number (EIN). 

We’ve now explored the question, “Are property management companies regulated?” and walked through 11 regulations. These legalities protect both you and the residents of your rental home. But for homeowners and managers who want to go above and beyond, these regulations should be considered the bare minimum. 

Renting out your home is all about making sure residents feel welcome, supported, and comfortable in their living space. Often, homeowners who excel in this area will be rewarded with reliable, committed renters who take care of the home as if it was their own. 

The property management companies of yesterday were too often inefficient and not human-focused, viewing renting as nothing more than a financial transaction. 

Today, modern alternatives to the property management company have emerged. These platforms, like Belong, leverage technology and put service first, creating a better experience for both owners and residents. 

Are you a homeowner looking for a better way to manage your property? Learn more about Belong and find out if your home qualifies today.

Property managers are subject to laws governing landlords and businesses operating in the US. Here are 11 regulations property managers must abide by

Are Property Management Companies Regulated? 11 Regulations to Know

Legislation changes ripple through the real estate market. Before you buy your next property, here are 4 impactful initiatives on the ballot in the US in 2022

2022 Ballot Initiatives That Could Impact Homeowners

A plethora of factors can influence the real estate market and give you cold feet before you’ve even signed on the dotted line. 

Property availability, prices, and investment potential are mainly influenced by demographics, interest rates, and economic cycles, but they’re also closely tied to government policies and legislation, including tax incentives. 

Whether you’re a new or soon-to-be real estate investor, knowing what’s on the ballot can help you make smarter investment decisions and mitigate risks. 

Even if an initiative isn’t currently on the ballot in your state, popular measures are often echoed in other areas across the country. With that in mind, here are some of the most impactful initiatives to get familiar with before you purchase your next property. 

In November 2022, we’ll see the Wealth Tax to Support Clean Air Programs on the ballot in California. 

The proposition would implement a 1.75% tax increase on personal income over $2 million, which could generate $3 billion to $4.5 billion annually to create funds for electric vehicle incentives and wildfire prevention. 

Wildfire management costs California billions every year. Businesses, environmentalists, and public health organizations alike argue more needs to be done to fight climate change.

The wealth tax initiative further encourages zero-emissions vehicles and infrastructure, a program that has already been adopted in 12 states. Funds will also be used to support low-income communities or those who live in heavily polluted areas, as well as provide additional wildfire protection and prevention.

Similar to property taxes, a wealth tax would apply to all property in your ownership. Residential and commercial real estate will be subject to the tax.

A wealth tax could help address the growing housing shortage, which has discouraged first-time home buyers and renters, as well as contributed to homelessness.

King County, Washington’s Proposition 1, Property Tax for Natural Areas, Trails, and Green Space Funding Measure is an effort to restore and preserve conservation in the region.

The proposition would enact a property tax of $6.25 per $100,000 of assessed value to provide an advisory committee and funding for green spaces like natural areas, wildlife habitats, trails, river corridors, farmlands, and forests within King County.

Conservation directly affects flood protection and air quality in King County. Green spaces allow for more recreation and community connection, which is critical because many King County communities experience disproportionate racial, social, environmental, and economic inequities. 

Land stewardship can benefit homeowners and residents alike — particularly low income families experiencing excessive heat, poor air quality, or flooding. Supporting communities’ health and prosperity in this way can significantly influence the real estate market.

In 2023, King County will see Initiative 135 on the ballot, which would establish the Seattle Social Housing Developer to create permanently affordable housing. This measure is also generating interest in California and Hawaii. 

According to the National Association of Realtors, “there are many misconceptions about affordable housing, the main one being that they decrease property values. A recent study in Alexandria, Virginia has proven that affordable housing actually increases or has zero effect on property value.”

3. Florida’s Flood Resistance Improvements

Florida Amendment 1, Disregard Flood Resistance Improvements in Property Value Assessments Measure would allow the state legislature to pass laws blocking the consideration of flood resistance improvements when assessing a property’s value for taxes.

Florida experiences the highest amount of property value losses due to flooding, with Dixie, Franklin, and Monroe Counties at risk of losing property value the fastest. In 2022-23, legislation from the Florida House will dedicate $100 million to mitigate the impacts of flooding on homes and businesses. 

Public service workers could soon receive a tax break to buy a home in Florida. Florida Amendment 3, the Additional Homestead Property Tax Exemption for Certain Public Service Workers Amendment would provide an additional homestead property tax exemption of $50,000 on assessed values between $100,000 and $150,000 for property owned. 

The amendment is designed to lessen the financial burden purchasing a home may have on the public workforce. Those eligible include essential workers like K-12 classroom teachers, law enforcement officers, emergency medical technicians, and more.

