sam_schneider

Yes.

Seems like a by your own logic comment here.

You're right—we are limited in what is and isn't an HOA—the public data isn't great. We're working on it!

For space—you'd be surprised what we can fit, but there are certain lots where it will be impossible without demolishing and re-building a smaller home. We don't currently do that, so in that case, you are out of luck for now, but you can go it alone. We do love fighting with HOAs!

This law actually exists in Oregon and parts of Minneapolis. ADU laws were only in Oregon and Washington until recently, California's State-wide ADU push was part of a nationwide reform towards ADUs. The same is happening for SFRs.

Our federal governance structure doesn't provide enough $$$ for housing that isn't single family homes—until we change that, infill single family development is inherently subsidized by fannie and freddie -> I anticipate that other desirable areas will have to do this to stop out-migration and stay affordable.

We aren't solving the affordable housing crisis in one fell swoop.

We are bending/slowing the insane growth in SFR prices and slowing/ending homeowner displacement.

As we scale we'll make a meaningful impact, but the solution to affordable housing is not just loosening artificial supply constraints, and is bigger than any one private (or public) organization.

For home value: It's about 5-12% decrease depending on the setup--in extreme cases as bad as 15%. We haven't had a pre-assessment come in lower than 15% (the homeowner still going to make a lot——it's a large property). Most are around 7-8%. Usually there is 50%+ return, so that previously illiquid/non-existing capital has a much higher value, but there is real depreciation.

Lower value homes depreciate less, higher value more--but are offset by larger returns!

It will likely re-appreciate in a few years, and so the loss is temporary/the other capital could be deployed to quickly outpace any depreciation.

I mean, in theory me, who has spent their whole life working on solving problems in the physical world at scale—-for the last 4 years working on housing—- could run a scam that was horrible for homeowners and then get sued for price gouging, and expose myself to personal lawsuits, legal persecution (imagine how unsympathetic the jury would be).

This is true with any product that is new and requires mutual trust.

Or we could just deliver a product people want, and make much more money at scale than trying to optimize for a short term scam!

Great Q! As of now, the homeowner has to refinance on the smaller lot. We have a partner that will do it at the time of application, and underwrite it in consideration of the future income.It hasn't been a problem to date, though it may hold up some projects.

In theory banks could approve the transfer—certainly they could split the lot, but the current lien would be spread between the two lots, and we couldn't finance the property today.

A crazy insight: Many of the customers we work with don't have mortgages.

They intrinsically don't trust debt, because of either low income, job insecurity, and/or their long tenure of homeownership (often intergenerational). They do like the ideal of selling their yard for money, and don't have the risk appetite/ability to go it alone!

We're working on a solution that will allow the existing lien-holders to stay on title until sale--making a refinance less burdensome for the current homeowner.

Down the road, we'd like to provide the owner to keep some ownership interest in the property with homestead, if they'd prefer long term income. In this arrangement, we likely wouldn't

No, I'm so sorry! We'd love to one day, but we avoid consulting—we find that without an eye on the whole process, projects can still go very awry and the consultant is left with the blame. It's why we started homestead—these consultant solutions just don't solve end-to-end problems like we'd want them to!

You can reach out to connect@homestead.is, let them know I sent you, and I'll try to carve out 10 minutes to point you in a good direction!

To date, every infill residential project is custom. Even if its a pre-designed plan on the internet, its a different city, different material supplier, different local architect, different contractor--every time.

We just put the whole process on rails--a few material options and designs still have exponential customization, but represent drastic reduction in overall project complexity and project-to-project variance.

With a kit of parts we can automate design and management, and with 3d scanners in everyone's pocket, we can mostly offsite QC with similar or better quality outcomes.

Because we're a repeat provider, we offer builders, cities and suppliers consistency that's only been available to date in tract housing, which is incredibly environmentally destructive.

One specific example:

When an affordable architect specs a house, they almost never spec a shower valve (let alone cabinets, specific flooring providers, etc). When you buy a shower fixture, the valve doesn't come with it. This means you or the contractor has to either drive to home depot to buy a 6 dollar valve, or install the wrong valve to pass inspection and then wait and reinstall the correct valve.

