Where to Move

Would more people leave California if they just knew where to go?

Here are my favorite links to get your research started:

Best Places to Retire – 2020:

https://realestate.usnews.com/places/rankings/best-places-to-retire

Best Places to Live 2020:

https://realestate.usnews.com/places/rankings/best-places-to-live

Money Magazine, Best Places to Live in the U.S., 2019:

https://money.com/collection/best-places-to-live-2019/

Best 100 Places to Live, 2019:

https://livability.com/best-places/top-100-best-places-to-live/2019

Sunset Magazine, Best Small Towns – 2018:

https://www.sunset.com/travel/travel-tips/best-small-towns-to-live-in

 Charming Small Towns Across America:

http://www.countryliving.com/life/travel/g2294/must-visit-small-towns-across-america/

15 Best Small Towns in California

http://101usa.com/top-15-small-cities-in-california/

Best Towns in California to Raise a Family:

https://wallethub.com/edu/best-worst-cities-for-families-in-california/15993/

Widowed Sellers and Taxes

Widowed taxpayers.

If you are a widowed taxpayer who doesn’t meet the 2-year ownership and residence requirements on your own, consider the following rule. If you sell your home within 2 years of the death of your spouse and you haven’t remarried at the time of the sale, then you may include any time when your late spouse owned and lived in the home, even if without you, to meet the ownership and residence requirements.

Also, you may be able to increase your exclusion amount from $250,000 to $500,000. You may take the higher exclusion if you meet all of the following conditions.

  1. You sell your home within 2 years of the death of your spouse;
  2. You haven’t remarried at the time of the sale;
  3. Neither you nor your late spouse took the exclusion on another home sold less than 2 years before the date of the current home sale; and
  4. You meet the 2-year ownership and residence requirements (including your late spouse’s times of ownership and residence if need be).

https://www.irs.gov/publications/p523

Remodel Assistance By Donna

With prices so high now, everyone knows that it’s smart to fully upgrade your house before selling – at least when possible.  But not many sellers do, so buyers get as close as they can and then deal with the rest.  My general rule-of-thumb still applies – expect to spend another $25,000 to $50,000 for upgrading any house you buy!

We are happy to assist our buyers with those upgrades too!

Here are photos of a newer but normal tract house that our buyer thought needed some pizzazz, so Donna coordinated the work before our buyer moved to town.

The TV was on a large, barren wall, and adding an electric fireplace gave it a traditional feel.  But instead of installing it flush, let’s build it out to add some dimension:

This electric appliance kicks out steady heat and has 50+ color combinations!

The kitchen had an off-white antique finish to the cabinets, which looks dirty after a few years. Let’s paint those light gray, change the cabinet pulls, add some modern stools, class up those pendant lights, and install a built-in fridge too:

The master bathroom was base grade:

Let’s ditch the basic wall mirror/medicine cabinet and combo them up instead – with lighting!

How about this new closet by Top Shelf Pull Outs for about $6,500!

Note to self – always take two photos in case someone has their eyes closed!

 

No Mistakes

Remember before the last crash when buyers and sellers were far more cavalier about their real estate decisions?  Why was that?  Because if they needed to move again, there were always a reasonably-priced house down the street or around the corner for sale.

But things sure have changed.

Selling/buying/moving is no longer just something you do casually.  Because of the difficulty, you are probably only going to move if, and when, you decide to make a permanent lifestyle change.

Look at the differences just since this blog has been around:

NSDCC January through September:

Year #Detached-Home Listings Percentage Over $2M Percentage Under $800,000
2005
4,487
19%
28%
2019
3,960
33%
5%

The noteworthy:

There Are Fewer Homes For Sale – In particular, there are fewer high-quality homes for sale that would make it worth it for existing homeowners to move up or down.  In spite of having loads of equity, trying to find a home better than your current home is a major obstacle.

Home Prices Are Higher Than Ever – If you can find a house that suits your needs, the price will be higher than ever.  You have to pay more, qualify for more, and be willing to eat higher recurring costs like property taxes too.

Cost of Moving is High – Gone are the days when you could throw everything you own into a U-haul and move in a day.  Commissions, closing costs, packers & movers, home upgrades, and new furniture will cost you $50,000 to $100,000 or more in any house you buy around the NSDCC.

Competition is Stiff – As a result of the three items above, buyers are very picky and holding out for the highest quality.  Staying on the edge of your seat 24 hours a day can take its toil!

It’s a Market For The Affluent – With only 5% of the NSDCC houses priced under $800,000, it means home buying is only for those who have real horsepower – and regular folks are priced out, unfortunately.

