Homeowner’s Face Mandatory Upgrades

Homeowner’s face mandatory upgrades as the state legislature has determined that it’s time for us all to remodel our bathrooms. Well, not just bathrooms, actually any part of your home that contains older plumbing fixtures. Now there’s no excuse to put off that bathroom upgrade you so desperately needed. Of course, everybody knows that changing a plumbing fixture will open Pandora’s box, and of we’ll all then need fancy new bathroom vanities and glass tiled backsplashes to accentuate our new low flow faucet.Water Conservation

In the end this is good for our water conservation efforts, as well as stimulating our economy with hundreds and thousands of remodel projects about to get on the books. How long before you have to take on a multitude of remodel projects? Less than six months it turns out.

Though this new ordinance does not rise to the level of a point of sale requirement, it is a disclosure requirement at the point of sale. It also encourages cities and counties to adopt more stringent rules than the statewide mandated “disclosure only”, so don’t be surprised if a town near you rises this to the level of a new point of sale ordinance, assuring every home for sale would then be outfitted with the latest trendy look.

Below is the text we excerpted from the Civil Code, for your convenience.

 (a) On and after January 1, 2014, for all building alterations or improvements to single-family residential real property, as a condition for issuance of a certificate of final completion and occupancy or final permit approval by the local building department, the permit applicant shall replace all noncompliant plumbing fixtures with water-conserving plumbing fixtures.

****(b) On or before January 1, 2017, noncompliant plumbing fixtures in any single-family residential real property shall be replaced by the property owner with water-conserving plumbing fixtures.

****(c) On and after January 1, 2017, a seller or transferor of single-family residential real property shall disclose in writing to the prospective purchaser or transferee the requirements of subdivision (b) and whether the real property includes any noncompliant plumbing fixtures.

(Added by Stats. 2009, Ch. 587, Sec. 1. Effective January 1, 2010.)

 

Disclaimer:

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Belmont Tries to Paint the Town Red

THIS JUST RELEASED: Belmont, has hastened its pace to become the leader in paint stores on the Peninsula.  When asked what initiated this race for dominance, a senior spokesperson from Belmont said, “Let’s face it, if we can’t compete with San Carlos’ or San Mateo’s dining and entertainment options, we can certainly go after their paint stores. By forcing the unpropitious Holiday Liquor store to close, we’re now just two paint stores shy of besting San Carlos.”

While San Carlos may be known for their wide array of dining options and a vibrant downtown, Belmont continues its goal to reign supreme when it comes to paint stores.  “This is great news for the citizens of Belmont, he continued, after all what’s more exciting than paint? Isn’t there even a saying about how fun it is to watch paint dry?”

Gray Paint450

Yet there’s a real and present threat to the livelihood for stores such as Starbucks and Pete’s Coffee in Belmont. Sherman Williams for example is serving FREE coffee in their establishment, becoming a one-stop-shop for entertainment and refreshments.

The citizens of Belmont are overwhelmingly in favor of more paint stores, with comments like, “Look how colorful their store front is now” and “Who needs more social dining and gathering places when you have some many chic new palates to talk about?”

The much anticipated Water Dog Tavern scheduled to open in September in the Carlmont Shopping Center couldn’t have picked a worse time to go head-to head with more deep-pocket paint stores.

When asked for further comment, a senior spokesperson in Belmont continued “If we can’t “Paint the Town Red”, like our neighboring cities with watering holes and fine dining, by golly we’ll paint it just the same.”

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441. And sometimes, we just like to poke fun at our own town.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Painful Housing Stall Hits Belmont Sellers

Everybody knows that a plane experiencing a “stall” can lead to a crash, and of course as with airplanes, home values can rise and fall quickly too. Fortunately for everyone involved in home ownership, the consequence of a housing stall are not nearly as dire.

But a stall appears to be what we are experiencing in our local housing market. Since 2012 sellers have more-or-less across the board enjoyed listing their home only to receive more offers and money than they could have imagined.

That’s beginning to change, though the housing price numbers have yet to reflect the shift we’re experiencing.

