Community News January 26, 2024

Modern 3 Story Beach Home

An Amazing opportunity in our community!  Recently constructed 413 California Street in Huntington Beach is For Sale for a fantastic price:  $2,695,000!

A unique home is available for purchase in Downtown Huntington Beach!

CLICK HERE to look at the Walk-Thru 3D Tour.

Here is a LINK to more photos and all the listing details!

This is your opportunity to join the “Coastal Lifestyle” in comfort and style in this gorgeous 3 Story Modern style beach home!

It was Expertly Designed and Built in 2019 by a developer who was able to maximize the living area, balcony, and deck space in a way never previously approved by the planning department.

This is a remarkable home, it has no upper level set backs. The architect skillfully obtained planning department approval of the revolutionary design… there is more living area and deck space than any of the other New Homes recently built in the area. There is “more to love” about this house… definitely worth a look!

Located on one of the quietest blocks in Downtown HB (almost no traffic), yet just a short stroll to Parks, Pacific City, Main Street Village, and the soft sands of Huntington Beach! This home is in “like new” condition, and features: 3 Bedrooms + Office + Bonus Room | 4.5 BATHS | Open Floorplan | Huge Front Patio with BBQ & Linear Fire Pit | Approximately 3341 SqFt of living area | Oversize Lot | Air Conditioning | Elevator | Gourmet Island Kitchen with Breakfast Bar | Gorgeous Artistic Wine Cellar | Dramatic Floating Staircases & So much more!

This Open Concept Great Room Design features gourmet island kitchen with breakfast bar, professional quality appliances, dining areas, artistic wine cellar wall, powder room, and attached two car garage on the first level. The large front patio was designed for hosting parties.

The second floor features an office/family room, luxury master suite, and another in-suite bedroom with large private balcony.

The 3rd Floor is like none of the other homes developers build in the area. The top floor is like a Guest House featuring: a bedroom with full bath & private balcony, sitting area, living area with another full bath & walk-in closet, and finally another large deck with outdoor fireplace and BBQ area! Your family & guests will appreciate your hospitality, and of course all three levels are serviced by an elevator for convenience.

Arguably the best combination of design, location, and luxury features & upgrades to be found in Downtown Huntington Beach. And, the Price per Square Foot is the best you will find for a Recently Constructed home in the area… this home is a fantastic design & value!

CLICK HERE to look at the Walk-Thru 3D Tour.

Here is a LINK to more photos and all the listing details!

For more information you may contact Scot Campbell, the listing agent, at 714-336-0394 or SdCampbellRealtor@gmail.com

Advice for home owners December 31, 2023

SPECIAL REPORT: Real estate related law changes for the New Year.

Source:  California Assn of Realtors – by Huntington Beach Realtor Scot Campbell – 714-336-0394

As always, there are many new laws going into effect for the New Year.  There are some that homeowners and landlords should be aware of. 

Below is a summary of laws going into effect in 2024:

GENERAL HOUSING LAW CHANGE:  

Increases the exemption limit for improvements otherwise subject to the California Coastal Act

The California Coastal Act previously exempted improvements of $25,000 or less if necessary to protect life and public property from imminent danger.

This exemption limit is now increased to $125,000 which amount will be adjusted annually for inflation pursuant to the consumer price index.

The California Coastal Act of 1976 (Coastal Act) requires those wishing to facilitate development within the coastal zone to obtain a permit from both the California Coastal Commission and the local government. Previously, the Coastal Act exempted improvements necessary to protect life and public property from imminent danger from seeking a permit if the improvements are valued under $25,000. AB 584 increases this exemption to $125,000 and permits that amount to be adjusted annually for inflation pursuant to the consumer price index. C.A.R. supported AB 584, which facilitates improvements necessary to protect life and property from loss resulting from natural weather events through a reasonable increase in the Coastal Act’s permit exemption cap. This law seeks to assist coastal landowners in their efforts to protect their homes in an economy experiencing rising costs due to rising interest rates and materials costs.

Assembly Bill 584 is codified as Public Resources Code § 30611. Effective January 1, 2024

 

LANDLORD / TENANT LAW CHANGE:  

Security deposits limited to one month’s rent.

Landlords may collect no more than one month’s rent for either furnished or unfurnished units in addition to first month’s rent.

There is an exception (two months rent allowed) for small landlords, defined as a landlord who is a natural person or LLC and owns no more than two residential rental properties with no more than a total of four units offered for rent.

AB 12, beginning July 1, 2024, prohibits a landlord from demanding or receiving security for a rental agreement for residential property in an amount or value in excess of an amount equal to one month’s rent, regardless of whether the residential property is unfurnished or furnished, in addition to any rent for the first month paid on or before initial occupancy.

Exception for small landlords: A small landlord may demand or receive a deposit in an amount or value not in excess of 2 months’ rent, whether or not the unit is furnished, in addition to any rent for the first month, if the landlord (1) is a natural person or a limited liability corporation in which all members are natural persons and (2) owns no more than 2 residential rental properties that collectively include no more than 4 dwelling units offered for rent. The exception for small landlords includes family trusts.

This small landlord exception does not apply if the prospective tenant is a service member.

Landlords who currently hold a security deposit or demand or collect a security deposit in excess of one month’s rent prior to July 1, 2024, may continue to retain the security even if it is more than one month’s rent.

Assembly Bill 12 is codified as Civil Code 1950.5. Effective July 1, 2024.

 

 LANDLORD / TENANT LAW CHANGE:  

Landlord must offer “ability to pay” in lieu of reliance on credit history and reports in assessing a tenant’s rental application when prospective tenant is receiving a government rent subsidy such as a Section 8 rental voucher

Landlord must offer “ability to pay” in lieu of reliance on credit history and reports in assessing a tenant’s rental application when prospective tenant is receiving a government rent subsidy such as a Section 8 rental voucher.

SB 267 makes it unlawful, in instances where there is a government rent subsidy, for a landlord to use a person’s credit history as part of the application process for a rental accommodation without offering the applicant the option, at the applicant’s discretion, of providing lawful, verifiable alternative evidence of reasonable ability to pay the portion of the rent to be paid by the tenant, including, but not limited to, government benefit payments, pay records, and bank statements.

