Sacramento / Placer / El Dorado Hills 2021 real estate update

 

I think it's no surprise that the real estate market is on fire.  The bay area folk are coming here in droves.  Covid has pushed companies to allow employees to work from home and its seems to have a cost benefit.  With productivity up and over head down this seems to be an unexpected turn of events.  To that point, the bay area people are looking at Sacramento region as a more affordable solution.  

I can tell you it's been more than difficult and frustrating out showing houses.  When you want to do right by your buyer and not have them pay too much, yet they keep getting out bid.  Keep in mind we're going roughly 30K over asking on most, or more!  In one of the graphs below, you can see how the days on market has dropped to roughly a week.  It's not going to go lower.  Seller need around a week to gather offers and review.  Its a frenzy out there.  We're at the traditional peak buying time of the year.  Spring is when we usually see an uptick in prices and number of sales.  It never really slowed down this last winter.

From two graphs below, you can see we're up around 18.5% year to date.  That's a huge jump in prices.  At what point is affordability going to come into play?  If interest rates continue to trickle up we'll see a change in the market.

For investors, this is a great time to sell.  I have one investor who owns around 40 houses in Sacramento.  We're reviewing the portfolio and going to pick 5 to sell.  Where to park the money seems to be the usually question.  Why sell high and buy high in a 1031?  That doesn't make sense.  I advised my client to speak to his CPA about doing a Sales Deferred Trust.  Basically that's a trust where you park the money, invest in commodities and no tax is paid until you make a draw on the account.  When the market makes a downturn, reinvest in real estate.

My advise for the buyers out there is to look long term and make sure you're comfortable with the payments.  The market, like the stock market goes up and down.  I do everything in my power to give my clients all the information they need to make the best decision for themselves.  

Feels like I had too much coffee and rambling.  Kinda bouncing around here but there's so much going on right now.  I'm working on several land developments projects too.  60 acres in Orangevale that we're looking to map for 1 - 2 acre parcels.  It's going to take 3 years, but a fantastic location.  On the boarder of Granite Bay & Folsom on Santa Juanita.  

I'm off to list a new house for sale in West Roseville today.  3113 Village Center Dr.  2200 sqft 2 story house.  Looking to hit the market at $525,000.  At that price I expect to get multiple offers.  There's little to no houses for sale in Roseville right now.  I'm sure I'll get calls off the coming soon sign going up in an hour.

The market is always changing, like it's alive.  Make sure you are working with an experienced full time local broker like myself to take care of your real estate needs.  I'm always here to help and do my best to answer my cell.  Call me with your thoughs/questions.

Chad Phillips Real Estate Broker Associate  RE/MAX GOLD 916-390-1476 | 2998 Douglas Blvd #125 Roseville CA.  95661 |chad.remaxgold@gmail.com | www.RealEstate-Roseville.com  LIC # 01405825

Sacramento and Placer County Real Estate market update and 2021 forecast

 

We’re looking at another banner year come 2021.  The move up buyers are going to fuel the mid range prices and the passing of prop 19 will fuel the high end market.  Prop 19 is where people who are over 55 yrs are able to take their tax base with them if they buy up.  Folks that have owned their bay area home for decades will be enticed to move out this way. 

Our inventory is low and demand is up.  I wanted to keep this short and to the point.  Below are some opinions from various sources.  I’m looking forward to another busy year.  Feel free to contact me with your real estate needs.

 

A recent article in the SacBee:

The Sacramento metropolitan area will be the hottest-selling home market in the country in 2021, according to a national forecast published Monday by Realtor.com.

The analysis combines expected house price increases and increases in the number of sales. The online real estate sales and data agency is forecasting the average price of a Sacramento home to go up 7%.

Notably, Realtor.com predicts there will be 17% more houses sold in the Sacramento region in 2021 than in 2020, when very few homes were on the market. Local builders say they expect as well to increase new home supply in 2021 by greater numbers than 2020.

 

Everyone in sales should be familiar with the name Brian Buffini.  Brian was joined by National Association of REALTORS® (NAR) and their take is such:

“Overall, he felt confident that home prices would maintain their stability throughout the pandemic, but he did not anticipate that prices would soar, “particularly in the second half of the year.”

What might the future hold? Yun predicts that home sales could be 20 percent higher in the third and fourth quarter compared to the prior year. Additionally, he sees home sales rising more than 5 percent, possibly 10 percent, in 2021, as a vaccine becomes available and possibly leads to faster job growth with still favorable mortgage rates, which should stay near 3 percent.

Yun also anticipates home-buying trends to continue moving toward their current shift from open floor plans and smaller homes to larger homes with more segmented spaces.