Belmont Housing InventoryNotice in the graphic that the inventory last year grew steadily and then began to decline as more buyers entered the market. This year that trend has almost reversed itself, with more inventory developing as the year goes on.  While overall there are no more homes being listed than there were last year, and no fewer sales—yet year to date there’s been a four-fold increase in homes with price decreases and that number translates into 11% rise in price decreases county-wide this year as compared to last.

We’ve also noticed a change in the mind-set of many sellers this year. Sellers remain bullish and are declaring what price they want for their home, only to find disappointment when the market doesn’t agree with them, and with Buyers now wondering if this is the beginning of a market correction.

Buyers have become so used to being in a competitive market, that when they find a home which has no other offers, instead of jumping at the opportunity, many choose to sit back and ponder what‘s wrong with the house.

The result is we are seeing is a much need shift in our market to one that is more sustainable in the long term. The new mindset will take some getting used to for buyers, sellers and real estate agents, and it may not last beyond the elections, but it’s here today, and today is the only market we can guarantee.

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

You can find them on Facebook at https://www.facebook.com/Morganhomes and also find them on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Making Heads or Tails of The Housing Market

Making Heads or Tails of The Housing MarketCoin Toss

Whenever the real estate market has been heading in an upward or downward direction for an extended period of time, people naturally begin to question when the current trajectory will end—and we are not immune to that natural tendency.

We live in Belmont and our real estate office is in Belmont but we also look to national and macro indicators as well, since the Bay Area really is its own microcosm of tech and real estate activity and what happens in the Bay Area tends to stay in the Bay Area.

Trying to make heads or tails of our local market is much harder since the number of sales (data points) are so few they are easily distorted by one or two outlier sales—a bidder who “had to have the home” and paid way too much, or a seller that sold off market for far too little.

The Macro Level

We post Standard & Poor’s Case-Shiller analysis each month to our web site. Even though the data has a three month lag time, its relative information and year-over-year data points are telling.

This is a graph of the MSA for our area—referred to as the San Francisco MSA (Metropolitan Statistical Area) but it’s composed of counties, Alameda, Contract Costa, Marin, San Francisco and San Mateo. Note that we’ve recently experienced a blip on the radar of declining index values for two months in a row.  Is it a trend? It could be. We’ll know more over the next two month’s reporting periods. Since the beginning of the recovery in February of 2012, there have only been two other instances when the index declined, only to bounce right back up—but only one  cycle of decline during this period ever lasted more than three consecutive months . What is disconcerting is that four of the five index declines have occurred in the last two years.SFMSA 2015-2016

With that in mind, we turn to Belmont home sales for March 2016.

Stats March 2016

The chart depicts Belmont real estate activity for the month of March in 2015 as compared to March 2016.

SALES

Sales of existing single family homes waere down 70 percent YOY, which might seem frightening except that inventory levels—the homes available to sell were down 60%.

MEDIAN HOME PRICE

We believe this actually dropped, here’s why. Technically, the median home price was up 6.3% YOY but that bought a Belmont home which was over 30% larger than in 2015. The 539 square feet difference at the going rate of $643 per square foot equals a disparity of almost $350,000. If you were to subtract that from the 2016 median home price, we get an adjusted media home price of $1,175,000—or an 18% drop in the median home price YOY.

PERCENT RECEIVED

This also dropped from 120% of asking in 2015 to 104.5% in 2016—a 13% drop. Now 120% in March of last year was an anomaly, but still on either side of March in 2015 it was 107% and 117%.

Belmont home values have reached a point where fewer and fewer people qualify for the median home price. That puts a damper on the rate of appreciation, so we expect that this year we will see more volatility in the numbers, and continue to put these numbers into perspective as best we can.

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

You can find them on Facebook at https://www.facebook.com/Morganhomes and also find them on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Free Solar Panels May not be Such a Bright Idea

Solar power leases may have pitfalls. We’re seeing more and more solar panel popping up on home these days and with them come issue when trying to resell one’s home. Studies have suggested that the addition of solar panels on a home can boost a home’s value. But sometimes those solar panels can sabotage a deal when it comes time to sell.Solar Power Savings

Selling Green Homes

Making the Case for Energy-Efficient Homes

Energy-Efficient Mortgages Gain Popularity

More Builders Find the Sun Is a Selling Point

Do Green Homes Fetch Higher Sales Prices?