When so offered, the applicant may elect to provide alternative evidence of reasonable ability to pay.

In which case the landlord must:

Provide the applicant reasonable time to respond with that alternative evidence and

Reasonably consider that alternative evidence in lieu of the person’s credit history in determining whether to offer the rental accommodation to the applicant.

Nonetheless, the landlord may still request information or documentation to verify employment, to request landlord references, or to verify the identity of a person.

Senate Bill 267 is codified as Government Code § 12955. Effective January 1, 2024.

 

LANDLORD / TENANT LAW CHANGE:  

Tenant Protection Act: Tightens up requirements for no fault evictions; adds damages, penalties, attorney fees and enforcement mechanisms for violations.

This law tightens up the requirements for a landlord to terminate a tenancy under the Tenant Protection Act (i.e., California statewide rent cap and just cause eviction law) for no-fault evictions based upon owner move-in or substantial remodeling.

Additionally, an owner who violates the TPA by improperly terminating a tenancy or by raising rent beyond the maximum amount is liable for actual damages, reasonable attorney’s fees and costs (at the discretion of the judge), up to three times actual damages for willful violations and punitive damages. The Attorney General et al is authorized to seek injunctive relief. Effective April 1, 2024.

Background: The Tenant Protection Act of 2019 is a statewide rent cap and just cause eviction law. Under the TPA, there are only four permissible reasons on which a landlord may base a no-fault termination of tenancy. Senate Bill 567 seeks to close perceived loopholes in two of them: terminations based on owner-move and those based on demolishing or substantial remodeling. SB 567 also seeks to address the question of remedies for a violation of the TPA. Currently, the TPA does not specify damages or enforcement mechanisms.

Termination of tenancy based on owner move-in:

Under SB 567 in order to lawfully evict a tenant for just cause on the basis of an owner move-in:

The owner must identify in the written eviction notice the name and relationship to the owner of the intended occupant and include notification that the tenant may request proof that the intended occupant is actually an owner or related to the owner.

The owner or their family member would have to move in within 90 days after the tenant vacates and then occupy the unit for at least one year

The owner or their family member could not already occupy a unit and there could not be another vacant unit at the property.

If the intended occupant does not actually move in within 90 days or use the unit as their primary residence for at least a year, the owner must offer the unit back to the tenant who was evicted at the same rent and lease terms in effect at the time they vacated and reimburse the tenant for reasonable moving expenses incurred in excess of the required relocation assistance payment that may have been made in connection with the eviction.

If the former tenant does not move back in, and the owner subsequently identifies a new tenant still within the yearlong period after the eviction, the unit must continue to be offered at the lawful rent in effect at the time the eviction occurred and

The owner has to be a natural person holding at least a 25% ownership interest in the property (in order to prevent someone who holds a very small share of the property from evicting a tenant), a natural person who co-owns the property entirely with family members either outright or via a family trust, or a natural person who meets the 25% ownership threshold and whose recorded interest in the property is owned through an LLC or partnership.

Termination based on intent to demolish or to substantially remodel the residential real property:

Remodeling must require the tenant to vacate for 30 Consecutive Days. The remodel must not be able to be reasonably accomplished in a safe manner that allows the tenant to remain living in the place and must require the tenant to vacate the property for at least 30 consecutive days.

However, the tenant is not required to vacate the property on any days where a tenant could continue living in the property without violating health, safety, and habitability codes and laws.

Written Notice. A written notice terminating a tenancy must include all of the following:

A statement informing tenants of the intent to demolish or substantially remodel the unit, The following statement verbatim:

“If the substantial remodel of your unit or demolition of the property as described in this notice of termination is not commenced or completed, the owner must offer you the opportunity to re-rent your unit with a rental agreement containing the same terms as your most recent rental agreement with the owner at the rental rate that was in effect at the time you vacated. You must notify the owner within 30 days of receipt of the offer to re-rent of your acceptance or rejection of the offer, and, if accepted, you must reoccupy the unit within 30 days of notifying the owner of your acceptance of the offer”,

  • A description of the substantial remodel to be completed, the approximate expected duration of the substantial remodel, or, if the property is to be demolished, the expected date by which the property will be demolished,
  • A copy of the permit or permits required to undertake the substantial remodel. However, if the renovation is to abate hazardous materials then no permit need be given unless legally required.
  • A notification that if the tenant is interested in reoccupying the rental unit following the substantial remodel, the tenant must inform the owner of their interest and provide to the owner their address, telephone number, and email address.

SB 567 further provides that any termination notice that does not comply with any provision of the just cause rules is void.

 

Damages and enforcement mechanisms: Recovery of possession

An owner who attempts to recover possession of a rental unit in material violation of the just cause provisions will be liable for:

  • Actual damages.
  • In the court’s discretion, reasonable attorney’s fees and costs.
  • Upon a showing that the owner has acted willfully or with oppression, fraud, or malice, up to three times the actual damages. An award may also be entered for punitive damages for the benefit of the tenant against the owner.

The Attorney General et al is authorized to seek injunctive relief based on violations of the just cause rules.

Damages and enforcement mechanisms: Collecting or demanding rent beyond the maximum.

An owner who demands, accepts, receives, or retains any payment of rent in excess of the maximum rent shall be liable in a civil action for all of the following:

  • Injunctive relief.
  • Damages in the amount by which any payment demanded, accepted, received, or retained exceeds the maximum allowable rent.
  • In the court’s discretion, reasonable attorney’s fees and costs.
  • Upon a showing that the owner has acted willfully or with oppression, fraud, or malice, damages up to three times the amount by which any payment demanded, accepted, received, or retained exceeds the maximum allowable rent.

The Attorney General et al is authorized to 1)Enforce the provisions of this section and 2)Seek injunctive relief based on violations of this section.

Note on “actual damages” for material violation in termination of tenancy rules:

A tenant who has been wrongfully evicted is now authorized to recover actual damages. How might one calculate actual damages? The case of DeLisi v Lam, (2019) 39 Cal.App.5th 663, which involved the San Francisco rent control ordinance, is illustrative of how open ended the calculation can be. In the DeLisi case, the judge permitted the jury to weigh two competing (and mutually exclusive) methods of determining actual damages, as set forth by the expert witnesses for each side.

