A California Real Estate Update for Some 2018 Housing Laws

Senate Bill 2 became a 2018 law. Building Homes & Jobs Act.
This enacts a recording tax of a flat $75 per every document which is already required to be recorded, on every real estate instrument not part of a sales transaction, and the funds of which are allocated out largely to address the need for affordable housing, and according to one source is expected to generate $200-$300 million annually.  The good news for homebuyers is that this law does not affect owner occupied home purchases or home refinances.  There are some exemptions, and the fee is capped at $225 per transaction.  The documents that will be charged include:

"deed, grant deed, trustee’s deed, deed of trust, reconveyance, quit claim deed, fictitious deed of trust, assignment of deed of trust, request for notice of default, abstract of judgment, subordination agreement, declaration of homestead, abandonment of homestead, notice of default, release or discharge, easement, notice of trustee sale, notice of completion, UCC financing statement, mechanic’s lien, maps, and covenants, conditions, and restrictions."

The exemptions to the fee are: 1. If document is already subject to the Documentary Transfer Tax; 2. If it is real property in an owner-occupied purchase; 3. If the document is not related to real property.
The title company involved in each transaction must now attach a cover sheet to each document involved that shows a declaration of exemption for that particular document, or will get charged the fee.

Senate Bill 35 amends the Planning and Zoning law to create a streamlined approval process so that cities can meet their mandated housing goals and a stronger requirement that cities report their annual housing production to the California Department of Housing and Community Development. California has been behind for many years on building the housing needed as its population increased by birth rate alone.  But how much affordable housing will increase is unknown, as the bill addresses only local governments that have fallen behind on their state goals for homebuilding. The bill had support by many entities.

Senate Bill 229 - Accessory Dwelling Units.  Already mentioned in a previous post, these units are allowed statewide and are also under "granny flats" labeling.  This law allows units in residential areas which were not previously zoned for more than single family residential growth, in order to increase affordable housing.  Long Beach, for example, was concerned about parking issues in some areas already impacted, and in October 2017, established additional clarifications concerning construction of these units, as have other cities.  However, none are supposed to supercede the law signed by Governor Brown in 2017.  The advantage of this law for many house owners is that an existing "guest quarters" can be upgraded to a legal ADU, or a garage (with all proper permits) may be legally converted to living quarters as an ADU, or an existing room of a home may be converted (with all proper permits and inspections) to a separate legal quarters. 

If you would like additional help on resources, or discuss how they might apply to your planned home purchase, please contact me.  I'm a licensed Realtor since 1994 (also a Broker).

Practicing Fire Prevention Safety for Your Home

1. Secure your roof.
2. Add Metal Mesh to Vents.
3. Use tempered Glass for Windows.
4. Clear vegetation.
5. Avoid flammable patio furniture

Effects of Tax Reform on Homeowners

Here is an excerpt from today's message from the National Association of Realtors on the effects of the tax bill expected to pass into law:

"Although the final tax reform bill is far from perfect, it is significantly better for homeowners than previous versions. That’s thanks to the efforts you made. REALTORS® generated over 300,000 emails and telephone calls to members of Congress over two Calls for Action and held countless in-person meetings with legislators, all of which helped shape the final product.

Last-minute changes to the bill include the following improvements:

• Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.

• Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.

• State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.

• Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities. This change will lower the taxes of many real estate professionals."

"REALTORS® generated over 300,000 emails and telephone calls to members of Congress over two Calls for Action and held countless in-person meetings with legislators, all of which helped shape the final product."

Average Selling Prices in Long Beach, Cerritos, Lakewood, and Local Counties, November 2017

It's that time of the year, where housing often slows down for the holidays, but here it's spending less time on the market.

For a single family detached home, the average prices for the cities and counties below range from $357,823  to $1,052,160, the low being San Bernardino County.

Overall the Los Angeles County average price for single family home is $923,612, a small increase from the previous month of $910,161, and still under the high of July 2017.

All these prices are for the month of November, 2017, based on data from CRMLS Infosparks.

Long Beach saw an average price decrease (but up from October), and Orange County is still  down just slightly from the high of May, 2017, while Los Angeles County as a whole is still decreased from the high of $955,973 in July.  San Bernardino County's averages have dipped under earlier highs of $360,000, the highest point in the last 5 years.

Prices are varying according to area, and here's what they look like locally.