More companies are offering home owners a contract to lease solar panels where they pay no upfront costs for the installation and could start saving on their electricity bills right away. But some home owners who sign onto these deals are finding some snags when they go to sell.

Many potential buyers are leery of taking on the leasing payment contracts for the next 15 to 17 years because they often have to qualify on credit from the solar companies themselves, in addition to the mortgage. Also, some buyers are hesitant to sign a contract because they’re concerned the solar equipment will become obsolete or won’t amount to a big savings in the end after paying the leasing fee.

We asked Solar city over to our home in Belmont for an estimate. Of course the carrot is free installation, but the savings is minimal. Since they are leasing you the equipment, they take an override on the energy their panels on your roof produce–and they sell that energy to you at a reduced rate–but it’s not anywhere close to free, as if you owned the equipment.

But we’re seeing issues trying to re-sell home with leased solar panels. Some home buyers are refusing to buy the house unless the seller buys out of the remaining lease payment stream — which could be $15,000 or more. If you’re going to eventually buy-out the contract anyway, it’s a far better idea to but it up front and enjoy 100% of the energy dollar savings.

In Fresno, Calif., a couple trying to sell their house told The Los Angeles Times that it attracted multiple offers but two sets of buyers backed out of the contracts due to the leased solar panels on their roof. The buyers felt the long-term cost of the lease agreement was too high or they were concerned about the credit qualifications they had to meet in order to take over the lease. Ultimately, the couple selling the home had to pay $22,000 to break the lease with the solar company so that they could sell the house.

With the rising popularity of solar, we already have seen several disputes arise over solar panel leases, and we expect the problem will get nothing but more frequent.

Residential solar installations are rising dramatically — up by 50 percent per year since 2012, according to the Solar Energy Industries Association.

Before you sign on the dotted line for a solar lease, check with your accountant for tax consequences if you purchase the system, you might qualify for a tax incentive write-off. A simple home equity line of credit may be all you need to qualify to own 100% of the power your home generates.

Source: “Leased Solar Panels Can Complicate – or Kill – a Home Sale,” The Los Angeles Times (March 22, 2015)

Belmont Ignores a View Ordinance

Belmont, or beautiful mountain (beau mont)–for which this blog is also named– is one of the most unique and charming cities on the peninsula. It’s heavily forested hillsides and undulating hills make for a delightful backdrop against the busy peninsula transportation arteries.

Belmont offers impressive views of San Francisco and the open space around Sugarloaf Mountain, the San Francisco Bay, and on any clear day Mt. Tamalpias, Mt. Diablo and Mt. Hamilton.

Belmont’s attributes are many but its highly coveted views are among the top reason people choose to live in Belmont.

Belmont_old_3The hills of Belmont weren’t always so heavily wooded as suggested by this rendering–published in “Heritage of the Wooded Hills”A Belmont History, by Ria Elena MacCrisken and available at the Belmont Historical Society. As Belmont neighborhoods developed tress were planted which forever changed the natural foliage into forested hillsides (one needs to look no further than the Watershed open space to see what Belmont’s hills probably looked like before it was populated).

Ironically, Belmont has no view or tree ordinance which regulates whether or not a tree can obstruct the view of a homeowner; one can’t build a structure to block a view but there’s nothing to regulate allowing a tree to grow unchecked into what once was someone’s impressive vista.

Many of the trees in Belmont which grow unattended such as eucalyptus are not indigenous to Belmont and in fact are not protected under Belmont’s existing tree ordinance–yet those are some of the most offensive trees in terms of obstructing views (and they’re pretty messy too).

When living in a society where our existence impacts others it’s essential to have ordinances to protect the health, safety and welfare of the public. We currently have ordinances to protect the quality of life and Belmont should seriously consider adding a view ordinance which will allow for the responsible ownership of trees.

