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Category Archive: ‘Local Government’

The Big Stagnation, Part 2

In September, I touched on the Big Stagnation:

http://www.bubbleinfo.com/2017/09/02/the-big-stagnation/

Just talking about the GOP tax changes could slow down the market.  Because the N.A.R. and others are suggesting publicly that home values could drop 5% to 10%, won’t potential home buyers wait to see if it happens?

The demand will still be there; it will just be more picky than it is today.

The move-up market is where we could see real impact from the proposed tax changes.  If potential move-uppers don’t move, they would keep their mortgage-interest deduction and lower property taxes.  If they do move and get a loan over $500,000, they’ll enjoy paying on a new mortgage for 30 years with no MID, and pay higher property taxes.

They won’t calculate the exact cost of losing the MID (it’s not that much) – and instead, it will be the last straw and they will just quit thinking about moving because they’re disgusted with politicians.

We will also lose a few who need to stick around longer to qualify for the tax-free gain on the sale of their house, due to the change of having to own/occupy the house for five out of the last eight years to qualify.

End result: Fewer people willing to move up, which would have a significant impact on the higher end market.   True, the move-up buyers won’t be listing their lower-priced house for sale either, which would create a net-zero change, and potentially make the inventory tighter, which would be better for the remaining sellers.

But there hasn’t been a shortage of homes for sale listed over $1,000,000 (there are 1,395 homes for sale today in San Diego County priced over $1,000,000, and 327 sold in October).

Higher-end sellers will have to wait even longer for the trickle of buyers to reach them.  Plus, if a neighboring seller or two dumps on price to unload theirs, the lower comps could add another six months to the selling timeline, or longer.  The sellers who claim to be in no rush will be tested!

The environment will be compounded by the lack of experience in dealing with this type of market by everyone involved. For the last seven years, if you wanted to buy a house, you had to pay the sellers’ price….or more.  Will that continue?  Yes, for those selling a perfect house at the perfect price.  But it will be too easy for buyers to pass on the clunkers or OPTs.

S-t-a-g-n-a-n-t  C-i-t-y.

The lower end should stay red hot, but it won’t be trickling up as much.

And that’s not considering the possibilities of higher interest rates, earthquake or other natural disaster, nuclear war, or recession!

Posted by on Nov 7, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Local Government, Market Buzz, Market Conditions | 6 comments

New Affordable-Housing Laws

The 15 new housing laws were signed by Jerry Brown on Friday, and it sure seems like the politicians were intent on throwing everything and the kitchen sink at the so-called housing crisis.  But as you read through the bills, and listen to the Governor above, how confident are you that anything will change?

http://www.sacbee.com/news/politics-government/capitol-alert/article176152771.html

“This package has everything from A to Z – affordability to zoning,” Assembly Speaker Anthony Rendon said in a statement. “It’s not a magic wand, but it is going to put a lot of drafting tools, backhoes, hammers and door keys to work.”

State Sen. Toni Atkins, D-San Diego, an author of one of the major bills in the package, said the state has only begun to address its housing challenges.

“This is a necessary and critical first start,” she said.

State Sen. Scott Wiener, D-San Francisco, pledged to do more next year.

“Today, California begins a pivot … I am happy to hear my colleagues (say) this is the beginning, not the end, because I have some bills for you next year,” Wiener said.

The housing bills provide new funding for low-income housing development, seek to lower the cost of construction, fast-track building, and restrict the ability of cities and counties to block new development. Here’s a rundown of the bills in the package:

Senate Bill 2, Sen. Toni Atkins, D-San Diego: Imposes a new $75 to $225 fee on real estate transactions. Estimated to generate $250 to $300 million per year to fund affordable housing development, programs to assist homeless people and long-range development planning in cities and counties. For 2018, revenue would be split equally between the state and local government. The state share is specifically aimed at combating homelessness. It’s available for rental assistance, homeless navigation centers and development of housing for homeless people.

Senate Bill 3, Sen. Jim Beall, D-San Jose: Will put a $4 billion housing bond before voters in November 2018. If approved, $1 billion would go to the CalVet home loan program, established in 1921 to help military veterans purchase homes. The remaining $3 billion would help fund low-income housing projects and development near jobs and public transportation.

Senate Bill 35, Sen. Scott Wiener, D-San Francisco: Lets developers bypass the lengthy and often expensive review process for new housing development, which includes extensive environmental analysis and public hearings. If a community has not built enough housing – state law outlines the housing needs, at all income levels, for each city and county in California – developers can bring forth a project without undergoing the process. It mandates higher construction worker pay and benefits on projects with 10 units or more.

