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Prop 19 and What it Means for You

Posted on December 18, 2020 by Admin

Information posted from C.A.R on November 23, 2020:

Proposition 19: Property Tax Increase Limits on Primary Residences
How does Proposition 19 change the rules on tax basis portability?
Prop 19 allows a homeowner who is 55 years of age or older, severely disabled or whose home has been substantially damaged by wildfire or natural disaster to transfer the taxable value of their primary residence
to: a) a replacement primary residence anywhere in the state, b) regardless of the value of the replacement primary residence (but with adjustments if replacement has a greater value), c) within two years of the sale and d) up to three times (or as often as needed for those whose houses were destroyed by fire).

The prior rule limited this exemption to a one-time transfer within the same county (Prop 60) or between certain counties (Prop 90) and only if the replacement property was of “equal or lesser value.”

When does the tax basis portability portion of Prop 19 take effect?

April 1, 2021

Can my client buy/sell now and take advantage of the tax portability benefits before April 1, 2021?

There is no definitive answer in the law. Although, we believe that the tax benefits under Prop 19 will apply to transactions where either the sale or purchase of a primary residence takes place before April 1, 2021, as long as the subsequent sale or purchase takes place within two years and occurs on or after April 1. If you have a client who wishes to obtain the tax benefits of Prop 19 for a transaction that closes prior to April 1, 2021, whether it is buying or selling a property, the client should be encouraged to seek the advice of a qualified California real estate attorney or tax advisor.

If the replacement property is of equal or lesser value, does the tax basis of the replacement property change?

No. The taxable value of the original property may be transferred and become the taxable value of the new one. If the replacement property is of greater value, how is the new taxable value calculated? The new taxable value is calculated by adding the difference between the full cash value of the replacement property and the original property to the original taxable value. For example, if a seller of an original property has a $300,000 taxable value and a full cash value of $1M and then buys a replacement property for $1.5M, the taxable value of the replacement property would be $800,000.

Can a replacement property be purchased prior to the original primary residence being sold? Yes. This is how the current rule under Prop 60 works, and Prop19 uses nearly identical language.

How does Prop 19 affect the rules on intergenerational transfers to children or grandchildren?

It limits the exemption to those properties where the primary residence continues to be used as a family home by the child or grandchild transferee. If so, the taxable value will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.

If the property is more than $1M over the original tax basis, what is the new taxable basis?

The new taxable basis will be the assessed value of the property at time of transfer minus $1M.

When do these new rules on intergenerational transfers apply?

February 16, 2021.

Where may a claim to transfer a tax basis be made?

Claims may be made with forms provided by the local county assessor’s office.

 

Quick Guide

Proposition 19 from the Secretary of State

Real Estate: The “Bright Spot” in California’s Economy

Posted on December 17, 2020 by Admin

The beginning of 2020 saw the California real estate market humming along at a good clip. Then came March and the COVID-19 lock-down and everything came to a screeching halt. Sellers pulled homes off the market, afraid of contagion, and buyers stopped looking, mostly for the same reason, as the entire US economy literally shut down for about the next three and a half months.

But in June of 2020 things began to change. Real estate was designated “essential” and Home buyers, driven by a refocused need of home as a refuge, began to come out again. This resurgence was in part fueled by a large segment of workers in our economy who needed to work remotely from home, many with children who were also schooling remotely from home. Home has always been held in high esteem, but the pandemic raised the idea of Home as a Refuge to new levels of demand not seen before.

In July, the California Association of Realtors (C.A.R.) reported that home sales across the state rose by a whopping 42% from May to June 2020. That’s partly due to the state’s gradual reopening which happened at that time as well as from pent up buyer demand.

What was a surprise and has since become a trend is the exodus of buyers leaving high priced, high-density urban areas, like San Francisco, for suburban areas that offered more space, privacy, and affordability. In fact, as we speak, San Francisco continues to experience a softening of prices in its housing market. And local news channels report that a significant number of San Francisco rentals are sitting vacant.

As an example, this trend was readily seen last summer in areas like the Russian River of the North Bay. Out of the way comparatively “cheap” river shacks along Rio Nido, Guerneville, Monte Rio and Cazadero were gobbled up like so many potato chips left unattended at a picnic with all-cash offers and little to no contingencies. Other rural to suburban areas, like Murphys, is experiencing similar value shifts in its housing market. With many now having the ability to work remotely, areas once inaccessible as a primary residence are now doable.

Home Buying Institute (HBI) predicts the following for the California real estate market in 2021:

  1. Home price appreciation will tick upwards as buyers and sellers realize that real estate deals can still be conducted despite the pandemic and because of upcoming vaccinations which will help to create confidence and normalize life.
  2. “Urban Flight” will continue to be a thing, with the desire for space and privacy at an all time premium which will continue to drive up prices in small towns, suburbs and more rural areas.
  3. Home inventory is expected to grow as more sellers get comfortable with putting their home on the market again and as we see more foreclosures come to market.
  4. Mortgage rates are expected to stay at an all time low at around 3-3.5% well through 2021.
  5. An increase in home sales is expected as the urban to suburban migration continues, which should keep California’s real estate market very active all through 2021.

