Cell Phone Photos Should Be Banned

If a picture is worth a thousand words, then what does an awful picture say?

Putting your home’s best foot forward is of paramount importance to get the positive attention you want when selling your home.

Nikon-Cameras
If you stop and think about the role that advertising plays in our culture, one can easily see why it’s important that your home’s advertising is top notch—after all, there’s a reason the top 200 advertisers in the United States collectively, spent a record $137.8 billion on advertising in 2014, up 2% year on year, according to Ad Age’s annual “200 Leading National Advertisers” report, advertising works!

Let’s take just one aspect of the marketing for your home—the photos.

The idea behind photographs in on-line marketing, is to entice potential buyers to come and physically see your home. The photos should be of high quality and resolution and be taken by a professional. The days of using your own camera are gone. So, should the use of cell phones, yet we still see this atrocious practice employed even in our sophisticated market.

The old saying, “If you don’t have anything nice to say, don’t say anything at all”, applies equally to photography. Remember, photos are a vehicle to get people to visit your home, not scare them away. Too much information can be as detrimental as none at all. A professional photographer typically knows the difference, but not always, so we’re still vigilant about filtering out only the shots that best represent a home.

We’ve seen some amazing work by seasoned agents who should clearly know better.

This is one of our favorites. It was on the market for 21 days and yet the agents never took the time to straighten the photo.90 Degree Home

 

 

 

 

 

 

In this photo, we can see the agent never even visited the home. They simply took a screen shot of a Google Map (the directional arrow is clearly visible in the photo).

Screen Shot 2017-01-23 at 11.39.00 AM

 

 

 

 

 

 

But there are less obvious infractions, like crooked photos, over or under exposed shots and even small minutia like leaving a toilet seat up when shooting the bathroom.

Agent in Mirror

Here’s a home where the agent
took her own photos. Not only were all of them crooked, in this photo of the bathroom she can be seen standing in the mirror with a washed -out flash.

 

When Photoshop Works Wonders3344 El Sobrante

Let’s face it, the weather doesn’t always cooperate on the day of a shoot. For this home in San Mateo we recently sold, the day came for photographs and the sky was ominously dark. The driveway also had streaks from rain water running down to the street. Here you can see what a few minutes of Photoshop can do to remedy a problem.

 

When interviewing an agent to sell your home, it’s best to see examples of their work. Avoid the dangers of Adverse Selection and asymmetric information by doing an on-line search for their work in its entirety, not just the examples they’re willing to share.

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

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomesand 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.

 

Housing May Be Approaching Equilibrium

A lot transpires at the end of the year. There are resolutions for the new year, and reflection upon the year just passed. There’s wrapping up the holiday decorations and reflecting upon the celebratory memories.

And then there’s wrapping up the year-end business for us. Surveying what happened in our local housing market and taking a stab at the “Why”?

We posted an article for our blog in December which we authored and was originally printed in the Examiner. It was aptly titled, “Shifting Market in Play”. In it, we discussed the subtle but noticeable shift in our housing market towards a market approaching equilibrium—that being a market wherein the demand is nearing the supply. That’s a good thing, as a more normal market is a more sustainable market.

It’s not simply that demand for housing is waning, but rather demand at the newly established price point is down. In other words, fewer people can afford the median price home which has had a dampening effect on home sales.

Affordability is affected by three major factors: median house price, mortgage interest rates, and household income. Mortgage rates are still below historical averages, and household income is on the rise. So, what is keeping housing affordability down are home prices—which are ironically artificially inflated due to the first two factors, low interest rates and high income.

Comparing the year-end numbers for Belmont, we see that listings were up but sales were down. The time it took to sell a home was higher, but the price the sellers received and the percent of the seller’s asking price were lower.

2016-2017 YOY Data

 

 

The median price appears to have taken a hit too, but upon further examination, one can see that while the median price was down 1.5%, the median size home that sold last year was down even more, at 3.4%.

When the housing market dropped in 2007, home values bounced along at the bottom for several years before climbing again. This is typically true at the peak as well. Are we there? We could be. Data from Q1 & Q2 will give us a more clear picture.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomesand 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.

 

Shifting Market in Play

NOTE: Shifting Market in Play is an article we did for the Examiner in December, when asked to comment on 2016—A Year in Review: This is a link to the original article.

In order to understand our current housing market, one must appreciate that markets are constantly in flux. In our town of Belmont, we looked at home sales and compared the periods from January thru November for years 2015 and 2016.

