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Category Archive: ‘The Future’

Prop 13 Change?

Hat tip to W.C.Varones for sending in this article.  I read it, and all of the supporting documentation, but didn’t find any surveys or data to back up the president’s claim below that well over 1 million additional properties will change hands – he just made that up.

If you can afford the cost and hassle of moving up, the increase in property taxes isn’t going to be what stops you.  If we’re going to change Prop 13, let’s do it based on surveys and valid research, not some cheerleader popping off:

Local Realtors President Bob Kevane, who unveiled the Proposition 13 change, said he has been touting the idea for a decade and believes it is needed more than ever because of low inventories.

“I think the majority of California property owners who have owned their homes for five or six years are not moving because of Proposition 13,” he said. “It’s basically locking them into their current residence and not providing the normal move-up markets we’ve had in the past.”

In the first two or three years after changing Proposition 13, he said, “You would see well over 1 million additional properties change hands.”

Under Kevane’s proposal, buyers would carry over their own tax basis plus what’s owed on the difference between the sales prices on the old and new properties. (If the new value is less than the old value, the old tax bill would apply.)

Kevane offered this example for a move-up buyer:

Home 1: Purchased for $300,000 in 2000. The original tax bill of $3,000 has now risen to $4,000 because of the annual assessment adjustments plus any permanent improvements. It sells for $500,000.

Home 2: Purchased for $600,000. Current law would set the tax price at $6,000. But Kevane’s proposal would reduce it to $5,000 — $4,000 carried over from the Home 1 bill plus $1,000 covering the tax difference between the two home prices.

The break is similar to a senior discount enacted in two Proposition 13 amendments. But under those provisions, owners aged 55 or older can keep their old tax base only if their replacement home price is no more than their sold property’s price. That senior discount can be invoked only once for a couple or individual.

In effect, Kevane’s proposal would make the senior discount available to all sellers every two years without age, income or price restriction. Older owners would also benefit because they no longer would be limited to invoking the tax discount once and children who inherit their parents’ homes could continue enjoying the lower tax base if they choose to move.

“How it’s going to benefit lower-income people is it’s going to free up all the houses that have not been on the market for years,” Kevane said.

Kevane said the state association is expected to announce the ballot campaign by Aug. 22, the deadline set to launch statewide citizen initiatives. But he also said he will speak with state Sen. Toni Atkins, D-San Diego, and other legislative leaders to see if they will put on the measure on the ballot directly.

Posted by on Jul 15, 2017 in Jim's Take on the Market, Prop 13, The Future | 1 comment

Amazon Realtor Referrals

The easiest way for anybody to make money from real estate – refer a realtor.  Costco, Lowe’s and others have tried it, but you don’t get the best realtor – you get the best realtor who is willing to pay to be on the list, and/or willing to discount their commission too.

LINK

As shoppers scoured Amazon’s website on Tuesday for its annual Prime day deals, the online shopping giant quietly disclosed a new service coming soon to its users: “Hire a Realtor”. The move would turn the company into a competitor with Zillow and Redfin. Shopping for a new television? How about adding a new home to put it in?

Tucked into the website’s Home and Business Services section, where users can receive quotes from professionals for various services including assembling new purchases or setting up new technology, Amazon now lists a “Hire a Realtor” webpage, seen below.

The website offer very little information on the possible service other than what is shown above, and Amazon did not get back to a request for comment by the time of publication.

An article in GeekWire, however, by Monica Nickelsburg, stated, “When reports of the Amazon page surfaced, Zillow’s stock price slumped from $46.15 a share to $44.54 as of Wednesday morning, showing just how closely investors are watching the Seattle retailer.”

If Amazon does get into the real estate world, it wouldn’t be the first service market its decided to disrupt this summer.

Amazon also revealed earlier this month that it was rolling out its own version of Best Buy’s popular Geek Squad service, which offers in-home product installations and repairs on electronics and appliances, according to an article in CNN Tech by Kaya Yurieff.

