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Former Santa Clara County principal planner Don Weden told members of SILVAR’s Cupertino/Sunnyvale District this week that California is experiencing a number of structural changes and will be facing bigger challenges than in the past due to population growth, household changes, and an aging population.
The California Department of Finance projects Santa Clara County’s current population of 1.8 million will grow by 140,000 people in 15 years. As population grows, so will households, but their makeup will change.
“The future looks gray,” said Weden.
Currently in Santa Clara County, one in 10 persons is age 65 and older. By 2030, one in five persons or one-fourth of the adult population will be over 65.
Weden said development plans anchored on the drivable suburban model are no longer suitable. One in five Americans over 65 do not drive – because of rising gas prices, because they can’t, and some prefer not to.
“Neighborhoods we thought were fun to grow up in may be problematic to grow old in,” said Weden.
Weden indicated the rate of home ownership among the 25-34 year old group has dropped from 40 percent in 2007 to 31 percent in 2010. Millennials, the generation born between 1980 and 2000, now number 80 million, more than the baby boomers, and projected to soon comprise majority of the U.S. workforce. This generation has never known the world without the Internet. Weden said Millennials are the most educated generation in history, but also saddled with much student debt. They are mostly renters not only due to economic necessity, but because they want to be mobile, free to move from job to job without having to worry about selling their home every time they move.
“They are also less confident in the economics of the American dream,” said Weden.
Also important is this generation does not like driving. Eighty-eight percent want to live in an urban setting that is walkable. This is why it is critical for cities to focus on planning walkable urban neighborhoods instead of drivable suburban communities, said Weden. Baby boomers would also prefer it, especially once they can no longer drive.
Weden said the evolution from the predominantly drivable suburban neighborhoods to walkable urban neighborhoods is gradually taking place in Bay Area cities. He said REALTORS® need to get involved in planning these neighborhoods. The neighborhoods need not be exotic, but should be complete, offering residents of all ages an active lifestyle, with services and shops, including grocery stores and other amenities.
April 2014 marks the 46th anniversary of the passage of the 1968 landmark U.S. Fair Housing Act. Title VII of the Civil Right Act of 1968 strives to ensure equal housing opportunity for all and prohibits housing discrimination based on race, color, national origin, religion, sex, disability, and family status.
“Fair Housing Month is an opportunity to recommit to the principle that fair housing is an essential part of everything we do. REALTORS® play a vital role in ensuring fair housing for all and strive to make home ownership accessible to everyone,” says David Tonna, president of the Silicon Valley Association of REALTORS®.
Article 10 of the National Association of REALTORS® Code of Ethics provides that, “REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.”
Home sellers, home seekers, and real estate professionals all have rights and responsibilities under the Fair Housing law:
• Home sellers or landlords are required under the law not to discriminate in the sale, rental and financing of property on the basis of race, color, religion, sex, handicap, familial status, or national origin. They cannot instruct the licensed broker or salesperson acting as their agent to convey for them any limitations in the sale or rental because the real estate professional is also bound by law not to discriminate. A home seller or landlord cannot establish discriminatory terms or conditions in the purchase or rental; deny that housing is available, or advertise that the property is available only to persons of a certain race, color, religion, sex, handicap, familial status, or national origin.
• Home seekers have the right to expect that housing will be available to them without discrimination or other limitations based on race, color, religion, sex, handicap, familial status, or national origin. This includes the right to expect housing in their price range made available to them without discrimination; equal professional service; the opportunity to consider a broad range of housing choices; no discriminatory limitations on communities or locations of housing; no discrimination in the financing, appraising, or insuring of housing; reasonable accommodations in rules, practices and procedures for persons with disabilities; non-discriminatory terms and conditions for the sale, rental, financing, or insuring of a dwelling; to be free from harassment or intimidation for exercising their fair housing rights.
• Agents in a real estate transaction are prohibited by law from discriminating on the basis of race, color, religion, sex, handicap, familial status, or national origin. A request from the home seller or landlord to act in a discriminatory manner in the sale, lease or rental cannot legally be fulfilled by the real estate professional.
Complaints alleging discrimination in housing may be filed with the nearest HUD office, or by contacting them at http://www.hud.gov.
The economy has made a remarkable comeback from the Great Recession, according to a California Association of REALTORS® (C.A.R.) real estate analyst. The nation’s GDP is at 2.4 percent, up from 1.9 percent in the beginning of 2013. Personal consumption, the biggest component of GDP, hinges on consumer confidence, which has also rebounded, with its index climbing to 82.3 in March, the highest reading since January 2008.
“Right now, the economy is charging along and moving forward. There is positive economic growth,” Sara Sutachan told members of the Silicon Valley Association of REALTORS® during her visit to the area last month. Sutachan is manager of Broker and Real Estate Finance Outreach for C.A.R.