Let’s first discuss the market conditions. There’s a lot of hyperbole as to the state of our current housing market. Sellers are still in the mindset that they hold all of the cards, yet buyers are beginning to push back on prices. Sellers are receiving fewer offers, many have had to lower their asking prices, and homes are often times closing below the asking price—something that rarely happened from 2012-2015. This suggests a shifting market.

Clearly, the sky is not falling, the shift is towards a more normal market, where homes sit on the market longer, and may sell above, at, or below the seller’s asking price. This long awaited market shift is not a correction, but rather a predictable and healthy move towards a more balanced and sustainable market. To be blunt, prices have risen to a level at which the majority of buyers can no longer afford the median priced home, resulting in a cooling down effect on the housing market.

We first examined all of the home sales in Belmont that occurred in 2015 through November in order to compare those with the same period of home sales in 2016. We added no search filter other than the date range, since the larger the pool of sales, the more reliable the data.

2015 2016 % ∆
Sales 178 181 1.7%
Median Home Price $1,516,500 $1,389,000 -8.4%
Home ft² 1850 1760 -4.9%
$/ft² 830 856 3.1%
DOM (Days on market) 12 11 -8.3%
% Received 114.5 107.2 -6.4%
Price Reductions 9 19 111.1%
For How Much $120,638 $118,477 -1.8%
Sold Over Asking 156 149 -4.5%
Sold At Asking 6 10 66.7%
Sold Under Asking 16 22 37.5%

 

It’s clear that a market shift has occurred. Note that the median home price reflects a significant decrease year over year (YOY), and part of that is simply because smaller homes sold in 2016 skewing the numbers. But in almost every category there’s a distinct shift towards a more normal market. There were fewer homes selling for more than the asking price and the ones that did sell over asking sold for 33% less over asking than in 2015. There were more cancelled listings, and more price reductions for greater amounts. The inventory of homes for sale is growing—up from 0.3 to 0.7 months of inventory (still considered seller’s territory).

On a more macro-level, when we look at the San Francisco Metropolitan Statistical Area (SFMSA) as produced by Case-Shiller for Standard and Poor’s, which encompasses the counties of Marin, Alameda, Contra Costa, San Francisco and San Mateo, one can see that while the YOY increase in their index was a rise of almost 15%, there was only a nominal 0.5% increase in home values since April.

How long will the new normal market continue? We’ll save that wild card question for other talking heads. Nobody really knows of course, and anybody that professes to know should give you cause for concern. However, the market appears to have hit a price threshold. As fewer buyers can qualify for the median priced home, more sellers will be getting less windfall profits like they did during the meteoric rise over the last three years.

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

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and 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.

Know What Changed our Housing Market

In order to know what changed our housing market, one must understand that markets are constantly in flux, it’s just hard to see when you are in the middle of one.

We took a look at homes in Foster City for a client recently. The premise was they wanted to know if the housing market was in the seller’s favor, or in the buyer’s favor–if prices were going up, steady, or dropping.

Anecdotally many agents will tell you their opinion based upon their personal observations. If they had a hard time selling their last home they might tell you the market is “changing” and if their last listing flew off of the shelf, they might believe the housing market is as robust as ever. But whatever people feel, the numbers don’t lie. Numbers are an unemotional representation of what is occurring in a given market.

Let’s first discuss the market conditions. There’s a lot of hyperbole as to the state of our current housing market. Sellers are still in the mindset that they hold all of the cards, yet buyers are beginning to push back on prices. Sellers are receiving fewer offers, many homes are having to lower their asking price, and homes are selling often times below the asking price—something that rarely happened in 2012- 2015. This lends itself to a shifting market.

Shift

Clearly the sky is not falling, the shift is towards a more normal market, where homes sit on the market longer, and may or may not sell at the seller’s asking price. This long awaited market shift is not a correction, but rather a predictable and healthy move towards a more balanced and sustainable market. To be blunt, prices have risen to a level that the majority of buyers can no longer afford.

We first examined all of the sales in Foster City which occurred in 2015 through August 31st in order to compare 2015 home sales within the same seasonal periods to 2016. We added no search filter other than the date range, since the larger the pool of sales more reliable the data.

