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.

Sacramento County & Placer County 2020 summer real estate market update

This summer has been different from years before.  I suppose this is expected since we're in the mist of Covid-19.  We're seeing a higher demand for houses then there are supply and it's causing prices to rise.  Most buyers seem to be loosing out on several houses before getting more aggressive and finally getting a house.  Since spring, you can see on both charts that the pending's have shot up.  Part of the reason for the housing shortage is rates.  With interest rates down in the 2's and low 3's, a lot of people are deciding to stay put and refinance.  Another factor is people might have trouble getting a new loan due to their job situation.  I recently had two buyers fall out of escrow because they were furloughed. 

Many of my buyers and clients are interested in what the market is going to do this winter / next year.  One can only speculate but I see two different paths depending on the election.   Either way the market is going to correct, the timing will be different due to who is elected president.  I think we'll hit a downturn softer and faster with Biden and with Trump I think we'll prolong the downturn but it will be worse when it hits. 

Uncertainty is in the air.  The stock market is volatile, gold prices are soaring. 

My last update was mid Feb, before Covid hit.  Quite a curve ball I'd say.  I've very curious how this will be after the election come Nov.  I have to say, some of this seems politically charged.

If you have an investment property and you're considering selling, I'm happy to consult and run numbers to see if now is the time that makes sense to sell.  For buyers, I suggest getting a great loan officer that will get you DU approved and you're going to have to be aggressive to get a house right now.  Some buyers of mine have given up.  It can be frustrating!  Having a long time experienced realtor like myself that knows most of the other agents in town is also a helpful factor when trying to get your offer accepted. 


Sacramento County Chart thru June 2020


Placer County Chart thru June 2020

Roseville Housing Market

I pulled this from fannie and freddie & zillow.  It's about the market as a whole, everyone still optimistic!

FANNIE'S FORECAST

The housing market looks good according to the February 2020 Economic Outlook from Fannie Mae's Economic and Strategic Research (ESR) group. Summing up the report, Fannie Mae's SVP and Chief Economist Doug Duncan said, “Looking ahead, we continue to anticipate that the economy’s resilience will help keep housing on a firm growth track. In fact, our updated housing market forecast shows greater strength in essentially every part of the housing market extending through the first half of 2021."

RATES & REFIS

Refinance activity surged to the highest level in seven years according to Freddie Mac's Primary Mortgage Market Survey for the week ending February 13. Freddie's analysts characterized refinance and purchase activity as robust, "with mortgage rates hovering near a five-decade low" and "reflective of a solid economic backdrop."

CONFIDENT CONSUMERS

Consumer sentiment reflects the bullish outlook of economists and experts. Fannie Mae's latest Home Purchase Sentiment Index®  (HPSI) rose for the third straight month in January to 93.0, moving closer to the survey high of 93.8 set last year. The (HPSI) is a composite index designed to track consumers’ housing-related attitudes, intentions, and perceptions.

TESTY TRANSACTIONS

Buying and selling homes causes couples to clash according to a Harris Poll commissioned by Zillow. A whopping 77% of respondents who bought property with a significant other in the last 10 years admitted to arguing during the process, while 71% who sold a home admitted to fighting during the experience. Re/Max Gold - Chad Phillips

