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Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Local Government’

Two Out Of Five, For Now

This is a real estate blog, not political, but legislation gets passed that affects real estate decision-making.

Here is what the HW said we can expect from the new HofR:

https://www.housingwire.com/articles/47337-mba-lobbyist-heres-what-a-democrat-led-house-means-to-us

But let’s go back to the tax reform passed in December.

Nobody has brought this up yet, so I’m just speculating.

The original proposal was to change the 2-out-of-5-year residency requirement to five out of the last eight years in order to get up to $500,000 tax-free profit.

This provision was conceded, and all the talk centered around the lowering of the MID and the limits on the SALT deductions.

But when the final bill was passed, they didn’t change the residency requirement to the five-out-of-eight version.  It is still the two-out-of-five requirement today.

If the Democrat-led House of Representatives decides to re-visit the tax reform, there will be a lot of yelling and screaming.  But if they cut deals in the end to pacify everyone, it’s the five-out-of-eight requirement could be one of the concessions – because there wasn’t any resistance to the change last time.

It won’t matter to long-time homeowners, but for those who purchased in the last 2-3 years and were thinking of moving up or out with tax-free profit, this could hamper the plan.

Thinking of selling now, just in case?  Contact Jim the Realtor!

Posted by on Nov 7, 2018 in Jim's Take on the Market, Local Government, Tax Reform, Why You Should List With Jim | 0 comments

Prop 5 Defeated

Prop 5, the project of the California Association of Realtors, was soundly defeated – but it won’t be the last time we hear about the issue.  The supporters only spent half the money raised:

California voters have rejected a ballot measure to expand a property tax break for older homeowners who move, sparing schools and local governments a major revenue loss.

With 5 million ballots counted early Wednesday, Proposition 5 was behind 57 percent to 43 percent.

Under current law, seniors and near-seniors can transfer tax assessments if their new homes are worth the same or less than the ones they sell, and they can only do it only once. Current law also limits out-of-county transfers.

Proposition 5, backed by the California Association of Realtors, would have allowed over-55 homeowners to transfer their assessments to any new home — no matter what it costs — anywhere in the state and as many times as they wish.

It was a low-key campaign with high stakes.

“Today’s decisive defeat sends a strong message to the California Association of Realtors that voters won’t tolerate self-interested initiatives that attack the critical local services that strengthen our communities,” Graham Knaus, executive director of the California State Association of Counties, one of the main backers of the No on Prop 5 campaign, said late Tuesday.

The Legislative Analyst’s Office concluded that schools and local governments would each probably lose more than $100 million in property tax revenue a year initially and that, over time, those losses would reach about $1 billion a year for each. About 85,000 homeowners over 55 who move every year without the tax break would pay much less.

Current law requires the state to provide more funding to most schools to cover property tax losses. Not so for local governments.

Supporters said passage would end a “moving penalty” on older people and encourage more to sell, helping alleviate California’s housing shortage. The Legislative Analyst’s Office estimated home sales would increase by tens of thousands a year.

The Realtors funded a consultant’s report that contended Proposition 5 would have much less impact on state and local governments, resulting in annual losses of $120 million to annual gains of $200 million.

Opponents challenged the assertion that Proposition 5 would spur construction and warned about a hit to public services.

As a result of Proposition 13 passed in 1978, a home is typically taxed at 1.1 percent of the purchase price and increases no more than 2 percent a year. Prices have risen much more, sticking many homeowners with much higher taxes when they move.

Supporters raised $13.2 million as of Oct. 23, mostly from the Realtors, whose benefit from sales commissions. But the campaign only spent about half of what it raised and didn’t engage in television advertising or direct mailers.

Opponents raised $2.8 million, largely from the Service Employees International Union and California Teachers Association.

The Realtors recently filed notice with authorities that it would try again on the November 2020 ballot if Tuesday’s measure failed. Chris Carlisle, its legislative advocate, said it was “just to signal to our opponent we are not going away. If we lose this time, we will be back in 2020.”

https://ktla.com/2018/11/07/prop-5-california-rejects-measure-to-expand-property-tax-break-for-seniors/

If you are thinking of moving and want to go where the political climate is suitable for you, here’s how the country stacks up today (click to enlarge):

Posted by on Nov 7, 2018 in Jim's Take on the Market, Local Government | 6 comments

Hometainers

I love this idea – but $140,000 each? Hat tip Eddie89!

The region’s first housing project made from shipping containers could open as soon as April, providing homes for 21 formerly homeless veterans and possibly paving the way for hundreds of new affordable and median-priced homes in the near future.

