December 2020

Coronavirus Dominates the News

With hospitalizations steadily increasing and millions of Americans who chose to travel for Thanksgiving in defiance of public health experts, we have been warned of an upcoming "surge upon a surge".

In California, hospitalizations are soaring and the state has more patients hospitalized right now than it has at any other time since the start of the pandemic. Health officials are concerned that hospitals may be overwhelmed in the coming weeks. And to top it off, Governor Gavin Newsom instituted a new "drastic" stay-at-home order.

I understand we are all on overload about the coronavirus but that should not stop us from doing what we need to for prevention and spread as well as being thankful for all those health care workers and first responders performing their jobs without question. I know I am.

Nearly Half of Americans are Considering a Move to Reduce Expenses

The COVID-19 pandemic has been a mainstay for the better part of 2020, affecting nearly every aspect of daily life as we know it. Our housing choices are no different.

Record-breaking unemployment, with more than 11 million Americans still jobless, along with an exodus from major cities with dense populations, such as New York, and a desire for more living space are all factors motivating Americans to reevaluate priorities for their next home purchase or lease.

A new Lending Tree survey finds that close to half of Americans have a move on their minds in the not-too-distant future. The results, based on the responses of more than 2,000 participants, offer some insights into what could motivate consumers to pack up and relocate.

Of those considering a move, more than 1 in 4 (27%) want to stay within their current area. More than 1 in 4 (26%) Westerners and nearly a quarter (24%) of Northeasterners say their local cost of living is high and no longer worth it. More than 6 in 10 (64%) of Americans who work remotely are entertaining the thought of relocating in the next 12 months. More than half (52%) of Gen Xers report their living situation has changed because of the pandemic. That is compared with 49% of millennials and just 10% of baby boomers.

Sellers Likely to Keep Market Advantage in 2021

With buyer competition remaining strong and low inventory pushing home prices to new highs, sellers are likely to keep their market advantage next year, according to a Realtor.com housing forecast. Home price growth may slow but will continue an upward trend, along with property appreciation for sellers.

Housing shortages nationally will largely continue to persist, but the number of listings will slowly rebound in 2021. More homes hitting the market will offer buyers some relief in next year, but it will not be enough to tip the scales in favor of buyers. As inventory slowly begins to replenish and buyer demand for homes remains steady, sellers will continue to be in the driver's seat.

California Proposition 19 Amends the Constitution

Proposition 19 amends the California Constitution by adding sections that provide further expansion and qualifications regarding limitations on property tax increases for persons over 55, the severely disabled, victims of wildfires or other natural disasters (collectively referred to as "eligible homeowners") and transfers of certain inherited properties. Eligible Homeowners:

Effective April 1, 2021, location restrictions will be removed allowing eligible homeowners to:

Move Anywhere in the State. The taxable value of a primary residence may be transferred to a replacement primary residence anywhere within the state, as long as it is within two years of the sale of the original primary residence.

Purchase a More Expensive Home. A home of greater market value may be purchased without incurring a substantial increase in taxable value. The property tax bill would still go up but not by as much as it would for other homebuyers.

Increase the Use of the Transfer. Homeowners who are over 55 or severely disabled could transfer the property's taxable value up to three times in their lifetime. Victims of wildfire or other natural disasters are allowed a once-in-a-lifetime transfer.

Inherited Properties:

Effective February 16, 2021, the following qualifications will apply to inherited properties:

Continued Use as Primary Residence or Family Farm. The reassessment exemption on inherited properties would apply only if the property is used by the child (or grandchild under certain circumstances) as their primary residence, or if the property is a family farm. Properties used for other purposes would not qualify for the exemption.

Increase for High Value Inherited Homes and Farms. If the current market value of an inherited property exceeds the parent's taxable value by more than $1 million, then the child's taxable value shall be assessed as the current market value less $1 million*.

*The State Board of Equalization shall adjust the $1 million amount for inflation beginning on February 16, 2023 and every two years thereafter.

Oct-Nov Comparisons for the 3 Bay Area Counties

Comments: In all three counties, the # of new listings as well as total sales were down month over month. This is fairly typical for this time of the year, coronavirus or not. As you can see, median prices remained about the same overall with Palo Alto and Cupertino seeing an increase. Days on the market declined due to the continued lower inventory and high demand which also shows up as an increase in the list to sales price. (Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS)