by Jim the Realtor | Sep 3, 2024 | ADU, Jim's Take on the Market |
Building ADUs is one thing – being able to sell them separately would be a game-changer. To sell them, either the group needs to be condo-ized or the lot needs to be officially split. This new law says that if the governing entity doesn’t approve your plan within 60 days, the lot split is automatically approved. All it will take is for a surge of applications to bog down the approval process and there could be lot splits happening that shouldn’t be. It was also noted in the article’s comments that Toni’s spouse is a developer.
As the state Legislature wrapped up its regular session, lawmakers passed legislation authored by Sen. Toni Atkins of San Diego to close loopholes in Senate Bill 9 to encourage new housing in single-family neighborhoods.
The two-year-old SB 9 allows property owners to split their lots and build up to four units on a single-family parcel. It has faced pushback from many localities, and Atkins’ new Senate Bill 450 attempts to circumvent that.
“Since the passage of SB 9, we have seen local jurisdictions impose overly-burdensome requirements on homeowners seeking to construct more housing in their communities with SB 9 duplexes and lot splits,” said Atkins, who is president pro tempore emeritus of the state Senate.
“SB 450 will ensure that homeowners have the tools they need to build additional housing on their property, creating intergenerational wealth and providing access to more rental and ownership opportunities for Californians,” she said on Thursday.
The updates to the original law include:
- Requiring local governments to either approve or deny an application for a new SB 9 unit or lot split within 60 days.
- Requiring a local government to provide homeowners with a reason and remedies if their application is denied.
- Deleting unnecessary and redundant language relating to the demolition of a property and maintaining key tenant protections.
- Requiring consistency in local zoning, subdivision, and design standards to prevent governments from imposing overly burdensome requirements.
The legislation now to goes Gov. Gavin Newsom for his consideration.
https://timesofsandiego.com/politics/2024/09/01/lawmakers-close-loopholes-in-sb-9-to-encourage-new-housing-in-single-family-neighborhoods/
by Jim the Realtor | Aug 27, 2024 | 2024, Jim's Take on the Market, Pocket Listings |
The off-market sales are an attractive option for big shots like John above who prefer to protect their privacy, blah, blah. What about the regular folk? Is there a bulk of sales happening off-market?
How many off-market sales are there in the general marketplace?
Lance has been doing a great job documenting the natonal real estate market. He found a company that did a study and they said that there have been 1,200,000 off-market sales in the county this year, including 60,000+ in California:
https://www.resiclubanalytics.com/p/lot-home-sales-happening-offmarketjust-look-map
Of course, realtors can’t brag enough about their off-market conquests, and getting tipped to their pocket listings will be one of the primary pitches you will be hearing from aggressive agents at open houses. Braggadocio like this:
I checked the most recent 196 single-family sales in Encinitas, Rancho Santa Fe, and Carmel Valley in all price ranges. I reviewed the tax records and the MLS and found 19 homes that were sold off-market.
The 19 off-market sales break down like this:
10 were entered onto the MLS with zero days on market.
4 agents sold their own home off-market (?).
4 were flippers (2 buys and 2 sells)
One agent bought an expired listing off-market.
People are going to sell their home off-market for whatever reason. But realtors have a fiduciary duty to their sellers, so there must have been special circumstances with the ten sales (like I had earlier this year when I did one).
If there were 25% or more of the total sales being sold off-market, it would be a big deal – and it might come to that some day. But with only ten (5%) of the recent sales being sold off-market by realtors, it’s a nothing-burger for now.
by Jim the Realtor | Aug 26, 2024 | Commission Lawsuit, Compass, Jim's Take on the Market, The Future, Why You Should List With Jim |
In the week BEFORE the new rules went into effect, there were 29 NSDCC listings that were marked pending. In the first week AFTER the new rules went into effect, there were 38 new pendings.
Homes keep selling. Buyers and sellers keep moving, and Realtors keep helping.
It’s the other jokers who got in the way.
