How Is Housing So Strong Right Now?

If you're a potential buyer or seller sometime in the past year, you've had some experience with Property Entry and Advisory Declaration (PEAD) forms, required for all prospective buyers to sign before entering a listed home on the market. 

PEAD Data

To backtrack a little, both the national and California economies have recovered, and COVID figures are on the decrease at this time.  Looking back to Feb.-April of 2020, earning data shows that job losses for people earning over $100,000 annually were at 12%; job losses for earners under $100,000 annually were at 88% -- the retail, food industry and other service jobs were the hardest hit, while the other job categories over $100,000 income were not hit nearly as hard.  Interest rates are at historic lows and are likely to stay that way for sometime to come.  Mortgage applications dipped last Spring, but climbed way up in January 2021, all of which is fueling home sales in 2021.  California saw a 22% increase over last year in number of homes sold, over 484,000 in one month (but compare to January of 2005 when over 600,000 sold).  

In December, 2020, total California home price rose to $717,930 (+16.8% from last year); fueled also by low inventory (-48%), leading to median of 11 days on market and a list-to-sales-price ratio of  100.1% (+1.9%). 

Southern California home prices have increased to $650,000, overall, over 16% since one year ago,  and sales have increased 13% year over year: By county, OC at $971,000; LA at $697,660; Riverside $495,500; San Bernardino $390,000; San Diego $730,000; Ventura $776,000.

This is the strongest growth in California in 7 years.

Only 5% of sales are all cash, but two of five homes were sold to first time homebuyers.  And 33% of those 1st timers had more than 20% down payment!!  Yes, parents, friends and family are helping them out. 

So as the charts above show, showing traffic shows the homebuying momentum as the PEAD forms are tracked in various counties.  Lately the showing pattern is: put home on market mid-week, showings take place at 15 minute intervals Friday, Saturday, Sunday, offers are due in Sunday or Monday, by Wednesday of the following week, the buyer is found.  Needless to say, winning offers are completely documented with solid loan pre-approvals and proofs of funds.  This is a hectic time for buyers who must compete and be prepared (on some properties) to overbid. 

With the lowest housing supply in years, most sellers who can think about making a change will get showing activity.  If you're wanting a home value estimate, this is a good time to contact a Realtor.

See the complete housing report here
 

 

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

Long Beach Sales Volume and Price Comparisons in 2020

2019-2020 Sales Volume Comparison, Long Beach

As broken down by area, the highest number of sales for 2019 and 2020 took place in the North Long Beach area, followed by the Bixby area and Lakewood Plaza.   Most areas had fewer sales in 2020, but Belmont Shore/Naples areas actually had higher sales volume in 2020 compared to 2019.

See how average Long Beach single family home price (blue) rose in 2020 compared to 2019 with lower inventory (green) for single family homes! The top average in 2019 was under $800,000, whereas the top average in 2020 was just under $1,000,000. The Corona virus and the restrictions placed on how homes were to be shown (for the really motivated buyers and sellers) the market prices continued upward, fueled by the lowest inventory and lowest rates seen in recent times.

 

2020 Average sales price Long Beach

2019 Average sales price Long Beach

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

New Real Estate Laws Which Might Affect You in 2021

 Condominium or other homeowner association homeowners may be accustomed to establishing the number of rentals allowed in the association, but under AB 3182, the common interested development must now allow at

Happy 2021!

least 25 percent of owners to rent or lease out their units starting January 1, 2021, regardless of whether the HOA has formally amended their governing documents. This also includes ADUs related to the property:  if the owner occupies his own unit then renting out a space within the unit, an ADU or junior ADU must be permitted. No matter what, the existing rights that owners currently enjoy to rent out their units cannot be changed. Thus in a 30 unit building, 25% of the units is 8 (rounded up from 7.5) which may now be allowed to rent out, regardless of what current rules or CCRs state.