The stakes are high, and making any mistakes now will be very costly.  The worst part is that home prices are moderating (except in Solana Beach), and without an increase in their equity position, those who need to sell shortly after purchasing could incur a substantial hit.

We are in the No-Mistake zone. Get good help!

P.S. The Solana Beach house on Rios that set the all-time non-oceanfront price record in March at $8,250,000 was relisted for $9,750,000…..and it went pending today!

How Will Kids Afford A House?

This new post about millennials and their housing/lifestyle expenses outlined by a Compass realtor in Houston made me think of the budget above which is more applicable to those of us in Socal.

https://notorious-rob.com/2019/10/the-truth-about-millennials-and-housing-with-nicole-lopez/

The takeaway? You should buy a house for each of your kids, just in case they can’t!

The Truth About Millennials and Housing with Nicole Lopez

Good-Bye MID?

Maybe having a mortgage is going out of fashion now that the affluent have taken over real estate? Or do we just need to Get Good Help with filing taxes? (30%-40% of Americans prepare their own taxes)

The mortgage-interest deduction, a beloved tax break bound tightly to the American dream of homeownership, once seemed politically invincible. Then it nearly vanished in middle-class neighborhoods across the country, and it appears that hardly anyone noticed.

In places like Plainfield, a southwestern outpost in the area known locally as Chicagoland, the housing market is humming. The people selling and buying homes do not seem to care much that President Trump’s signature tax overhaul effectively, although indirectly, vaporized a longtime source of government support for homeowners and housing prices.

The 2017 law nearly doubled the standard deduction — to $24,000 for a couple filing jointly — on federal income taxes, giving millions of households an incentive to stop claiming itemized deductions.

As a result, far fewer families — and, in particular, far fewer middle-class families — are claiming the itemized deduction for mortgage interest. In 2018, about one in five taxpayers claimed the deduction, Internal Revenue Service statistics show. This year, that number fell to less than one in 10. For families earning less than $100,000, the decline was even more stark.

The benefit, as it remains, is largely for high earners, and more limited than it once was: The 2017 law capped the maximum value of new mortgage debt eligible for the deduction at $750,000, down from $1 million. There has been no audible public outcry, prompting some people in Washington to propose scrapping the tax break entirely.

For decades, the mortgage-interest deduction has been alternately hailed as a linchpin of support for homeownership (by the real estate industry) and reviled as a symbol of tax policy gone awry (by economists). What pretty much everyone agreed on, though, was that it was politically untouchable.

Nearly 30 million tax filers wrote off a collective $273 billion in mortgage interest in 2018. Repealing the deduction, the conventional wisdom presumed, would effectively mean raising taxes on millions of middle-class families spread across every congressional district. And if anyone were tempted to try, an army of real estate brokers, home builders and developers — and their lobbyists — were ready to rush to the deduction’s defense.

Now, critics of the deduction feel emboldened.

“The rejoinder was always, ‘Oh, but you’d never be able to get rid of the mortgage-interest deduction,’ but I certainly wouldn’t say never now,” said William G. Gale, an economist at the Brookings Institution and a former adviser to President George H.W. Bush. “It used to be that this was a middle-class birthright or something like that, but it’s kind of hard to argue that when only 8 percent of households are taking the deduction.”

Link to Full NYT Article

Sweeteners

A combination of mine and Leonard’s lists of sweeteners:

In an increasingly competitive environment – especially on the high end – it may be wise to sweeten the package you are selling by including some value or time-savings item.

Some mega-homes include expensive fancy cars or artwork and other gimmicks, but of course those items are factored into the purchase price and often appear as somewhat desperate. Some may want to increase the commission incentive for the buyer’s agent.

It may be wiser to include certain items that are more focused on time-savings…..and something that may have practical value to make a buyer feel there is less to be spent after closing.  Here are 10 ideas:

1.  A buydown of the mortgage rate probably has the best financial impact – it can last for 30 years!

2.  Pre-paid real estate taxes for the first year could be appealing, or paying HOA/Mello-Roos fees.

3.  How about $5-10,000 worth of new landscaping, or window coverings?

4.  One year’s worth of weekly yard maintenance would be appreciated.

5.  $1,000 worth of Home Depot, Amazon, or UBER dollars could be appealing.

6.  If a home has gorgeous views and big windows, include a year’s worth of window cleaning.

7.  Offer to have the interior painted to colors of the buyer’s choice at closing.

8.  Pay for a maid service to come weekly for a year.

9.  If the house is staged, offer a price list of all the furnishings that could be bought. The buyer may see great time-savings value in not having to furnish themselves.

10. Lower the price!

These are just some simple ideas that may make your listing more memorable and more appealing to some buyers…..and possibly sweeten the deal enough to make them choose your listing over another one!

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