It’s even better in the Bay Area, especially in the San Jose metro area, which has experienced a 3.4 percent job growth, adding 110,000 in the area. Silicon Valley is charting a stronger course compared to other parts of the state.
“You are in a world of your own and going gangbusters,” Sutachan told the REALTORS®.
Sutachan then gave REALTORS® a heads-up on what to expect this year.
* Interest rates have begun tapering off, so consumers should expect to see rates hover around the 5 percent range. This will place a damper on housing affordability for many buyers, especially first-time home buyers.
* Financial reforms stemming from the Dodd-Frank Act are reining in lenders to ensure that they make a good faith effort to verify a borrower’s ability to repay their mortgage. Stiff penalties are imposed if they do not. Mortgage applications are required to comply with the Qualified Mortgage (QM) rule, which includes full documentation of income, assets and employment, a maximum of 3 percent for points and fees, a cap of 43 percent on the back-end debt-to-income ratio, among other requirements.
* Talk of dissolving Fannie Mae and Freddie Mac threatens home ownership since these government-sponsored enterprises are the cornerstone of housing. The GSEs and Ginnie Mae (Government National Mortgage Association) are responsible for 90 percent of mortgage originations and 99 percent of mortgage securitizations.
* The proposed draft legislation on federal tax reform could significantly impact home ownership because it proposes to lower the cap on the mortgage interest deduction, place tighter requirements on the capital gains exclusion, repeal the deduction for property taxes paid in connection with an owner-occupied home, along with all other deductions for state and local income taxes.
Sutachan forecasts statewide home sales could decline about 3 percent this year. She expects the median price to rise about 8.2 percent from last year. She said sales have stalled due to tight inventory since there has been little new construction for the past five years; sellers are reluctant to put houses their house on the market because they don’t have anywhere to go; because of the high appreciation, investors are renting instead of flipping their properties; there are fewer distressed sales in the market; off-market listings are growing.
The number of California homes that sold for a million dollars or more last year rose to the highest level in six years, and Silicon Valley neighborhoods continue to rank among the highest on the list of these high-end home sales.
A report from real estate information service DataQuick indicates a total of 39,175 California homes sold for a million dollars or more last year, up 45.1 percent from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, according to DataQuick.
Hillsborough, Saratoga, Menlo Park, Cupertino, Los Altos, Woodside and Los Gatos, which are located in the five districts served by members of the Silicon Valley Association of REALTORS® (SILVAR), were on the list of communities with the highest number of million-dollar home sales in the state. Hillsborough had 436 million-dollar home sales last year, with the most expensive home selling for $13.3 million; Saratoga, 332 million-dollar home sales, the most expensive purchased for $12.3 million; Menlo Park, 321 million-dollar home sales, the most expensive purchased for $5.5 million; Cupertino, 317 million-dollar home sales, the most expensive sold for $3.8 million; Los Altos, 267 million-dollar home sales, the most expensive purchased for $14.3 million; Woodside, 273 million-dollar home sales, the most expensive sold for $12 million; and Los Gatos, 243 million-dollar home sales, the most expensive sold for $4.8 million.
David Tonna, president of SILVAR, attributed the rise in high-end home sales in the region to a robust economy and rising home prices. “We are fortunate to have an economy that has made a comeback quickly, thanks to tech companies that are growing, some by leaps and bounds. The high demand for homes and lack of inventory has led to the appreciation of many homes,” explained Tonna.
Statewide, 840 homes sold for more than $5 million last year, an all-time high and up 20.3 percent from the previous high of 698 in 2012. In the $4-$5 million range a record 596 homes sold, up 29.3 percent from 2012. In the $3-$4 million range, a record 1,455 homes sold, up 31.3 percent from 2012. In the $2-$3 million range sales totaled 4,492, a record and up 37.4 percent from 2012. In the $1-$2 million range, 25,352 sold last year, up 42.5 percent from 2012.
The DataQuick report indicated the most expensive confirmed purchase in 2013 was a 15,355-square-foot, 8-bedroom, 14-bathroom beachfront Malibu mansion which sold for $74,500,000. The largest was a 25,447-square-foot, 16-bedroom, 18-bathroom mansion in Indian Wells that sold for $2,250,000.
According to the real estate information service a record 10,602 homes that sold for $1 million or more were bought with cash, up from 7,791 in 2012. Cash was used more frequently the higher up the price scale. Of those who did finance their purchase last year, the median down payment was 30 percent of the purchase price.
On Feb. 25, SILVAR members enjoyed the Global Business Council Potluck, which featured an array of ethnic dishes provided by members and guests. Along with the good food and networking, members received information about global real estate, shared their experiences in this field of real estate, and offered tips on how to connect with foreign buyers. They also received information on how best to utilize Proxio, a new membership benefit for SILVAR REALTOR® members.