Balancing the rights of a homeowner to maintain their view against that of a nearby property owner to plant and grow trees where they wish is difficult as property ownership rights are always held in high regard–as they should be. Like anything else though, views must be preserved and a balance must be struck between the property ownership rights of both parties.

Are trimming trees counterproductive to living green? Absolutely not. The International Society of Arboriculture not only recommends tree ordinances they go so far as to suggest how to structure one. Furthermore many adjacent towns which benefit from similar views already have such ordinances in place. Cities such as Tiburon and Berkeley, both where property values are substantially affected by their views, have adopted view ordinances to cope with urban tree growth and should serve as a guide to Belmont to act to preserve our declining views.

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

You can find them on Facebook at https://www.facebook.com/Morganhomes and also find them on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

How Low Can Housing Inventory go?

The year is just getting started but already there’s a problem with the housing inventory levels. Belmont’s housing inventory consisted of five homes for the month of January 2016. To put that into perspective, Belmont’s housing inventory has averaged 41 homes a month since 1998. In 2015 the average for the year was 12 homes a month. Since housing inventory fluctuates seasonally, we looked at the housing inventory levels for each January—that averaged 30—remember, we are at five right now.

This inadequate housing supply puts intense upward pressure on home prices. As we have seen in the past year alone, the amount sellers received of asking increased from 105% in January 2015 to 107% in 2016.

MONTHS OF INVENTORY

Month’s supply of inventory is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. For example, if there are 50 homes on the market and 10 homes selling each month, there is a 5 month supply of homes for sale.

The months of supply is a good indicator of whether a particular real estate market is favoring buyers or sellers. Typically, a market that favors sellers has less than 6 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favors buyers. Belmont currently is running a housing inventory level of .56—yes, less than one month. On a national level, we’re still hovering around 5.6 months of inventory. Home Sales January 2016

MEDIAN HOME PRICE

The median home price in Belmont increased 24% YOY, from $1,210,000 in 2015 to $1,500,000 in January 2016.

The median size home which sold increased YOY too, from 1,500 sqft in 2015 to 1,610 sqft in 2016. If it’s any consolation to buyers, while homes went up 24% in January 2016, buyers did get a home that was 7.3% larger.

PRICE REDUCTIONS

Price reductions remain at an all-time low. Only one seller in 2015 had to lower their initial asking price and in 2016 no one suffered the price reduction fate. Imagine the chatter around the water cooler when it’s time to fess up to your colleagues yours is the only home that had to have its asking price lowered.

OVER/UNDER GAME

Of the homes that sold in 2016, seven sold for over the asking price, one home sold right at asking and one home sold for less—strange as that may sound given the tight market conditions—it’s still possible to overprice one’s home.

Days on Market [DOM]

The time it took to sell a home in Belmont dropped nominally from 12.7 days in 2015 to 11 days in 2016.

New Rules For Tax on Home Sales

Taxes

There are new rules for taxes on home sales you will want to understand. We know taxes are not the most sexy subject, but they’re important for one to understand when it comes to the disposition of real property assets.

First, what is FIRPTA? The IRS defines it as the, “Foreign Investment in Real Property Tax Act of 1980 regarding the disposition of a U.S. real property. Interest by a foreign person (the transferor) is subject to the  (FIRPTA) income tax withholding.”

What the Change to FIRPTA Withholding Means for You

Under current federal law, if a foreign person sells US real property, the buyer is obligated to withhold 10% of the gross sales price and remit this to the IRS. Pursuant to the Protecting Americans from Tax Hikes Act of 2015, however, which became law on December 18, 2015 (the “PATH Act”), the required 10% withholding will increase to 15% for all closings occurring on or after February 16, 2016.There is an exception to the increase for sales of a personal residence wherein the sales price is between $300,001 and $1,000,000. Under this circumstance, the 10% withholding rate continues to apply. In summary:

  • If the sales price is $300,000 or less AND the buyer will use as a personal residence – No change, exempt from withholding.
  • For all other real estate sales the buyer must withhold 15% of the sales price of the real estate (10% if a personal residence with a sale price between $300,001 and $1,000,000) and send it to the IRS within 20 days after the date of transfer.

