People staying in homes much longer – is this a problem?

My friend Jay Vorhees at JVM Lending recently posted a blog about how people staying in homes longer creates an inventory shortage. Here are his thoughts below.

“Fewer homes for sale is a big reason why even ultralow mortgage rates, record levels of home equity and a strong job market haven’t jump-started the sluggish housing market.”

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The above quote is from this recent WSJ article – People Are Staying In Their Homes Longer – A Big Reason for Slower Sales.

According to the article, homeowners are now staying put for an average of 13 years, or 5 years longer than they stayed as recently as 2010. This, of course, puts a huge damper on inventory levels.

Below are several reasons why people remain in their homes longer now:

Baby Boomers are living longer and are much healthier

Because of this, baby boomer-homeowners are less likely to downsize as soon as they would have in years past.

Property tax exemptions

Many homeowners have special property tax exemptions that they cannot take with them when they move, so they stay put in order to preserve them.

Too expensive to move up

Many homeowners who bought years ago and now want to move up cannot afford to do so because there has been so much appreciation in the housing market.

Don’t want to give up low rate

This was not mentioned in the article and it is not as much of a factor now, but it was a significant factor last year when rates were much higher. Many homeowners with very low fixed rates (in the low 3% range) do not want to give them up. And moving when rates are higher forces them to give up their low rates.

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Capital gains taxes

This is a much bigger factor than most people realize. The WSJ article uses a Danville, CA couple as an example. They bought their home in 1987 for $440,000 and it is now worth $1.8 million. If they sold, they would have to pay capital gains against almost $1 million of capital gains (after their exemption). If you are single or divorced and have the house then you only get $250k of capital gains write off vs. $500k.

This is an even bigger factor for investors. I recently blogged about my nephew renting a $2 million home for $4,250 per month in San Francisco. That works out to less than a 2.5% return against a $2 million asset. I realize that is over-simplified, as there is much more that goes into a full real estate investment analysis (appreciation, cash out of pocket, debt service, maintenance, depreciation, taxes, etc.) but there are millions of landlords across the country who are sitting on poorly performing properties solely to avoid capital gains taxes. We see this constantly when we are pre-app roving borrowers.

Kristin’s note: The state is trying very hard to figure out our housing shortage by focusing on ADUs – “additional dwelling units,” better known as in-law units. Consistent laws have been made across the state, but, come January, a few of the current laws will be changing to make it even easier for somebody to build an ADU in their backyard. For example, you used to have a parking garage space for the ADU unit and the owner had to occupy at least one of the living spaces. Stay tuned for a future blog about those upcoming changes.

Event Round-Up: Nov. 16, 2019

Looking for some fun activities between your family time around Thanksgiving? I’ve got you covered. Here are five local events you can do over the next month or so!

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Walnut Creek on Ice! (thru Jan. 20, 2020)

If you haven’t taken advantage of Walnut Creek’s little ice rink in previous winters, now is your chance! Visit their website for more info on prices, hours, etc.

Leonids Meteor Shower (night of Nov. 17) – Anywhere!

This is a regular event, but still well-worth staying up late to watch! If it’s a clear night, you can wrap up in a blanket in the backyard and see a dazzling display of shooting meteors. One of nature’s best performances.

Exploratorium After Dark (Nov. 21) – San Francisco

This week’s Exploratorium After Dark is called “Nonsense Machines,” which sounds just so San Francisco. This is a super fun adult nighttime outing in the City. Tickets are about $20!

Jack London Square Christmas Tree Lighting (Nov. 22) – Oakland

Always wanted to witness a huge public Christmas tree get lit up? Now’s your chance! Go down to Jack London Square and bring the kids for this free event on a Friday night. The event begins at 5 p.m.

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Walnut Creek Holiday Stroll (Dec. 6)

Stroll down the streets of Walnut Creek and take advantage of open houses, sips and savors, caroling, live music, an ugly sweater contest, and more! It kicks off at Water Light Public Plaza at 5 p.m.

Nabolom Bakery in Berkeley is a must-try

What I love about the Bay Area is if you get out and explore, you will always come across some neighborhood gems. I was meeting a friend who lives in Albany to head into the city and she recommended we meet in Berekely where one car could be parked for the day. It was blocks from Nabolom Bakery on Russell St. It looked like a quaint, family-run joint and she recommended stopping to get a coffee and pastries; of course I had to give it a try and it turned out to be a very good decision!

I love supporting local businesses. I had a croissant and a cappuccino – my go-to breakfast choice. I also spied some gorgeous loaves of bread – which is my kryptonite – and passed on buying one for later as I probably would have snacked on it during our drive to and from the city!

This little bakery seems to be very popular with locals. They don’t have much pizzazz in the way of decoration, but the options are endless, and they had some very tasty-looking bakes that I didn’t get around to trying.