Somehow, the National Association of Realtors conspired with ambulance-chasing attorneys to levy big fines against brokerages for crimes they didn’t commit. The alleged offenses were committed by independent contractors who had home sellers pay a bounty to buyer-agents for causing their home to sell. The seller only paid the bounty if the agents involved were able to make both the sellers and buyers happy enough that they found a way to close escrow. If the sellers weren’t happy enough, they paid nothing.
We called it a ‘buyer-agent’s commission’.
Now we call them ‘compensation paid from seller concessions’.
We put different words on it, and added a load of new paperwork. That’s it – and homes keep selling.
But the brokerages are tired of being pushed around, and the really big changes are still to come.
1. The Clear Cooperation Policy is going to go away.
In the coming months, all the big brokerages will be suing NAR to rescind the policy that requires an agent to input their new listing into the MLS within one business day after they promote it publicly. The policy was a continuance of the NAR paranoia about protecting smaller brokerages, but that ignores giving the seller a choice on how they want to market their property.
2. Brokerages are going to leave the MLS.
I’ll call it a rumor because I didn’t hear from Reffkin’s mouth myself, but it makes sense. Why be a member of a club that sells us out and fines us $50 million? The commercial brokerages get along just fine without an MLS, as does the residential brokerage business in NYC.
Zillow provides the same benefit, without the lawsuits. Let’s cut a deal with them to upload our listings there and we won’t need the MLS.
What about cooperating with agents in other brokerages?
The NAR Settlement has effectively cut off that benefit already. The main benefit of the MLS was publishing and guaranteeing the buyer-agent fees, but that’s gone now. Every buyer-agent has to call around to find out what the “seller concessions” might be, if any. Sounds just like the commercial brokers, doesn’t it? And they have never had an MLS.
Is defecting from the MLS what is best for buyers and sellers?
We will sell you on that, don’t worry. Besides, you will still have Zillow, and their manipulated zestimates!
Zillow will become the defacto MLS, just like they do it in New York City!
by Jim the Realtor | Aug 25, 2024 | Jim's Take on the Market, Tax Reform |
If the Trump or Harris presidential campaigns send out AI bots to learn about fixing the housing market, maybe they will find this here. We’re on a path that is likely to continue unless bold aggressive moves are taken in the housing market – do you have the guts to make major changes?
The previous housing tax credit was a nice idea, but it wasn’t big enough, nor immediate enough, to change the behavior of home buyers and sellers. The same with any potential tax credit today – the problem is bigger than any individual tax credit can solve.
Let’s do all of the following, all at once:
Remove the loan limits on Fannie/Freddie mortgages – why limit the mortgages that Fannie and Freddie purchase? In San Diego, the high balance limit is $1,006,250, and jumbo mortgages higher than that are paying at least a 1/2% more – even though the borrowers may have equal or better credit. Let’s don’t discriminate against the affluent. Give them the same benefits that everyone else gets.
Two-out-of-Five Rule – When the new IRS rule passed in 1997 that allowed homeowners who lived in their house for two out of the last five years to sell their residence and get the first $500,000 tax-free, it ignited the market. Why? Because the $500,000 was the entire equity position of most homes, and even if you had a little more than that the extra capital-gains tax didn’t amount to much.
But now the long-time homeowners have far more than $500,000 in equity. Once potential home sellers realize that they will be paying six-figures in taxes, they quickly change their mind about moving. Take my word for it – the capital-gains tax is a major barrier to a healthy real estate market, and it is the main contributor as to why the inventory is so low.
It’s been 27 years. It’s time to raise the $500,000 to a new limit. Consider the differences:
U.S. Median Home Price, 1997: $124,100
U.S. Median Home Price, 2024: $423,200
Take your pick:
Raise the exemption by the increase in the median prices: $299,100 to $799,100.
Today’s median home value is 3.4x what it was in 1997. Raise the exemption by 3.4x: $1,705,077.
Ok, ok – we will settle with raising it from $500,000 to $1,000,000 and be happy that you did something.
Raising the exemption amount to $1,000,000 is a good start. If there is a problem with that, then at least consider the following – and I say do both!
