Roseville real estate agents - Sept. 2022

 We're in full swing with Biden policies and inflation is steady at around 8.2%.  Isn't this awesome?  Don't expect things to change anytime soon.  The idea of printing more money to stop inflation is WRONG.  With that said, the world will not stop spinning.  For us real estate agents in Roseville, we need to stay on top of the market changes.  Looks like interest rates are going to go up another 3/4 point at the next fed meeting.

We're seeing real estate prices in our area (Placer and Sacramento County) come down.  We're roughly down about 5% this year with what I'm seeing.  There's pocket areas like Sun city Roseville that are holding steady, but the new construction is slowing way down.  JMC home has 20 out of 21 escrows fall apart in Aug.  The problem is that buyers cannot lock rates until the homes are ready.  By the time the houses are built, rates went from 3-4% to 5-6%.  The new homes in Roseville and Rocklin are trying to keep the prices up for the neighborhood; however, they're having to offer upgrades and incentives to attract the buyers now.  Some builders we're giving roseville realtors a commission, but now we're their best friend and getting the full 3% commission.

Seems we're going to continue to see prices pull back with interest rates going up.  When is the ideal time for a buyer to jump in and buy real estate?  The monthly payment is balanced out with lower prices and higher rates.  The one advantage to lower prices is lower property taxes.  

When we see home prices come down where you can rent the house out and make the payment is coming.  Currently you still need to put down around 25% and have it pay for itself.  

Looking forward to home prices and what Roseville home prices will do this winter.

Recession and real estate Sacramento / Placer County

 Here' we are in Aug 2022 and the circus goes on.  Congress just passed the clubbing baby seals act.  Well, they didn't actually call it that but its just as fitting as the inflation reduction act.  Neither name has anything to do with what's in it.  Spend more, get more taxes is the anthem.  I'm not trying to get political here but the policies that we're dealing with have a direct impact on the economy and the real estate market.  The costs will out weigh the new taxes that are squeezed out of the middle class.  Inflation will continue to rise with the policies.  

The federal deficit is a run away train.  It's so bad that no one wants to talk about it.  Trump was able to get the deficit to hold steady for a short term when we were firing on all cylinders, but then covid we released on the world and we printed an addtional 4 trillion.  Game over!  I'd like to have a discussion of how this plays out.  Do we default on China and tell them to kick rocks?  How will this cookie crumble?  Right now we're doggie paddling and hoping for the best.  Biden already raised the debt ceiling once and next year will need to do so again.  We're approximately at 125% debt to GDP.  It's a house of cards!  We're not alone though, other countries are in similar positions.

I wonder if the problem is even worth pondering.  Even if there was a way to correct our direction, will we choose the right path.  Seems to me it comes down to the haves and have nots.  Life's not fair, buy a helmet.

Switching to real estate now, I know lenders are struggling.   Refi's are gone, that leaves purchases and the market is slowing.  Inventory is up and prices are reseeding. We have cycles in real estate, it's normal.  We haven't found the new normal since our 2008 implosion.  It's going to take a couple decades to see a new pattern.  It used to be a 7 year cycle.  Now we're looking like 10-12 year.  Maybe now the gov has got so large that there are more variables in the equation.

In todays market, I would be very cautious about buying a million dollar home.  I guess it's all relative but if our market drops 10%, like it probably will then you had better plan on riding this out.  

Our rental market is still strong.  People need places to live.  Cash flowing an income property is key.  I'm currently looking to build 10 rental houses on Main St in Roseville.  The lots are large enough for an ADU too.  I'm going to plumb utilities for the ADU, that will be phase II.  There is no retirement plan at a realtor, need to have passive income.  

What will next year bring?

2022 recession - real estate market update Roseville Remax

 Seems its been 6 months since I did a market update on my Blog.  To start this year I was super busy and slammed.  I had 13 deals in escrow at one time and that was a little stressful as I do my own files.  I'm still going strong with 5 in escrow now; however, I sense things are going to hit the brakes.  

Interest rates are on the move and not likely to slow down.  Our gov spending over the Covid crisis was inevitable to come back to bite us.  There is absolutely a cost when you print too much money!  My first econ class was all about supply and demand.  Fairly easy concept...  The problem in lies "power".  The Dems and Reps have lost their way on working together.  The result is the American people getting screwed over.  I'm not saying there are simple answers to the problems we face but it truly feels they are making things worse on purpose.  These rate hikes are necessary to gain some control over inflation.  At what rate will things calm down?  7%, 9%.  My folks talk about the time when rates got up to 20% in the early 80's, a bit before my time but that is hard to comprehend with todays prices.  Sure they were 20%, but houses were around $100K.  A million dollar house at 20% rate would be insane.  A viable change they could do is to remove the cap of 10K property tax deduction.  I'm not a wealthy person and pay more than 10K in property taxes every year.  That should be deductible on your federal taxes!