Amazon is also a source for homeowners to find house cleaners, local carpenters, electricians, etc.

“The new ‘Amazon Smart Home Services Store’ on its website allows users to book appointments for installations or free consultations. Company experts will answer questions and set up products like smart lights, thermostats and of course, Amazon’s line of smart devices,” the article stated.

Amazon took down their realtor webpage later.

Posted by on Jul 13, 2017 in Jim's Take on the Market, The Future | 2 comments

Boomer Parents-to-Children Transfers

Daytrip sent in this article (link below) on baby boomer sales, and how the transfer of homes from parents to children are likely to dampen the supply of homes for sale – and somewhat limit the property-tax receipts:

LATimes.com

But then I went to the actual report for more info and graphs:

http://www.lao.ca.gov/Publications/Report/3693

They do expect more boomer sales – it looks like a growing trend as more boomers get into their mid-70s:

Home Sales Likely to Pick Up as Homeowners Get Older. Although the aging of California’s homeowners has depressed home sales in past years, this pattern is likely to reverse in the future.

As California’s homeowners continue to age—transitioning from the 55 to 75 age group to the over 75 age group—more and more will begin to downsize, move into assisted living or with family, or die. When this occurs, home sales are likely to rise.

Between 2003 and 2013, over two-thirds of homes in California with owners 75 or older were sold to a new owner, compared to less than one-third of homes with owners ages 55 to 75.

Different Rules Apply to Homes Passed From Parents to Children. In general, when a home is transferred to a new owner, its taxable value is reset to its purchase price.

California voters, however, passed Proposition 58 in 1986, which amended the California Constitution to exempt transfers between parents and children (and later grandparents and grandchildren under certain circumstances under Proposition 193 [1996]) from revaluation. This allows a child to inherit their parent’s lower taxable property value.

The report shows the parent-to-child transfers to be around 10% over the total homes sales over the last decade, but it should be going higher, especially in the higher-cost coastal counties!

Parent-to-Child Exclusions Have Had a Notable Impact on Revenues. Over the past decade, around 10 percent of property transfers have taken advantage of the parent-to-child exclusion to prevent an increase in property tax payments. Figure 6 shows how many of these exclusions have been used each year during the past decade.

JtR:

San Diego County is the second most populated county in the state, so no surprise we’re #2 on list at $133,000,000 in estimated reduced taxes.  Those are a substantial number of homes being transferred within the family!

If the average tax savings was $10,000 per house sold, it would mean 13,300 homes transferred from parent to child – and this is from 2014-2015.  We had 35,382 homes sold on the MLS in the same period.  Add the FSBOs and new-home sales and we might have had 40,000 to 45,000 total homes transferred in fiscal 2014-2015.

The parent-to-child transfers could be as many as 25% of the homes moved! (40,000+13,300 = 53,300.  13,300/53,300 = 25%)

Their $133,000,000 estimate could be a tad off, but we probably have 10% to 20% of the potential supply of homes for sale being transferred within the family.  No wonder the public supply is so limited.

It is a trend that probably started to increase in 2013 as prices took off.  Parents realized that with the low tax basis, a child would be better off moving into the family homestead, rather than buying a resale home and paying full boat on the property taxes!

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Posted by on Jul 10, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, Prop 13, Property Tax Re-Assessment, The Future | 0 comments

The Future of Realtors

Notorious Rob has a series of posts about the new CEO for the National Association of Realtors, and the future of the realtor industry.  The interesting part is that the current president of the N.A.R. responded, which only brought up more questions.

Rob’s blog with his three posts is linked here.

This is his most-recent post that addresses the president’s response, and Rob’s call to action (I left a comment):

http://www.notorious-rob.com/2017/06/a-response-to-bill-brown-2017-nar-president/

The first two posts get into how Bob Goldberg became C.E.O.  But the post linked above could be a catalyst for change.  Hopefully the N.A.R. folks are listening, and are serious about doing something to help agents!

