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

California Housing Market Prediction for 2021

The California Association of Realtors with Leslie Appleton-Young presented the annual market outlook (this year it was all online, so we missed our annual Expo and Luncheon as we sat at our laptops), which at the very end always gets to the final price and sales volume predictions for the coming year.  So to break all suspense, I'll show that slide first (there were 100 slides covering the entire state's regional markets and economic conditions, I'm just hitting the highlights), which shows the predicted increase in the California home sales market to be 3.3 percent, at a median price of $690,000+ (up from $476,000 in 2015).

 

California Housing Market 2021 

• The impact of COVID-19 seemed to cause buyers to get out there and buy, rather than stay home, so prices in many areas have jumped considerably as inventory in many areas was still quite low, especially in the affordable range (something under $600,000 in the So Cal metro regions).  
• The lowest mortgage interest rates since long before 1971 allowed more buyers to purchase at the upper end their loan qualifications.  
• By August, sales and prices were up, inventory was down statewide to 2.1 months, but keep in mind inventory has generally been low since 2012, and 1-2 months inventory in some So Cal areas is not uncommon.  
• The total home sales in August was the highest in 10 years, 2005-2006 was the last time California saw a much higher sales volume extending up to 600,000 residential units. 
• The share of first time buyers was the highest in 10 years and investor buyers the lowest since 2001.
• More sellers leaving California, highest since 2005 (hello, Proposition 19); Los Angeles and Bay area sellers are mostly moving to the Inland Empire and other cheaper counties; the Inland Empire and other cheaper counties are moving out of state
  
• Potentially 600,000 foreclosures nationwide, perhaps 60,000 in California, due to job loss, etc.
• California is the 5th largest economy, with $175 billion in annual exports--economy still strong.
  

 

CA worst case scenario 2021

 For the complete presentation which goes into much greater detail, please contact me, very easy to email.  For an market valuation of your residential or income property, please contact me for the latest information in your area.

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

What Could the Passage of Proposition 19 Mean for You and Your Property Taxes? Part I

Proposition 19 has officially been declared a winner, receiving 51.1 percent of the votes cast.  Key supporters included California Professional Firefighters, as well as key endorsements from Gov. Gavin Newsom, Secretary of State Alex Padilla, State Controller Fiona Ma, the California Democratic Party, Republican legislators, labor unions, chambers of commerce, seniors, and wildfire survivor, and 1.5 million signatures were collected to put it on the ballot.  It was supposedly opposed by 16 major newspapers, including the Los Angeles Times, but endorsed by one major newspaper The San Diego Union-Tribune.  It was also strongly supported by the California Association of Realtors.

This proposition was officially named The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.  Up until the present, for many years senior home sellers could benefit from Propositions 60 and 90, which allowed the freedom to take their property tax base either anywhere within their home county, or to one of just several reciprocating counties (they varied over time) elsewhere in California which agreed to participate in this program--but owners were restricted to a certain formula of being able to purchase a new property slightly higher in price, otherwise they had to find a lower priced property to buy.  

As market prices increased, changing homes became very difficult to achieve, and caused many people to move out of state, taking their equity with them.  The rest stayed put, which meant they may not be able to move closer to family members as they aged. The passage of Prop. 19 has changed this--not only does it help the general population over 55,  it also helps people with severe disabilities and victims of natural disasters such as wildfires by allowing them to move closer to family members or medical care who can aid them, or find a home that better fits their needs.  It limits property tax increases on wildfire victims who replace a damaged home and gives funding for fire protection and emergency response in such cases.  Last, but not least, it can open up the market for first time homebuyers and other buyers throughout the state because of the greater ability for those over 55 to move.

In the past, children who inherited their family property were not required to live in it, but could rent it out.  That is no longer possible--in order to obtain a net increase in property tax revenue to the government, and the tax advantage to heirs, the property must be occupied by an child of the deceased parent(s), so there are no more second homes, vacation homes, or income properties--but Proposition 19 will continue to allow the tax benefits of earlier Propositions 58 and 193 which allow the passing down of homes by parents and grandparents for use as a primary residence by heir(s). 

Family farms, schools, cities and counties also receive local revenue from this proposition!

 If you're interested in finding out more, and what your current home value may be, please contact me.

LA Times Article

Widipedia article 
 

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

In the Middle of a Pandemic, the Real Estate Market is Healthy

Some astonishing facts about the current market:

Interest Rates, Lowest Ever


• Median home price in California is $700,000 (September), lowest interest rates have led to fastest sales growth in a decade;
  
•  Average U.S. homeowner with a mortgage saw their equity rise over $9800 this year.
• The number of homeowners in forebearance dropped to under 7%, according to the Mortgage Bankers Association (September)
• The So Cal six county region broke a median price of $600,000 in August
• September mortgage demand was up 25% from one year ago.
  

 To see how your opportunity exists, take a look at the sample $500,000 selling price for a house, where a 2.99% rate could be $325 dollars less every month than the next 4.27% rate next to it.  It saves monthly, and it may also help a buyer qualify better to get in a slightly higher priced home.

To find out more, please contact me.  I'll be happy to provide you with a home value report.

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

You'd Like to Move to Greener Pastures, And Keep Your California Property Tax Base?

 Propositions 60 and 90 are tools for helping sellers keep their property tax base if they are over 55: 

"(they)allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale."  California State Board of Equalization. 

The number of counties participating in Prop. 90 fluctuates, it is currently at 10: 

• Alameda
• Los Angeles
• Orange
• Riverside
• San Bernardino
• San Diego
• San Mateo
• Santa Clara
• Tuolumne
• Ventura
  

 Currently this is a one-time only benefit, and one of the owners must be 55 years or over.  This is for principal residence only, not your investment properties unless you're living in one of them. There are certain guidelines if you buy one or two years after the sale in which the transfer of value may take place.  Depending on the county, a seller may have to relocate some distance to get into a new home purchase that is in a similar or lower price range, so this is not always viable.  If you stay with

in your own county, the transfer works in any county, but if you're moving out of your home county, then it applies only if you go to one of the other 10 counties.  In a rising market, this can be limiting, and some people cannot afford to move without that tax benefit.  

To find out about the Proposition 19 on the November ballot, go to this link for a summary, a yes vote allows more people to move and transfer their tax base anywhere in the State, along with other benefits.

For an estimate of current value on your home, please go to my site below for an instant estimation at the What is Your Home's Value?, or contact me directly.  I have been a licensed Realtor since 1994.

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

New Listing, $599,000, Beautiful Single Family Home with Patio

It doesn't get any nicer than this two-story house just waiting for the new owner.  Beautiful custom touches, spacious plan with vaulted ceilings and a lovely patio area for outdoor relaxing.  All three bedrooms are upstairs, with a half-bath off the entry hall, and two full baths on the upper level. The large kitchen has plenty of storage and counterspace. Newer flooring and carpeting, tile floor in kitchen, living room fireplace all complete the ambiance. Over 1700 sq ft inside.  Two car attached garage.  Go through the separate laundry room to access the garage. It's a great price at $599,000, MLS PW20178644.  Near Lakewood shopping and the freeway!

Rear patio, fountain, room for dining

Large kitchen, dishwasher, double sinks

 

 

 

 

 

 

 

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