In conclusion, the housing market continues to surprise economists and analysts. During this unprecedented pandemic it has been referred to, repeatedly, as the one “bright spot” in the nation’s economy. This surprisingly strong performance is expected to continue through the end of 2020 and well into 2021. And as we collectively face the challenges ahead, including what is now commonly termed a “dark winter” it’s nice to have a bright spot on the horizon. Finally, it’s worth remembering that the shortest, darkest day of the year is December 21st, but after that, days will get longer and brighter. Think of the pandemic as the shortest, darkest day of the year and look forward to things getting better and brighter.

Wishing you and your loved ones hope and brightness in the days to come. May 2021 be the year more of our hopes and dreams come true.

—Mark Stevens and Associates at The Agency, Healdsburg

December 18, 2020

 

 

Source citations:

Norada, https://www.noradarealestate.com/

HBI (Home Buying Institute), http://www.homebuyinginstitute.com/news/california-housing-predictions-for-2021/

“Affordable” Housing in Sonoma County? Yes!

Posted on September 15, 2020 by Admin

Sticker shock was in full force when I moved from Northern Colorado to Northern California in 2016. In Colorado, $350,000 could get you a modest three bedroom, two bath rancher along the Front Range. In Sonoma County wine country? Not so much.

I had about $80,000 as a down payment and a new job and after adjusting to the new market metrics, I began to get acclimated to my environs and the crazy California housing market. I was renting a downtown Santa Rosa apartment for about $2200 a month…..renting. It was driving me crazy because who wants to throw away that much money every month towards something you don’t own and that pays someone else’s mortgage? For the past twenty years I had owned my own home and I knew the value of owning rather than renting. In addition to having your investment appreciate in dollars, there is also the psychological value of knowing that you are in charge of where you live (meaning, no landlord to raise the rent or end your lease or decide to sell).

After getting my ducks in a row and working with a good realtor, I discovered an established town home complex called Courtyards East in Windsor and fell in love. The complex is mostly owner-occupied and surrounded by heirloom oaks and mature Redwoods and maples. Located near the 101 highway it also made for easy commuting. Once I discovered all the nearby hiking trails, I really fell in love and felt like I had stumbled upon a secret that not many others seemed to know about. And the town of Windsor is so quaint and cool–Oliver’s Market, Russian River Brewing Company, and weekly town green concerts in the summer (pre-COVID). And there are so many other great places nearby….world-renowned Calistoga is a mere 30 minutes around the corner, and the  same for funky Russian River towns like Guerneville and Monte Rio with the coast just a few minutes further. And don’t forget Santa Rosa and all its conveniences is a short drive down the highway, with Healdsburg only five miles north and always a draw for wine tasting, shopping and dining.

Three years have passed since I got my foot firmly lodged in the Sonoma County real estate market and it’s time to let someone else do the same and take advantage of “affordable” housing in Sonoma County. My beautiful town home, which holds so many great memories, is now available as I transition into a new life in a new home with a great guy (soon to be my husband). If you are done with renting and want a home under $400,000, and want to take advantage of today’s crazy-low mortgage rates, come take a look at my place at 216 Courtyards East in Windsor. You’ll be glad you did!

Rare Home and Rental Find Within Sebastopol City Limits

Posted on September 15, 2020 by Admin

Two for One Makes this Offering Very Special!

Welcome to 7934 Juanita Court located within the city limits of Sebastopol with easy access to all Russian River recreation and wineries. The main house is a single story Rancher with two bedrooms and a half bath. The second dwelling is located at the back of the property and is a contemporary, spacious studio with a full bath and kitchen. This offering is a rare and fantastic home and rental opportunity within the city limits of Sebastopol.

Loads of charm potential and investment value in this 2 bedroom/1.5 Bathroom Rancher in the heart of Sebastopol,complete with a gorgeous detached Studio with a full bathroom and kitchen located at the back of the property. Tons of rental potential. Main house would be easy to transform into a charming, adorable home. Floor plan features two bedrooms on either end of the house for maximum occupant privacy. Features original hardwood floors, 2-car garage, large backyard with outdoor shower and mature trees. Within walking distance to parks, restaurants, art galleries, The Barlow, and more. A little TLC and a few finishing touches will make this home sparkle!

Live the Good Life in Healdsburg

Posted on July 21, 2020 by Admin

Healdsburg is a small, tourist community in Sonoma County in the heart of California’s beautiful Wine Country. Healdsburg truly takes the pleasures of life seriously with natural beauty, world-class wineries, farm-fresh food, and friendly residents. Considering moving to Healdsburg? Get ready to experience life in what is frequently ranked as one of the Coolest Small Towns in America and one of the Best Small Towns in the U.S.

The Sonoma region is best described as a haven for wine lovers and a grown-up’s theme park with restaurants that are less pretentious than in nearby Napa Valley yet just as chic and three of America’s top wineries all within reach.