Posted by on Jun 29, 2017 in Jim's Take on the Market, Realtor, Realtor Training, Realtors Talking Shop, The Future | 1 comment

Real Estate Marketing Movies

With so much focus on HGTV real estate shows, it’s inevitable that our marketing will go Hollywood too:

A woman in a red dress twirls with a dark and mysterious man through light-filled hallways. Music flutters and surges in a romantically lit courtyard overlooking the twinkling city. A mischievous coda plays, and then the credits roll.

It’s a classic scene plucked straight from Hollywood. But this eight-minute mini-movie is far from a silver-screen blockbuster.  It’s a real estate advertisement for an $8.5-million, 1.5-acre compound in Encino:

Successfully marketing a mansion now requires much more than panning shots from an iPhone or even expensive videos shot by drone. Real estate agents with luxury listings are now experimenting with full-on property movies — films featuring actors, story arcs, scores and Tinseltown-caliber cinematography.

“The classic old-school walking tour of the house is becoming more and more obsolete — with all the content that’s thrown at us these days, it’s hard to hold someone’s attention with that,” said Kristine May, who directed the Encino shoot and owns If I May Films in Woodland Hills. “People get attached to a story, and they want to stick around and see what’s happening.”

So what if the narrative and performances are sometimes more Razzie than Oscar? Real estate agents contend that movies showcase their properties in a way that helps buyers envision themselves there.

Real estate agent Ben Bacal, an early innovator of high-gloss property films, worked with married clients Ori and Nafisa Ayonmike to craft a $20,000 film to market their home in Hollywood.

The Ayonmikes star in a fictional narrative that begins with Ori skulking through the sleek, contemporary rooms of his 5,500-square-foot, five-bedroom estate. In the next 11 minutes, Ori tells Nafisa he wants a divorce, a passionate fight ensues, Ori gets kicked out and Nafisa chucks her massive diamond ring into the pool.

Amid all the high drama, production company Rafiki captures the home’s 20-foot ceilings, high-tech security system, marble fireplaces and tony Hollywood Hills neighborhood. The video of the property listed at $3.65 million has generated nearly 61,000 views since being posted on YouTube last year.

Online video platforms have become a key component in property sales. Some 36% of home buyers used YouTube, Vimeo or another video hosting website in their search last year, despite only 8% of real estate agents using film in their marketing strategies, according to the National Assn. of Realtors.

Bacal posted another movie trailer-esque listing video last year for a Bel-Air property, in which two children develop Ferris Bueller fevers and spend the day playing hooky. The pair splash in their infinity pool, shoot golf balls over the Los Angeles skyline from their lawn, try on outfits in their generous closets and have a puppy delivered by drone.

The 14,230-square-foot spread sold in December for $39 million.

Typically, the filmmaking cost is covered by either listing agents, sellers or both. Movie-style real estate videos can cost anywhere from $5,000 to upward of $30,000 to make, directors estimated.

Read full article here:

http://www.latimes.com/business/realestate/hot-property/la-fi-hp-movie-trailer-homes-20170624-story.html

Posted by on Jun 23, 2017 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, The Future | 2 comments

Investor Financing For Flips?

Big-money investors are entering the real estate space, though not in California yet – but it’s just a matter of time.

Notorious R.O.B. explores whether there would be much difference between selling to an investor, and selling with a realtor on the open market:

http://www.notorious-rob.com/2017/06/are-investor-offers-always-worse/

But he also brings up a curious thought – what if the investors re-sell the house, and carry the financing for the buyer? An excerpt:

Longtime readers know that I think the most interesting possibility is that companies like Opendoor, Offerpad, and others are looking at revolutionizing the home financing process by offering direct seller financing to buyers. That was premised on the idea that these guys would resell their loans as private label RMBS.

What if they figure out a way to just hold on to the loans and service them directly in some fashion?

If investors were selling re-conditioned homes and offering to self-finance the purchase, they could bring in a whole new set of homebuyers that can’t get a loan now.  They wouldn’t finance just anybody, but they could pick up those who get left out of the current mortgage guidelines for silly reasons.  If they had sensible guidelines, they could even become the go-to lender – you just have to buy their house, at their price, to get their financing!