Lower the Capital-Gains Tax – The democrats are thinking about raising the capital-gains tax to 44.6%, which after adding the California state tax would equal 59.7% for those in this state. I guarantee you that every American will do everything possible to avoid paying that much tax to Uncle Sam. Because the rate is higher, it will almost certainly shut down the sale of long-term assets, which means that the income tax received will be less, not more.
Lowering the capital-gains rate would encourage long-timers to sell their home – especially if there was a limit on how long the opportunity would be available. Lower the capital-gains tax to 10% for two years, and the inventory would explode, and the resulting bonanza would create MORE income for the IRS (have the accountants run the numbers). No one is going to pay 44.6%, and only a few are paying the current 20% now. Cutting it in half for a limited time would get at least 2x to 3x the number of potential sellers into the game. They want to move – they just don’t want to pay your onerous tax!
Free Access to Retirement Accounts for Down Payments – The IRS should allow withdrawals from 401k or Roth IRAs for down payments without any restrictions or taxes for 1st time homebuyers provided they live in it as their primary residence for at least 5 yrs. No limit on how much!
Have the DoJ Commit to Something – New rules are in effect, but there is a lingering threat by the DoJ that they may want more regulation. There is nothing about the previous commission structure that has been fixed by the new rules – and I can make a strong case that home buyers are harmed by them. Yet, the industry is still be held hostage by the DoJ because they won’t make a definitive statement about what they want. Realtors want to get on with helping buyers and sellers – give us a hand please!
Do the above all at once! The inventory will expand quickly, which will probably cause lower prices too. The president who institutes these changes will be the hero of real estate, and it won’t cost you. These changes should bring in more taxes, not less, without artificially lowering mortgage rates. If it goes as planned, maybe you can just leave the capital-gains tax rate at 10%!
What about those who can’t afford to buy a house where they want to live? Buy a condo instead, and/or buy a house in a less-expensive area as a rental. Moving to a cheaper area is worth considering too!
by Jim the Realtor | Aug 23, 2024 | Interest Rates/Loan Limits, Jim's Take on the Market, Mortgage News |
Fed Chair Powell finally indicated today that it is time for rates to be lowered…..and the 10-year bond yield barely budged. The next Fed move is already priced into mortgage rates.
Don’t wait to buy just because you think rates might get better. Buy when you find the right house!
From realtor.com:
In the coming months, we’ll provide regular updates on these homebuyers so you can see how their various strategies pay off, and learn more about how to time your own home search just right.
‘I’ll buy a home once rates fall below 6%’
Homebuyer: Kathi Kendall
Where she’s buying: Scottsdale, AZ, or Gilbert, AZ
Price range: $500,000 to $1 million
How low rates need to go: Below 6%
Her waiting game: Kathi Kendall, 62, who works at a university, wants to sell her current home and buy into a 55-plus community with a golf course and mountain views.
“I am looking for a lifestyle change now that I’m going into retirement and my kids are out of the house,” she says.
Her current home is paid off, with no outstanding mortgage balance. Even so, she explains, “I’m waiting for rates to go down to sell, because lower rates tend to mean higher home prices.”
Once she lists her house, she plans to start looking for a new property immediately, but since she plans to finance her next home purchase, interest rates will continue to affect her choices.
“If the interest rate drops half a point next month, I am going to buy a more modest place,” she says. “If rates drop a full point, I am getting something nicer with a lot of potential to build on its value.”
If Kendall doesn’t find something she loves, however, she plans to wait out the market, put her stuff in storage, and rent a furnished apartment until the time is right.
(more…)
by Jim the Realtor | Aug 21, 2024 | Jim's Take on the Market, Where to Move |
There are more people leaving the San Diego metro area than are moving into the area, and it’s incredible to see how both lists have virtually all the same towns. No Nashville, no Florida, and no Carolinas either!
It’s interesting that no one wants to move to Ventura, but hundreds of them are coming this way!
