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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

Prop 19 – Will Trust Protect Reassessment?

Prop. 19 will reduce or eliminate some generous tax breaks that families get when property is transferred between parents and children. But it won’t change the rules for trusts themselves.

Some transfers are exempt from reassessment. Transfers between spouses are always exempt.

Another exclusion applies to transfers between parents and children, and between grandparents and grandchildren if the parents are not alive. For simplicity, we’ll assume here the transfer is from parents to children, but it also works in reverse.

Under current law, parents can transfer — by sale, gift or inheritance — their primary residence to their children and it won’t be reassessed, no matter how much it’s worth or how the kids use it.

In addition to a primary home, each parent can transfer “other property” — such as a vacation home, rental or commercial property — and exempt up to $1 million in assessed value (not market value).

Prop. 19 changes these rules on parent transfers that take place after Feb. 15 in the following ways:

  • It abolishes the exemption on “other property.”
  • It preserves the exemption on primary residences, but only if the child also uses the home as a primary residence and to the extent the difference between the home’s assessed value and market value does not exceed $1 million (indexed for inflation)
  • If it does exceed $1 million, it will be partially reassessed, but not to full market value. If the child does not use the home as a primary residence, it will be reassessed at market value.

Prop. 19 is not retroactive and won’t apply to any property until it is transferred (or deemed transferred) after Feb. 15.

(more…)

Will Prop 19 Increase Inventory?

The U-T asked their twelve real estate experts about the effects of Prop 19:

Q: Will Prop. 19 substantially increase home inventory in California?

Of the local experts, 11 out of 12 said NO, and the justification for the one YES answer could have been just as easily been reasons to say NO.  Gary’s answer above was the best and most-accurate. See the rest here:

Link to Article

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Prop 19 is Ahead

I thought that Prop 19 would get lumped together with Prop 15 and cause voters to consider them both to be a change/threat to the original Prop-13.

Though Prop 15 is losing, it appears that Prop 19 has passed:

California Proposition 19

(100% reporting)

YES: 51.5%

NO: 48.5%

If passed, the initiative goes into effect on April 1st, so we should see seniors start to list their homes for sale in March.  Look out for those tens of thousands of housing opportunities!

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