Special guest Sateesh Lele, vice chair of the California Association of REALTORS® Global Real Estate Forum, shared information from the Forum’s presentation at the C.A.R. Business Meetings in San Diego. Lele indicated Florida, California, Texas and Arizona continue to be the leading destinations for international buyers, while Canada, China, India, Mexico and the U.K. are home to majority of international buyers.
Davena Gentry, chair of the Silicon Valley Association of REALTORS® Global Business Council, said even as home prices are appreciating, the US. is still relatively inexpensive in cost of living and housing, offering value, diversification, stability, and size. She shared information from a March 2013 CNBC article that indicated in Hong Kong, for example, the average property prices in the fourth quarter of 2012 ranged from $4,570 – $5,050 per sq. ft.
SILVAR REALTOR® members may now log in to Proxio, a leading global marketing and real estate networking platform that connects real estate agents from across the country and around the world. Proxio is a new membership benefit for SILVAR REALTOR® members that will enable them to share their listings with other real estate agents in more than 140 countries. SILVAR has partnered with Proxio to provide SILVAR REALTORS® a Standard Level membership to their Global MLS.
The global networking platform has been described as “similar to a LinkedIn for real estate agents, but more.” Access to ProxioPro gives agents networking opportunities and an agent and property search. Your listings and marketing materials will be automatically translated into 19 languages, 55 currencies and metric measurements.
The SILVAR ProxioPro Standard Level membership includes a member’s profile in the network of over 600,000 real estate professionals across the U.S. and in 140 countries, and international MLS exposure for members’ listings presented in 19 languages. In addition to the Standard Level features, the SILVAR member benefit package also includes two upgrades – the Multicultural IDX (M-IDX) widget for a member’s website, which includes a full MLS search and translations of all properties in MLSListings into Proxio’s 19 languages; and the Proxio SocialSearch™ app for a member’s business page, with full IDX in five languages – English, French, Spanish, Portuguese and Chinese. Both of these features – the Multicultural IDX (M-IDX) widget and the Proxio SocialSearch™ app for your Facebook business page, will be available to members in their Proxio account within the next two weeks.
Proxio is conducting live training classes for members at SILVAR to get them up to speed on this global tool. Cameron Garcia, who teaches the Proxio overview classes, encourages SILVAR members to complete their profile as best they can. Adding their specialties and a photo of yourself will provide agents and their listings better global visibility. Studies show agents are more receptive to connecting with other agents when they see a photo on their profile. Engaging with other real estate agents and establishing relationships can increase your listings’ exposure.
Garcia also assures members that the Proxio site is secure. Everyone who is a member of the Proxio international network is a legitimate real estate professional.
Carole Rodoni spoke to REALTORS® in Palo Alto early this month.
The current slowdown in home sales is attributed to seasonal factors, combined with higher home prices and a rise in interest rates. This development does not disturb some experts in the real estate industry.
According to Carole Rodoni, president of Bamboo Consulting, Inc. and formerly president of Fox and Carskadon Real Estate, chief operating officer of Cornish and Carey Real Estate, and president of Alain Pinel Realtors home prices have come back an average of 24 percent in the Bay Area. In Silicon Valley, she said the market has been “on fire.” In some places like Palo Alto, prices are up 40 percent.
A speaker at the Palo Alto District’s January tour meeting, Rodoni said the San Francisco Bay Area is experiencing an “economic revolution,” attracting investors, international buyers and those with cash. Compared to the rest of the state and nation, real estate in Silicon Valley moves at a different pace.
“Silicon Valley is the heart of technology. At the end of the day, it’s a good thing because you cannot own or run a business today without technology,” said Rodoni.
Many baby incubator tech companies are sprouting in the region and mammoth giant companies based here, like Apple, Google and Yahoo, are acquiring more companies and workers every day. Start-ups that succeed will go public and give birth to more millionaires, according to Rodoni.
Rodoni predicts this year Silicon Valley will continue to have multiple segment markets, depending on price point, location and area. Buyers need to decide which type of market they are in – is it a negotiable market or a multiple offer market. If it is the latter, are they willing to pay the premium price?
It is still a very good time to buy. While an interest rate of 2.5 percent last year would be better than 3 or 4 percent this year, it is still better than the average 7 percent, said Rodoni.
“At these still very low interest rates, you gain equity on your property and it doesn’t have to appreciate,” explained Rodoni.
Rodoni said she has been asked if the slowdown is a sign of a bubble bursting. She believes not. The market is merely “taking a breath” for now. It doesn’t mean it is in a bad state; it is merely readjusting, said Rodoni. Expect more action in the spring. It will be a good market moving forward, she said.
