Federal: Congress is working through several fiscal policy proposals. It is very likely that whatever relief is passed will include tax incentives that will need to be carefully planned for.
The Treasury and IRS announced on March 17 that the tax deadline will be extended 90 days, to July 15, and the IRS will waive interest and penalties for certain taxpayers. The delay is available to people who owe $1 million or less and corporations that owe $10 million or less.
California: The state has granted extensions to individual filers, partnerships and LLCs and quarterly estimated tax payments: Filingand payment is due June 15. The Employment Development Department and California Department of Tax and Fee Administration have also released guidelines.
It seems as though legalized marijuana is said to be good for almost everything. Now a new study from the National Association of Realtors (NAR) has added real estate to the list. The impact is clearer when it comes to commercial properties, but agents saw differences in the residential sector as well where medical and/or recreational use of the substance has been legalized.
The NAR study, Marijuana and Real Estate: A Budding Issue (yes, NAR went there) grew out of a survey conducted with over 150,000 of its members, equally divided between those who operate in the commercial area (including building owners and managers) and those who practice residential real estate.
The study looked at states where marijuana has been legalized for medical purposes, for recreation, and for both, examining how it is grown, harvested, stored, sold, and consumed within those states. NAR found more impacts from legalization over time so divided some of the findings according to whether it occurred after or prior to 2016 which accounts for the dual percentages reported.
“As more states legalize marijuana, the real estate market will progressively have to adjust,” said Dr. Jessica Lautz, vice president of demographics and behavioral insights for NAR. “From property owners, to manufacturers, to those who simply want to engage for leisure – it all touches real estate in some form.”
In states were marijuana is legal in some form, between 9 percent and 23 percent of members who responded to the survey said they believe the inventory of available homes is tight for multiple reasons, including all-cash purchases from within the marijuana industry. While most respondents hadn’t seen any changes in property values near dispensaries, between 7 percent and 12 percent said they had seen an increase in values while 8 percent to 27 percent said they had seen values decline.
“Residential practitioners are getting used to the new normal of having marijuana legally used within rental properties, while homeowner associations are tasked with setting new rules to address consumption and growth,” said Lautz.
The majority of respondents reported that homeowner associations have rules that place certain restrictions on smoking and growing marijuana in homes or common areas. Only around 3% answered that specific homeowner associations do allow growing or smoking in home or common areas.
Three-quarters of members had never tried selling a grow house but among residential practitioners who had, 29 percent said they had a difficult time doing so. Twenty-seven percent of those in more recently legalized states reported difficulty compared to 25 percent in states that legalized before 2016.
Because Federal banking laws prohibit use of checks or credit cards to purchase marijuana, it is usually an all-cash business. About one-fifth to a quarter of landlords said they were unwilling to accept cash for rent in any instance, while about 10 percent said they would only refuse cash from an illegal federal activity. Forty-two percent of those in states where only medical marijuana is legal would accept cash rent, as would two-fifth of those where both medical and recreation use is allowed.
Among commercial practitioners, NAR found an increased demand for land, warehouses and store fronts that are intended for marijuana. In states where both uses are legal, more than a third of those polled said they saw an uptick in requests for warehouses or properties used for storage. In those same states, up to one-quarter of members said the demand for storefronts grew, while one-fifth said there was a greater demand for land.
“When the business of marijuana is discussed, some have a tendency to focus on only the buyers and sellers of the product,” said Lautz. “However, these numbers show that marijuana has been a boon to commercial real estate.”
Marijuana as a business has prospered for more than a decade and that growth continues to evolve. In the states where medical and recreational marijuana have been legalized for three years or more, each saw increases in the demands for commercial properties. As in residential uses, the effect on commercial property values near dispensaries was mixed, but about 20 percent reported an increase. There were fewer reports of declines.
Many respondents said leases had been modified to accommodate the marijuana industry, especially where legalization occurred prior to 2016. About half of respondents in medical marijuana states reported no issues leasing a property previously used to grow marijuana as did 35 to 49 percent of those where both uses were legalized. The most common problem among these properties were lingering odors, followed by moisture issues. Both matters were more common in areas where recreational marijuana has been legal for a longer period of time.
