Passing Prop 19 in November 2020 will have significant consequences for homeowners selling in one county and buying in another.  We witnessed much of this movement in the past few months as families in the bigger cities – such as San Francisco – wanting more space and bigger homes, moved to the suburbs.  As a result of Prop.19 there will be consequences going forward that may benefit sellers who moved between counties rather than within a county.

Up until February 15, 2021 a seller could only transfer their tax base within certain counties.  With this new law enactment, eligible homeowners may now transfer their tax basis anywhere within the State.

Additionally, Prop.19 increases the number of times that certain people may transfer their tax assessments.  If a person is 55 years or older, has severe disabilities, or lost a home in a natural disaster (such as a fire), the person may transfer their tax assessment up to three times (formerly only once.).

Unfortunately, many people will experience a negative impact from Prop.19 since it considerably limits the parent-child exclusion for purposes of real estate tax assessments.  Formerly, parents could transfer a primary residence to children without any new fair-market reassessment regardless of how they might use the property, thus allowing them to enjoy the same property tax basis as their parents.

In the past, if a child chooses to keep the home and to use as a primary residence, a $1 million of reassessed value will be excluded from the new property tax basis.  If, however, the child decides to keep it as a rental property or anything other than the primary residence, there is no $1 million exclusion, and the child will face a significant increase in property taxes.

It would seem that this Proposition will have as much of an impact on California real estate as Prop.13.

In today’s market it is harder than ever to find a home to buy.  Even before the health crisis there was a shortage of homes on the market, but when the stay-at-home order was imposed, many prospective sellers decided to wait which resulted in making a bad situation even worse.  Experts agree that this is the biggest challenge facing an otherwise hot market.  Danielle Hale, Chief Economist at realtor.com explains it this way:

“With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower.  In January as a whole, the number of for sale homes dropped below 600,000 [total US].”

While this may be the “state of the union”, it is only amplified in California.  In fact, many homes are simply selling faster than they’re being counted as current inventory.  It is somewhat reminiscent of last spring when toilet paper was flying off the shelves faster than it could be restocked.

Hale goes on to say:

“Time on the market was 10 days faster than last year meaning that buyers still have to make decisions quickly in order to be successful.”

While some California home sellers will feel comfortable listing their homes in the first half of 2021, others may want to wait until the vaccine is more widely distributed.  With this mindset, if you want your home to shine, you may want to get it on the market earlier rather than later in the year.

Sellers want to sell as quickly as possible, for the best price, and with little to no hassle.  If this describes your hoped-for selling experience, today’s market is the right time.  When demand is high, and inventory is low, you have the optimal climate for a successful sale.

If you are needing a fast bridge loan to make your real estate dream a reality anywhere in California, consider calling Sun Pacific Mortgage at 707-523-2099.  We offer a program that solves the problem and can be solved in record time, sometimes in less than 5 days!  This could make the difference between competing in today’s market or sitting on the sidelines.

A recent report in Quarterly Refinance Statistics, which covered refinances through 2020, stated that the dollar amount of cash-out refinances was greater in 2020 than in recent years.

In another article published by Freddie Mac a report stated the following:

“Americans treated their homes like ATMs last year, withdrawing $157.7billion amid a cash-out refinancing spree not seen since before the 2008 financial crisis.”

This information should not raise horrible memories of the housing crash we experienced in 2008, though.  In this article the facts behind the 2020 refinancing phenomenon are vastly different from those of 2008 as listed below:

1.  Americans are sitting on much more home equity today.  In 2006 the tappable equity (amount of equity available for homeowners to use and still have 20% equity left in their home) topped out at $4.6 trillion.  Today that number is $7.3 trillion.  This is the largest number of tappable equity ever recorded and includes an 18% increase since the end of 2019.
2. Homeowners cashed-out a much smaller amount this time.  In 2006, Americans cashed out a total of $321 billion, equaling 7% of the total tappable equity in the country.  In 2020 the $153 billion that was cashed out represented only 2% of all tappable equity.
3. Fewer homeowners tapped their equity in 2020 than in 2006.  Freddie Mac reports that 89% of refinances in 2006 were cash-out.  In 2020 that number was only 33%, leaving tappable equity in a better position.

Today’s cash-out refinance situation in no way resembles the situation of 2006 which preceded the housing crash.  Recently, the reasons for cash-out refinancing seen by our family company here at Sun Pacific Mortgage, have ranged from investing in rental properties, consolidating debt to improve one’s credit score, getting financing for business capital, and home improvements to name a few.

If you have substantial equity in your home, owner-occupied or investment property, give us a call at 707-523-2099 to discuss the wide range of programs available for short-term private financing.  Make your money work for you with a short term private money loan from us.

Living in Sonoma County has proven to be more difficult over the last year due to the restrictions imposed, however, that has not stopped or slowed down the continued good health in the real estate market here!

The following data regarding single-family residences obtained from the county’s MLS will shine a light on just how “healthy” the market has managed to remain through all the other obstacles it faced:

• Average sold price/square foot: $504 (+18% Year To Year)
• Median price: $740,000
• Average price:  $945,000

Individually, towns within Sonoma County have had some record-breaking numbers to mention:

• Town of Sonoma:  $773psf (+55% YTY)
• Sonoma coast: $836psf (+38% YTY)
• Russian River area: $458psf (+31% YTY)
• Petaluma West Side: $595psf (+29% YTY)
• Northwest Santa Rosa: $441psf (+23% YTY)
• Southwest Santa Rosa: $451psf (+23% YTY)
• Cloverdale: $372psf (+22% YTY)
• Southeast Santa Rosa: $423psf (+11%YTY)
• Petaluma Eastside:  $442psf (+11%YTY)
• Cotati/Rohnert Park: $390psf (+8%YTY)
• Healdsburg: $757psf (+7%YTY)
• Northeast Santa Rosa: $447psf (+6%YTY)
• Sebastopol: $520psf (+4%YTY)
• Oakmont: $377psf (-1%YTY)
• Windsor: $331psf (-14%YTY)

It was certainly hard to predict last year at this time that the housing market would look like this today!  What will tomorrow bring to the market?  Stay tuned!

If you are looking to cash in on this hot market, but cannot qualify for a conventional loan, give Sun Pacific Mortgage a call at 707-523-2099 and find a program that may get you into your new home through private funding.  We offer financing for owner-occupied residences as well as non-owner occupied for over 3 decades now.