This is the data:

FC Market Conditions

It’s clear that a market shift has occurred. While the median home price had a marginal increase of 3% YOY, in every category there’s a distinct shift towards a more normal market. There are more homes selling, for less over the asking price, and taking longer to do so. There are more cancelled listings, more price reductions, and for a greater amount. The inventory of homes for sale is growing—up from .83 months of inventory to three months this year.

The 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 3 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favors buyers. Foster City is currently running a housing inventory level of 3 months.

What this means is that the market shift will no doubt continue until there’s a full blown correction. We could be years away from that happening, but we are moving into the slowest part of the season where seller’s typically net the least for their homes. And if interest rates rise—and they should since they’re at historic lows, that too will have a damping effect on home values in the foreseeable future.

How long will the new normal market continue? We’ll save that wild card prediction for other talking heads. Nobody really knows of course, and anybody that professes they know should scare you. But the market appears to have hit a price threshold. As fewer and fewer buyers can qualify for the median price home, fewer sellers will be getting windfall profits like they did during the meteoric rise over the last three years.

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

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.

 

 

 

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.

Uncertainty in the Housing Market

October brings to mind images of Jack-O’-Lanterns, will-o’-the-wisps, spider webs, creative costume expressions on All Hallows Eve, and the gentle stir of leaves falling from the trees. But there’s more rustling around in the wind than dry leaves right now—it’s the sound of uncertainty in the housing market. Are we headed for a crash? Or is the market still in a Bull Run phase?

We’re getting asked a lot about what we think is going on, as there’s a lot of uncertainty in the housing market. Whenever there’s a perceived slow down, it gives cause for questioning the market conditions. We think those concerns might be a little premature.

But people should be skeptical. The housing market did-in a lot of people during the great Recession and they’d be foolish not to be concerned about being in a better position for the next downturn.

So we hope that our small window of analysis will help you sleep better, at least if you live on the mid-Peninsula—the sweet spot of our market and where we focus our energy.

Belmont September 2015

Belmont–September 2015. Data from the MLS of SMC. Click on the picture for a larger image.

These are the statistics for several of the cities we watch carefully.

San Carlos—Median Price was up 11.6% year-over-year this September. Down from 14% YOY (Year-Over-Year) from 2013-2014 so a bit of a slow down there. Seller’s received 5% more over asking though.

Belmont—Median price rose 12.5 % since last September, up from just 2% YOY (a year earlier) (we discount this as an anomaly of small numbers). Sellers are still getting 107% of asking price—same as last September.

San Mateo—Median Price went up 12.8% YOY, down from a 27% increase in 2013-2014. Sellers are getting 1% more over asking this year than last.

Hillsborough—Median price fell 6% YOY in 2015, down from a 26% increase in 2013-2014. Sellers got slightly more over asking—97% last year as compared to 101% this year.

San Mateo County-This is a good indicator of the overall market conditions since it includes so many cities and a lot of data points. But it can also be somewhat misleading. For example, when prices are skyrocketing in Menlo Park, San Carlos and Belmont early in a recovery phase, Daly City, San Bruno and South San Francisco are typically still foundering. Yet when the top three start to peak in terms of price, buyers flood these less expensive areas and cause the overall increase in the median home price to appear to be climbing, when in your city it may be stalling.

Think of the San Mateo Median home price like a “composite index” if you will. It rose 12.1% YOY since last September, and seller’s received 3% more of their asking price. Last year it gained 18% and in 2012-2103 it rose 16.3%–that’s coming off a 21% increase from 2011-2102.

Let’s hope it calms down even more in 2016. A more sustainable recovery always lasts longer.

NOTE:–As always you can view these graphs on our web page.

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.

When is the Best Time to Sell My Home?

When is the best time to sell my home is perhaps one of the top five questions we are frequently asked. On my desk I have a crystal ball—literally. And often when I am asked to venture a guesstimate as to how the real estate market will perform, I simply stare down at the glass orb until my clients’ eyes follow mine to my point of fixation, and they realize their question was really impossible for me to answer with any certainty.

If you’re read our blog page, you know I love to look at the numbers—how much have homes have gone up, what percent sellers are receiving of asking, etc.

These numbers don’t really tell me what will happen—they’re historical numbers so they only tell me what did happen. But before we get started, no decent look at the market would be worth anything if we didn’t first explain our thought process and methodology.

In assigning probabilities, there are two common to employ. Frequency based probabilities, which rely and past data points to lend credibility to predicting a future event, and subjective probabilities based upon our belief that something will or will not occur.