It reminds me of this REO we saw on the way to Valley Center. It sold for $950,000 with 5% down in 2005, was foreclosed and sold for $276,500 in 2009 (when this video was taken), and just resold for $775,000 in September. What a country! This video has 27,500+ views too!
The California Association of Realtors were backing SB50, but it died in the State Senate today. Hat tip to SM for sending in this article – an excerpt:
California’s controversial housing bill, which would have required cities and counties to change local zoning laws to allow for new, denser housing near job centers and public transportation, died in the state Senate Thursday morning,fourvotes shy of the support needed to advance the legislation to the Assembly.
The measure has deeply divided stakeholders for more than a year, and lively debate on the Senate floor before an initial vote was taken on Wednesday stretched to two hours. The bill was narrowly defeated 18-15 on Wednesday afternoon, with six senators declining to vote, including Republican leader Shannon Grove, R-Bakersfield, who was in Washington, D.C. It was re-introduced Thursday morning in a final effort to get the bill through before the Jan. 31 deadline, but still failed.
Introduced in December 2018, the bill has failed to pass in the Senate in the past two legislative sessions despite lengthy discussion. It aimed to address California’s severe housing shortage that is driving increases in homelessness in the state, creating a financial crunch for many residents and contributing to urban sprawl that clogs freeways with commuters who live far from their workplaces, according to Sen. Scott Wiener, D-San Francisco, who authored the bill. He argues that local zoning laws are undermining the state’s efforts to address the issue.
The legislation took aim at restrictive zoning andwould have required counties with more than 600,000 residents to approve permits for more construction of multi-story housing and streamline the approval process for apartment buildings in neighborhoods near public transportation.
It would have required local governments to approve four-story buildings within half-mile of transit and five-story buildings within a quarter-mile. SB 50 also would give the state more power to curb local parking requirements in favor of more housing, and enable more building in high-income areas. Smaller cities, with less than 50,000 people, would have to add up to 15 extra feet of height to their permits, essentially adding an extra floor of housing,in areas within half-mile from transit.
The bill was endorsed by a diverse group of advocates, including pro-housing organization California YIMBY, the California Labor Federation, and the California Chamber of Commerce. The bill also garnered support from environmental organizations, including Natural Resources Defense Council and California PIRG, because of its potential to reduce the carbon pollution that comes from long driving commutes.
Senator Toni Atkins (who is the CA Senate President pro Tem, and represents District 39: San Diego, Coronado, Del Mar & Solana Beach) is committed to finding more solutions – this issue isn’t going away:
On Friday we closed escrow on another sale of a Lloyd Ruocco classic – two in a row! This one was 20 years older (1947) and in Mission Hills with a panoramic view of the city, ocean and bay.
MISSION HILLS MODERN! Architect Lloyd Ruocco’s Keller Residence is one of the first post-War modern homes in all of San Diego! Enjoy views of Downtown & Point Loma to the Coronado Islands and beyond. Contemporary finishes blend seamlessly with original, vintage design as the interior blurs with the exterior landscape. Retreat to this culdesac location and enjoy an incomparable setting of privacy amidst the urban landscape. Historically designated, incredible Mills Act tax savings conveys!
It’s rare to get a 15-page history on a house – this goes back to the beginning:
James Don Keller was the district attorney of San Diego between 1946-1971 (and probably knew my grandfather who was district attorney of Alameda County in 1947-1969).
The house on Puterbaugh was the second house designed by Ruocco for the Kellers – the first was in National City, and the third was 9405 La Jolla Farms Rd.
There are two real estate-related measures expected to be on the November, 2020 ballot.
The most contentious will be the attempt to modify Proposition 13 – one version has already qualified to be on the ballot, and organizers hope to get enough signatures to qualify a revised version.
The other initiative is the one that failed in 2018 because the tepid support from the California Association of Realtors was intended to test the waters, and then get it passed in 2020. It would enable seniors to buy their next home in any county, at any price, and bring their old property-tax basis with them.
I’m not convinced there will be the surge in sales that the C.A.R. predicts, but for the group of seniors who are 55+ that want to move up in value, this could be worth waiting for if you have a small property-tax basis currently.