The population of Healdsburg, CA is 11,721 and it’s one of 30 communities in Sonoma County, CA ranging from small coastal villages and quaint towns to major cities like Santa Rosa. The city has a median age of 44.6 years old, far above the national average 36.8 years, and this reflects the community’s high share of professionals, retirees, and highly educated residents. About 28% of people in the city have at least a bachelor’s degree compared with just 19% of the United States as a whole. Healdsburg is somewhat diverse with an ethnic composition of 62.6% white alone, 33.7% Hispanic of any race, 2.2% two or more races, and 1.1% Asian.

Looking for a safe place to live and raise a family? It’s hard to beat Healdsburg’s low crime rate. This safe city has far lower reported crime rates for theft, property crime, burglary, and violent crime than the California and national averages.

If you’re considering moving to Healdsburg, CA, you probably already know that life in central Sonoma Valley isn’t cheap. Healdsburg’s cost of living index is about 170 compared to the national average of 100 and the California average of 138. Much of this is attributed to high housing costs in Healdsburg, CA.

The average home price in Healdsburg is $647,600, nearly three times the national average, and the homeownership rate is slightly below average. Still, you can find homes that run the gamut with condos and townhomes priced below $250,000 to beautiful estates topping $3 million. You can start searching for Healdsburg, CA homes for sale to get an idea of what you can get with your budget.

So, how much does it cost to live in Healdsburg as a renter? Average rents in Healdsburg are around $1,466, according to RentCafe. That makes the city more affordable than nearby Santa Rosa where rent tops $2,200.

As a small city with just 4.5 square miles of area, Healdsburg doesn’t have many neighborhoods. That doesn’t mean you don’t have plenty of choice in where to live in Healdsburg, though. Every area of the city is highly rated for safety, great schools, and outdoor recreation.

One of the best places to live in Healdsburg if you like to be near the action and vineyards is the City Center. This is where most of Healdsburg’s businesses are located along with a handful of homes and apartment complexes. It’s here that you’ll have the best luck finding an apartment for rent in Healdsburg.

The Powell Ave/University St neighborhood is home to the Healdsburg Golf Club at Tayman Park and many residential developments with single-family homes. There are plenty of parks to explore in the neighborhood and one of the city’s famous vineyards.

The Lytton/Simi area is the largest area of Healdsburg and it’s home to the most open space, beautiful views, and spacious homes. If you want room to explore and more privacy from your neighbors, you’ll probably want to be in this area farther from the city center.

Take a look at our featured listing for Healdsburg: Turn-Key Craftsman Charmer


Article courtesy of Jesse Lovan. Access full article here: https://mentorsmoving.com/blog/moving-to-healdsburg-ca/

 

Moving Forward (in Spite of it All)

Posted on May 14, 2020 by Admin

It’s not a stretch to say that what we are all experiencing right now with the COVID-19 pandemic is something none of us have ever seen before, expected or even imagined. I will be 73 next month and can certainly vouch that this is a first. The Corona virus has put a spotlight on the horror of a global sickness, something most of us never thought much about. Like 9/11, we are being confronted by things none of us ever wanted to contemplate and like 9/11 what we are discovering is that we have been caught asleep at the wheel.

Almost as bad as the virus itself is the generalized feeling that we should have been better prepared, “someone” should have known better (perhaps our government) and that this never should have happened in the first place. But similar to 9/11, it seems there must always be a first time and one cannot be prepared for everything, despite our best intentions. Like terrorism, the viral pandemic doesn’t care about a level playing field or being fair or the assumed sanctity of borders. And it makes even the most mundane things, like an errand to the grocery store, an undertaking fraught with risk and inconvenience as we head out armed with masks, hand sanitizer, and the awkward and unnatural maintenance of a 6-foot social distance. Indeed, we have never seen anything like this before, young or old.

As the daily news continually reminds us of what not to do, the question remains: What is left to do and what is best to do? For me, I have found that maintaining my own personal sanity and a positive attitude is at the top of the list and possibly one of the biggest challenges—and the biggest accomplishments. Despite the fact that “normal” has left the building, life still must go on.

To celebrate that intention, my wife Connie I and headed out to Stinson Beach for a long hike on Mother’s Day.* It was a perfect day for a long, hard hike due to a cold front that had blown in the night before, changing temperatures from the mid-90s to the mid-70s. Both of us having spent an idyllic childhood in Mill Valley, we were up to speed on where to park in Stinson in order to access the trails by foot. We were rewarded by a perfect day full of panoramic ocean views, spring wildflowers, old growth redwoods, and the feeling that we are truly blessed: out and about and enjoying all the beauty inherent in our glorious North Bay lifestyle……almost like normal.

As they say, we will get through this. And there are some things, like our beautiful corner of the world we know as “the North Bay area” that will endure and continue to offer up all its wonders to those who choose to live in this magical place we call home.

 

–Mark Stevens

May 2020

*Note: There were numerous courteous groups on the trail and when passing, we all applied our masks.

(More about the trail: The Steep Ravine Trail takes you to the Pan Toll Station, and from Stinson Beach to the Pan Toll station it is about a 1500 foot elevation climb)