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

Jan 2020

Market Update with Chad Phillips 

Re/Max Gold Roseville

We're seeing the market start slow this year.  This is typical; however, what we're not used to seeing is inventory this low.  Generally I'm of the opinion for my sellers to wait until spring time, or at least after the Superbowl to list their house for sale.  This is the first year where I'm thinking a seller will potentially gain more on the sale of their home by listing now and beating the usual influx of homes that tend to come up for sale in April/May. Interest rates are near record lows as well.  With rates in the low to high 3's, it's certainly an incentive for buyers to make the move.  Rates are also encouraging some folks to say put and refinance.  I'm currently in that boat!  I'm looking to do a cash out refi on my primary to pay off a rental property.  The numbers make sense! Another benefit of a refi could be to shave off years on the loan.  Going from a 30 year to a 20 year or even 15 year loan and your payment is roughly the same.  That will save you a lot of money over time. As for the coming year, 2020 looks to be another year of gains in property values.  There are several factors that indicate that we're on a solid path, notably the jobs reports, low inventory, interest rates and overall strength of the economy.  I do foresee some factors that are posed to negatively effect us though.  This rent control bill will likely have a negative impact.  The intention of the bill is to keep rents low; however, I think the 5% a year cap is only going to encourage landlords to adhere to this an impose the 5% a year.  Another proposition on the table is getting rid of prop 13, but they disguise it by this title: California Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative.  If this goes thru it will drive more businesses out of California.  If commercial property owners property taxes skyrocket, it's going to translate to higher leases.  It might take a couple years to hit home, but when leases come up for renewal we'll start to see more offices buildings empty.  The lack of common sense here is disturbing, and unfortunately deliberate. For what it's worth, I'm predicting a good 2020 and then a market correction in 2021.  Regardless of who wins the presidency!  The market has rebounded from the bottom at 2012 to surpass values of the past peak in 2005.  There are no indicators of a crash like we had before, but a price correction is what I'm preparing for.  Only time will tell!  Keep your real estate investments conservative at this point.  If you need help running the numbers on a project, feel free to contact me and let's see if it's viable and worth doing.  Have a great 2020 folks.

2020 placer county real estate market

01-10-2020 I like to do quarterly updates and here we are in the new year.  Currently we're seeing low inventory which is contributing to the rise in prices.  Supply and demand, simple concept but of course there's more to the story.  Interest rates are near record lows and it's an incentive to keep the market going.  What we're seeing though is more folks refinancing and staying put.  Usually I advise folks that are thinking about selling to wait until early spring to list; however, this year is different.  I have several clients that are getting ready to sell and I'm advising the sooner the better.  For example, I have a house coming soon in Orangevale at 375K.  Currently there are only 2 houses on the market between 350 - 375K and one of them just hit the market.  It's likely that a seller will make more right now than waiting for spring.  If you're looking to sell this year, contract me to come formulate a game plan.  It's just as important to know what not to do for preparing your house for sale. Below are some info about the market as a whole.  This is your Roseville real estate agent signing out.  I'll have a more in depth quarterly review come April.

BUSY '20?

The U.S. housing market is poised for a brisk year. In CoreLogic's latest Home Price Insights report, Chief Economist Dr. Frank Nothaft said, “The latest U.S. index shows that the slowdown in home prices we saw in early 2019 ended by late summer. The decline in mortgage rates has supported a rise in sales activity and home prices.” CoreLogic predicts home prices will rise 5.3% year-over-year by November.

RATE RANGE

Mortgage interest rates have hovered in a limited range for the last two months according to Freddie Mac. In its Primary Mortgage Market Survey for the week ending January 2, Freddie dubs the activity "welcome news after the interest rate turbulence of the last year, which caused a slowdown in the housing market," and declared that "the low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices."

RISING RENTS

Average rent rose nationwide according to January's National Rent Report from Zumper. Rent for a one bedroom rose .4% in December to $1,217 per month, while average rent for a two-bedroom increased .1% to $1,440. In its survey of over 1 million active rental listings, Zumper says the majority of large rent growths nationwide occurred in the mid to lower tiered markets.

INS & OUTS

Idaho and New Jersey got top billing in United Van Lines' 43rd Annual National Movers Study. Idaho had the highest number of people moving in, followed by Oregon and Arizona. New Jersey saw the most outbound immigration, followed by New York and Connecticut. United Van Lines has been tracking U.S. migration trends since 1977.

