Pasadena Real Estate Blog

Propositions 98 and 99 are opposing ballot initiatives for the upcoming primary election.  I’ve read the voter’s information pamphlet from the California Secretary of State’s Office, and I’ve come to some conclusions. 

Prop 98 limits the governments rights to take private property by eminent domain, and transfer it to private owners or developers for their private use and profit.  This has happened recently in Arcadia, where the city of Arcadia condemned private property in order to put a car dealership in it’s place.  The city benefits because of the increased sales tax revenue, so that was their claim to eminent domain.  The private business owners who were displaced, lost their businesses, some after many years of success. 

The opponents of Prop 98 (the supporters of Prop 99) have made some ”mis-statements” in their arguments against Prop 98.  They state that this proposition

• Eliminates rent control.
• Wipes out basic renter protections like requiring the fair return of rental deposits.
• Takes away protections requiring 60-day notice before forcing renters out of homes.

The first point is the only one that is correct.  Part of this proposition does eliminate rent control.  However, it keeps it in effect for as long as the current tenant remains in the property.  Only after that tenant has terminated their lease, does it go into effect for new tenants. 

The last two points are flawed.  I’ve read through the entire proposition several times, looking for these items, and I could find nothing that mentions rental deposits or notice given to tenants.  The proposition simply refers to the California Civil Code that covers rent control, and mentions nothing else. 

Proposition 99, however, changes essentially nothing about the current eminent domain laws.  According to the Legislative Analyst, “this measure would not change significantly current government land acquisition practices.”  And, in the language of the proposition itself, “SECTION 3. By enacting this measure, the voters do not intend to change the meaning of the terms in subdivision (a) of Section 19, Article I of the California Constitution, including, without limitation, “taken,” “damaged,” “public use,” and “just compensation,” and deliberately do not impose any restrictions on the exercise of power pursuant to Section 19, Article I, other than as expressly provided for in this measure.”

In addition, there is a provision in Prop 99 that states that if Prop 99 gets more Yes votes than Prop 98, Prop 98 becomes null and void, EVEN IF Prop 98 is approved by a majority of voters.  That doesn’t seem quite fair to me.  This measure is so badly written that it’s conceivable that both measures could fail at the ballot box, and if Prop 99 gets more Yes votes, “the provisions of this measure shall prevail in their entirety”.  I’m sure that this would be immediately challenged in Court, but nevertheless, that’s what it says. 

To protect private property rights, and prevent future car dealerships, etc. from taking over private homes and businesses, I recommend voting YES on 98, and NO on 99. 

Call your Legislators today to Ask that  the Point-of-Sale Provision be Removed from AB 2678!

There is a bill before our State Legislature, AB 2678 (Núñez), which among other things, requires that ALL homes and commercial property in California have an energy audit at point-of-sale and that mandatory energy efficiency investments be made. While we appreciate the goal of AB 2678, we strongly opposes the point-of-sale requirements in AB 2678 because they fail to achieve the bill?s objectives and, such mandates will further weaken the housing market. If enacted, AB 2678 could add thousands of dollars to the cost of purchasing a home, including up to $400 just to have a home audited. AB 2678 was passed by the Assembly Utilities committee. It will have a vote in the Assembly Appropriations committee before heading to a vote by the entire Assembly.

Contact  your Assembly member, and urge him or her to OPPOSE AB 2678 unless the point-of-sale requirement is removed.

ISSUE BACKGROUND

AB 2678 will require a state agency to set up a process to require point-of-sale energy efficiency audits that will cost up to $400 and ultimately will require point-of-sale energy efficiency retrofits that may cost THOUSANDS of dollars.

Don’t let this happen to you as a future buyer or seller (most of us are going to end up buying or selling a home at some point) – call your legislator TODAY!

While we have no objection to increasing energy efficiency, AB 2678 will be both dangerous to the real estate market and grossly ineffective. Here’s why AB 2678 is a bad idea:

AB 2678 will cost both buyers and sellers, in time, as well as money. Heaping costly requirements on all sales will slow every residential AND commercial transaction, further weakening the real estate market and the economy.

Point-of-sale approaches take too long. Research shows that only 22% of the properties most in need of energy efficiency retrofits will actually be sold by 2020. AB 2678 will be grossly ineffective in achieving its goals.

AB 2678 will hurt housing affordability. The mandatory audit and retrofit requirements ultimately created could add THOUSANDS of dollars to every transaction. And every $1,000 increase in the price of a home disqualifies 26,600 families from owning.

Call your Legislators today, and help stop this ill-advised bill. 

April 15 provides an annual reminder about the tax benefits of owning a home:

Most people know that mortgage interest and property taxes are deductible in most cases, as is the interest paid when homeowners borrow against the equity in their home. What they may not realize is that the Tax Payer Relief Act of 1997 provides that owners who have lived in their home for more than two years don’t have to pay taxes on the first $250,000 of profits (if they are single) and $500,000 of profits (if the owners are married) when they sell the home.

This year might be a particularly good time to buy, considering that we are pretty close to the “bottom” of the market.  And, you’ll never know that the market has hit bottom, until it starts to go up. 

Once again, it’s time to update you on our current real estate market. 

According to an article on the Los Angeles Times website, www.latimes.com, on April 15, 2008, home prices in Southern California continue to fall. The median price of homes dropped to $385,000 in March. The total number of homes sold was up from February, but down 41% from a year ago.  This represents the lowest price since April 2004, per information from DataQuick.   The median sales price of Southern California homes fell below $400,000 in March, as the real estate market’s traditional spring bounce was far weaker than normal.  Last month’s median price was down 5.6% from February’s $408,000, and down a record 23.8% from $505,000 in February 2007. 