Of course the belief or subjective probability approach at first glance appears just as the name infers—that it’s too subjective. However it’s actually quite important, and you probably use this approach more often than you do frequency based analysis when conducting your day-to-day assessment of say, whether or not you think the price of gas will be lower next week to decide if you want to wait to fill up then.

What about when we use both approaches, or aren’t sure which one is more appropriate for a given situation? Refinancing your home is a good example. Today’s question might be, “Will rates go lower than they are today, or will they soon rise to more historical levels?”. Here we might use frequency based analysis to look at the historical trend of mortgage rates and see where they are today in relation to average historical rates. Seeing how they are near the bottom of where rates have been over the last 30 years, one might conclude that they have nowhere to go but up, yet once again they dropped this October even after the Fed’s all but promised a rate hike—because things change.

One of the problems inherent in using only frequency based analysis is that there’s a trade-off between accuracy of the information (having enough data points) and relevancy (how old is the data). Going back further and plotting more data points is certainly going to give us more information to evaluate, but the relevancy begins to drop off as we got too far back in time, when say our economy was in a different state— pre-internet for example.

So it is with these probability approaches in mind that we deliver to you our trend for the percent a seller receives of their asking price–each month of the year, over the past 17 years. Glancing at the graph one can easily see that spring appears to be the best point at which sellers get the highest percentage of their asking price. Note: the months tagged in the graph above the line are the months in that year where the seller received the highest percentage of their asking, while the red numbers below the line illustrate the month in each year where the seller received the least percent of their asking price. **clicking on these graphs will bring up an enlarged image.Best Time To Sell A Home

These are the percentages of frequency in occurrence where each one has an 8.3% (1/12) equal chance of homes selling either over or under the asking price in a given month.Best Months

May is a clear winner as to when reported sales of homes showed that sellers obtained the highest percent over their asking price—statistically. Since most of May’s homes probably sold in April, it’s more likely that the sale actually was consummated in April with a typical 30 day list to close time frame.

The problem with probabilities based solely upon past performance is that things can change quickly. Governments can topple or be overthrown sending the world into economic panic, external natural effects such as tornados, tidal waves, droughts, El Nino events, etc. can all contribute to altering selling and buying patterns. For example, October never shows up as a month where the least amount a seller received occurred, except for in 2001, after the September 11th terrorist’s attacks.

Also interesting to note is that if one breaks down this graph into pre-Deep Recession and Post Recovery periods there’s much less of a clear distinction as to which month is consistently a winner—or loser. An important and fair distinction should also be made in relying solely upon the percent a seller receives of asking as a definitive demarcation as to when selling your home is optimal. Sellers could be pricing their homes lower in the spring than they do later in the year, when new higher price levels have already been achieved. So measuring how much the seller received in real dollars is actually more important, but doing so involves tracking the median price trend which is easily influenced by relatively small market samples when larger or smaller homes sell in a given month. Tracking the price per square foot per month would help add more information into the mix, but that is susceptible to errors when homes with larger or smaller lots are involved.

And to throw the final wrench into the works, one must remember that during these 17 years there have been two recessions, and a lot of variance of interest rates and various government stimulus packages which have influenced people’s personal behaviors one month over another, not to mention El Nino’s and droughts which also have affected buying and selling patterns.

We hope this has helped further the cause of trying to turn the uncertainty of when to sell your home into a measurable risk. But remember, as Mark Twain is attributed to having once said, “History doesn’t repeat itself, but it does rhyme”.

 

 

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.

 

 

Belmont Home Values Peak–August 2015

It’s very hard to stare at numbers that are counterintuitive to what you feel about the market around you. This is the case once again in Belmont when we compare last August to August of 2015.

This August felt really slow—like there was a pull-back in the market. Many of our colleagues are still commenting about how if just feels different—but the numbers say something else.

One can account for the lag between an offer date and closing to explain away part of this nagging feeling, since most of the homes which closed in August were sales consummated in July. August could turn out to be a slow month when we look at September closings next October.

Certainly the stock market vacillation has people on edge and the Federal Reserve’s non-stop droning about interest rate hikes has people feeling uneasy, and when people feel uneasy they tend to pull back or even freeze, absent a clear path through the valley of the unknown.

 

We’ll summarize this very quickly for you: (click on the picture for a larger image).

Belmont August* Rinconada was our sale.