If they spec the materials themselves, it isn't much better: their preferred suppliers never get shop drawings, often are out of stock, and are not able to scale with them.

We make sure there is always an interchangeable backup part, that any specific finish material or fixture is on site before the time it's needed. Designs specs are updated in real time to deal with supply chain disruptions.

That is just for a shower valve—it compounds as custom plans are changed, materials are out of stock, items don't fit as planned.

Prefab solves for a lot of these issues, but because of transportation costs and capacity constraints, it usually is costlier and longer to delivery from start to finish, even though the install is quicker.

We can scale with demand: because their cashflow velocity is so much quicker than working with homeowners, contractors always want to bid on our projects.

For Sb9 we'll use prefab where it makes economic sense—we are solution agnostic!

For existing homeowners, our liquidity is provided by in-house debt backed by the future lot asset.

For purchasers, we own part of the purchased home & that interest is transferred to the new lot when it is split!

Amazingly, the state minimum is 2,400 sq ft. If you can split into two 1,200 sq ft units, you are allowed to build 800 sq ft single unit or two 800 sq ft units as-of-right! Tiny homes for everyone!

I am doing it as soon as I purchase a house! I couldn't afford one until SB9—I could make the down payment, but because of my low income (obviously its relative) it would be hard to make loan payments. With SB9, I can develop with Homestead, and use the sale value to reduce my payments, so I can focus on adding more housing with Homestead!

Most of the homeowners who wanted ADUs were lower income & couldn't find financing (likely not HN community). These are multigenerational households where the children live in the house their parents bought with them and their kids. They work two jobs—their yard is rarely used—no one stopped to mourn it.

They wanted to make money to help lighten the economic burden of living where they grew up, and maybe not work the night shift, or have to provide their own childcare while working full time.

I imagine a large subset of HN and the tech community will not want to lose their yards-and its a free world, we aren't going to take them away!

Most of our team is signed up for our buy product. If you think people you know would be interested, send them our way!

Well, voters capped their ability to make money on property tax, so is that the state's fault? (Also it has a budget surplus?)

I think this is sort of a memory bandwith/memory capacity metaphor mix.

Hi! Great questions and let me see if I can answer them:

HFZ: Yes, sadly—though i think there is good logic to prohibit more density in fire prone area, and HOAs are already dense, so in your case it doesn't make sense.

HOA: yes, for now that is a blocker. This was also initially a problem with the 2017 legislation enabling ADUs, but in 2019 the state expanded the law to overrule HOA's. We'd like to see that as well, and can easily give you the resources to contact your legislators (coming soon on the search tool, we can help at connect@homestead.is for now)

LA County had relatively liberal interpretations of the ADU law, we hope they will reform some rules to make lot splitting easier!

All and all, there are still millions of ideal SB9 lots—I am very sorry your's isn't—and i think HOA restrictions are a load of crap!

Uh... do you want this (https://www.neom.com/en-us/regions/whatistheline) ? There is a prince in Saudi Arabia who'll do it for you!

Interestingly, California is one of the lower direct carbon footprint per capita states. With drastically less heating and cooling in the Bay, LA and SD than national averages, and denser areas, it's a net positive to build more housing here than Phoenix, Austin, Houston, Dallas, etc.

We pass through building costs, there is perfect alignment in our incentives, which is to maximize sales price.

There is a non-zero chance—-very unlikely: it would require a 50%-60% decrease in housing prices—-that they could lose the backyard without making income. The weighted probability might lower the Expected Value 1k. That said, foreclosure would still be beholden to the profit split agreement should the lot be profitable.

We disagree! Most people do not have access to the equity underneath their feet—they do not have the income to utilize it as cash, and so it amounts to golden handcuffs. We enable middle and lower income homeowners to access it without moving—a huge plus for communities.

Great Q! For a sb9 lot split, the homeowner legally must intend to stay in place on one of the lots for 3 years—we haven't seen a measurable price hike for SB9 eligible lots. We've built a lot of ADUs and they rent about 40% above market, so combined with our better pricing and more efficient & automated processes, we'll definitely create more value for the homeowners than if they did it on their own. If they do elect to do it on their own—it's a full time job—they'd have to price in that labor in a cost-benefit analysis.