Nabolom’s has been around since 1976 as a collective and then closed in 2015. Luckily, in 2016, they reopened under the stewardship of Julia Elliot where they acquired the original Nabolom’s recipes. They added daily pizzas a la Julia’s Cheese Board Collective experience. They are open from 7-7 and are closed on Mondays and Tuesdays, so be sure to swing by on your next jaunt through Berkeley. You won’t regret it!

Arlene Lane – closed

I recently closed a sale at 45 Arlene Ln. Two wonderful families offered on the home – one needed to sell their home, and one wanted to close in 21 days. My client chose the family whose house was already in contract. Parkmead is such a wonderful neighborhood, with great schools, ideal for families; and this house boasted a .49 acre flat lot with a pool and 3,000+ sq. ft. The neighborhood has a 4th of July Parade, Chili/Mac & Cheese Cook-Off, a very festive Halloween with over 300 Trick-or-Treaters, plus a summer BBQ at Dewing Park, our local swim club.

The new owners have two kids, know people in the neighborhood, and are super excited to be living there! The seller I was representing moved to Santa Barbara to be closer to her mother and her son.

My seller struggled a bit with who to choose. After 20-some years in your home, the desire to have one more Thanksgiving, was more appealing than rushing out. After a conversation with her son, practicality prevailed and it went smoothly thereon. This home was listed at $1,500,000 and sold for $1,465,000.

Art Town: Fountains

With so much changing around downtown Walnut Creek at any given moment, it’s sometimes nice to reflect on the places that have been around for years. One of those places is the J. Rockliff real estate building at the corner of N. Main and Civic.

You’d recognize the building by its brick-on-brick look. It sits right across Civic from City Hall and diagonally across from La Scala. It almost looks like a mini-brick castle. Anyway, they have fountains out front that I never stopped to look at before, and they are gorgeous!

The fountains complement the property and the real eye-catcher is the wrought-iron statue in the middle, perched atop a mosaic base. It’s quite mesmerizing up close!

Take a minute to recognize an old classic in Walnut Creek next time you’re in the area. With buildings and blocks changing all the time, it is nice to see something stay the same.

Pancoast Pizza expands!

Fellow pizza enthusiasts, rejoice! Pancoast Pizza, one of the best options in town, has expanded its space next to Las Lomas and now boasts a ton more seating options. To go along with it, they expanded their menu! The pizzas are pricier than most, I think it is because they have quality ingredients.

Pancoast is one of my favorite pizza joints in town (doesn’t hurt that it’s walking distance from my house!). I love thin-crust and theirs is delicious and it has to do with the cheese which comes from Wisconsin. I’m excited to see they’ve added some other options to the menu. They are still serving strombolis, and now there are hoagies, Philly cheesesteaks, and even chicken wings.

This is truly a small, local business in Walnut Creek. The owner is usually there and the staff is generally very friendly. It attracts a younger crowd, as you might expect with its location next to the high school. I often go after a late night at work and get a slice of the cheese pizza – it is addictive!

A closing on 7007 Mariposa

I recently sold a home at 7007 N. Mariposa in Dublin. One cool thing about it is that this is the fourth property I have either helped sell or buy for this same family.

Each time they bought, I said, “you will be moving in four or five years!” They have a growing family so a move-up buyer makes sense. This home I just sold had only a small side yard and no driveway, but as you can see by the pictures, they had a beautiful home that went quickly. So off they went to find the unicorn house that has it all.

They are now in contract on new construction and I have a feeling they will be staying in this one for a long time. I’m so happy I was able to help them out again. Though one of the kids was sad to leave, I believe they will love their new home and their new baby brother or sister due to arrive next year Congrats to all!

Have you used ThredUp?

I recently took about 10 items to ThredUp, but only one was accepted for a grand total of $7. The company will pay you for bringing in older clothes, much like Main Street Rags or Labels. The difference is that ThredUp will donate, recycle or put them on their website if they don’t buy it. They also will give them back to you if you want to directly donate it.

That’s what I really like about ThredUp. What they don’t take will get consigned on the website and you might end up getting more money or the material will get recycled and donated. So either I feel good about where it’s going or I might get some money out of it.

I also didn’t feel clothing-shamed (that it wasn’t good enough for the consignment store). I tend to hold on to items, and all consignments want items that are two or three years old. I recently Marie Kondo’d my closet for the first time in 10 years, so I have a bunch of (old) stuff to donate, and just have to do it seasonally. But, ThredUp accepted everything that I had (even if they only kept one item to sell). I left feeling good about it all, versus going to the snobby consignment store next door.

Whew, it feels good to get rid of a lot of old stuff (of course those are the items that I won’t get any money for). ThredUp was founded in 2009 and inspire their customers to think “#secondhandfirst.” It’s a very cool concept, and I hope you all give it a chance!