First, according to the expert for the tenant, actual damages are the difference between the rent being paid by the tenant and the market rate rent, multiplied by the tenant’s intended length of occupancy. The tenant testified that she intended to stay five or ten years. Under the San Francisco ordinance, a triple damage penalty is automatically applied. Taking into account the present value of a ten-year tenancy, the expert arrived at a figure of $287,180. That figure multiplied by three would allow for total damages of approximately $860,000.

The expert for the landlord took a different view. In his view, the value of the rent-controlled tenancy was not an asset the tenant could monetize. Instead, damages would be the amount the tenant was out-of-pocket beyond what she would have been if she had stayed in the rent-controlled apartment. This included moving expenses, the difference between her monthly rent at the rent-controlled property and her monthly rent at her new apartment, and any differences in expenses for items such as commuting to work. All in all, “actual damages” would be $23,139 for a five-year period and $48,183 for a 10-year period. Multiplied by three these dollar figures are still considerable, but a far cry from amount calculated by the tenant’s expert.

The jury returned a verdict for $120,000 which multiplied by three equals $360,000. Which theory of “actual damages” did the jury base their decision on? No one knows for sure. Juries are not required to report the basis of their decisions. (They can be asked to answer specified questions. But even there, they are not reporting the reasoning behind their decision).

Mind you, in many legal cases the attorney fees are staggering, often in excess of the actual damages awarded. Under SB 567 attorney fees may be awarded to the tenant at the discretion of the judge.

Senate Bill 567 is codified as Civil Code §§ 1946.2 and 1947.12.

Effective April 1, 2024.

 

LANDLORD / TENANT LAW CHANGE:  

Tenants may keep bicycles, e-bikes and other “micromobility” transport devices in their units.

SB 712 prohibits a landlord from prohibiting a tenant from owning personal micromobility devices or from storing and recharging up to one personal micromobility device in their dwelling unit for each person occupying the unit, subject to certain conditions and exceptions.

Personal micromobility devices are things like bicycles, scooters, hoverboards, skateboards, and their electric counterparts such as an e-bike or e-scooter.

SB 712 prevents landlords from prohibiting tenants from owning personal micromobility devices and also prevents landlords from banning the storage and recharging of personal micromobility devices in their dwelling units if the devices meet certain criteria as follows:

either,

They are not powered by an electric motor, or

They comply with certain safety standards for e-bikes and e-scooters (see below), or

Failing compliance with such safety standards, the tenant has insurance covering storage of the device within the unit.

Batteries for e-bikes should comply with either the UL 2849 standard, recognized by the United States Consumer Product Safety Commission, or the EN 15194 European Standard for electrically powered assisted cycles. E-scooters, on the other hand, need to align with the UL 2272 standard from the U.S. or the EN 17128 European Standard for personal light-electric vehicles.

However, landlords have the option to provide tenants with exterior “secure, long-term storage” for their devices. If such storage is offered without charge, landlords can prohibit the in-unit storage of these devices.

A landlord is not required to modify or approve a tenant’s request to modify a rental dwelling unit for the purpose of storing a micromobility device inside of the dwelling unit. A landlord may prohibit repair or maintenance on batteries and motors of personal micromobility devices within a dwelling unit. A landlord can require a tenant to store a personal micromobility device in compliance with applicable fire code.

Question: Can the landlord prohibit a tenant from storing a bike on the balcony?

A: Unclear. A landlord cannot prohibit a tenant from storing a device “in their dwelling unit.”

 

Senate Bill 712 is codified as Civil Code 1940.41. Effective January 1, 2024.

 

 

 

Advice for home buyersAdvice for home ownersMarket Updates December 8, 2023

SPECIAL REPORT:  What is the Best Indicator of Market Conditions for the Huntington Beach Housing Market

By Scot Campbell, Realtor 12/7/2023 | Sources: Reports on Housing, Realtor MLS, NAR, Wikipedia

I have been selling real estate for over 30 years in Huntington Beach, and I have a formal education in real estate finance and economics.

So, my friends, past clients, and family often ask the familiar question: “How is the Market?”

The answer to that question is best answered by looking at what I consider the best indicator of market conditions. That “metric” is called the Days of Supply, and it is defined by:

The number of days it would take to sell every home currently on the market at the present rate of home sales if no new listings came onto the market.

So, in considering the components of Days of Supply, we have the number of homes on the market, also known as “inventory”, and we have the rate of home sales, “demand”.

The strength of the demand relative to the inventory of homes for sale, tells us the answer to the question “How’s the Market” in one very simple number which I have labeled “Days of Supply”.

Think about a very popular champagne vintage that many people purchase at the holidays to toast for the New Year.  If there is an abundance of bottles on the shelf at the store, lots of inventory, and fewer people appear to be buying champagne this year, there is little concern about your family “going without”.  So, you might wait to see if the champagne goes “on sale” in time for the holidays.

On the other hand, if you see there are only ten bottles left, and the gentleman ahead of you in in the process of putting four bottles into his cart, you would probably jump to buy the two bottles you need for your family’s New Years Eve toast.

So, when there is an abundance of champagne on the shelves, and few are buying bottles, we could perhaps compute that there is 120 “Days of Supply”.  At this level, it is a Buyer’s Market, and there is every chance the store will discount the champagne to rebalance their inventory.

But, what about when there are only ten bottles left, and four just flew off the shelves in the last few minutes.  We could say the “Days of Supply” is very low, perhaps just 1 “Days of Supply”.  At this level, it is a “Seller’s Market” for champagne and the store may raise the prices of the other remaining vintages to take advantage of market conditions… they certainly would not put any champagne “on sale”.

Now, with a full understanding of Days of Supply, let’s turn our attention toward the market for homes in Huntington Beach.  Inventory is the first part of the equation, so let’s start with some context on the supply of homes.  As you might suspect, the supply of homes in Orange County, and Huntington Beach correlates closely with the numbers in the United States as a whole.

According to the National Association of REALTORS®, at the peak of the financial crisis in 2008 there were over 4,000,000 homes on the market in the United States.  By January 2012, there were 2,330,000 homes available across the U.S. It dropped to 1,880,000 in January 2014.  The 2014 Market in Huntington Beach was the last in recent years where the entire year was in the Balanced Market Range for Days of Supply.