Do you as a buyer really have to hang onto the 15% of the seller’s proceeds? The answer is if you don’t, you could be liable for the seller’s tax obligation. But not to worry, if you use an escrow company to handle your transaction they’ll take care of it for you, and protect you by having the seller sign a form for the IRS.

Information courtesy IPX Property Exchange Services, Inc. and Lawyer’s Title Company.

 

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

You can find them on Facebook at https://www.facebook.com/Morganhomes and also find them on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Are December Home Values Real?

Are December Home Values Real? Can we trust what we hear?

Being REALTORS, we’re used to being asked “How’s the market?”, but never more than during holiday social events.

Real estate is the topic of conversation at a lot of social gatherings—we overhear conversations when we are out and about quite frequently. Usually it’s one person telling another about a crazy home sale in their neighborhood, where the final sale price was hundreds of thousands of dollars over asking, or the number of bidders hitting double digits.

That makes for great story telling, and in fact it’s an accurate one at that. Out of the 20 Belmont home sales in December 2015, 10 sold over $100,000 above the initial asking price. So if that’s become the norm, wouldn’t the better story be the home in the neighborhood that closed over a hundred thousand dollars under the asking price? And in fact that was the case in December, when a home on Adelaide sold for $123,000 under the list price of $1,688,000. We’ll save how that could happen for our next post…

December Belmont Home Sales
December Belmont Home Sales

SALES

Belmont has 20 homes sell in December, besting December of 2014 sales by over 60%.

MEDIAN PRICE

The median home price was $1,431,000 in December, a drop over November’s median home price of $1,652,000, but an increase over December of 2014 when the median home price stood at $1,198,000. Since the median home price seems to be the factor most people focus on, we’ll try and put that ~20% year-over-year increase into perspective.

One of the problems with using the median price is that it reflects if there has been a large amount of more expensive or less expensive homes sold in any given period. In these circumstances, you can often notice large differences in the median home price of a certain city from month to month.

For this reason, it is often better to view median prices over longer periods of time and monitor the trends, rather than looking at one month’s figures in isolation.

Last year the median size home in Belmont that sold in December was only 1,430 sqft, while this December it was 1922—34% larger. A 20% increase in price offset by homes being 34% larger could mean that home values in December actually dropped year-over-year. But this is small market sample, relatively speaking, and therefore subjected to these types of wild swings in data points.

To further answer the question of whether values are still on the rise, we turn to a larger market sample—San Mateo County, where instead of the average 15 sales we have in Belmont in a given month, the county as a whole has 350.

Here we find that the median home price trend went up 22% year-over-year. Since this includes many areas which are just now enjoying the rapid appreciation Belmont has seen in the past several years, areas like South San Francisco and Daly City, this number too is a bit skewed and is not necessarily representative of our mid-peninsula cities median home price growth.

When we take the median home price in Belmont for all 12 months in 2014, we arrive at a median monthly home price of $1,283,750 and using the same calculation for 2015 we arrive at a median monthly home price of $1,506,250—or a 17% increase year-over-year.  Obviously home values are still on the rise, but the exact rate is difficult to ascertain with small market samples.

Days on Market [DOM]

Homes are still selling in about 13 days on average. This is not to say that all homes are selling in 13 days, it means that of the homes which sold, they took 13 days to sell. Some homes languish on the market even in today’s red hot seller’s market and do not sell and are thus excluded from this calculation.

MONTHS of INVENTORY

The months of supply is the time it would take for all the current inventory to sell if it all sold at the current rate without new inventory coming on the market. In Belmont, it stands at .1—yes, that’s 1/10th of 1 percent a month of inventory. To put that into perspective, nationwide the housing inventory level stands at 5.7 months.

PERCENT RECEIVED

Belmont homeowners enjoyed receiving 109.4% of their initial asking price, as compared to 107.2% in December 2014.

It is interesting to note that 35% of the homes sold closed for less than the seller’s asking price. We contribute that primarily to the slower seasonal period.