Creating a new buyer pool could keep the party going for a few more years!

Read Rob’s article here:

http://www.notorious-rob.com/2017/06/are-investor-offers-always-worse/

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Posted by on Jun 20, 2017 in Jim's Take on the Market, Real Estate Investing, The Future | 0 comments

‘Craziest’ Markets

From realtor.com:

“With a record number of home buyers out there, this is officially the most competitive, fastest-moving spring housing market in decades,” said Javier Vivas, manager of economic research at realtor.com. “Following a furious start to the season, the median days on market for homes on realtor.com in May is the lowest since the end of the recession, and marks the first time that 1 in 3 homes is selling in under 30 days nationally.”

The median age of properties on realtor.com in May is 60 days, which indicates that properties are selling five days (8%) faster than this time last year, and two days faster than last month.

“The lack of affordable inventory remains a critical issue, particularly for a growing number of first-time home buyers and millennials lining up for starter homes and urban dwellings.”

So where in the U.S. are things the craziest—those places where homes fly off the market the fastest, and buyers are up all hours, clicking on listings? When we pulled together this month’s list of the hottest markets in the country, the top markets were a one-two punch for the Bay Area, with San Francisco (including nearby Oakland and Hayward) at No. 2 and Vallejo, just to the north, at No. 1.

I don’t think a faster-moving market is crazy – instead, the tight inventories have caused us to naturally evolve to quicker pace.  It’s not just the buyers – agents, lenders, appraisers, and inspectors all move faster now, and you could say, ‘it’s about time’.

Words like ‘craziest’ are just headline porn – the market evolution is on track.

Is there a potential benefit to slowing it down?

Agents dig the face pace – buyers and sellers have less time to think, and deals close quicker so we can get on to the next one.

How would sellers and buyers benefit from slowing down the process, and how could it happen?

Imagine if we eliminated the ‘Coming Soon’, ‘Sold Before Processing’, and other ways that agents wrongly tilt the table.  Instead, we adopt an industry-wide standard process for selling homes so everyone has a crack at buying each house.  After all, shouldn’t that be in place already?

If everyone knew that the seller would pick the buyer on Friday afternoon (or some other deadline), then we’d have an open, honest, and predictable marketplace.  If we added a open bidding process at the deadline, the resulting transparency would help even more.

The frantic running-around today is from agents abusing the system, which causes buyers to pull their hair out every time they lose a property unfairly.  They are determined to get the next one, no matter the cost, because they abhor the way they are treated.

You could say that the realtors’ unethical behavior that has helped to create the frenzy does benefit the sellers.  Most will say that as long as sellers benefit, then all is good.

But is it a long-term solution?

We will eventually run out of buyers who are willing to put up with this environment.  Then what, another dip?  Great.

The conversion to The Slow-Down Plan outlined above (adopting a industry-wide process for selling homes) is our soft landing.  If we continue at a break-neck speed with no solution in sight, won’t we crash….again?

Posted by on Jun 15, 2017 in Jim's Take on the Market, Listing Agent Practices, Realtor Training, The Future | 5 comments

Statewide MLS

I am a proponent of San Diego realtors joining the CRMLS (with 80,000+ members) because their system is vastly superior to the crappy MLS version supplied by our Sandicor. But here’s an alternative reason why we should adopt a statewide MLS – because consumers know more than realtors:

It’s My Business, the campaign for statewide MLS listing access in California, traveled to the C.A.R. Meetings in Sacramento in May 2017.

Industry leaders were asked “What is the Future of the MLS?” Hear their answers, plus what they think about 3rd party listing websites and how they’ve changed the business of real estate.