SALES—

The housing units sold over the two period was a dead tie at 24—so nothing to note there.

SIZE—

However the median size of a home which sold in the two periods was vastly different—as the homes which sold in 2015 were 450 sqft or 21.5% smaller and on lots 12% smaller.

MEDIAN PRICE—

That did nothing to dent the increase in the median home price, which rose another 20% year-over-year despite the homes were 21.5% smaller—that’s noticeable.

PRICE PER SQUARE FOOT—

We’d expect this to be higher, since smaller homes sell for more per square foot than their larger counterparts—and it was, 35% higher than last year.

So what’s the real median price increase if the homes are selling for 20% more and yet are 21.5% smaller? Let’s look at that difference of 450 sqft and multiply it by the amount at which homes are selling. To be conservative, we’ll use the smaller number a year ago of the larger homes—a median price per square foot of $665 x 450 = ~ $300,000, which we then add to the median price in 2015 of $1,517,500 to arrive at an adjusted median price of $1,817,500 or an adjusted 44% more year-over-year.

Looking at this from a different angle, what if we added the raw 20% year-over-year growth numbers and added to that 21.5% since the homes were that much smaller? We get 42.5% year-over-year.

Could it be that prices in August went up 40+ % year-over-year? No wonder the market feels like it’s slowing down. Home affordability is at its lowest point since the highs of 2009.

 

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.

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.

Drew & Christine Morgan did not necessarily participate in these sales.

How to Buy a New Home and Keep Your Tax Base

How to Buy a New Home and Keep Your Tax Base. If you’ve thought of moving but are frightened at the prospect of a property tax increase we have a few propositions for you—60, 90 and 110. You may already be aware of these but we have some new information which might make them more attractive.

Most homeowner’s are keenly aware that buying a new home means having their property tax base increased to 1% of the purchase price. For those of you who have owned a home for many years this alone can make a move financially impossible; for many, it means they couldn’t afford to buy the home they already own.

A BRIEF HISTORY

Proposition 60 enacted into law in 1986 allowed for the one-time transfer of your current home’s tax base to a replacement property of equal or lesser value after the age of 55 of either spouse, providing that the replacement property was located within the same county.

Proposition 90 passed by the legislature in 1989 allowed counties to voluntarily extend the transfer into their county to all 58 California Counties.

Proposition 110 passed in 1996 extends this relief to permanently disabled people, whether 55 or not.

The problem for most people wishing to benefit from this tax base transfer is they are limited to moving within the county in which they currently reside, or moving to one of only a handful of reciprocal counties (Alameda, Los Angeles, Orange, San Diego, Ventura, San Mateo, and Santa Clara).

Fortunately, another very desirable county in the Sierra foothills was added to the list—El Dorado. Their legislature passed a resolution into law on December 10th 2009 taking effect February 15th of 2010 allowing anyone in the 58 California counties to transfer their tax base to El Dorado County.

There are rules you must follow or your transfer will be denied so before you consider a move you will want to read several of the helpful publications which exist, and/or consult with your tax or legal advisor. The State Board of Equalization offers some easy to understand  “Question and Answer” publications as well as a pdf containing many test case scenarios, but here’s a brief summary:

The market value of the replacement principal residence must be equal to or less than 100 percent of the full cash value of the original property as of the date of sale, assuming the replacement dwelling is purchased prior to the date of sale of the original property. That number is increased to 105 percent of the full cash value if the replacement dwelling is purchased within the first year following the date of the sale of the original property, or 110 percent of the full cash value of the original property if the replacement dwelling is purchased within the second year following the date of the sale.

If you’ve been holding back on making a move to retain your home’s current tax base it’s nice to know you now have some great options. And if you’re not familiar with this Gold Rush era county, you owe it to yourself to check it out.

There are many cities within El Dorado County which offer a great quality with life. Located around Folsom Lake with its various water activities (when the lake has water), El Dorado County extends all of the way north to South Lake Tahoe. The many towns in between including Placerville,  offer affordable housing options—from award winning retirement communities to cities catering to the first time buyer and neighborhoods that rival homes the Peninsula has to offer—including Hillsborough—all at a fraction of what it costs to live in the Bay Area.

Visit the on-line version of this newsletter at MorganHomes.com and use the underlined links in this article to read more.  If you are not comfortable with the internet, simply give us a call and we’ll mail you out some more information or schedule a time with us for a short visit to discuss these opportunities.

 

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.

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.