November 2017

Long Beach
$667,858 | -0.7%

Lakewood
$570,839 | +2.8%

Cerritos
$776,412 | +9.9%

Los Angeles County
$923,612 | +5.3%

San Bernardino County
$357,823 | +5.3%

Orange County
$1,052,160  | +12.8%

These statistics show a mix of pricing, with Long Beach/Lakewood  with average days on market at 18 days, and Cerritos having less than 24 days on the market on average, less than 2 months inventory, and closing prices continuing within 0.7%-1.5% of original price.  In other words, houses are selling within 2% of original list price, with less time on the market, with a low housing inventory from which to choose.   

Condos

Briefly, Long Beach condo average price is $383,921, down from over $400,000 the month before. The condo average for Los Angeles County is $608,000. Other local city condo prices:  Monterey Park, $425,800; Pasadena, $713,622; Whittier, $353,692.

 It’s a tight market right now!

For an online and automated home valuation, try my site at http://www.juliahuntsman.com/home-evaluation.  It probably works more accurately for single family homes than condos in some areas, depending on what properties lie within about a one-mile radius.  Try it!  And I am always happy to do a more customized report to send out via e-mail.  If you're thinking about making a move, do it! It pays to keep an eye on things.

 

See this Chart on How Congressional Tax Reform May Affect California (and other states) Taxpayers

By the time the reader sees this, the tax "reform" bill may be a done deal, but here is how changes may very well affect California taxpayers. Visitors can see how homeowners will be impacted by the Tax Reform Bill. Check out this National Association of REALTORS resource, see Capital Gains exemptions and the impact on housing prices from the 2017 tax reform framework.

To see other tax scenarios for taxpayers in other states, click on this link and find a state in the drop down list.

Would You Like to Keep Your Calif Property Taxes Lower?

Taxes Due

Take Your Tax Base Anywhere in California

First off, July 1 is the beginning of the first installment property taxes are due by 5pm on December 11th, after which you will pay a 10% penalty, so don't be late! Your next last day to pay is the following April 10th for the second installment.

Ballot Drive - Freedom to Move
Next, did you know there is a signature drive on to expand Proposition 13 tax legislation?  Currently, there are 11 counties in California which allow senior and disabled homeowners to transfer their current property tax bases (Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura), which is a good thing; however, the new home has to be of equal or lesser value, which in some areas may prevent some owners from moving.
To create more opportunities for potential sellers, California Association of Realtors is circulating petitions (I have already obtained signatures) to expand this rule which would "also allow them to apply their old property tax assessment to a new home that’s more expensive than the old one. The new assessment would be a blend of the old and new assessments, combining the old assessment up to the sale price of the old home with an additional assessment for the amount paid over that price on the new home."  The entire purpose of this drive to put this on the ballot for 2018 is to provide new opportunity for those older homeowners who are staying put in order to keep this tax expense down.   New scenario per article in OC Register:

• More expensive: Say a couple owned a home for 30 years and its current assessed value is $75,000, meaning they pay $750 in annual property taxes. They sell the home for $600,000 and buy a new one for $700,000. Their new tax assessment would be $75,000 plus $100,000 (the difference between the old home’s sales price and the new home’s sales price). Their new property tax would be $1,750. (vs. initial standard property tax on a new purchase of a $700,000 home of $8750 per year).
• Less expensive: Say the same couple sold their old home for $600,000, then paid $500,000 for a condo. Since the condo’s price is 83 percent of the old home’s sales price, the new assessment would be 83 percent of the old, or $62,500. Their new property tax would be $625.

Under this proposal, there would be no limit to the number of times a homeowner could transfer their assessment to any of California's 58 counties.

For more information, please contact me!

Average Selling Prices in Long Beach, Cerritos, Lakewood, and Local Counties, October 2017

Prices are varying according to area, and here's what they look like locally.
For a single family detached home, the average prices for the cities and counties below range from $364,271 to $1,052,322.

Overall the Los Angeles County average price for single family home is $903,618, a decrease from the previous month of $925,566, and even lower from July 2017.

All these prices are for the month of October, 2017, based on data from CRMLS.

Long Beach saw an average price decrease, and Orange County is still up slightly from July 2017, while Los Angeles County as a whole is still decreased from the high of $955,973 in July.  San Bernardino County's averages in September and October are now over $360,000, the highest point in the last 5 years.

