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Senate Bill 9

It is already legal to add an ADU and a junior ADU to a property zoned single-family.  Another bill has passed the California Senate that allows up to four units total  – and to be able to create two parcels, which means they could be sold separately – if the owner agrees to occupy the property for at least three years. Here’s a thorough article on the subject with examples:

https://calmatters.org/housing/2021/08/california-housing-crisis-zoning-bill/

An excerpt:

Senate Bill 9 would technically allow as many as two duplexes, two houses with attached units, or a combination — capped at four units — on single-family lots across California, without local approval.

The bill would allow more building where it’s now illegal, with the intent of reducing California’s fast-rising home prices and increasing access to homeownership through a greater variety of options, according to state Senate leader Toni Atkins, a Democrat from San Diego who introduced the bill and similar versions in the past.

The bill returns to the Senate for expected concurrence on the amendments before heading to Gov. Gavin Newsom’s desk.

A group calling itself Californians for Community Planning Initiative immediately filed a proposed constitutional amendment for the November 2022 ballot to reassert local control over zoning and land-use decisions in opposition to the bill.

But some analysts say the linchpin of the Senate’s housing package would probably have a negligible impact on the California housing crisis, at least in the short-term. As for the nightmare scenario described by opponents? There simply isn’t enough evidence to back that up, either.

That’s because a change to zoning means very little in reality, starting with the number of units that would actually get built, these analysts say.

https://calmatters.org/housing/2021/08/california-housing-crisis-zoning-bill/

Link directly to Senate Bill 9 text:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB9

ADU Approval Process Is Deplorable

Last month, we heard from an architect on how bad the ADU permit process had been in San Diego.

Now here’s a report from our good friends at the PLF:

https://pacificlegal.org/still-no-place-to-live/

An excerpt:

Pacific Legal Foundation obtained public records from San Diego and Riverside Counties (two of the most populous counties in the state) to determine whether local governments are abiding by the new 60-day permit-approval period, which took effect in January 2020. 

Unfortunately for California residents, local governments are failing miserably to abide by the new state law.  

    • San Diego County took a median of 187 days to issue an ADU or Junior ADU building permit after January 2020. Permits issued prior to the new law took a median of 112 days to be issued. Only 52% of permits issued prior to the new law fell within the previously required 120-day mark.

Currently, only 5% of permits issued by the county met the state’s 60-day deadline. Many times, the permitting process is held up by excessive fees or approvals needed from other departments within the county. As of July 21, 2021, there are 587 pending applications, of which 90 were submitted prior to 2020. If these permits were issued today, the median wait time would be 255 days after the application was submitted.

The government, and society in general, needs to recognize how dire the housing crisis is for the citizens.  We’re going to have continued upward pressure on home prices and rents, and building ADUs is one of the best ways to alleviate the problem. It doesn’t matter if the resistance by local governments is conscious or sub-conscious, the ADU-approval process needs to improve radically to implement the will of the people, and slow down prices.

https://pacificlegal.org/still-no-place-to-live/

Prop 19 Setting Seniors Free

Prop 19 was sold by the California Association of Realtors as a solution to the low-inventory environment. The intent was to free up seniors over 55 to move anywhere within the state of California, and take their old property-tax basis with them.

The C.A.R. said it was all we needed to create more inventory!

While we don’t have any direct results yet, but with inventory about 10% behind last year’s covid-impacted count, and 21% behind the 2019 count of total listings between Jan 1 and July 30th, it’s safe to say that Prop 19 hasn’t had achieved its goal yet.

Or maybe I just need to do more!

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Do seniors just need more information on transferring their current property-tax basis?

If so, here’s your taxpayer advocate:

As Rob Dawg duly noted, seniors may need to stay in California so they can take their low property-tax basis with them to make it worth moving.

Where can you move within California? Here are some ideas:

Julian is close by, and you can get this 2,808sf one-story for $825,000:

https://www.zillow.com/homedetails/5009-Pine-Ridge-Ave-Julian-CA-92036/16757715_zpid/

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How about Idyllwild? It’s only a two-hour drive and you can buy a 2,713sf single-story for $579,000:

https://www.zillow.com/homedetails/53680-Toll-Gate-Rd-Idyllwild-CA-92549/18047261_zpid/

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How about Placerville? The elevation is only 1,867 ft. and population is around 12,000.

You can buy this 2,094sf single level for $650,000:

https://www.zillow.com/homedetails/1635-Pheasant-Run-Dr-Placerville-CA-95667/18591209_zpid/

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Ok, ok, you want to stay coastal. How about Cambria? Pick up this 1,875sf one-story for $875,000:

https://www.zillow.com/homedetails/3144-Wood-Dr-Cambria-CA-93428/15410632_zpid/

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We hope to build a referral network with agents in every town, and in the meantime, Donna is excellent at vetting realtors for you. Let us know where you want to move, and we’ll set you up with a top agent!

2 Out Of 5 Years Exemption, Revisited

The residential real estate market has no boundaries on pricing.

It’s free enterprise at its finest – no laws, no restrictions, and no limit on where prices can go.

We saw a dramatic example where a model-match tract home on the same street sold for $550,000 more than the last sale the month before!

Many local homeowners can say they’ve picked up another half-million in appreciation in just the last year, which provides one more hurdle to moving.

Their net profit exceeds $500,000, which means they are going to pay capital-gains tax if they move.

Nobody likes to pay tax to Uncle Sam – especially when it might be six-figures!

We’ve seen it with the investment properties, for example. Long-time owners who paid a tenth of the money they can get today who absolutely refuse to sell just because of the taxation. They could still reap hundreds of thousands, or even millions in profit after paying the tax, but it irks them so much to pay the government that kind of money, that they refuse to consider it – and most consider it a shakedown.

It’s the same with residential. If you have to pay the government a big chunk of your profit in taxes, you’re going to think twice.  It may even be the last straw, and end up being what prevents you from moving.

The 2-out-of-5 years exemption was created in 1997 and gives married homeowners as much as $500,000 in net profit, tax-free, when they sell their home.

But in 1997, the median home price in America was around $170,000 – and today it is twice as much.

Shouldn’t we revise the rule to reflect the increase?

I think so.

Let’s double the exemption and make it $1,000,000 tax-free.

Politicians would need to agree that the lack of supply is killing the American Dream for the middle class. Without more homes for sale, the pricing will continue to climb until homeownership is beyond the reach of most people – which it already is in many areas.

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State to Invest in Homes?

When the Fed cut the Fed Funds rate to zero at the onset of Covid-19, it caused mortgage rates to drift under 3%, giving the illusion of helping home buyers.  But it has been the sellers who have reaped the big rewards. 

The San Diego Case-Shiller Index has gone up 19% in 13 months, and the NSDCC median sales price has INCREASED 38% between March, 2020 and May, 2021.

Creating a state program to increase demand would do the same thing.

Hat tip to both Mitch and Anna for sending in this article.

An excerpt:

Flush with a historic budget windfall of more than $100 billion, state lawmakers have a chance to put their money where their mouths are on housing. Assembly and Senate budget leaders alike have identified homeownership as key, but must still agree on the details.

The Assembly has made it a priority to increase investment in the finance agency’s down payment assistance program. By how much, or the source for that funding, is yet to be hammered out.

In his revised budget that he submitted to the Legislature on Friday, Gov. Gavin Newsom proposed a $100 million state and federal investment in the same program. Newsom also proposed $100 million to finance “granny flats” and other accessory dwelling units for low- and middle-income families.