In regards to the real estate market, we've seen 10 years of strong appreciation.  I think we all know this ride would come to an end at some point.  A correction is required and I think we've come to the affordability ceiling.  30 year conv rates are at 5.75 right now.  We're going to 6's soon.  At the end of the day can only pay so much on the mortgage every month.  There's only 2 factors in the house payment, principle and rate.  One has to give and we know rates are going up.  Along with rates going up, the cost of everything else is too.  Energy costs are directly linked to the cost of goods.  With the trajectory we're on I foresee prices coming down around 10% by the end of the year.  It's more of a correction that we've been expecting.  To make a prediction though is laughable right now.  We have way too many variables to consider.  The focus for our economy as a whole should be on oil prices.  We need to get a lock down on oil prices.  We're exporting oil now to make more money.  There is greed in the oil business and Biden is exacerbating the problem with cancelling XL pipeline and disallowing drilling/fracking permits.  Trump called it!  If Biden gets in office gas prices are going to be 6-7-8 bucks a gallon.  Gas prices would have jumped on Trump too, but likely around 4-5 bucks.  His better energy policies would help but gas prices aren't that simple.  Russia is playing a roll, no question.  

Feels like I'm rambling here a bit.  I'll try to stay on topic.  It's tough because the politics are bleeding into everything now a days.

The folks out there that are locked in with a good rate in the 2's and 3's are likely to want to sit tight and not move.  Why would they?  I'm one of them and we're locked in at 1.99%.  It's like free money.  I don't want to give that up and get 6% on another house now.  

In the last 4-6 weeks, we've seen a shift in the market.  In the beginning of this year I sold 11 houses in Roseville, all were cash deal.  I had trouble getting those deal together.  Even though we we writing strong over asking cash offers, we were still getting beat out on homes.  It was insane!  A month ago I put a nice single story on the market in Orangevale and I only got 1 CalHafa offer.  For those who don't know what that is, it's a first time buyer with no money.  They needed 20K seller credit to pay for their closing costs.  I'd say that's a shift in the demand.  I have other clients (sellers) who missed the window by a week or two.  They ended up pulling the house off the market and renting because it's not selling.

The honey holes are drying up.  A lot of people did well in the stock market and were able to pull money for a down payment to buy a house.  With the stock market tumbling and peoples 401K's dwindling I think we're heading for a recession.  I'm sure they will announce in the beginning of July, it's official, we're in a recession.  

My advise is to stack chips folks and rain in on spending.  We might be in for a bumpy ride.  Look to keep your monthly costs were you can manage.  If you over extend yourself right now I think you'll be sorry.

For having the best year in real estate with 6 months left to go, I know this seems gloomy.  I'm certainly not the only one thinking things are going to get worse.  To what extent, we'll soon find out. 

Fall 2021 Placer and Sacramento Real Estate Update

 We came into 2021 with all cylinders firing.  We didn't have the typical slow down that we usually have in the winter.  The market has been strong and continues to hold but we've finally seen a dip where the buyers aren't having to get as aggressive on offers in order to procure a property.  I have to tell you it was quite exhausting for buyers and agents alike.  When your buyer is writing around 50K over price, releasing all contingencies and still not getting the property it can be deflating.  You have to consider the appraisal and who wants to buy a house and know you're underwater on day 1.  We seemed to have peaked this summer in July with the aggressive over asking multiple offers.  We still have a shortage of homes and inventory, the demand has cooled down a bit.  

I have been getting a lot of calls from sellers lately and my first question now is if they're moving out of state.  A lot of people are over California!  It has to do with a multitude of things; such as, politics, fires and the ability to work from home now.  People are looking to take their equity and move elsewhere and pay cash for their house.  I can't say I blame them.  That's easy living!

This winter will be a good time for those buyers that weren't able to get a house to get in.  I think we're going to see a "normal" market next year.  When I say normal I mean 2-4% appreciation and a more balanced supply/demand.   New home construction is still going full speed ahead.  Builders are still having supply issues and it's not just lumber.

The one wild card we are facing is inflation.  This isn't just CA of course.  It should be concerning to all on how much money the administration is looking to print.  I don't want to get into politics but economically speaking we're writing checks we can't pay for.  There will be fall out and repercussions for the trillions of dollars printed.  I guess we'll just have to see how the cookie crumbles.

We do have a new curve ball that was added to the mix.  A new bill was passes - SB-9.  Here's a link if you would like to read more:

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB9

This bill was passed with the idea that the urban areas need more housing and this will allow certain owners to split their property where zoning wouldn't allow it before.  There are plenty of conditions with this and it's so new that no one is exactly sure how it's going to play out.

 

 

 

Let me know if you have any real estate needs or questions.  I'm happy to help!

 

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 / 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.