MAY 2024
Homes in multiple California cities see price reductions
According to recent data from Zillow, 15 percent of properties in major California cities showed price reductions aimed at attracting hesitant buyers. Of the 83,093 properties for sale in California on Zillow as of last week, 13,430 had a price reduction. In Los Angeles, of 6,039 properties listed for sale on Zillow, 971 or 16 percent had a price reduction. San Francisco also had a price reduction in about 16 percent of homes listed. Oakland saw 18 percent of listings with prices reduced, and San Diego, 19 percent. Sacramento showed 21 percent of homes listed for sale on Zillow had a price reduction.
At the state level, prices are increasing, however. This is mainly due to a historic shortage of homes. According to Redfin, the median sale price in California was $816,800 in March, up 1.01 percent from a year earlier. See our local Bay Area stats at the end of this newsletter.
Judge rules California's lot-splitting law unconstitutional.
When Senate Bill 9 passed in 2021 and went into effect in 2022, it allowed property owners in California to split their lots and build up to two new homes, with some guidelines about the size of the original and resulting lots. The law was hailed as a way to open single-family neighborhoods to build more desperately needed housing. Two years later, a Los Angeles Superior Court judge ruled the law unconstitutional.
The ruling applies to five Southern California charter cities that were parties to the case: Redondo Beach, Whittier, Carson, Del Mar and Torrance. However, if the case is appealed, the appellate court's ruling will apply to charter cities statewide, including San Francisco, Oakland and San Jose. Charter cities have special privileges under the state Constitution, including the right to enact their own laws. When the state Legislature wants its laws to apply to those charter cities, lawmakers have to demonstrate the law addresses a statewide concern.
In his decision, Judge Curtis Kin said that the Legislature didn't do that in this case. SB 9 says its purpose is to "ensure access to affordable housing." The lawsuit asserted that "affordable housing" means specifically below-market-rate, deed-restricted housing. Since the law doesn't require property owners to develop that kind of housing, Kin ruled that the law is unconstitutional. The Attorney General's office has said that they are reviewing the case and would "consider all options in defense of SB 9."
Does your 3% mortgage make you richer in California?
The ultra-low mortgage rates of 2020 and 2021 set off a homebuying frenzy in California, according to an article in the San Francisco Chronicle, and many also took the opportunity to refinance. Just 77 percent of existing mortgages in the state are below 4.2 percent, according to new research from the Federal Housing Finance Agency. Meanwhile, the average mortgage rate recently climbed to 7.17 percent.
For those with low rates in a world where rates are rising, a mortgage turns from a liability to an asset. Low rates enable many homeowners to save more for their goals, adding to the personal balance sheet of many California homeowners. However, some with low mortgage rates are choosing to stay in their homes instead of selling them, perhaps buying a larger or smaller home, and acquiring a higher mortgage rate. Regarding paying down a 3 percent mortgage early, experts suggest that making early payments is similar to making an investment with a 3 percent return. If you believe you can get a higher return than 3 percent, Holden Lewis at Nerdwallet suggests investing that money elsewhere, such as with the S&P 500 that historically returns 10 percent, or even a high-yield savings account that now pay more than 4 percent.
Who do you know?
I have a nice listing for a home in Boulder Creek that needs a new owner. I thought I would put it out to you to see if you knew anyone who might be interested in a sweet mountain home in the beautiful redwoods either as a primary residence or possibly a vacation home. It is priced under market at $519,000. Let me know if you do.... and thanks!
April '23 to '24 Comparisons for Santa Cruz, Monterey & the Bay Area
Comments: As I mentioned last month we are in very changing times. Interest rates are still up, and the Fed doesn't seem to want to lower them. 72,000 insurance policies were cancelled by State Farm in CA with other companies threatening.
So, let's look at the numbers one year over the previous. Wow, a serious increase in new listings in all 3 counties. Hello, it seems none of what is happening matters, people are just fed up and getting on with their lives. The same with sales, a 46% increase in Santa Cruz and 38% in Santa Clara County. Oh yeah, and then there are prices! Significantly down in Santa Cruz County (-14.4%) but up in the other two. Sales price to list price declined 3.5 pts in Santa Cruz and almost 1 point in Monterey but good ole Santa Clara County increased over 3 pts across all cities. These statistics were a total surprise to me, as I haven't seen or heard any significant buzz from my cohorts. Can't wait to see what happens in May. (Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS)