Senate Democrats have a more radical idea. Under their pandemic recovery budget blueprint released last month, the state would partner with first-time homebuyers to buy through what they’re dubbing “California Dream for All.” The state would pay, and own, up to 45% of the home, cutting the purchase price for people by nearly half. For example, a family could buy a $400,000 home for $220,000 under the program.

The money would come from a yet-unspecified revolving fund set up by the state, with shares sold to investors. As home values increase, so would the value of the shares.

The Democrats have proposed commissioning the state treasurer to hash out the program in greater detail and present it back to the Legislature for approval in 2022.

The expansion in homeowner aid would disproportionately favor low-income communities of color who most need the help, allowing the state to “circle around” the constitutional provisions that bar the state from considering race in programs, said Muhammad Alameldin, economic equity fellow at the Greenlining Institute in Oakland.

Link to Full Article

Twitter comments here:

https://twitter.com/CalMatters/status/1400129342282383366

Upzoning Carlsbad

Above is the map produced by the City of Carlsbad to help identify the areas where they can increase production of multi-family units, and try to reach their low-income housing goals.

I circled in red the larger developments:

  • The owners of the Mall have proposed rezoning their parking lots and adding 993 homes there, plus the neighboring Verizon/Michael’s shopping center has proposed redeveloping it into 242 residential units – a total of 1,235 homes.
  • The #4 site in the middle was once going to be a WalMart (who owns it), but it never gained traction.  A developer from Phoenix has proposed building 474 homes on the 39 acres there.
  • There are six parcels totaling 21 acres on both sides of Poinsettia at Brigantine.  Under the current zoning, 50 homes could be built there, but the developer as applied for upzoning so they can build 327 multi-family units.

If re-zoned, these projects will include NO single-family houses. Because the city is pressed to hit their goals, it looks like most of these units will be restricted to low-to-moderate income residents.

Read the full report here:

Link to City of Carlsbad report

Carlsbad Grand Promenade

The tunnel under the freeway seems extravagant when people can use the existing Carlsbad Village Drive access. The rest of the project seems simple and relatively inexpensive if the tunnel is left out.  Let’s note that the map above is from 2009 – none of parking structures have happened yet.

The Imagine Carlsbad team will host a monthly Carlsbad Village walkabout and Q & A on Monday, April 19th at 6PM. The first walkabout will focus on the topic of the Grand Promenade and Grand Street Tunnel. Come meet Gary Nessim and Bob Wilkinson on the corner of State and Grand to review the vision and plans for a Village gathering space called the Grand Promenade and the proposed Grand Ave tunnel under the 5 freeway to Pio Pico.

The Grand Promenade was originally presented to the City Council Members in 2009 and has been incorporated into the Village and Barrio Master Plan. There will be a short walk along Grand and a Question-and-Answer opportunity following the walk. The team at Imagine Carlsbad plans to host a monthly walk to address pertinent issues including: Northwest quadrant Civic Center options, Parking, Architectural Style. Looking forward to seeing all interested citizens.

Prop 19 Answers

Jordan works for the county and answered questions about Prop 19 in this interview here:

https://www.facebook.com/SanDiegoUnionTribune/videos/4210256878986440

A few highlights:

If you transfer ownership to your kids by February 15th through a grantor trust or irrevocable trust, then they won’t be impacted when the new rule takes effect. Ask about your IRS step-up in basis though.

The county recorder’s office is closed on February 15th.

The county recorder’s office is closed for over-the-counter work due to the pandemic.

If you notarize your document by February 15th, they will accept it as long as you record it at the county recorder’s office within three years.

Call his cell phone during normal hours (his wife is a divorce attorney).

Link to 40-minute Interview

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Palm Trimming

A local fire this week showed how flammable a palm tree can be when not trimmed:

Cal Fire, Carlsbad FD & Police doing another great job – no homes damaged, and no injuries.  Two other fires were started nearby on the same day, and a homeless woman was arrested for arson.

Click here for more photos and video:

https://twitter.com/hashtag/parkfire?src=hashtag_click

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