Good day MAR Members!
Let’s Go Giants! Let’s Go Giants!
It’s hard to believe that this will all be over soon…hopefully with a big parade on Market Street. The Giants’ amazing run continues, and as far as I can tell many of you MAR Members have been at the World Series games…at least that’s what Facebook is telling me. MAR Member Robert Bradley was even mis-identified as the “Marlin Guy” on TV…nice suit, Rob!
Also this weekend, I’ve got to give another shout out to the Utah Utes football team, with a rousing come-from-behind win over USC with 6 seconds remaining. My USC Trojan wife Heather was not as amused, but the four member MAR/Utah cheering section is very pleased this week. All four of us.
OCTOBER CAR CONFERENCE AND EXPO WRAP-UP
This week it’s a short recap on the last of the CAR stuff. First of all, after all of my reporting the past couple of weeks about the Millennials and their delayed home buying patterns, CAR issued a press release and published a Webinar about this generation and their attitudes about homeownership. The highlight seems to be that this generation still believes in homeownership, with 54% rating homeownership as an “8” or higher on a 1-10 scale about the importance of homeownership.
But enough with the Millennials, already!
As always, one of the highlights of the conference is CAR Chief Economist Leslie Appleton-Young’s forecast for the coming year. I shared a couple of the most important highlights a couple of weeks ago, which is that CAR expects total home sales to increase by 5.8% in 2015, and also that the median price is projected to increase by 5.2 % in 2015.
The whole presentation is finally available online here, and it’s worth a quick review…well, as quick as you can review a 128 slide PowerPoint presentation. All of your economic questions should be answered here!
Since we are at the end of a 2-year legislative cycle, the most recent round of advocacy for our members has concluded in Sacramento. Much of what we worked on were a list of priorities for 2015 and beyond. Here are some of the highlights:
-The CAR Board of Directors voted to adopt a “FOR” position on California Proposition 1 on the November ballot, which is the Safe, Clean and Reliable Drinking Water Supply Act of 2014. All other state ballot initiatives were deemed “Not Real Estate Related”.
-The “Split Roll” Task force released its report and recommendations. “Split Roll” refers to Proposition 13, and the question of whether residential and commercial property tax rules be “split” and taxed with different policies. The Task Force recommended the following:
1. That CAR continue to oppose measures that would impose a split roll property tax system. To that end, a “tool box” should be established on CAR’s website with information with which to combat attempts at the local level to establish a statewide split roll.
2. That CAR support measures that provide that when there is a substantial change in ownership interests if (a) real property or (b) a company owning real property that the property be reassessed.
The CAR Board of Directors voted to adopt these two policies.
-The Taxation and Government Finance Committee had the following action item:
That CAR “SPONSOR” legislation requiring that all property owners be notified when a proposed parcel tax is going to be voted on.
The genesis of this position is based upon the fact that if you’re an out-of-town owner and thus don’t vote in a particular area, currently you often do not know if a parcel tax is on the ballot. You deserve to know. The CAR Board of Directors voted to adopt this position.
We voted on lots of other things like starting working groups about various issues, plus a number of broker compliance items, but I’ll categorize those as “inside baseball” with real action items to come in the future.
Other odds and ends from CAR:
-In an economic session I attended, Christopher Thornberg of Beacon Economics was asked if the current real estate “run” was over? His answer, notwithstanding that sales were down in 2014, was that he sees a “whole new wave” of buyers and sales. Mortgage financing is expected to be made more available and accessible to potential buyers in the coming years, and those people will buy homes. The iron fist of mortgage lending is expected to loosen up.
-In this same session, both Thornberg and Richard Green, Professor and Director of the USC Lusk Center for Real Estate, agreed that our much-loved Proposition 13 both keeps home prices higher and also makes it harder to move. People with a low property tax base are reluctant to move and give that up. I can relate to that, having bought my house in 1996…moving to a house that is the same price today would result in a 150% increase in my property taxes. I’m hardly alone, and people like me who don’t want to move constrain the supply of homes on the market. When you combine this with the fact that most everyone has refinanced into a super-low-rate 30-year mortgage, it’s understandable why we have constrained supply.
-Baby boomers are also delaying retirement, partially because their interest rates are so low why would they sell and downsize into something with a higher rate?
-Everyone throughout the week expected the current low interest rates to be around for a while to come. They may go up a bit, but no quantum leaps are expected.
-Thornberg also expects more and more banks to hold mortgages rather than sell to Fannie and Freddie: “Where there is a profit there is a way.”
-No one sees a return to sub-prime lending practices like we saw in the middle of the last decade. Green had previously been in favor of those policies to increase accessibility of loans, but everyone got bitten last time and thus there is no will for that type of financing…regardless of how much money there might be.
-Finally, in a breath of fresh air that hopefully our legislators in Sacramento will adopt (not likely): The CAR Affordable Housing Task Force determined that any policy on this subject is “not a project that can be implemented at a state level.” Affordable housing challenges and policies are different throughout the state, and need to be addressed at a local level. So chalk one up for CAR supporting local control. Hopefully we can get that message across in Sacramento that one-size-fits-all housing policy is simply not practical in California.
I think that’s enough for this week, and with that I’ll close the book on the 2014 Fall C.A.R. Business meetings. Next week, back to local stuff!
I wish you a safe and prosperous week.