Including testimonials from:

Bryan Forrest – Director of C.A.R.
Monet Love – Director of Pacific Southwest AOR
Max Zaker – Board Member of Pacific Southwest AOR
Claudia Zaker – REALTOR w/ Keller Williams
Brenda Meyer – Past President of East Valley AOR
Joe Prian – President of Scenic Coast AOR
Mike Carunchio – President of North San Diego County AOR
Kevin Williamson – Director of North San Diego County AOR
Rich D’Ascoli – CEO of Pacific Southwest and N. San Diego AOR
Kesha Toler – Broker Associate, Scenic Coast AOR
Jan Farley – 2017 President Elect of Pacific Southwest AOR
Mike DeLeon – Past President of Orange County AOR

Posted by on Jun 11, 2017 in Jim's Take on the Market, Realtor, Realtors Talking Shop, The Future | 1 comment

The Unwanted McMansion

A great article from realtor.com. Excerpts:

As baby boomers look to downsize out of their suburban McMansions, a generational showdown is looming: Millennials might be coming into their own as the nation’s biggest group of first-time home buyers, but they aren’t exactly lining up with bids in hand for those large, expensive homes in the sleepier suburbs. Instead, they’re looking for a different kind of home—the same ones, in fact, that the empty nesters are looking to buy.

It’s a battle of the millennials vs. baby boomers playing out in the nation’s suburban housing markets.

Younger and older generations alike are gravitating toward smaller dwellings in more urban, walkable suburbs and cities, with restaurants and coffee shops around the corner. It’s leading to a real estate traffic jam: Increasingly, boomers are getting stuck, because most can’t buy the home of their dreams until they unload their current ones. And many millennials have neither the desire nor the means to help them out.

“What you have is everyone chasing the same type of home,” says Rick Palacios, director of research at John Burns Real Estate Consulting. “More and more buyers of all ages want to avoid having to deal with a huge yard and all the upkeep and the costs to maintain [a larger] home.”

It’s creating an odd imbalance in a real estate market—a disruption to what has long been considered the traditional generational housing life cycle. And it’s leaving many would-be buyers out in the cold.

When they do make that move to the suburbs, millennials often seek more walkable towns that have many of the urban amenities they’re used to, like bike lanes, social events, and lots of shops and restaurants.

“What’s really attracting millennials are the communities that are bringing the urban flavor out to nonurban towns,” Palacios says. “They don’t want the traditional  massive homes and big yards. They want smaller homes and cool things to do.”

“It’s more important to have proximity to the lifestyle they want,” says Jason Dorsey, president and researcher at the Center for Generational Kinetics, focused on millennials and Generation Z. “Their living room is actually the park outside the condo.”

It’s not just the size of boomers’ homes that is a turnoff; it’s also the style. Times and tastes have changed, and today both boomers and millennials are attracted to modern, open floor plans—which aren’t common in the older homes that boomers are hoping to unload. Boomers like the flexibility of these spaces for aging in place, and millennials like the clean design.

And while they’re willing to compromise on size, millennials are less willing to bite the bullet on amenities. Weened on HGTV, they want high-end finishes, nice countertops, upscale appliances, and luxurious bathrooms.

“They’ll buy a smaller house with fancier amenities, close to town, rather than chase square footage,” Dorsey says.

As for Generation X, having weathered the Great Recession during what should have been their prime earning years, they now have to save for their kids’ college expenses, their retirement, and caring for their aging parents. So they’re not likely to trade up from their starter homes. And if they do, many prefer an easier-to-maintain smaller home in a community with activities they enjoy—just like those millennials and boomers, Dorsey says.

Meanwhile, since the boomers see their home as their nest egg, they’re not all willing to reduce their asking price and shortchange their retirement accounts, says Dorsey. So more of them end up staying put.

“There certainly was a lot of speculation about what would happen if the boomers tried to sell their houses en masse, and whether that would flood the market with a supply of large homes that the younger population didn’t want—or couldn’t afford—to buy,” Porter says. But “the boomers do seem to be moving less and aging in place more.”

Read full article HERE.

Posted by on Jun 9, 2017 in Boomer Liquidations, Boomers, Jim's Take on the Market, The Future, Thinking of Buying?, Thinking of Selling? | 5 comments