It’s estimated that approval of the amendment would reduce local property tax revenue by $85.9 million, resources that typically fund local governments. As property values and taxes increase, this initiative could improve the accessibility of the real estate market for first time buyers. 

Make moves on your rental home with confidence

Making predictions about the real estate market and how to price your rental home isn’t as simple as looking at the latest news cycle — we recommend seeking expert advice. If you have a rental property and are seeking a hassle-free experience with an expert crew to support your investment goals, book a consultation with us at Belong.

Assembly Bill 1482 regulates what Californian homeowners can charge for rent, in municipalities without existing rent-control laws.

What Rental Property Owners Need to Know About CA Assembly Bill 1482

If you’re a homeowner in California, you’ve probably heard of Assembly Bill 1482, or AB 1482. This law regulates something on every owner’s mind — what they’re allowed to charge in rent! 

AB 1482 helps protect rental residents throughout the state of California. But it also profoundly affects what it means to own a rental property, so you’ll want to get to know this bill inside and out. Here's what you need to know about AB-1482.

AB 1482 controls how much landlords are allowed to increase rent every year. The bill was passed in late 2019, and took effect at the beginning of 2020. Barring another change in legislation, it will remain active until 2030. 

The goal of AB 1482 is to protect tenants in California. It does that in two ways — by controlling rent increases, and by regulating evictions. 

AB 1482 rent increases across California are limited to 5% annually, plus the local rate of inflation. In total, the increase must be no more than 10% higher than the previous year’s rent. Even though it’s a state law, this bill will not affect rent control in every area of California.

Some CA municipalities, like Berkeley, Oakland, and the Bay Area, already have their own rent control legislation. In these municipalities, existing rent-control laws will take precedence.

Additionally, don’t forget that rent control only applies to residents who already live in your home. If you’re searching for new tenants, you can still charge whatever rent you like — although of course, you’ll be limited by market prices in your area. 

If residents have lived in your rental home for at least a year, AB 1482 means you’ll only be able to evict them for what the bill defines as a ‘just cause.’

Luckily, those ‘just causes’ are very fair and comprehensive. They’re mostly around breaching the rental contract, or needing access to the property yourself.

Some just causes under AB 1482 include: 

A resident subletting the property against the lease, or without the owner’s permission 

A resident refusing the owner’s legal access to the property

Using the home for illegal purposes (such as a commercial operation in a residential district)

If the owner, or their family member, wishes to move into the home

If the owner no longer wishes to rent out the home

If the owner was ordered by the local or regional government to vacate the property

Here’s a complete list of eviction just causes under AB 1482. 

This law sounds like a pretty big deal — and for many homeowners, it is. 

But the good news is that AB 1482 comes with some pretty major exemptions. Unless you own a multi-family dwelling or started a corporation, there’s a good chance you won’t be affected. 

If your home falls into one of these categories, you’re exempt from AB 1482: 

Owner-occupied residences in which the owner and tenant share a kitchen or bathroom

Single-family residences not owned by a corporation or LLC

Condominiums not owned by a corporation or LLC

Any home constructed in the last 15 years

As you can see, these are some pretty wide-ranging exemptions. 

In general, AB 1482 will only affect landlords who own multi-family residences, properties they don’t live in, or homes over 15 years old. 

Additionally, don’t forget that this bill only affects municipalities without existing rent-control laws. 

As a homeowner, rent control and eviction legislation might feel annoying. Your home was a costly investment, and It’s only natural to want to have full reign over how you manage that asset. 

But even if you are affected by AB 1482, remember that it’s intended to help residents feel safe and secure in their rental homes. 

When renters feel protected, it creates a stable rental environment, where owners and tenants can trust and rely on each other. That makes finding and keeping housing less stressful, benefiting your entire community. 

Good management practices are another important part of good owner-resident relationships. 

When renters know they can easily reach their landlord and rely on them to solve problems, they’re likely to want to stick around and treat their home well, long-term. 

But that level of service can be tricky for many homeowners to deliver all on their own. 

That’s the idea behind Belong. Our modern, people-focused solution streamlines every stage of the rental process, from finding residents to maintaining your property. 

We believe renting should feel friendly and positive for everyone — owners and residents. Find out if you qualify today. 

Assembly Bill 1482 regulates what Californian homeowners can charge for rent, in municipalities without existing rent-control laws. Learn more in this article.

Afton Brazzoni

Flora Fiorillo

Sparsh Mehta

Melanie Kershaw

Tyler Infelise

Ashleigh Graf

Flora Fiorillo

Sparsh Mehta

Melanie Kershaw

Tyler Infelise

Ashleigh Graf