The units are planned for a vacant lot at 2941 Imperial Ave. in Logan Heights.  Each 320-square-foot unit would have its own patio, kitchen and bathroom. While the units will be built from metal shipping containers, they will be insulated and have interior drywalls.

Read More

Posted by on Oct 25, 2018 in Homeless Cure, Ideas/Solutions, Jim's Take on the Market, Local Flavor, Local Government | 4 comments

Prop 5 – Will It Pass?

It’s one thing to talk about whether Prop 5 will make a difference, because it’s very speculative – we won’t really know unless it passes.

Will it pass?

The powers that be are pushing their agenda on either side, but I doubt there are voters sitting on the edge of their chair awaiting the outcome.

If voters just go off the voter guide for direction, this is what they will see:

The ‘con’ argument starts with two zingers and then fingers the ‘corporate real estate interests’ as the culprit.  If voters go to their website, this is the first image they see, which will make an impression:

Because the C.A.R. is already gearing up for a revised initiative in 2020, this may just be a test run.  But it would be helpful to have it pass, and see if there is any positive impact on the statewide market that could provide additional data for the 2020 initiative.

If it does pass, but the market doesn’t change much, then the C.A.R. will be able to say that we need the next round – which eliminates the inheritance tax break for vacation and rental properties, and clamp down on businesses that avoid higher property taxes when they buy commercial real estate.

Posted by on Oct 19, 2018 in Jim's Take on the Market, Local Government, Prop 13, Realtor | 4 comments

Prop 5 – Who Needs It?

As election day nears, let’s take a look at Prop 5, sponsored by the California Association of Realtors – who is encouraging agents to help get the vote out.

I’ve been skeptical that, if passed, Prop 5 would bring many more long-time owners to market.  The benefit only helps those who have a low property-tax basis currently, and won’t move unless they can take the same low tax basis with them.

The latimes.com featured a typical example here:

After Robert Holland’s knee surgery a few years ago, he’s had a harder time climbing the stairs in his trilevel home in the Tujunga neighborhood of Los Angeles.

Holland, a retired stagehand, wants to move from his residence at the foot of the San Gabriel Mountains to a one-story place nearby with a yard large enough to raise a goat and a couple of chickens.

But one big thing is holding him back: taxes. Holland purchased his home in 1995 and owes $4,500 this year in property taxes. If he buys a new house where he wants, his tax bill will more than double.

“It’s a matter of the quality of life,” he said, chuckling about his dilemma about whether to move. “I’m 63. I’m thinking what do I got, 20 good years left?”

The California Assn. of Realtors has a solution to Holland’s problem. It’s sponsoring Proposition 5, a statewide initiative that would provide property tax benefits for homeowners 55 and older as well as the severely disabled and natural disaster victims if they move to a new home.

Under the measure, qualifying homeowners would no longer have to pay property taxes based on the purchase price of their new home. Instead, they’d pay based on a combination of their new and old home values, lowering their property tax payment. The Realtors’ group, which has raised $13 million for the campaign, contends that the tax breaks are needed to help older residents and could free up larger homes that young families could use.

But a host of Proposition 5 opponents — including economists, local governments and labor unions — argue that older homeowners already receive disproportionately large property tax benefits in California. They say that providing additional breaks will exacerbate those disparities while costing cities, counties and schools billions of dollars a year.

Fernando Ferreira, an economist at the University of Pennsylvania’s Wharton School who has studied California’s property tax system, called Proposition 5 “completely nonsensical.”

“Right now, you’re giving a gigantic tax break to older homeowners who live in the best houses in the richest parts of the state,” Ferreira said. “This new proposition unfortunately will just perpetuate this inequality.”

Read full article here:

http://www.latimes.com/politics/la-pol-ca-prop-5-housing-tax-break-20181011-story.html

Upon further review, we see that the Hollands have it pretty good.  Their tri-level house is 2,400sf on a 9,216sf lot, and their zestimate is $810,083:

Link to Zillow page

But once you’ve lived in a house for 20+ years, it has become very unlikely that you will move again.  Just the cost and hassle is mentally challenging, and the usual result is to make the old knee last a few more years.

Here’s why.

These folks could move right now, and take their old tax basis with them – all they have to do is buy a house that is less-expensive than the one they sell.