In 2017, there were 1,680,000 homes on the market in the U.S., and in January 2020, just before the CV-19 pandemic, there were 1,400,000, the lowest start to a year since tracking began in 1982.

Of course, demographics play a partial role, but research shows that the main reason inventory fell in the years between 2014 and 2020 was a deficit in the number of new homes built.  Since 1970, California has been experiencing an extended and increasing housing shortage, This shortage was estimated to be 3-4 million housing units (20-30% of California’s housing stock, 14 million) as of 2017, and has only gotten worse.  In 2017, the Days of Supply in Huntington Beach spent the entire year in the Seller’s Market Range.

But, the supply of homes for sale in the U.S. has fallen further.  In 2021, the number of homes for sale plummeted to 1,030,000; in 2022, it hit a record low of just 850,000 homes.  This year, 2023, started with 980,000… this is roughly one half the number of homes which were for sale in the U.S. when conditions were last in a full year of a Balanced Market.  So, in looking at our champagne example, this year there is just one half as many bottles remaining on the shelves as compared to the inventory in normal a normal year.

The demand for homes is the second component in the Days of Supply equation.  Certainly, mortgage rates rising have curtailed the number of buyers purchasing homes since mortgage rates more than doubled in the Spring of 2022.  We know that inventory is half of what it was in the last Balanced Market in 2017, but what was the level of home sales that year relative to 2023?  In 2017, there were 5.51 million closed home sales in the U.S.  It appears there will be about 4.17 million closed sales in 2023.  The decline in home sales is roughly 25%, in looking at our champagne example, this year there are still about three quarters as many bottles coming off the shelves as compared to a normal year.

In summary, we would expect this year to have a Shortage of Champagne.  About three in every four customers are buying as they usually do, but there is only half as much available on the shelves… eventually the champagne will sell out before New Year’s Eve.  One in four customers will have to “do without” this year. 

So, even with mortgage rates up over 7%, the real estate market is experiencing Seller’s Market Conditions in the U.S.

Let’s take a look specifically at Huntington Beach… “How is the Market?” 

I have been tracking the numbers carefully in my spreadsheet since 2014, so I have some great information for you.  What I have found over the years is that Days of Supply above 120 is a Strong Buyer’s Market, and a Days of Supply reading below 60 is a Strong Seller’s Market.

The Days of Supply was 62 on November 27, 2023.  So, presently, we are experiencing conditions of a slight Seller’s Market.

Buyers will find that homes which are priced close to market value and in good general condition will sell quickly… and they will be a little disappointed that there are not more homes available to purchase.  However, they will be pleased at the buying conditions in comparison to the 2021 CV-19 market when Days of Supply was hovering around 20… there were multiple offers on everything!

Home Sellers will find a strong level of activity on their home and will get top dollar if they prepare the home for the market, hire a Realtor who does an excellent job with the listing imagery, and it is priced “close” to market value.


Advice for home buyersAdvice for home ownersMarket Updates December 8, 2023

SPECIAL REPORT: 2023 Year End Market Recap for Huntington Beach

By Scot Campbell, Broker | Source: Realtor MLS, FreddieMac, NAR

Revised – December 28, 2023

How is the Huntington Beach Market? 

“Days of Supply” is the best overall indicator of real estate market conditions in Huntington Beach.  I have been tracking the numbers carefully since 2014.

A Days of Supply reading above 120 is a Strong Buyer’s Market, and Days of Supply below 60 is a Strong Seller’s Market.

The Days of Supply was 66 on December 26, 2023.

So, presently, we are experiencing conditions of a slight Seller’s Market as we move into the final week of the year.

What should buyers & sellers expect as we move into 2024?

  • Buyers will find that homes which are priced close to market value and in good general condition will sell quickly… and they will be disappointed that there are not more homes available to purchase. However, they will be pleased at the buying conditions in comparison to the 2021 CV-19 market (when Days of Supply was hovering around 20 and there were multiple offers on everything)!
  • Home Sellers will find a strong level of activity for their home and will get top dollar if: 1) They prepare the home for the market  2) Hire a Realtor who does an excellent job marketing the home with beautiful imagery  3) Price the home “close” to market value.

Normally early January is a slower time of the year to buy or sell; however, with mortgage rates falling by 1.25 percent in the last 10 weeks, now is a very good time to put a home on the market or purchase a home.

 

What happened with Home Sales Volume?

I have been tracking the numbers carefully since 2014. Certainly, there has been significant variation in the sales volume due to the pandemic and then subsequent spike in mortgage rates. Looking at Sales Volume as a percentage of the 5-Year Average for the month being observed is a better way to see where sales volume is today as compared to “Normal”.

In 2023, Huntington Beach saw a significant drop in the number of homes sold due primarily to high mortgage rates.

The sale volume was 112% of the 5-Year Average in March 2022 (just before mortgage rates began increasing).

  • Mortgage rates continued rising for most of 2022 peaking in November at 7.08%.  By February 2023, the sales volume dropped to just 56% of the 5-Year Average.
  • Spring is typically the beginning of the selling season and a drop in mortgage rates (which bottomed in on February 2, 2023 at just 6.09%) reignited the market with sales volume jumping upto 82% in March… and ranged between 76% and 91% of the 5-Year Average during the Spring to Summer selling season.
  • By October, mortgage rates spiked again to just below 8%.  The result was another drop in Sales Volume to just 68% of the 5-Year Average for November 2023.

From October 2023 to December 28, 2023, mortgage rates fell about 1.25 percent (125 basis points) to just 6.61% according to FreddieMac.

It is likely that the Sales Volume for late December 2023 rebounded, and we will see further improvement in buyer activity as we move into the New Year.

 

 

What happened with Home Price Appreciation?

I have been tracking the numbers carefully in my spreadsheet since 2014.  I have found, over the years, that Average Annual Home Price Appreciation in Huntington Beach hovered around 5% in the years 2015 through 2018.