 Rent moratorium and other state and local laws affecting landlords and tenants are in effect, or may soon expire.  They are numerous and complex, so without mentioning them further here (AB3088 and SB 1079 would be two of those laws), any landlord or tenant is advised to consult with their local city and/or county, and/or apartment association attorney, before selling, renting, raising rents, or evicting concerning his/her property.

The law authorizing the revocable transfer on death deed which allows a transfer of property by deed to a named beneficiary has been extended for another year.  (SB1305). This is another legal instrument which the property owner is wise to seek some legal advice about before making such a transfer.

Home hardening disclosure which requires a seller of a home built before 2010 in a designated high or very high fire area to povide a buyer with documentation that it is in compliance with local laws about vegetation management and defensible spaces. Look for more information here from Cal Fire https://www.readyforwildfire.org/.

 AB1885 increases the homestead exemption to $300,000 or the countywide median sale price of a single family home, whichever is greater, not to exceed $600,000.  In Los Angeles County, that would be $600,000.  Existing law exempted $75000 to $175,000 (depending on residents' situation) of a home's equity from a judgment debt.  The new law increases this equity exemption amount to the higher levels, and will be adjusted annually for inflation.

AB2463 prevents foreclosure of a principal place of residence based on a judgment lien if it was based on consumer debt. 

This is only a portion of new laws affecting California property owners, for instance the new laws passed under Proposition 19 have been discussed in 2 earlier posts.  For a complete list and more explanation of new laws concerning renting and rent control, consumer privacy act, foreclosure forbearance, exemption from reassessment after a declared disaster, and more, please contact me for a digital copy.

 

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

Cost vs Value 2020 from Remodeling Magazine

This annual report from Remodeling Magazine covers 12 project areas, broken into different levels of job costs, resale value, and cost recouped.  This is usually an interesting and viable resource for homeowners who are contemplating a remodel, or for those who already have completed one this year.  Resale value, in my opinion, is always a good thing for the remodeler (homeowner) to consider, as sometimes what will boost the value of a home is sometimes overestimated.  The reader may go online and download a full report for his or her area, see link below.  This report is based on the Los Angeles area.

There are five projects covered in this post, chosen according to highest return on value, regardless of the original investment amount.  Many times homeowners can maximize their sale price without plunking down a huge investment.  

Second highest return on cost:  As in past several years, garage door replacement brings in over 100% of investment (106.6%). The replacement is a four-section steel door with foam insulation and windows in the top panel, insulated glass. The motorized door opener was not replaced.  Cost:  $3,956.

Highest return on cost:  manufactured stone veneer with a return of 120.2%, which involved removing a 300-square-foot of vinyl siding from front of property, and replacing with manufactured stone veneer.   Additional installation included two separate layers of water-resistive barrier over bare sheathing.  Total cost: $9,699.

Minor kitchen remodel: 95.1% return on value. This involved replacing cabinet fronts on original cabinetry with new wood panels and drawer fronts, including new hardware. Replace cooktop/oven range and refrigerator with new energy-efficient models. Replace laminate countertops; install sink and faucet and new flooring, new painted walls, trim, and ceiling. Cost $26,993.

Entry Steel Door Replacement: 91.2%, cost $2,119. This is a factory finished door with same color on both sides, lockset replaced, included dual-pane glass panel.

Composite Deck addition;  84.4%, 16x20-foot deck composite material in a simple linear pattern. Include built-in bench and planter, stairs, assuming three steps, railing using a matching system made of the same composite. Cost $23,911.

Surprisingly, bath remodels or additions, which vary in cost, did not recoup as much as  the kitchen mentioned above.  Roofing and siding replacements fared higher in return than bathrooms.  For more complete cost comparisons, and costs in different regions, please review a download of the Remodeling article.

All project information in this post is from: Remodeling 2020 Cost vs. Value Report (www.costvsvalue.com) ©2020 Hanley Wood Media Inc. Complete data from the Remodeling
2020 Cost vs. Value Report can be downloaded free at www.costvsvalue.com

 For a market estimate of your property, and to find out what recently remodeled properties in your area have sold for, please contact me for a professional valuation.

