It’s one thing to talk about whether Prop 5 will make a difference, because it’s very speculative – we won’t really know unless it passes.
Will it pass?
The powers that be are pushing their agenda on either side, but I doubt there are voters sitting on the edge of their chair awaiting the outcome.
If voters just go off the voter guide for direction, this is what they will see:
The ‘con’ argument starts with two zingers and then fingers the ‘corporate real estate interests’ as the culprit. If voters go to their website, this is the first image they see, which will make an impression:
Because the C.A.R. is already gearing up for a revised initiative in 2020, this may just be a test run. But it would be helpful to have it pass, and see if there is any positive impact on the statewide market that could provide additional data for the 2020 initiative.
If it does pass, but the market doesn’t change much, then the C.A.R. will be able to say that we need the next round – which eliminates the inheritance tax break for vacation and rental properties, and clamp down on businesses that avoid higher property taxes when they buy commercial real estate.
As election day nears, let’s take a look at Prop 5, sponsored by the California Association of Realtors – who is encouraging agents to help get the vote out.
I’ve been skeptical that, if passed, Prop 5 would bring many more long-time owners to market. The benefit only helps those who have a low property-tax basis currently, and won’t move unless they can take the same low tax basis with them.
The latimes.com featured a typical example here:
After Robert Holland’s knee surgery a few years ago, he’s had a harder time climbing the stairs in his trilevel home in the Tujunga neighborhood of Los Angeles.
Holland, a retired stagehand, wants to move from his residence at the foot of the San Gabriel Mountains to a one-story place nearby with a yard large enough to raise a goat and a couple of chickens.
But one big thing is holding him back: taxes. Holland purchased his home in 1995 and owes $4,500 this year in property taxes. If he buys a new house where he wants, his tax bill will more than double.
“It’s a matter of the quality of life,” he said, chuckling about his dilemma about whether to move. “I’m 63. I’m thinking what do I got, 20 good years left?”
The California Assn. of Realtors has a solution to Holland’s problem. It’s sponsoring Proposition 5, a statewide initiative that would provide property tax benefits for homeowners 55 and older as well as the severely disabled and natural disaster victims if they move to a new home.
Under the measure, qualifying homeowners would no longer have to pay property taxes based on the purchase price of their new home. Instead, they’d pay based on a combination of their new and old home values, lowering their property tax payment. The Realtors’ group, which has raised $13 million for the campaign, contends that the tax breaks are needed to help older residents and could free up larger homes that young families could use.
But a host of Proposition 5 opponents — including economists, local governments and labor unions — argue that older homeowners already receive disproportionately large property tax benefits in California. They say that providing additional breaks will exacerbate those disparities while costing cities, counties and schools billions of dollars a year.
Fernando Ferreira, an economist at the University of Pennsylvania’s Wharton School who has studied California’s property tax system, called Proposition 5 “completely nonsensical.”
“Right now, you’re giving a gigantic tax break to older homeowners who live in the best houses in the richest parts of the state,” Ferreira said. “This new proposition unfortunately will just perpetuate this inequality.”
But once you’ve lived in a house for 20+ years, it has become very unlikely that you will move again. Just the cost and hassle is mentally challenging, and the usual result is to make the old knee last a few more years.
Here’s why.
These folks could move right now, and take their old tax basis with them – all they have to do is buy a house that is less-expensive than the one they sell.
If they sold their house for $810,000, they could buy this one-story house on a flat half-acre that would seemingly suit all their needs, listed for $799,999:
If they were that committed to moving to a one-story house where they can have “a yard large enough to raise a goat and a couple of chickens”, they could do it today – and take their low tax basis with them.
Do they need a swankier place?
If this house isn’t good enough, and they need a single-story that costs a whole lot more, than they should pay the regular property tax.
What is behind the scenes is the C.A.R. intent to put this measure back on the ballot in 2020 with another initiative:
After gathering signatures to put the initiative on the ballot this year, the Realtors lobbied the Legislature for a deal. The group wanted to replace Proposition 5 with a separate measure that included the same tax breaks for older homeowners, but eliminated the inheritance tax break for vacation and rental properties, and clamped down on businesses that avoid higher property taxes when they buy commercial real estate.
The California legislature didn’t go for it – and this year’s initiative just seems like a trial run to test the waters. Can’t wait for 2020!
Wondering what the Boeing 737 airplane needs for a runway?
The minimum runway distance for a 737 is 6,800ft. This proposal only extends the current runway to 5,697ft.
The article:
The San Diego County Board of Supervisors voted unanimously Wednesdsay to approve a new 20-year master plan for the McClellan-Palomar Airport. Supervisor Kristin Gaspar recused herself.
Part of the update includes extending the existing runway up to 800 feet. The county of San Diego said this would allow airplanes to reach the East Coast, Europe and China without having to refuel.
People living in the area are concerned that a longer runway could mean a lot of noisy planes — but Supervisor Bill Horn, who is also a pilot, said technology is helping fix that.
“Those airplanes are a lot quieter than the old stuff,” Horn said. “And that’s just going to improve the noise issue.”
A report from county staff said a longer runway would mean airplanes are able to increase elevation sooner after takeoff which could also reduce noise on the ground.
An economic analysis shows that by 2030 the Palomar airport could support more than 4,500 jobs and provide $33 million in state and local tax revenue. The runway extension project is expected to take 13 to 20 years to complete, depending on available funding.
The airport is constructed over portions of an inactive landfill, and stakeholders commented that runway extensions constructed over landfill areas could damage the methane collection system and impact the environment. Prior to construction of any improvements on the landfill, the methane collection system will be re-designed to accommodate the improvements.