   

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

3rd quarter real estate update for placer and sacramento county

August 6th 2019 - Real Estate Update - Placer

I like to do the quarterly updates and relay my observations as it keeps me more aware of what the market is doing.  As a full time real estate agent in Roseville we see trends and deal with things daily.  When you get down to it the market adjusts mostly on the basis of supply and demand.  Of course there are countless other factors that come into play, such as rates, job markets, economy as a whole, building fees, government regulations and taxes...
It's been 10 years now since I joined Remax in Roseville Ca.  I like reviewing the trend graphics as its a good visual representation of what the market is doing.  Below is a graph showing the number of homes that are active pending and sold for Placer county month over month.  Since winter we're seeing and increase in the amount of homes for sale and pendings and solds have dropped off.  July's numbers aren't showing up yet, but they will show the continuing trend.  Buyers will have a better chance of scoring that house they want to buy, but keep in mind the nice houses priced right will still gain multiple offers.
I think it's more interesting to see the graph of the value ranges where people have been buying houses and how that's changed since 2012.  As you can expect the 200's and 300's where hot back in 2012 and now it's 400's and 500's.  People have gained equity and are buying up and it's hard to even find properties sub 300k in Roseville / Rocklin area.
Interest rates have been great, they keep coming down too.  If you think about it, the feds need the rates low due to the national debt problem they have.  Interest payments alone are almost a run away train.  If rates were at 6%, I'm not sure we'd be able to pay.  My point is, don't worry about rates going up any time soon!
We are due for a market correction though.  Are we seeing that now?  I don't think so!  I think we're seeing the normal trend of the end of summer slow down.  We're getting closer to an election year and that seems to be a factor.  Trump will do what he can to keep the ball rolling but inevitably we'll see a correction.  For those investors out there, stack some chips.  In a couple years I think we'll see a good time to pick up some rentals.  For home buyers, find something and go with it as long as the payments are comfortable.  Even if the market drops 10-15 percent, over time 5-10 years you will be fine.

If you have any specific real estate questions, feel free to give me a call.  I work on commercial property, land developments, partition sales, trustee sales...  It's a fun business that is always changing!

 

Re/Max Gold - Chad Phillips
2998 Douglas Blvd Ste 125
Roseville, CA. 95661
916-390-1476
Real Estate Broker #01405825

Sacramento / Placer Real Estate Update May 2019

I've reviewed the metrics for both counties and they are roughly have the same market indicators.  We're in a stall or flat market right now.  Things are selling and around 50% of homes for sale are selling with multiple offers.  This is a strong indication; however, we've seen the prices flutter and max out.  Unless a property is priced right it will sit there and require price reductions.   Buyers are now more opt to write low ball offers and contingent offers to make the transition more favorable for them.  This is a clear indication of a change in the real estate market.  At the end of the day it comes down to affordability.  Either prices or rates have to come down.

Rates have come down, around 4% now.  It would seem low rates would help trigger buyers that are on the fence buying a house in Roseville; however, people seem to focus more on price than rates.  It makes sense.  I did notice something rare yesterday.  The treasury bonds for the 1 month were better then the 10 year.  For those that don't know what that means, it suggests that there is concern of economy.  Things have been going pretty good since Trump came into office, but it never lasts forever.  A recession is predicted by some in the next 18-24 months.  I'm in agreement, although I think it will be more of a slow down with GDP and a market correction.  If you look at the charts and what real estate prices have done since the bottom of  2012, its about 20% appropriation a year.  That's been a great ride, brought prices back to where there were in 2005, but 20% a year is unsustainable. 

Some investors are liquidating and looking to sit on cash.  It wasn't that long ago when things collapsed and no one seemed to have any cash to take advantage on the situation.  We learn from our mistakes.  I'm looking to pick up another rental property but I'm steadfast and want a deal like everyone else.  I did pick up a rental last year in Citrus Heights.  The numbers worked and it's cash flowing.  They are out there!  If you're looking for a good income property, I can help with that. 

Below is a chart for Placer county showing the houses for sale vs sold houses and pending.  In spring we tend to have an upward tend and downward in the winter.  This is looking very typical for the housing market in our area.

If you're a first time buyer, make sure your comfortable with the payment and make sure you get a good real estate agent to help guide you so you don't end up with a lemon.  Happy to help if you have 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