  • In 2019, price appreciation was in the 3% range due to a combination of mortgage rates spiking up 1% and the elimination of the mortgage interest deduction (tax savings for owning a home reduced/eliminated).
  • The CV-19 Market (with historically low mortgage rates below 3%) lasted from late 2020 until Spring 2022, and this period saw double digit price appreciation which averaged over 15%.
  • When interest rates more than doubled in Spring 2022 into the high 7% range, price appreciation slowed dramatically falling back into single digits again.
  • In 2023, Average Annual Home Price Appreciation has fallen back into single digits and appears to be in the 6.5% range for the year.

In 2024, Average Annual Home Price Appreciation should be supported by the recent fall in mortgage rates.  There does not appear to be any crash in home prices as many buyers had hoped to see.

The CV-19 Market saw sustained double-digit appreciation from late 2020 until Spring 2022.

 

 

August 2023 was an anomaly with 9 homes selling between $3.25 and $7.4 million and price-per-square foot ranging from $1,076 to $1,785.  This has never happened in one month before or since.

 

 

What is happening with Mortgage Rates as we move into 2024?

According to the FreddieMac Primary Mortgage Market Survey, on December 28, 2023, 30 year fixed rate mortgage rates have fallen to just 6.61%.

Heading into the New Year, Mortgage Rates Remain on a Downward Trend – The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down. Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.

Many Home Buyers have been on the sidelines for months waiting for mortgage rates to decline.

January 2024 is going to be a great time to list a Huntington Beach home since there is certainly going to be a shortage of inventory relative to the number of buyers looking to purchase.  

 

Where is the market headed in 2024?

I have been tracking the numbers carefully in my spreadsheet since 2014, and carefully observing what moves the market. With the exception of the elimination of the mortgage interest deduction, the strength of the real estate market is most highly correlated with the availability of mortgages and the level of mortgage rates.

Mortgage rates have already fallen over 1.25 percent (125 basis points) since their peak in October 2023, and general predictions from experts are that rates will fall further in 2024.  Inventory will remain very low since most homeowners have a very attractive mortgage with a rate below 4%… they simply have no incentive to sell.

I predict 2024 will be a better time to sell (thanks to low inventory & enhanced buying power brought on by lower mortgage rates).  Buyers will have more competition in 2024, but will certainly welcome the lower payments from plunging mortgage rates

Advice for home owners October 29, 2023

SPECIAL REPORT: Where are people moving?

by Scot Campbell, Coldwell Banker-Campbell Realtors

According to an article in Axios on 10/28/2023, there are some very clear patterns on where people moved in 2022. 

“New data from the U.S. Census shows that around 820,000 people moved out of California and 550,000 out of New York in 2022. They join more than 8 million Americans who moved states in 2022”

California and New York are very “blue” states; however, research shows the politics is not the primary reason people are leaving (The poll of a sample of 1,006 general population adults age 18 or older, weighted on age, gender, race/ethnicity, education, and location to be nationally representative).  Here is a breakdown of the factors which provided the incentive for the moves from these states:

Motivation                                          Democrats                          Republicans

Rising cost of living:                                        45%                                        63%

Personal Reasons/Family:                             35%                                        27%

Jobs/Employment:                                          25%                                        25%

Taxation Issues:                                                23%                                        38%

Abortion Issues:                                                24%                                        16%

Gun Issues:                                                         28%                                        18%

Racial Issues:                                                     23%                                        10%

LGBTQ+ Issues:                                                 18%                                        10%

Education Issues:                                              12%                                        14%

 

The trend doesn’t look likely to change in coming years. 

Surveys show that overall 30% of Americans said they’ve thought about moving in the past six months. In Californians 50% (LA Times poll) and in New Yorkers 30% (Siena College poll) say they’re considering moving out of their state.

For those that did move in 2022, About 75% of people had some regrets over it, according to recent data from Home Bay, (survey of 1,000 Americans who moved in 2022 conducted on 12/29/2022):

Regret:                                                                                  Percentage

I wish I would have moved to a bigger place:                          20%

I miss my old home:                                                                      20%

I wish I got rid of more stuff:                                                       19%

It was too much of a hassle:                                                         19%

It took too long:                                                                                18%

It was too expensive:                                                                      17%

The move negatively affected my relationship(s) :                  17%

Items went missing:                                                                        17%

I do not like my new home:                                                          15%

I wish I moved to a smaller place:                                               15%

Despite their regrets, people approached moving with mostly positive emotions, with 65% reporting they were excited, hopeful or relieved that they had made the move.

 

Source: https://www.axios.com/2023/10/28/americans-moving-map-2022-florida-texas

Scot Campbell is the Realtor favored by your friends & neighbors in Coastal Orange County. He is an expert in helping consumers buy & sell homes, and has closed over a 1,000 transactions over the last 30 years including just about every type of transaction imaginable. For more information, reach out to him via phone/text (714-336-0394), email SdCampbellRealtor@gmail.com,  or Click Here to “schedule” a call.

 

 


Advice for home owners October 26, 2023

What are the typical Seller Closing Costs

 

Typically, buyers are stretching to get all the money necessary for the down payment and closing costs when they purchase a home. Since buyers are unable to close the escrow without all the necessary funds, the real estate industry long ago structured the normal payment of closing costs as we see today. 

Yes, it may seem like the seller is paying a lot of the closing costs… but when looking at your closing statement, just remember:  Since most buyers obtain a loan with 20 to 30% down, these Buyers can pay more for your home if they pay less of the closing costs… the additional money available for the buyer to pay toward down payment allows them to “finance a larger” purchase price.

You as the seller benefit from the buyer having more money available for the down payment because every extra dollar the buyer has toward down payment allows them to finance five additional dollars (assuming 20% down) in purchase price.

Sellers wanted to net more for their home in the past just as they do today.  Many years ago the residential real estate sales industry structured the closing costs as it did to please sellers and as necessary to satisfy lenders.

What do all these Closing Costs add up to for your home? 

A quick rule-of-thumb for Orange County, CA:  All of the closing costs (not including repairs, termite treatment, & commissions) will be about 6/10ths of one percent of the sale price (0.006).  So, if you sell a home for $1,000,000, the closing costs (not including repairs, termite treatment, & commissions) will be about $6,000 (but these costs can vary depending on sale price and area).  When I receive an offer on a home I have listed for a client, I typically provide an Excel Spreadsheet which estimates the closing costs much more precisely.  Certainly properties sold near the bottom of the market and luxury homes will see some variation to the 6/10th rule-of-thumb.