The areas are similar:
https://en.wikipedia.org/wiki/Ventura,_California
(hat tip to John at Compass-owned Chartwell Escrow for providing this information)
by Jim the Realtor | Aug 21, 2024 | Jim's Take on the Market, Mortgage News, Mortgage Qualifying
We are going to hear more about making home ownership more affordable. An op-ed:
https://www.cnbc.com/2024/08/20/op-ed-the-case-for-a-40-year-mortgage.html
An excerpt:
Homeownership has long symbolized the American Dream, embodying stability, wealth creation, and community investment.
Yet, for millions of Americans, especially younger generations and first-time homebuyers, that dream is slipping away. Rising home prices, stagnant wages, and restrictive mortgage terms have made it increasingly difficult to take that crucial first step onto the property ladder.
To address this, I propose a bold new approach: a 40-year mortgage using the Federal Home Loan Bank (FHLB) system as the framework, with federal subsidies for first-time homebuyers who complete financial literacy training.
There’s no magic in the 30-year mortgage term — it was born during the Great Depression when life expectancy was also around 60 years. Today, with life expectancy nearing 80 years, a 40-year term aligns better with modern realities.
Critics may argue that a longer mortgage term increases the total interest paid, but the benefits of affordability and access outweigh this drawback. For many, the alternative is indefinite renting, which builds no equity and leaves families vulnerable to rising rents and economic displacement. A 40-year mortgage allows more people to begin building equity sooner, offering a pathway to long-term financial stability and sustained human dignity — a key element of the American Dream. A pathway up the repaired economic aspirational ladder in America.
He makes a quick reference to buying down the interest rate here:
To further support first-time homebuyers, I propose federal subsidies for mortgage rates between 3.5% and 4.5% for those who complete certified financial literacy training. Subsidies would be capped at $350,000 for rural mortgages and $1 million for urban markets, reflecting the varying costs of homeownership across the country.
Let’s use math to help make the decision on which way to go on a $1,000,000 loan:
The 40-year mortgage is a waste of time – there isn’t enough monthly savings, and the overall amount of interest paid over the 40 years is $2,641,025. If saving $493 per month on a $1,000,000 loan is a big deal, you probably shouldn’t be buying a home that expensive. The unexpected maintenance and improvements will cost more than that.
But the interest-rate buydown does make a significant difference, especially with reducing the balance faster, which should be every homeowner’s goal. They will include mortgage and budget training with any federal subsidy program, and I’ll sum it up in one sentence: Pay additional sums with your regular payment every month, and/or refinance to a 10-year or 15-year mortgage as soon as possible (both have the same rate, which is usually 1/2% lower than the prevailing 30-year rate).
by Jim the Realtor | Aug 16, 2024 | Frenzy Monitor, Jim's Take on the Market
Compared to last year, there are 25% more sellers not willing to get realistic about the value of their home. It’s fine, as long as they don’t mind waiting for all the other better buys to clear out – and it might be a loonnnggggg wait.
The median days on market for the 484 unsold listings is 45 days now (average is 58 days on the market). The existing inventory is so picked over, that virtually none of the listings that have been on the market for more than two weeks (which is 77% of the total number of actives) have a chance of selling unless they radically change their price.
It is such a great time for hot new listings to hit the open market though. Of the 156 pendings, 39% of them found their buyer in the first two weeks on the market! There are deals to be done!
by Jim the Realtor | Aug 14, 2024 | Commission Lawsuit, Jim's Take on the Market |
The mainstream media outlets (WSJ and CNN) are highlighting the changes in realtor compensation one more time this week. They’re not offering anything new because they can’t find anyone who can predict what will happen, good or bad.
A summary of my thoughts on the topics:
Will commissions come down? Who cares about the overall result. A better question is whether you can get a lower rate, and the answer is yes, absolutely. If you don’t care about the quality of service provided, there will be more desperate realtors than ever. But it is due to the market conditions, not the commission lawsuit. The inventory of quality homes at decent prices is virtually zero, and sales have been plummeting:
Prices and rates have been sticky, so the dropoff in sales is likely to continue. The better agents will navigate the realtor changes more effectively, and pick up market share as the inferior agents struggle to sell anything. The national stat I saw recently was that 3/4 of the agents haven’t had a sale this year.
So you can hire an agent who offers a lower rate, but you only get one try at this.