“Because of work-from-home flexibility, people are suddenly realizing they are not content and are looking for a larger home with possibly an office space,” said Yun. “Agents should contact their prior clients, as they may be willing to hear what you have to say even if they were not considering buying or selling before the pandemic.”

 

RE/MAX Chief Customer Officer Nick Bailey was joined by Ivy Zelman, CEO of Zelman & Associates and their take is such:

For 2021, Zelman predicts that interest rates are likely to rise, especially upon the recovery of the economy when an effective vaccine becomes available. But as long as we are in a COVID environment, Zelman foresees housing will remain center stage. Once we go back to that normal environment, all of the financial stimulus is going to push interest rates higher.  Zelman also predicts that home prices will continue to rise by 3 to 4 percent as inventories are at the lowest levels on record.

 

Thank you,

 

 

 

Chad Phillips Real Estate Broker Associate  RE/MAX GOLD 916-390-1476 | 2998 Douglas Blvd #125 Roseville CA.  95661 |chad.remaxgold@gmail.com | www.RealEstate-Roseville.com     LIC # 01405825

Prop 19 update

 

If prop 19 passes, it will be good for our mid/high end market.  People from the bay area that have low property taxes will look to move their basis to El Dorado and Placer County.

 

What Does the Potential Passage of Prop 19 Mean? By: D. Keith Dunnagan, Esq. November 17, 2020

 

Property tax portability (Statewide Proposition 19) was on the ballot this year. As of today, the measure appears likely to pass with approximately 51.1% of the current vote tally. Proposition 13 (1978) has shaped the way property taxes are calculated for homeowners in California for decades, by allowing parents to pass their property to their children while keeping their same property tax basis. However, as property values have increased statewide, seniors who wanted to downsize sometimes felt trapped in their home. Changing homes in many cases meant increased value and increased taxes. Seniors on fixed incomes could not afford the increased property tax.   Prior to Prop 19, only a few California counties allowed seniors to transfer their property tax basis to a new home in the new county. Most counties prohibited such transfer of an existing tax basis. This was one of the key selling points for proponents of this year’s Prop 19. While it appears likely to pass, the election will not be certified until December 11, 2020, and there are still outstanding ballots to process. But assuming Prop 19 passes and becomes law, what does it mean for California property tax issues?   First, Prop 19 would allow a property tax basis transfer between counties for three groups of people: individuals that are (1) over the age of 55; (2) severely disabled; or (3) victims of wildfire or natural disaster. To transfer the tax basis, the eligible individual must acquire a replacement property at or below the full cash value of the current home. If the replacement property has a full cash value that exceeds the value of the replaced property, the new tax basis would be calculated by adding the excess value to the cash value of the new property for property tax purposes.  The individual must claim the homeowner’s exemption at the time of the purchase or transfer in order to avoid reassessment, but there is a one-year cure period.   Second, Prop 19 changes the tax basis for inherited property. Under existing law, property transferred between parent and child was always exempt from reassessment. Under Prop 19, if passed, transfer of properties between parent and child will retain its current property tax basis only if it is maintained as a primary residence by the child. If the child does not maintain its primary residence in the transferred property, the property will be reassessed for tax purposes. This means, for example, that if mom and dad transfer a rental property to their child and that child maintains its rental/investment property characteristic, it would be subject to reassessment.   Now, you might be wondering, what happens to properties that were transferred between parent and child prior to the passage of Prop 19 that are used as rental property. Let’s say, mom and dad transferred their primary residence to their child in 2013 and that property has been consistently used as a rental property since the child received it -- will it be subject to reassessment now? That is a good question, and it may take some test cases to make it through the courts before we know for sure. But, based upon the text of the Proposition, it seems that this situation would not result in a reassessment. Sec. 2.1(d) states: “Subdivision (h) of Section 2 [which exempts a transfer of a principal residence to a child and does not require a child to maintain the use as a primary residence] shall apply to any purchase or transfer that occurs on or before February 15, 2021 (effective date), but shall not apply to any purchase or transfer occurring after that date.” Thus, it appears that a child could receive mom and dad’s primary residence prior to the effective date and keep the parents’ property tax basis without being required to maintain the property as a primary residence.   However, if the same scenario transfer occurred after the effective date, the child would have to maintain the received property as a principal residence to maintain the property tax basis. Sec. 2.1(c)(1) of Prop 19 specifically requires that “the property continues as the family home of the transferee.”   One thing is certain, if you are considering an inter-family transfer in the foreseeable future, there may be some tax benefits to completing that transfer before the effective date of Prop 19. The attorneys at BPE Law have significant experience in advising realtors, investors and property owners related to their real estate needs and goals.   The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.