Read summaries of all 15 bills here:

http://www.sacbee.com/news/politics-government/capitol-alert/article176152771.html

Posted by on Oct 1, 2017 in Jim's Take on the Market, Local Government, Market Conditions | 4 comments

Latest Tax Proposal

Here is the N.A.R. press release on Trump’s tax reform, and reiterates the same threat that home values will plummet if the M.I.D. goes away:

WASHINGTON (September 27, 2017) – A group of legislators and administration leaders known as the “Big 6” today released an outline for comprehensive tax reform that if enacted, according to the National Association of Realtors®, could lead to a tax on homeownership for millions.

According to the Big 6’s framework for tax reform, changes to the current tax code would eliminate important provisions, such as the state and local tax deduction, while nearly doubling the standard deduction and eliminating personal and dependency exemptions. NAR believes the result would all but nullify the incentive to purchase a home for most, amounting to a de facto tax increase on homeowners, putting home values across the country at risk and ensuring that only the top 5 percent of Americans have the opportunity to benefit from the mortgage interest deduction.

NAR President William E. Brown, a second-generation Realtor® from Alamo, California and founder of Investment Properties said that the proposal reaffirms Realtors®’ concerns from earlier in the year and urged lawmakers to keep homeowners in mind as they proceed with comprehensive tax reform with the following statement:

 “We have always said that tax reform – a worthy endeavor – should first do no harm to homeowners. The tax framework released by the Big 6 today missed that goal.

“This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 percent who would still itemize their deductions.

Read More

Posted by on Sep 28, 2017 in Jim's Take on the Market, Local Government | 5 comments

Build More….3x More!

This article adds the numbers.  We need to build at least three times as many homes as we’ve been building to keep up with the growth – and no telling what that would do to prices, if anything:

http://www.cbs8.com/story/36420282/report-changes-needed-to-meet-san-diego-housing-demand

SAN DIEGO (CNS) – As the homeless population grows and rents balloon in San Diego, city officials Thursday announced a series of proposals to help alleviate the housing shortage over the next 10 years.

Numerous changes to city codes and procedures are required to meet the housing demand, according to a report presented to the City Council’s Smart Growth and Land Use Committee.

Some of those changes include rezoning areas around transit hubs to increase density, converting unused industrial zones into residential areas and encouraging smaller unit sizes. Making use of vacant lots and easing some onerous parking requirements are also among the ideas identified in the report.

“This is an exciting step because it gives the city goals for the future, and it gives the city goals to be measured by,” San Diego Housing Commission President Richard Gentry said.

To meet the housing need in San Diego, as many as 220,000 new housing units will need to be built by 2028, the report said. The top annual production rate within the last 5 years has been of 6,400 units. Even with the solutions identified in the report, San Diego would have to bolster its production rate.

“To meet the projected needs for the city for the next 10 years, we will need to produce between 17,000 and 24,000 housing units per year — a dawning task but a worthy goal to be set,” Gentry said.

After the presentation, City Councilwoman Georgette Gomez worried that more units may not necessarily fix the housing crisis facing the region.

“I would love to work with the housing commission to look at the affordability of housing,” Gomez said. “I’m not a firm believer that just creating units is going to get to the actual issues that are in front of us.”

According to a staff report, the annual rate of housing construction has been well under half that of population growth over the past decade, creating a warped supply-and-demand situation that has prompted costs to skyrocket. The result is that half of San Diegans can’t find rental units they can afford and 60 percent can’t afford to purchase a home, according to the report.

“What we are doing is driving our kids and grandkids right out of town,” Councilman Scott Sherman said.

The report identified the communities of Skyline-Paradise Hills, Linda Vista, Otay Mesa, Clairemont Mesa and Navajo as the areas with the largest housing growth potential. As many as 74,000 units could be built all together in those five communities.

If all the suggestions in the report are carried out, that 10-year housing goal could be met or exceeded. Then hope later one is to keep that same production rate through 2028 to keep up with the expected population growth.

http://www.cbs8.com/story/36420282/report-changes-needed-to-meet-san-diego-housing-demand

Posted by on Sep 26, 2017 in Boomers, Builders, Jim's Take on the Market, Local Government, Market Conditions, The Future, Thinking of Building? | 1 comment

$1B Mid-Coast Trolley Extension

More on the Blue Line trolley extension:

On September 14, 2016, the top transit official in the United States committed $1 billion toward building the San Diego region’s newest trolley line, signing an agreement that will provide 50 percent of the funds to extend the popular transit service for 11-miles from Old Town to UC San Diego and the University City community.

The largest public transit project in the history of the San Diego region, the Mid-Coast Trolley Extension will extend the existing Blue Line, building nine new stops along the north coast of San Diego, including near Mission Beach, Pacific Beach, the VA Medical Center, the UC San Diego campus, and the dense residential and commercial areas along Genesee Avenue.