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

The Change to "Green" -- Why Does This Matter?

 

In geographic areas where the homes are commonly 50-plus years old, and the most recent tracts were built up in the 1970s, the push for retooling may just feel like an uphill push only.  But in these times of need to financially conserve, there are ways to get your foot in the door towards more sustainable housing and lower expenses. To completely retrofit an older home may not bring a good cost-benefit return financially, but may other steps can be taken to improve a home's efficiency.

California has already passed laws concerning implementation of low-flow appliances, so if your living quarters haven't been changed out yet, they should be. And if you're not using light bulbs that save electricity, you're spending unnecessary money.

If a property owner is doing a major remodel on an older home or rental property, then he or she may be looking at retrofitting costs.  Part of that cost is estimating the time period to recoup the original investment.  According to some sources, adding low flow showerheads, installing LED lights and adding home insulation bring the fastest payback period for the lowest costs, most within a one year period or less

Ways to Save:

There are advanced green certifications as LEED or ENERGY STAR, which require following many steps towards certification.  But the average homeowner wishing to enhance features can do certain things that will build towards energy efficiency and more comfort without costing a lot:  

• window retrofits (more expensive but will save over time) which will also enhance the value of a home to a prospective buyer;  
• Replacing all the interior and exterior light bulbs with LEDs which use 25% of the energy of an incandescent bulb and may last up to 25 times longer, and save $75 or more each year.
• Efficient refrigerators may be 20% more energy efficient, and EE ceiling fans may be 50% more efficient. 
• Using weather sealant for doors and decks, and check insulation for proper "R" values, and wrap your old water heater to save up to 10%.
  
• Waterproofing paint generally leads to a longer lasting, more sustainable building. 
• Using renewably sourced construction material such as engineered woods, recycled woods, bamboo construction.
• Caulking, weatherstripping, sealing air ducts, installing a fireplace flue plug are additional ways to prevent air from escaping.  Thirty percent of energy in a California home is for heating and cooling, and these measures will help to reduce escaping air.
  
• A Smart Thermostat allows for programmable hours for work and vacations, another way to control home expenses up to 10% annually.  Find more energy management tools (EMTs) to save money.
  
• Xeriscaping, which calls for water conservation through low maintenance landscaping, can save over 50% of residential water use.  It's not necessary that your home look like a desert in order to achieve this, but planning with the right plants will reduce the amount of water on your grass lawn.
• Greywater is repurposed water for outdoor irrigation, and may involve a small filtration unit to direct water from the house to the outside.   
• Unplugging home printers and computers when not in use may save up to $200 annually in electricity costs!  
  

Buildings in the U.S. produce about 40% of the overall CO2 emissions, and scientists are expecting the world to need 40%-70% less CO2 emissions by 2050 to counteract the worst of climate change.  So energy efficiency is not just fashionable, it's important.  An energy efficient home is estimated to produce 2.5 fewer tons of CO2 each year! And an energy efficient home is less costly and more comfortable to live in.

For more information, check with your local city for incentive programs in place.

Further resources:

https://www.huduser.gov/portal/consumer/financial_incentives.html

https://www.benefits.gov/

http://www.dsireusa.org/

https://www.energystar.gov/rebate-finder

https://www.energyupgradeca.org/home-energy-efficiency/upgrading-your-home/ 

https://www.energy.ca.gov/programs-and-topics/programs/home-energy-rating-system-hers-program 

https://moneywise.com/a/easy-tips-for-saving-money-by-going-green     

https://greenhomeguide.com/     

https://greenlivingideas.com/              

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

Luxury Market is Active, Long Beach Quarter Ending September 2020

The luxury market in many areas has taken a surprising jump up, Long Beach included.  In fact, Los Angeles County for the quarter ending September, 2020, has had the most sales over $1,000,000 compared to the rest of the state, including the Bay Area. 