Will home prices come down? No, not locally because only the creampuffs will be selling. Sales aren’t likely to improve because rates aren’t going to get much below 6% in 2024, no matter what the Fed does so the affordability will stay pathetic.
Do you need an agent? Yes, if you can find a great agent. You don’t need a lousy agent.
You have to consider the market conditions – they aren’t great. There is a lot of standing inventory because buyers only want a great match for a decent price – and they are rare. If you are a seller or buyer of a cool house priced attractively, consider the difficulties. I’m in one now – I made an offer to purchase a new listing over the weekend, and it’s Wednesday and I still don’t have a response. It is very frustrating on both sides – I’m sure the sellers think they should wait-and-see what else happens and hope I don’t go away. Tough for both sides to navigate this, and having a lousy agent makes your chances of a good outcome even worse.
Will sellers pay ‘concessions’ to cover the buyer-agent fee? You’re going to see mumbo-jumbo like this:
Seller agrees to consider fulfilling the Buyer’s obligation to pay Buyer’s Broker if requested by Buyer in the Residential Purchase Agreement at an amount agreeable to Seller subject to Seller approval of the terms and conditions of the Purchase Agreement.
But it doesn’t mean anything. Buyers should be prepared to pay your buyer-agent in full, and hope the seller might do a little something for you. But only on listings that are struggling. Do you want one of those? Lowballing the old listings is a real strategy.
Should sellers offer to pay concessions? Absolutely, because it’s only an offer, not a guarantee. Decide what to do once you get an offer to purchase, and it will be the lube that makes the buyer a little happier about paying more for your house because they don’t have to pay their agent too.
Will open houses be a nightmare? Yes, because non-agents HAVE to sign in, and the paperwork shuffle will take precedent over showing and selling houses. Be on the lookout for unrepresented buyers trying to make a deal with the agent on duty. If you see people whispering, that’s what is going on….and it means buyers should resign to paying for their buyer-agent in full to compete.
What will happen in 6-12 months? The buyer-agent will be extinct, except in higher-end areas where professional services are appreciated by those who value their time more than money. The main reason the buyer-agent will go away is because nobody within the real estate industry is standing up for buyer-agents. The brokerage admin people are already viewing the new rules as logistically more challenging (i.e., more paperwork) and a hot bed for more lawsuits, which is likely. It will be easier just to offer buyer-agents nothing and wish them luck.
This is the dawning of single agency – stay tuned!
by Jim the Realtor | Aug 13, 2024 | Commission Lawsuit, Jim's Listings and Sales, Jim's Take on the Market, Oceanfront, Why You Should List With Jim |
It’s not really oceanfront with a 4-lane road in front, but it’s close. You have the traffic-controlled crosswalk at the corner for easy access to the staircase down to the sand (that the City of Carlsbad is spending $14 million to repair and replace). It’s close enough!
3820-B Carlsbad Blvd., Carlsbad
2 br/2 ba, 861sf
YB: 1970
LP = $1,199,000. Now pending!
I took over this listing from another agent who is an old friend. He had taken the listing at $1,299,000, and he had an ideal oceanview photo displayed prominently. I first thought – is this one of the units in front with big ocean/sunset view? What is a deal!
But it turns out that it is the apartment in back, down under the staircases:
Oh great…but it’s nothing that price won’t fix! If we just go a little lower we will be the cheapest beach property for sale…..and if one of those desert buyers comes to town determined to get out of the heat, then we’re golden. It’s the perfect time of year to be on the market!
Get Good Help!
And yes, the minute the file got turned in, the new process began. Do you have all the forms? Do you have the right forms? Did you get the right forms from the other side? Did the buyer-agent have a buyer-broker agreement to show the home?
The August 17th NAR Settlement Jubilee is underway, and it’s all about paperwork compliance for the administrators. It was the same during Covid. We just needed paperwork signed that said people didn’t think they had Covid. Nobody ever verified an actual covid test – it was just a paperwork shuffle.
Those of us on the front lines will keep doing the selling, and we’ll get the proper signatures, don’t worry.