Although prices were down, the number of homes sold actually increased from the prior month.  Last month’s sales total was an 18.8% increase from February’s total but was down 41.4% from March 2007.  But, this volume represented about half of the increase usually seen from February to March.  Foreclosed homes accounted for more than a third of homes sold in March, and they’re definitely affecting prices in a downward direction.

Buyers appear to be waiting to see if we’ve hit the bottom of the market, which some experts believe will be toward the end of this year.

A news item was announced today on KNX Radio (1070) that prices in the San Fernando Valley have actually started to go up - about 5% over last year.  It just may be an early sign that the market has hit bottom.  We may actually be on the upswing!  Hopefully, this is a new trend, and not an abberation, and that the trend will start moving east, to Pasadena. 

January 26, 2008 - Congressional leaders and the White House today reached an agreement to increase conforming loan limits as part of a larger economic stimulus package. Raising the conforming loan limits to more accurately reflect the cost of housing in California and other high-costs areas of the nation has long been an objective of C.A.R. While it’s not a “done deal” and the details remain to seen, this is a huge win for Californians.Currently, Californians are forced into more expensive non-conforming jumbo loans, decreasing homeownership opportunities for many and forcing others into more costly – and often riskier – loan products.

We are continuing to see a softening of our local real estate market, as well as the greater Los Angeles market. In Los Angeles County, the median price of a single family home in September dropped 2.8% from the prior year, and 5.9% from the prior month.And, the number of sales dropped 38.4% from the prior year, and 25.2% from the prior month.  The median price figures represent the largest month-to-month percentage decline on record.  They also reflect the first year-to-year decline in more than 10 years.     

“While the entry-level portion of the market has been adversely affected by the sub-prime situation and tighter underwriting standards for much of the year, the high end of the market also saw a decline in sales, as even well-qualified buyers were affected by the lack of funds available for jumbo loans,” said C.A.R. Vice-President and Chief Economist Leslie Appleton-Young,  This means it’s challenging times for sellers and buyers, alike. 

Strategies for Buying and Selling a House at the Same Time

Simultaneously buying a home while selling another can be tough. In a hot market it’s often a deal killer to include in your offer to buy a new home, a contingency to sell your existing home. Sellers will simply take their pick of offers not burdened by such a contingency.

On the other hand, if you sell your existing home first without signing for a new one then you could wind up temporarily homeless or spending exorbitant amounts on hotel rooms or other high-priced temporary quarters.

You do have some alternatives. The best-case buy-and-sell scenario is for those who can afford to own two homes — if only temporarily.

For those who can’t afford to own two homes, a more common move-up strategy is what’s called a “rent-back.”

In a rent-back, the seller sells the home but stays put, paying rent to the new buyer. The rent is typically the same as the new buyer’s mortgage payment, including principle, interest, taxes and insurance.

A back-up and riskier strategy is what’s called a “bridge” or “swing” loan. Using your existing home as collateral, you take out a bridge loan for three months to five years to use as the down payment on your new home. Once you’ve purchased your new home, you sell the old one and pay off the mortgage.

Carol Lollich, GRI, CRS
Broker-Owner

E-mail: mailto:homes@lollich.com
Website: www.pasadena-homes.com

(888) 412-0172 (Toll Free)

Concierge for Homes
2700 E. Foothill Blvd., Suite 122
Pasadena, CA 91107

*Real Estate…At Your Service(TM)

The above article is from my June 2006 newsletter, provided by Realty Times, Inc.

One of the newest home mortgages to come on the market is the 50-year mortgage.  This is a fixed-rate, fully-amortized loan.  It just takes “a little” longer to pay off!  It’s almost like an interest-only loan, since the principal amount is only slightly reduced each month, for probably at least 25 years.  But, it’s a good way to get into a property you might not otherwise be able to qualify for (or afford).  It can minimize monthly payments, without worrying about the interest rate and monthly payments going up on your loan.  However, the effective result is that, for most people, the principal amount will not go down appreciably for the amount of time the borrower has the loan, since most homeowners don’t stay in a property (or stay with the same loan) for 25 years.   

An alternative is the more commonly used (because it’s not quite as new) 40-year mortgage.  Both are also available as “hybrid” loans (interest-only at the beginning of the loan, then converting to a fixed rate).  Since most homeowners only stay in a home for a period of 5 to 7 years, both the 40-year and 50-year mortgages are good options.  

If you’d like more information about either of these programs, or any other loan information, let me know.  I have several good lenders I can refer you to.

Carol Lollich, GRI, CRS
Broker-Owner

E-mail: mailto:homes@lollich.com
Website: www.pasadena-homes.com

(888) 412-0172 (Toll Free)

Concierge for Homes
2700 E. Foothill Blvd., Suite 122
Pasadena, CA 91107

*Real Estate…At Your Service

Thank you for visiting my Pasadena Real Estate Blog.  Here is where I’ll be posting information about the current real estate market in Pasadena, California, as well as surrounding cities.  These include Altadena, Arcadia, Glendale, La Canada Flintridge, Monrovia, San Marino, Sierra Madre, South Pasadena, and other cities in the West San Gabriel Valley. 

I’ll be including information about current interest rates, market conditions, local information about what’s happening in our area, and other items that I think you will find useful.  I’ll be posting my newest listings here, as well. 

I hope you enjoy my blog.  If you have any suggestions about topics you’d like me to cover, please let me know via e-mail. 

Thank you again, for visiting.

Carol Lollich, GRI, CRS
Broker-Owner

E-mail: homes@lollich.com
Website: www.pasadena-homes.com

(888) 412-0172 (Toll Free)

Concierge for Homes
2700 E. Foothill Blvd., Suite 122
Pasadena, CA 91107

Real Estate…At Your Service