The C.A.R. wants realtors to go out and spread the word too:
Dear Jim,
As you may know, the state’s housing crisis continues to be the top issue California voters care about heading into next year’s election.
The CALIFORNIA ASSOCIATION OF REALTORS® is leading efforts to address California’s housing crisis at the local and statewide level, including qualifying our ballot measure for the 2020 November General Election. The initiative would remove the property tax “hit” senior homeowners can experience when moving to another home so that they can relocate anywhere in California, such as new housing and retirement communities or to be closer to family. It also protects the right of parents and grandparents to transfer their family home to their children — a right that’s been under threat or revocation in the Legislature.
These changes are an important part of the solution on housing — opening up existing inventory for purchase and making more efficient use of existing housing stock, while generating needed revenue for local schools and local government. At the same time, the measure will generate 67,000 to 90,000 new transactions on an annual basis, and more over time, as Baby Boomers transition out of their existing homes.
We’ve already launched a statewide signature gathering effort to qualify the measure for the November 2020 ballot. I’m pleased to share the news that signature gathering is off to a fast and robust start, with hundreds of thousands of voters throughout the state signing petitions to place this important measure on the ballot.
In December, we also launched a member program with the goal of collecting 50,000 valid signatures by February 20, 2020, and engaging REALTOR® members in the signature gathering process, which will build political engagement among the membership in preparation for the November 2020 General Election.
Research shows that the measure enjoys broad support — and the more that voters learn about the measure, support levels increase exponentially.
That’s why our local members play such an important role in a winning campaign. You are the best ambassadors to spread the word about the initiative and why it’s so important to place the measure on the 2020 ballot so that voters have the opportunity to be part of the housing solution in California.
I hope you will get actively involved in the campaign during our signature gathering phase.
In the meantime, I wish you and yours a very safe and joyous holiday season, and I hope you have a terrific 2020!
Sincerely,
Jeanne Radsick
C.A.R. President
It would seem to make more sense that the long-time homeowners would be downsizing, and the number who wanted to buy up would be somewhat limited as a result. But it would be a significant benefit to that group, and be worth waiting to move to see if this initiative passes in November. If it does, the effective date will be January 1, 2021.
The lowering of the train tracks in Carlsbad has been discussed for years, and it looks like it’s going to happen. The number of trains is expected to DOUBLE to 100 PER DAY!
The Carlsbad City Council received an update from the San Diego Association of Governments (SANDAG) on a future project to potentially lower the railroad tracks in Carlsbad’s downtown railroad corridor.
In anticipation of train traffic doubling through Carlsbad by 2035, a second set of train tracks will need to be built alongside the existing tracks. The city is exploring the alternative of lowering the future double tracks beneath the existing street elevations through the Village and Barrio areas in Northern Carlsbad.
The City of Carlsbad, SANDAG and North County Transit District completed a study in 2017, determining that lowering the railroad tracks in a trench, beneath the existing street elevations, is technically feasible and has economic benefit. Two alternatives are now under evaluation: short trench and long trench alternatives.
Both alternatives would lower the double railroad tracks beginning from the Buena Vista Lagoon in the City of Oceanside, require replacement of the Carlsbad Boulevard overcrossing with a new bridge spanning the tracks and replace the railroad bridge across Buena Vista Lagoon.
The short trench alternative, which spans 6,000 feet, would construct vehicle overpasses at Grand Avenue, Carlsbad Village Drive, and Oak Avenue, with pedestrian overpasses at Beech Avenue/Carlsbad Village Station and Chestnut Avenue.
The long trench alternative spans 8,400 feet to include vehicle overpasses at Grand Avenue, Carlsbad Village Drive, Oak Avenue, Chestnut Avenue and Tamarack Avenue, with a pedestrian overpass at Beech Avenue/Carlsbad Village Station.
Lowering the railroad tracks below street level is reported to have a variety of benefits, including:
Improved roadway circulation: Eliminates the need to stop at crossing gates multiple times a day, improving traffic circulation for drivers, public safety and first responders
Increased car and pedestrian safety: Creates a positive barrier separating cars and pedestrians from crossing the tracks
Decreased environmental impacts: Reduces noise impacts from train horns and eliminates the need for crossing bells
Positive economic impacts: Considers the value of lives, time saved, walkability and railroad operations
Next Steps
SANDAG is currently preparing an analysis study on the two options for lowering the railroad tracks in a trench. A draft report is estimated to be completed in fall 2019, at which point public input will be sought on the short trench and long trench alternatives.
