House Representatives Introduce Bill to Increase Capital Gains Exclusion

The "More Homes on the Market Act" was introduced on September 29th by Jimmy Panetta (D-CA) and Mike Kelly (R-PA), proposing increases in the capital gain exclusion amounts.  Under this bill, the exclusion amount of the sale of a principal resident for single filers would increase to $500,000 (now $250,000) and to $1 million (now $500,000) for joint filers.

Homes May Benefit from New Capital Gains Bill

This bill would provide tax relief for California homeowners, who are experiencing one of the highest cost markets in the nation, who have been unable or not wanting to move because of the large tax burden that  could result if they sold in the current market.  Senior citizens are more likely to face a larger tax burden since they have on average lived in their homes longer than younger age groups. 

The current capital gains exclusion was passed 25 years ago, with no indexing for inflation, in a different market which was not experiencing such huge equity gains. According to Rep. Panetta, "The current exclusion amount was first set in 1997 and was not indexed to inflation. If it had been indexed for inflation, it would be $461,325 for single filers and $922,650 today," amounts similar to the current proposed exclusion.  The new proposed bill does include indexing for inflation.

The current capital gains rate is  concurrent with fewer homes are on the market, which has contributed to higher demand and higher prices.  The National Association of Realtors estimates that single (95%) and married homeowners (68%) who purchased before 2000 could face capital gains tax if they sold their homes this year.

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Just Listed, South Wrigley Charmer in Long Beach

Front porch of Wrigley home

Living Room and fireplace

 

Update:  this property is listed as of 11/22/2022 for $720,000.  Best of this Wrigley neighborhood in Long Beach, this lovely home at 861 W 21st St is ideally located for those who need to commute to nearby Lakewood/Long Beach/

Backyard gazebo

Formal dining room and china cabinet

Los Angeles areas for work, or just want a very comfortable two-bedroom home.  Spacious back yard patio and gazebo with yard is ideal for entertainers or gardeners. Front xeroscaping is suitable for the environment, new driveway gate offers privacy and security. Art Deco styling is typical of the 1935 era, and newer plumbing is a maintenance asset. See it all at the MLS listing. Contact listing agent for more information, or visit my website below to see "featured properties" or open houses tab. List price at $740,000.  Find out more information for a $5000 grant for the buyer and qualifying for a special program.  Such programs may be helpful in buying down an interest rate, and saving money on the monthly mortgage!

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

August 2022 State and Los Angeles County Market Reports

Calif August sales and price report

Statewide, California inventory reached highest level since 2019, but at 2.9 months of supply is still well under the norm of 6 months.  Both time on market and median price of a single family home were up, making some sellers who only knew the previous pandemic market ask why it was taking "so long" to sell?  Well, there's nothing wrong with being on the market 19 days before selling. It actually is good to give both buyers and sellers time to think about choice of property and for sellers to review an offer.

Los Angeles County Market Update

 

For the County of Los Angeles, inventory in August was at 3.1 months, with the median price of a single family home at $854,960, a 1% increase from the prior month, and a 3% increase from one year prior.  But total home sales in the County decreased over 29% from this time last year, although they increased about 1% from the previous month.   Median time on market for the County was 16 days, a 77% increase from this time last year.

Interest rate volatility, and upward jumps, have had an impact for many buyers, and with conventional rates around or above the 6% level now, although still low by historical standards, will continue to impact buyers dependent on mortgage financing.  From California Association of Realtors:

“It’s encouraging to see that August’s sales pace rebounded above an annualized 300,000 units sold,” said C.A.R. Vice President and Chief Economist Jordan Levine. “Although we do not expect a rapid bounce-back because the Fed is expected to continue raising interest rates to get inflation under control, the monthly increase in closed and pending sales suggests that the market may have already priced in most of the rate increases to date. Still, buyers will continue to grapple with rising costs of borrowing, which will keep home sales below the 350,000 annualized pace for the remainder of the year.”

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

How Much Froth in the Housing Market is There?

Mortgage interest rates have been volatile, going up and down on a daily basis--today's rate (August 17) is at 5.22% per https://thefinancials.com for a 30-year mortgage, but recently it was up past 6%.  This has been affecting buyer behavior a lot for the purchase market, and has been slowing the sales volume for sellers.  However, while market time is longer than it was in the crazy pandemic purchase market, it is still not a buyer's market, just a somewhat longer selling time for sellers. 

Credit: Steven Thomas--Housing Reports

Price reductions in Los Angeles County equals 35% of market listings as of last week; Orange County reductions at 39% of market listings last week, and so on for Southern California counties. 

What counts right now for sellers is really taking stock of how you as a seller compare to your nearby home sales in terms of curb appeal, views, upgrades, remodels, and showing condition, on a more specific level than has been happening since before the pandemic price surge.  There are more listings on the market, but still not at the "normal" 6 month inventory level, and in fact, the Long Beach inventory level for July single family homes and condominiums was still only 1.9 months! On a national basis, it's more like 3 months--so in spite of the media attention given to some kind of housing debacle, there is in fact still a demand for inventory.  Increased interest rates have definitely affected buyers--the super low rates are not around, and the higher rates have pushed up monthly mortgage costs that many people cannot absorb.

 For a more complete weekly analysis of the Southern California real estate market, visit Orange County economist Steven Thomas at his weekly show.

Local market update for average single family home prices in July by zip code: 

Long Beach

90803 - $1,665,375

90815 - $1,008,650

90808 - $1,093,065

90806 - $728,800

Lakewood 

90712 - $817,938 

90713 - $855,535 

Signal Hill

$1,170,000 

Cerritos

$1,022,733

If you are thinking of selling, or would just like to know the market pricing for your home in the next 30-60 days, please contact me, I will be happy to assist you in person or online.  

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996