  • Title Insurance: Purchase escrows in California require a Title Insurance Company guarantee clear title to the buyer. It is customary for the seller to pay for title insurance.
  • Documentary Transfer Tax: The Grant Deed is the document which transfers title to the buyer. This deed must be recorded at the County, and there is a fee charged by the recorder’s office for this service. It is customary for the seller to pay for the Documentary Transfer Tax.
  • Escrow Fees: Typically, the buyer and seller each pay half of the base escrow fee. The seller will pay additional fees for the loan payoff, and the buyer will pay additional fees related to the loan origination.
  • Natural Hazard Disclosure:  Part of the disclosure process in California is for the seller to provide a Natural Hazard Disclosure Report (NHD).  This highly informative report provides information on earthquake zones, flood zones, fire responsibility areas, and much more.  The seller customarily pays the cost of the NHD report, and it is about $95.
  • Home Warranty: In most transactions, the buyer will request a home warranty in the purchase offer. The base cost of the home warranty is about $750 and increases with size of home and coverage: pool/spa, roof, A/C, refrigerators, and other items. The seller usually pays for the Home Warranty.
  • Termite Inspection, Repairs, & Treatment: It is customary for a Structural Pest Control Report to be issued by a State Licensed Contractor as part of the disclosures. Sometimes it is necessary to treat a home for active infestation of termites either locally (spray) or the whole structure (fumigation). And, sometimes there is termite or dry rot damaged wood that must be replaced. It is customary for the seller to pay for the inspection, repairs, & treatment required to obtain the Section One clearance.
  • Termite Clearance Certificate:  The lender will want to see a certification that the structure is free of an active infestation of termites & dry rot. This Section One clearance certificate is customarily paid by the seller.
  • Real Estate Commissions: The brokerage commissions are customarily paid by the seller.
  • Miscellaneous: There are occasionally anticipated and unanticipated seller paid costs associated with home sales including repairs, installation of smoke & CO detectors, strapping water heater, etc. There may be some electrical, plumbing, roof, window, and appliance repairs requested by the buyer during the escrow.
  • HOA Transfer & Document Fee: The purchase agreement calls for the seller to provide copies of the association documents, minutes, budget, and reserve study as part of the disclosure process. The HOA Management company will provide these documents; however, they charge a service fee which is typically paid by the seller when escrow is opened.  The cost of these documents and transfer fee can be as much as $700 to $950 per association (some homes are members of multiple associations).
  • Accumulated Interest & Property Taxes: While it is not a cost of closing, real estate mortgages are structured such that interest is paid in arrears. As such, there will be accumulated interest unless the escrow closes on the first day of the month, and the mortgage payment is paid on that same day. The accumulated interest will be deducted by the escrow company from the seller’s proceeds.  In Orange County, the property tax fiscal year runs from July 1st to June 30th. Property taxes will be prorated to the closing date, and there will either be a reimbursement to the seller of prepaid taxes or a deduction from the proceeds if taxes have accumulated, but not yet paid.
Advice for home owners October 26, 2023

Why is it important to use the Best Imagery for your home listing?

This HDRI Enhanced photo captured the highly desirable front patio pool for this waterfront home.

 

We have all seen those property photos on the Realtor MLS or Zillow that make you wonder “Do they not want to sell the house?” 

Sometimes listing photos have bad lighting, poor resolution, are blurry, or perhaps the house just was not ready to be photographed in the first place.

Listings which have poor quality imagery are the ones which are most likely to have a bad ending (many days on the market with a low sales price)… it is certainly not likely to be a fairytale experience where “all is good in the world”.

So, as a home seller… you know the kind imagery for your home that you do not want.  But, what would be considered the “polar opposite” of bad photography… what is absolutely “the best in the industry”?

 

The best in the industry imagery for your home will be in four separate but equally important channels:  Still Photography, Drone Aerial Images, 2D Floorplan Drawing, and Walk-Through 3D Tour.

Still Photography

The function of the still photography is to get the attention of the buyer, and elicit an interest in “more information” about the property.  All images should have excellent lighting and the best angles of the rooms… several “very good” images are much better than some “good”, some “bad”, and several “poor” images which should not have been uploaded at all.

Obtaining very good images starts with an experienced professional photographer with excellent equipment including a very high resolution camera and quality lenses.  The next step in the process is cropping the images and photoshopping out any unnecessary clutter (toys for example).  The final step is having the images enhanced by a High Dynamic Range Imaging HDRI server.

High Dynamic Range Imaging (HDRI) image enhancement can significantly contribute to the marketing and sale of homes by providing visually appealing and realistic representations of properties. Here’s how HDRI image enhancement helps sell homes:

This HDRI Enhanced photograph of the living room of this home beautifully captured the elegance of the room and it’s view of the water.

Setting a Positive First Impression: HDRI images create a positive first impression. They can entice potential buyers to explore the property further, either through virtual tours or on-site visits.

Enhanced Visual Appeal: HDRI enhances the visual appeal of property photos by capturing a wider range of light and color. This results in images with vivid colors, well-balanced lighting, and better clarity, making the property look more inviting.

Realistic Representation: HDRI technology enables the creation of images that closely mimic what the human eye sees. This realism helps potential buyers get an accurate sense of the property, including its features, lighting, and ambiance.

Increased Online Engagement: In the age of online listings, high-quality images stand out and capture the attention of potential buyers. Enhanced images lead to increased online engagement and more clicks on property listings.

Attracting a Wider Audience: Well-lit and visually pleasing images are more likely to attract a broader audience of potential buyers. HDRI helps in showcasing a property’s full potential, which can be especially important in competitive real estate markets or when the goal is to obtain multiple offers.

Conveying Value: High-quality images help convey the value of a property. Buyers are more likely to perceive a home as valuable if it is presented in its best light, both in terms of interior and exterior photography.

Faster Sales: Homes with high-quality images often sell faster because they generate more interest and attract serious buyers. A quick sale can be financially advantageous for both sellers.

In a competitive real estate market, where online listings play a significant role, the quality of property images is paramount. HDRI image enhancement helps create a lasting and positive impression, drawing in potential buyers and increasing the chances of selling homes more quickly and at a favorable price.