Any runway extension that requires construction over areas of inactive landfill may not be fully eligible for the FAA’s usual 90% grant share since FAA has indicated they may be reluctant to fund projects that result from the County’s placement of the landfills.
OK, now this gentrification stuff has gone too far. Hat tip Laker Joe!
Gentrification has accomplished what eluded city bureaucrats for decades.
Oceanside’s Main Attraction, North County’s only remaining topless club, is going away. A five-story 308-unit, apartment complex is proposed as its replacement.
Known to locals as “the purple church,” the Main Attraction bar and restaurant hosts between eight to 20 ladies a night who dance on stage around a brass pole while a DJ spins “Cherry Pie” or “Pour Some Sugar on Me.” Admission is $11 every night after 6 pm but $14 for the once-a-month “amateur night.” Dancers are topless but never fully nude. Once inside, patrons are frequently asked if they would to pay extra for a private lap dance.
“It is my understanding this property is being sold to a developer,” says former mayor Terry Johnson who adds that getting the topless bar off that city entryway will be good for the whole street. “I am sure things will now start moving with the [long closed] Bridge Motor Inn property [to the north]. They can now get a Hilton or Marriott to come in. And things will start moving with the Motel Six property and the vacant Mira Mar building to the south.”
For those who wonder what has been propelling the housing market lately, let’s note that people keep moving here – an average of 1,500 per year moved to Carlsbad over the last nine years!
The City of Carlsbad shows the current population to be between 110,000 and 113,000 people today. When fully built out in 2035, the general plan calls for approximately 135,000 people:
I hope those extra 20,000+ people bring the big money!
Jerry Brown’s replacement will be elected on November 6, 2018 – we can expect a barrage of advertising in the meantime. Here’s how the candidates speak about the housing dilemma:
Now that the big investors have virtually stopped buying homes, a legislator wants to find a way to regulate them.
Typically the term “institutional investor” refers to private investment firms that buy dozens of residential properties with the explicit aim of generating a steady income stream through rentals. Often they invest the money of wealthy individuals and public pension funds, like those established for California state workers and teachers.
The best example is Blackstone, a publicly traded Wall Street firm that barrelled into the country’s single-family home market in the depths of the Great Recession in the late 2000s. Through its residential investment-focused subsidiary, Invitation Homes, Blackstone is now the largest owner of single-family homes nationwide. In California, they own about 13,000 homes.
But firms such as Blackstone have stopped buying wide swaths of California homes. According to the real estate data firm ATTOM Data Solutions, which defines institutional investors as entities that buy 10 or more homes in a given year, institutional investors accounted for less than 2 percent of the state’s single-family home and condo sales in 2017.
That’s a pretty steep drop from as recently as 2012, when institutional investors accounted for about 7 percent of sales.
Why the decline? California no longer has a glut of cheap houses that can be easily gobbled up in foreclosure auctions. A sustained economic recovery and a lack of construction of new housing has sent housing prices skyrocketing. It’s now too expensive for institutional investors to buy lots of California homes. Blackstone’s Invitation Homes bought only 82 California houses last year.
This is a brief history of the growth of San Diego from a sleepy mission village to a major agricultural and shipping center. Credit for this transformation goes to two men, Alonzo Horton and Frank Kimball, and an unheralded railroad, the California Southern. The construction of this railroad poured millions of dollars into San Diego and led to a vast population expansion as men came to work on the line. National City, just south of San Diego, experienced immediate growth as terminal of the line and home of the railroad yard, shipping wharf and machine shops. The California Southern proved a pivotal pawn in the breakup of the Southern Pacific monopoly in California by the Atchison Topeka Santa Fe railroad.
The subsequent rate war between the two giants led to a tremendous real estate and population boom in Southern California in the 1880s. The California Southern, with its link to a transnational railroad, proved crucial to the transformation of San Diego from a farming community to a small city of emerging industry and mercantile expansion. Unfortunately the hopes of the citizens of San Diego to create a port to rival San Francisco were not realized. Los Angeles grew even more quickly, and San Diego never reached the prominence for which it dreamed.
A shutdown of the federal government could throw a monkey wrench into many corners of our economy. And if you’re getting ready to close on a house, look out, because one of those wrenches might be headed your way.
That’s because some government agencies are involved in the mortgage process, and they’re generally of the “non-essential” variety. The good news is, most home buyers (probably) won’t be affected. Mortgage giants Fannie Mae and Freddie Mac aren’t pure government organizations, and they’ll keep right on going approving loans during any potential shutdown.
However, buyers using FHA or VA loans may run into trouble, since those agencies would likely be staffed at minimum levels during a shutdown, with all the power of a DVD player on standby mode (though VA hospitals would remain fully staffed).
In December — when we last flirted with a shutdown, because this ridiculous ritual has become a regular exercise — Zillow estimated that 3,500 home loans per day could be delayed if VA and FHA employees were furloughed and couldn’t process incoming mortgages.
That’s not the end of it, though. If you’ve applied for a mortgage, you know it involves submitting a staggering amount of paperwork and documentation — including your tax returns. Responsible lenders generally verify that information with the IRS, and guess who won’t be answering emails or picking up the phone during a government shutdown.
“They’re barred from the building and barred from using the network for access. So, you have a real shutdown,” Mortgage Bankers Association CEO David Stevens told CNBC in April — during yet another recent installment of this nonsense.
Another hiccup could occur if a lender needs to verify your Social Security number, which could happen if your application has a typo or some other information that doesn’t match up with the data on file.
That’s no picnic — juggling a home purchase with an expiring lease or an existing home you’re trying to sell is stressful enough without one part of the equation falling through. But even worse, a few deals actually fell apart altogether.