October 2017

Long Beach
$646,002 | +5.3%

Lakewood
$558,111 | +1.8%

Cerritos
$795,732 | +17.9%

Los Angeles County
$903,618 | +3.9%

San Bernardino County
$364,271 | +6.9%

Orange County
$1,052,322 | +9.6%

These statistics show a mix of pricing, with Long Beach/Lakewood and Cerritos having less than 43 days on the market on average, approximately 2 months inventory, and closing prices continuing within 1%-2% of original price.

Keeping an eye on things

For an online and automated home valuation, try my site at http://www.juliahuntsman.com/home-evaluation.  It probably works more accurately for single family homes than condos in some areas, depending on what properties lie within about a one-mile radius.  Try it!  And I am always happy to do a more customized report to send out via e-mail.  If you're thinking about making a move, do it! It pays to keep an eye on things.

Goodbye Income Tax Deductions

Where do you fit in to the Administration's tax plan?

Halloween Scary Story

I was in an older historic neighborhood in Orange County, and wanted to do an impulse preview of a large two-story Victorian home built in the 1890s and located on a corner, with a for sale sign on the front lawn. It really piqued my curiosity.  I called the number on the sign and the front desk person for the company said it was available and I could go direct as it was vacant. 

 

I let myself in on the lockbox on the front door, and started to look around in the living room area when I heard a sound.  It sounded like heavier footsteps upstairs as if someone heard me and got up out of a chair and started walking away.  I immediately thought that there must be someone staying there occasionally and I had walked in on them.  I took a few steps up the stairs and called out "Hello", no one responded.  So I called out "Hello" again.  Then I heard more footsteps going to another part of the second story and the distinct sound of a metal window or door latch, as if it were closed quickly.  Suddenly, I was overcome with a cold chill and, in all the years I have entered vacant properties by myself, I have never ever felt in such a huge panicked rush to exit a property.  I couldn't find the door key fast enough, get outside and slam the key back into the lockbox. I  ran from the front door to the sidewalk, where I became more rational.  I thought there must have been an open window somewhere and I was hearing noises from a neighboring house, or there were unauthorized people sleeping there who heard me and left quickly.  I walked all around looking for outside exit stairs from the top floor, open windows, any sign of someone who could have been inside the house.  There were no stairs, and no sign of any open windows.

Since I wasn't sure what was going on, I decided I should notify the listing agent, so I called the listing office again and requested the agent's phone number.  I got the agent's assistant and said there might be somebody staying in the property.  He said he was coming right away and would be there in less than 15 minutes. I stayed outside in my car and watched the property, too chicken to move.  When he arrived, I let him go in first.  I followed him around downstairs and upstairs to check out everything in every room including closets.  There were no banging doors or open cabinets, no unlocked windows, no sign of anyone having been in the property.  He finally just turned to me and said that, similar to another listing he had one time, this just might be another ghost disclosure property!

(And seriously, if you think the neighbors are going to end up telling a buyer after the close all about the haunted house, it would be a good idea to relate the story to the buyer during escrow!)

Updated: The Ten Commandments of Buying a Home, Plus a Few More

Lenders are just not kidding around when they advise buyers about what to do for successful loan completion.  See the links below for my previous blog post on this subject, and in this post are more sage pieces of wisdom about how to have a best experience:

Always check with your lender, Realtor, and/or escrow officer personally on the phone, before sending a wire transfer to anyone.

Obtain complete documentation from your bank itemizing all money transfers.

Don't withdraw of deposit large sums into accounts unless absolutely necessary.

Try to avoid making career moves before close of escrow.

Don't allow your bank accounts to go negative, even if you have overdraft protection.

Don't apply for new credit.

All gift money must be documented, so avoid having a friend or relative pay for anything concerning the purchase of the home without first discussing with your lender.

If transferring money from overseas account, discuss the best time to do so with you lender.

Be aware if you close any credit card accounts, your debt ratio may appear higher, so DON'T close credit card accounts.  Just stop using them.

Avoid having your credit report run unless required by your lender of choice on a transaction.

More posts: Buyer Mistakes: https://longbeachrealestate.blogspot.com/2017/05/being-prepared-buyer-in-sellers-market.html
                    Wire Fraud:  https://longbeachrealestate.blogspot.com/2017/07/wire-fraud-in-real-estate-is.html