If they sold their house for $810,000, they could buy this one-story house on a flat half-acre that would seemingly suit all their needs, listed for $799,999:

Zillow page of house for sale

If they were that committed to moving to a one-story house where they can  have “a yard large enough to raise a goat and a couple of chickens”, they could do it today – and take their low tax basis with them.

Do they need a swankier place?

If this house isn’t good enough, and they need a single-story that costs a whole lot more, than they should pay the regular property tax.

What is behind the scenes is the C.A.R. intent to put this measure back on the ballot in 2020 with another initiative:

After gathering signatures to put the initiative on the ballot this year, the Realtors lobbied the Legislature for a deal. The group wanted to replace Proposition 5 with a separate measure that included the same tax breaks for older homeowners, but eliminated the inheritance tax break for vacation and rental properties, and clamped down on businesses that avoid higher property taxes when they buy commercial real estate.

The California legislature didn’t go for it – and this year’s initiative just seems like a trial run to test the waters.  Can’t wait for 2020!

Posted by on Oct 19, 2018 in Jim's Take on the Market, Local Government, Realtor | 5 comments

Palomar Airport Extension Approved

Wondering what the Boeing 737 airplane needs for a runway? 

The minimum runway distance for a 737 is 6,800ft.  This proposal only extends the current runway to 5,697ft.

The article:

The San Diego County Board of Supervisors voted unanimously Wednesdsay to approve a new 20-year master plan for the McClellan-Palomar Airport. Supervisor Kristin Gaspar recused herself.

Part of the update includes extending the existing runway up to 800 feet. The county of San Diego said this would allow airplanes to reach the East Coast, Europe and China without having to refuel.

People living in the area are concerned that a longer runway could mean a lot of noisy planes — but Supervisor Bill Horn, who is also a pilot, said technology is helping fix that.

“Those airplanes are a lot quieter than the old stuff,” Horn said. “And that’s just going to improve the noise issue.”

A report from county staff said a longer runway would mean airplanes are able to increase elevation sooner after takeoff which could also reduce noise on the ground.

An economic analysis shows that by 2030 the Palomar airport could support more than 4,500 jobs and provide $33 million in state and local tax revenue. The runway extension project is expected to take 13 to 20 years to complete, depending on available funding.

The airport is constructed over portions of an inactive landfill, and stakeholders commented that runway extensions constructed over landfill areas could damage the methane collection system and impact the environment. Prior to construction of any improvements on the landfill, the methane collection system will be re-designed to accommodate the improvements.

Any runway extension that requires construction over areas of inactive landfill may not be fully eligible for the FAA’s usual 90% grant share since FAA has indicated they may be reluctant to fund projects that result from the County’s placement of the landfills.

Link to KPBS article

Posted by on Oct 11, 2018 in Jim's Take on the Market, Local Flavor, Local Government | 7 comments

Purple Church

OK, now this gentrification stuff has gone too far. Hat tip Laker Joe!

Gentrification has accomplished what eluded city bureaucrats for decades.

Oceanside’s Main Attraction, North County’s only remaining topless club, is going away. A five-story 308-unit, apartment complex is proposed as its replacement.

Known to locals as “the purple church,” the Main Attraction bar and restaurant hosts between eight to 20 ladies a night who dance on stage around a brass pole while a DJ spins “Cherry Pie” or “Pour Some Sugar on Me.” Admission is $11 every night after 6 pm but $14 for the once-a-month “amateur night.” Dancers are topless but never fully nude. Once inside, patrons are frequently asked if they would to pay extra for a private lap dance.

“It is my understanding this property is being sold to a developer,” says former mayor Terry Johnson who adds that getting the topless bar off that city entryway will be good for the whole street. “I am sure things will now start moving with the [long closed] Bridge Motor Inn property [to the north]. They can now get a Hilton or Marriott to come in. And things will start moving with the Motel Six property and the vacant Mira Mar building to the south.”

Link to Full Article

Posted by on Oct 6, 2018 in Jim's Take on the Market, Local Flavor, Local Government | 2 comments

Carlsbad Population Growth

For those who wonder what has been propelling the housing market lately, let’s note that people keep moving here – an average of 1,500 per year moved to Carlsbad over the last nine years!

The City of Carlsbad shows the current population to be between 110,000 and 113,000 people today.  When fully built out in 2035, the general plan calls for approximately 135,000 people:

I hope those extra 20,000+ people bring the big money!

http://www.carlsbadca.gov/services/depts/planning/growth.asp

Posted by on Sep 10, 2018 in Carlsbad, Forecasts, Jim's Take on the Market, Local Flavor, Local Government | 1 comment