Very few real estate brokerages use the technology, but as a seller you should demand HDRI enhanced images if you really want the “best” still images possible for your home.

 

Drone Images

This drone image illustrates the waterfront location of the home

In many cases, there is no way better to demonstrate the architecture or fantastic location of a home within its market area than with aerial drone photography.

Sometimes a drone photo taken from up 30 feet in the air is the best way to show the spacious front yard of a home and its beautiful front elevation.

When a home has a special location near the beach, water, golf course, schools, parks, resort areas, or other amenities, a drone photograph from the air has a special an unique way of highlighting the home’s fantastic location.

The three most important aspects of a piece of property are:  Location, location, location.  And, drone photography is uniquely suited to achieve the task of illustrating the fantastic location of a home.

As a seller, you should demand drone photography of your home, and it should be done on a beautiful clear day whenever possible.  Drone images are an important component of “best in the industry” imagery for your home listing.

 

2D Floorplan Drawing

The 2D Floorplan Drawing for this home also captured the pool & spa area on the front patio.

Merchant Home Builders, the ones that build all those subdivisions in your area, have long relied on 2D Floorplan Drawings as a part of their Marketing Plan.  These companies in some cases have thousands of homes to sell in a neighborhood over a period of only a few short years.  They have become “experts” in providing the information that buyers want to see when making a home purchase decision.

These builders always use 2D Floorplan Drawings a part of their marketing suite.  Why do they offer this marketing material to buyers…?  Because it works!  Buyers take home the floorplan and then begin to visualize how they would live in the home, how they would decorate it, where their furniture would go… this causes additional “engagement” by the buyer on an emotional level.  Once the prospective buyer sees for themselves how well the home would work for their family, the buying process is substantially advanced toward the goal of receiving an offer.

Interestingly the builders also come up with “catchy names” for the floorplans which adds emotional appeal.  While it is not necessary to “name” the floorplan for your home, it is certainly beneficial to have a quality 2D Floorplan Drawing.  The software is readily available to all realtors; however, some do not have the inclination or skill to create a drawing for your home.  Be certain the brokerage you hire creates a floorplan drawing as part of the “best in the industry” imagery for your home listing.

 

Walk-through 3D Tour

This 3D Tour image shows the arrows and room labels to aid buyers navigate the home.

3D tours come in multiple formats.  There is “Room-to-Room” style of 3D tour which captures images of each room and is navigated with “tiles”.  The “Matterport” format popularized what became known as the Walk-through Virtual Tour.  Buyers came to learn & enjoy the format during Covid when touring homes was more difficult than today.

The current state-of-the-art Walk-Through 3D Tours have arrows and room names to help buyers navigate.  The best systems allow for icons to be placed throughout the tour to provide clickable information on appliances, finishes, and more.

Many brokerages do not use state-of-the-art Walk-Through 3D Tours because they are expensive in both time and money.  The tours require an expensive 3D camera, double or triple the number of images captured, naming of the rooms, and setting the views so that buyers enjoy the navigation through the rooms.   It is tedious and there is an “art” to getting it right.

However, all the effort is really worth it because no tool is better for expanding the buyer pool for your home to the highly qualified buyers who are find it difficult to drop what they doing and come see a home which just came on the market.  Sometimes these are buyers live locally and have a very busy schedule, sometimes they are traveling on work or pleasure, and occasionally they live out of the area and are shopping for a second home.  Regardless… the 3D Tour allows the buyer to experience the home, then decide make time or get on a plane to come to see it before another buyer purchases the home.

The value of the 3D Tour is not just for the family who purchases the home… the other value to the seller is getting additional qualified buyers to the home shortly after it comes on the market.  Getting just one additional buyer bidding on the home against one other buyer can make the difference between a higher sales price as well as better terms for the seller.

Be certain the brokerage you hire creates a Walk-Through 3D Tour as part of the “best in the industry” imagery for your home listing.

Summary 

Picture this… it is a fairly tale that could easily come true!

Once upon a time you decide to list your home using “best in the industry” imagery for your property.

Several buyers for your home saw the still photos and drone images… they were intrigued.  They printed the 2D Floorplan Drawing and visualized how the layout would be very comfortable for their family needs… finally the buyers took a Walk-though 3D tour and experienced virtually how it matched perfectly to their lifestyle.

Next step, they either made an appointment to see the home or they attended a scheduled open house.  The listing agent was certain to schedule showing appointments back-to-back to illustrate the high number of interested buyers, and as usual the Open House was busy with prospective buyers, neighbors, and realtors previewing the home due to the fantastic imagery.

Multiple buyers sensed that the listing was likely to sell quickly due to the high number of people looking at the home.  The buyer who flew in from Scottsdale to see the home was very surprised to learn they were the 5th showing for the day, and other buyers at the Open House were a bit distressed when they overheard a buyer all the way from Scottsdale was back for a second look at the Open House.

In the end, the buyers were well served by having all the imagery they needed to decide if they should come see the home in person, and there were several offers on the home.

You were able to sell the home for top dollar and… Everyone lived happily ever after.

 

Beware of the Big Bad Wolf

There are agents who want to list your home without doing “best in the industry” imagery for your home… and there are some that simply do not know how to create the images or just do not want to absorb the cost.  The only way to convince you to list your home with them is to tell you things like:

“The best imagery is not necessary to sell your home in this market.”

“That stuff does not work.”

“Buyers to not care about Walk-Through 3D Tours & 2D Floorplans.”

 

Consider this testimonial if you are looking for a realtor who uses “best in the industry” imagery for his home listings

Scot Campbell was recognized by fellow Coldwell Banker Office Managers at a regional conference for having the “Best in Industry Listing Imagery Package” for his listings.

“No one else comes close in his market area.” according to Chuck Whitehead of Coldwell Banker – Associated Brokers.

“His listing image package which includes:

>  Professional Photographer with years of experience
>  High Dynamic Range Enhancement for all Still Photos
>  Dramatic Aerials captured with 4K drone camera
>  Lifelike Walk-Thru 3D Tour with icon links to home upgrade info
>  Detailed 2D Floorplan Drawing to illustrate the layout of the home
>  YouTube Video with an assortment of “moving still” photographs

I would choose Scot Campbell to list my home if I was selling a property in the area!”