California Association of REALTORS® 2014 President Kevin Brown administered the oath of office to SILVAR’s new president and board of directors.
SILVAR’s 2014 leadership team was installed last night at Villa Ragusa in Campbell. California Association of REALTORS® 2014 President Kevin Brown administered the oath of office to SILVAR’s new president and board of directors. C.A.R. 2013 President Don Faught served as the evening’s emcee.
David Tonna, a REALTOR® and broker associate with Alain Pinel Realtors, was installed as 2014 President; Christopher Isaacson, a REALTOR® with Coldwell Banker in Woodside, President-elect; and Phyllis Carmichael, a REALTOR® with Coldwell Banker in Los Altos, Treasurer.
Joining the three lead officers as this year’s board directors are Carolyn Miller (RE/MAX Real Estate Services), past president; Suzanne Yost (Alain Pinel Realtors), Region 9 Chair; Lehua Greenman (Coldwell Banker), Menlo Park/Atherton District Chair; Jeff Beltramo (Coldwell Banker), Palo Alto District Chair; Bonnie Kehl and Joe Brown (Coldwell Banker), Los Altos/Mountain View District Co-chairs; Sue Bose (Referral Realty), Cupertino/Sunnyvale District Chair; Mark Von Kaenel (Keller Williams Bay Area Estates), Los Gatos/Saratoga District Chair; John Tripp (Foundation Trust), National Association of REALTORS® Director; Jeff Bell (Coldwell Banker), Mark Burns (Referral Realty), Eileen Giorgi (Keller Williams Bay Area Estates), Bill Moody (Referral Realty), Karen Trolan (Alain Pinel Realtors), Directors At-large; and Simon Offord (The Law Offices of Peter Brewer), Affiliate Chair.
The Silicon Valley Association of REALTORS® informed its members and their clients that Fannie Mae and Freddie Mac will postpone plans to increase mortgage guarantee fees. The news was recently announced by Rep. Mel Watt, D-N.C, incoming director of the Federal Housing Finance Agency, which oversees the government-sponsored enterprises (GSEs). Watt said he will delay the planned increases in mortgage fees until he has time to review the rationale behind it.
Fannie Mae and Freddie Mac said last month that they intend to charge more to lenders who guarantee loans for borrowers with mid-range-or-below credit scores, as well as borrowers who don’t meet certain down payment guidelines. The fees were set to take effect in March and April of 2014.
Critics in the mortgage and housing industry had argued that the fees were too high. Fee hikes on lenders are usually passed on to borrowers via higher interest rates
On Dec. 31, 2013 the extension of the Mortgage Forgiveness Debt Relief Act will expire. Without an extension, homeowners who negotiate a short sale, loan modification (including any principal reduction) or foreclosure will be subject to federal income tax liability on debt written off by lenders as a result of these distressed transactions. REALTORS® say at a time when the housing market is on the mend, now is not a good time to let this important tax relief measure expire.
One of the major successes Congress reached in the “fiscal cliff” negotiations at the end of 2012 was the extension of the Mortgage Forgiveness Debt Relief Act of 2007 for another year. Without an extension, homeowners will now be subject to federal income tax liability on debt written off by lenders as a result of these distressed transactions.
“Not having the Mortgage Forgiveness Debt Act extended causes uncertainty for homeowners. Homeowners shouldn’t be forced to pay tax on money they’ve lost with cash they never received,” says Carolyn Miller, president of the Silicon Valley Association of REALTORS®.
Since early this year the National Association of REALTORS® (NAR) has been working with Congress to extend this important real estate tax provision. NAR has aggressively sought co-sponsors for both Senate and House bills, S. 1187 the “Mortgage Forgiveness Tax Relief Act” and H.R.2994 “Mortgage Forgiveness Tax Relief Act of 2013.” With the U.S. House of Representatives now adjourned, it is unlikely Congress will act before December 31 to extend the Mortgage Forgiveness Debt Relief Act. However NAR is confident Congress will most likely address individual tax provisions retroactively in 2014.
As was the case with the previous extension, Congress is expected to retroactively apply mortgage cancellation relief to include transactions between January 1, 2014 and the enactment of the extension. In the meantime, NAR is asking REALTORS® and homeowners to continue to express the importance of this issue to their legislators.
California’s troubled homeowners who sell their homes in a short sale may not have to worry. Both the Internal Revenue Service and California Franchise Tax Board recently clarified that underwater home sellers are not subject to state income tax liability for debt written off by lenders in short sales.
In any issue involving taxes, Miller advises homeowners involved in a distressed transaction, such as short sale, to seek the advice of a tax professional on their particular situation.
Silicon Valley Association of REALTORS® says ... 