In Long Beach 90803 zip code alone, there were 52 residential sales over the $1 million mark ending in the 3rd quarter, and the average of the median price was over $1.382 million.  That was up 4% from the prior quarter.  Bixby Knolls was up 325% from the prior quarter, with 17 sales with median average price at $1.370 million.  Zip code 90808 (east Long Beach) had 11 sales averaging over $1 million, and 83% increase over the prior quarter.   The most expensive home sold in the last quarter was over $4 million.

The graphic shows more detail about Long Beach luxury sales.

 

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

What Proposition 19 Means in PropertyTax Changes for California Homeowners and/or Heirs? Part II

The passage of Proposition 19 was won, but not by a landslide in November's election.  There are both positive and negative issues to this proposition, which puts some things on the table and takes others off.

While it allows more 55+ homeowners to sell and move on a statewide basis, as of April 1, 2021, up to three times taking advantage of the new property tax basis, widely regarded as a good thing, it eliminates past rules about a child inheriting a parent's house.  Consider your capital gains exclusion at this point in time, and whether you took title as a joint tenant or as community property with right of survivorship. 

Since the new changes for parent/child exclusions come into effect February 16, 2021, this would be the time for some people to review the new law and how it may affect them.

If a new home is purchased at same or lesser value than former home, the former home's taxable value is taken to the new home.  But, if a new primary residence is bought, and is of a greater value than the one it's replacing, the new residence's value is added to the prior residence's tax base--it is calculated by adding the difference between the full cash value of the prior home to the full cash value of the new home's taxable value.  So if the prior home, with a taxable value of $400,000, sold for $900,000, and the new home was purchased for $1,000,000, your old tax base would carry over, plus the $100,000 difference in value would be reassessed for adding onto your original tax base, making a new taxable value of $500,000 for your new home. So while your property tax will increase, you still benefit by keeping the lower tax base (especially if you bought in 1970s for example), instead of paying the entire current tax rate on a $1,000,000 home.

However, effective February 16, 2021, the parent and grandparent grandchild exclusions from property tax reassessment only apply to transfers of a family home, not investor properties*, and only if the child or grandchild moves into the home within one year of the transfer (and supposedly the way the law reads right now, if there's more than one child, then all children must live in the home to have the exclusion apply).  Additionally, under earlier Prop. 58 and Prop. 193, there was no value limit on the parent's principal residence, but NOW under Prop. 19, if the home's current value exceeds its existing tax assessment by more than $1 million, then the excess value is added to the current assessed value to compute a new tax value!! If the new value after transfer to the child does not exceed $1 million, then there's no reassessment.  In today's California market that cap of $1 million could affect a lot of properties.  

Additionally, if an aging parent moved into a facility and passes away there, not living in the primary home, that home will be assessed at full value of property taxes, so if it's worth $1.7 million in today's market at the time of the parent's death, those taxes could be over $21,000.

* Residential, industrial and commercial rentals and family vacation homes are no longer eligible under Proposition 19.  Only principal homes occupied by child or grandchild (meaning child of deceased parents) are included under this Proposition.  So if your child is living in one of your rentals, that will no longer work under this Proposition.  So while there are many good aspects to this new law, there are other consequences--current homeowners may want to make decisions now in order to minimize future effects. 

• You can gift property to your children now, i.e., rentals (but do they want to manage them?), but they will lose the stepped-up basis at the time of your transfer to them, which would mean them getting the parent's adjusted basis and paying capital gains on the new basis and the value at the time of property sale.
  
• You can do nothing.
• You can in the future buy property and put directly into an LLC.
• Put property into an irrevocable trust (not the same as a living trust).  
•  Link to Proposition 19 bill
•  Link to chart on Proposition 19 at Board of Equalization.
  
• 
  

This is the time to consult with your trust attorney and/or tax advisor.  I am not a tax advisor, and do not give legal or tax advice, but as a Realtor I sometimes have clients who need to know about these issues in advance of closing escrow on a property.  Please feel free to contact me.

 https://longbeachrealestate.blogspot.com/2020/11/what-could-passage-of-proposition-19.html

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