“The Mid-Coast Trolley will bring fast, reliable transit to the places where it’s most needed, including our largest research university and biggest employment center,” SANDAG Chair and San Diego County Board of Supervisors Chair Ron Roberts said. “At the same time, it is an outstanding example of our ability to leverage the region’s local TransNet dollars to bring in outside money to complete major transportation projects.”

The San Diego region was able to garner the 50 percent match for the Mid-Coast Trolley in large part because it has a dedicated local source of funding that provided the other 50 percent match for the project. Revenues from TransNet, the countywide half-cent sales tax for transportation, are covering half of the $2.1 billion total project cost.

“FTA is proud to partner with San Diego to bring new transit options to this growing region,” said FTA Acting Administrator Carolyn Flowers. “With the population along the Mid-Coast corridor expected to grow nearly 20 percent in the coming decades, this Trolley extension will offer a much-needed alternative to traffic congestion in the years ahead.”

A ceremonial signing of the Full Funding Grant Agreement – dedicating approximately $1 billion to the project over the course of 10 years subject to annual Congressional approval – took place on the campus of UC San Diego, at a location where the future Pepper Canyon Trolley station will be built. As part of the ceremony, Flowers handed Roberts a symbolic $1 billion check. Metropolitan Transit System (MTS) Board Chair Harry Mathis, UC San Diego Vice Chancellor Gary Matthews, and Cynthia Abair, Acting Director of VA San Diego Health Care System, also spoke during the ceremony.

Pre-construction activities for the project – primarily the relocation of underground utilities out of the project alignment – are already underway. Primary construction is expected to begin this October, with service anticipated to start in 2021.

Once the extension is built, transit riders will enjoy a one-seat ride (no transfers) from San Ysidro to University City. Planners estimate that the project will provide more than 20,000 new transit trips every weekday.

The construction of the Mid-Coast project is expected to produce more than 14,000 new local jobs. Even after the construction is over, the Mid-Coast project will have an estimated $116 million of annual economic impact on the region by reducing congestion, reducing parking needs, and increasing access to jobs. The Mid-Coast corridor supports more than 325,000 jobs. The two ends of the route – Downtown San Diego and University City – account for nearly half of that total.

For more information, visit KeepSanDiegoMoving.com/MidCoast

My tour of the area:

The official, professional flyover tour:

Posted by on Sep 9, 2017 in Bubbleinfo TV, Jim's Take on the Market, La Jolla, Local Flavor, Local Government, The Future | 6 comments

The Rising Tide

Climate change has been hotly contested, and who knows what the eventual outcome will be.  It’s unlikely that we will have to worry about any possible effects, but your kids might – and look out Mission Beach!  Hat tip daytrip!

http://www.latimes.com/local/lanow/la-me-sea-level-rise-california-20170724-story.html

As glaciers melt amid the heat of a warming planet, scientists predict that coastal communities in the United States could eventually experience flooding from higher tides.

Conservative estimates range from an increase of about one to four feet in sea-level rise by the end of the century. Experts also warn that people should be prepared for unlikely but extreme scenarios of up to eight feet in sea-level rise, which would cause severe and chronic flooding in hundreds of coastal cities.

Grappling with this problem would be expensive for local governments. Anticipating the costly possibility, the city of Imperial Beach and the counties of Marin and San Mateo last week filed potentially groundbreaking lawsuits to push large oil and coal companies to foot the bill.

According to scientists, sea-level rise is underway in some seaside neighborhoods and comes on top of the potential for large storms to intensify because of climate change. Cities along the East Coast — such as Miami, Boston and Charleston, S.C. — face the greatest risk, but flooding is also projected to harm much of San Diego County’s coastline in the coming decades.

The major questions currently are: How much flooding will vulnerable cities experience, and how fast?

Read More

Posted by on Jul 26, 2017 in Jim's Take on the Market, Local Flavor, Local Government, Thinking of Buying? | 6 comments

Answers for the Homeless

Bye-bye Chargers – let’s turn their practice field into a homeless camp!

LINK

SAN DIEGO (KGTV)–Creating a quick, temporary respite for San Diego’s homeless population at Qualcomm Stadium was at the forefront of today’s meeting of the San Diego City Council’s Select Committee on Homelessness.

Committee chair and City Councilmember Christopher Ward, who represents the third district, presented options including:

  • Temporary housing at Golden Hall downtown
  • Temporary housing at Qualcomm Stadium practice field
  • Expanding outreach efforts
  • Creating more places in city-controlled facilities where people who live in their cars can spend the night

“One of the big barriers people have from getting off the streets today is that their stuff is on the streets,” Ward said. “So trying to go interview with the Housing Council or seek health assistance or do a job interview, they don’t want to leave their stuff. We don’t have enough storage and that’s something the city can provide.”

Save

Posted by on Jul 24, 2017 in Jim's Take on the Market, Local Flavor, Local Government | 3 comments