Rob Dawg mentioned the rent-control initiative that will be on the ballot in 2020.
It will be a scaled-down version of the one that got voted down last time:
Amid mounting pressure for lawmakers to protect renters from the steepest of increases in a hot rental market, this initiative is a scaled-back version of Prop. 10. The proposed ballot measure would not give cities carte blanche to impose sweeping rent control rules. New construction would not be impacted.
“We tried to address the concerns we heard during the last campaign,” says Weinstein, “A lot of politicians wanted to see reform instead of repeal of the Costa Hawkins rules.”
The measure would also allow cities to impose rent control on single-family homes if the landlord owns three or more homes, which exempts mom-and-pop landlords. Plus, the measure would allow for limited vacancy control, which is currently prohibited. When a tenant moves out of a rent-controlled apartment, cities and counties could limit rent increases for the next tenant, as long as they allow the landlord to raise the rent at least 15 percent over three years.
The new measure faces many hurdles on its road to the ballot box. Rent control opponents, including real estate interest groups, who describe the legislation as a retread of the old initiative, raised a whopping $76 million to defeat Prop. 10.
“Prop 10 2.0 would drive down property values and prompt an exodus from the rental housing market,” Tom Bannon, chief executive officer of the California Apartment Association said in a release. “California needs sensible housing policies that protect tenants and encourage the building of affordable homes for working families. This measure makes the crisis worse.”
Supporters of Prop. 10 raised only $26 million, the bulk of which came from the AIDS Healthcare Foundation. But Weinstein remains resolute.
The California Association of Realtors will also put forth the change to Prop 60/90 that would allow seniors to take their old tax basis with them to their new home, regardless of whether they paid more or less for it, or which county it’s in. The removing of commercial properties from Prop 13 protection will be on the ballot too, and maybe all bundled up together?
I doubt any of them will change home values in the short-term, but what an Election Day!
You’ve heard friends and family say it, and you may have said it yourself.
“Oh, I’m going to sell!”
It’s said casually, without a real commitment or timeline, with blame placed on politics, taxes, traffic, etc.
With home prices this high, it’s a real temptation because virtually every homeowner can cash out with six or seven figures and leave California for good – which I encourage!
We know you aren’t desperate, you don’t need the money, and you’re not going to give it away. We’ve covered that – heck, I even have a t-shirt!
If making a move is getting to be more than just a temptation, then what should a casual seller focus on?
Know where you are going to move.
Without knowing for sure where they are going to go, people just never get around to selling.
Let me help you – check out my collection here, and take a road trip:
Once you know where, then the next question is when – and look what’s coming in 2020.
We sold houses during Clinton, Bush, Obama, and a couple of years of Trump, so the real estate market won’t come to a halt. But this election cycle is shaping up to be an all-timer!
As we get closer to the election, more people will decide to wait, causing fewer buyers and sellers.
Let’s work it backwards.
Election Day is November 3, 2020, so we should just take October off, and focus on the World Series…..which should include the Padres.
September won’t be any better, and August and July could slow down too, so It would probably be smart to move by May/June – or wait until Selling Season 2021.
Or just get cracking now, while rates are in the mid-3s!
They should identify the locations so homebuyers are aware:
Sober living homes have become a contentious issue with residents in the neighborhoods where they have developed. As a result, the City Council formally approved an ad hoc committee to address them during its July 23 meeting.
Thousands of sober living homes have popped up throughout the state, mostly in Southern California from Los Angeles to Orange and San Diego counties.
Serving on the committee will be council members Keith Blackburn and Barbara Hamilton.
“It would be to address the issue of sober living homes, to engage community stakeholders, listen to and discuss their concerns and recommendations regarding sober living homes and to recommend potential state and local regulatory and legislative strategies for the City Council to pursue,” said Jason Haber, assistant to the city manager.
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