Scot Campbell can be reached via telephone/text at 714-336-0394 or email at SdCampbellRealtor@gmail.com


Uncategorized October 16, 2023

Staging | 3262 Sparkler Drive

Community News September 27, 2023

12th Annual FREE Pumpkin Patch at the Beach

I am hosting our 12th Annual FREE PUMPKIN PATCH at the Beach on Saturday, October 19, 2024 from 10AM to 2PM.

The event is going to be at my oceanfront office:  1720 Pacific Coast Highway, Huntington Beach, CA. 

Every child gets a Free Pumpkin + Face painters, balloon artists, and a chance to win $100 by Guessing the Weight of the Giant Pumpkin (winner keeps pumpkin).

Share with family, friends, & Social Media: www.HBpumpkinPatch24.com   

Questions:  Scot Campbell, Realtor 714-336-0394  Scot@Campbellrealtors.com

 

 

 

 

Advice for home buyersAdvice for home owners June 21, 2023

SPECIAL REPORT: Exchanging With a Related Party

Source: Article was provided by First American Exchange Company, LLC, a Qualified Intermediary, is not a financial or real estate broker, agent or salesperson, and is precluded from giving financial, real estate, tax or legal advice. Consult with your financial, real estate, tax or legal advisor about your specific circumstances. First American Exchange Company, LLC makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.

When considering purchasing from or selling to an individual or entity that is considered a “related party,” a taxpayer must take certain factors into consideration to have a successful exchange. In some cases an exchange may not work, or there may be a mandatory two-year holding period required for the replacement property. This article covers the basics of related-party exchanges, explaining why these rules exist, and how a taxpayer should approach a related-party exchange. 

What is a related-party exchange?

A related-party exchange occurs when a taxpayer buys or sells real property from or to an individual or entity that is considered related to them under Sections 267(b) and 707(b) of the Internal Revenue Code. Related parties include a spouse, sibling, ancestors, and lineal descendants. In addition, if someone owns more than a 50% interest in a corporation or partnership, that corporation or partnership is considered a related party. The full definition of “related party” is located in the code sections referenced above.

Initially, related parties could exchange properties without any limitations. In 1989, Section 1031 of the Internal Revenue Code was revised to limit related-party exchanges. The reason for the change was to discourage “basis shifting,” where a taxpayer with a low basis trades properties with a related taxpayer with a high basis. This is done to eliminate or reduce capital gains taxes on the sale of the property that originally had a low basis (and now in the hands of the related party has a high basis). For example, X has a property worth $1M with a basis of $100,000. He wants to sell but wants to avoid paying taxes on the $900,000 of gain. Y, his son, has a property worth $1M with a much higher basis of $950,000. X and Y exchange properties, each carrying over their basis from the property they exchanged. Y, now the owner of X’s former property, arranges with X to sell the property to a third party, triggering capital gains on $50,000. Taxes are only paid on that amount, instead of on the $900,000 that X would have realized had he not exchanged with Y. This scenario illustrates the core concepts of basis shifting.

Can a taxpayer exchange with a related party? 

The answer to this question depends on whether the taxpayer is swapping properties with the related party, selling to them only, or purchasing from the related party.

Swapping with a related party

When swapping with a related party, such that a taxpayer relinquishes property to the related party and acquires replacement property from the same related party, an exchange is possible provided that both parties hold their respective replacement properties for a minimum of two years after the date of the last transfer that was part of the exchange. If either party transfers their property before that date, both exchanges will be disqualified, with both taxpayers obligated to pay tax on their gain. That tax will be payable for the tax year in which the sale of the property acquired in the exchange occurs.

In the past, some taxpayers have tried to avoid these restrictions by setting up their exchange with a related party using an intermediary. The theory was that because each taxpayer is technically exchanging with the intermediary, no related-party issues should arise. However, there have been several cases and rulings stating that using an intermediary does not exempt the taxpayer from the related party restrictions. This is based on the statement contained in IRC Section 1031(f)(4) that the benefits of Section 1031 do not apply “to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection.”

There are a few exceptions to the rule, which are discussed below.

Selling to a related party

Generally, the view when selling to a related party in an exchange using an intermediary is that a taxpayer may proceed to exchange and acquire property from an unrelated party. Since the taxpayer is shifting its low basis to a property owned by an unrelated party, there is no cashing out of their investment in the same way as described above in a related-party swap. However, a taxpayer should always discuss the sale of property to a related party with a tax advisor, as there are other considerations to keep in mind – such as making sure the transaction is arm’s length.

Buying from a related party

When purchasing from a related party and selling to an unrelated party in an exchange, there are very limited instances in which a taxpayer can successfully defer gain. In many cases, the IRS and courts have disqualified such exchanges because of the potential for basis shifting. The basis shifting can occur and ruin the exchange even when it is unintentional.

However, there has been a Revenue Ruling and some cases indicating that a taxpayer may buy from a related party provided that the related party also completes an exchange (or is otherwise afforded non-recognition treatment and is not cashing out on their sale).

Exceptions

As discussed above, the related-party rules impose a two-year holding period for properties acquired in an exchange between related parties, and in some cases prohibit exchanging with a related party. Section 1031(f)(2) contains three exceptions to the limits imposed by 1031(f)(1). First, the parties may dispose of their properties during the two-year holding period upon the death of either the taxpayer or the related party. Second, if either party’s property is subject to an involuntary conversion prior to the end of the two-year period, that disposition will not trigger a taxable event for the parties. Finally, trading with a related party will not disqualify the exchange when “it is established to the satisfaction of the Secretary that neither the exchange nor such disposition had as one of its principal purposes the avoidance of Federal income tax.”

This last exception (the “non-tax avoidance exception”) has been used to allow related parties with undivided interests in different properties to trade them so that each taxpayer holds either a 100% interest in one of the properties or a larger undivided interest in one of the properties. For example, if two related parties each owns a 50% tenant-in-common interest in two properties, they can trade their interests such that each taxpayer owns a 100% interest in one of the properties.

As mentioned above, the non-tax avoidance exception has also been applied to exchanges where the taxpayer is acquiring replacement property from a related party who is also doing an exchange. Finally, the non-tax avoidance exception has been applied to transactions where the taxpayer could prove that there was no intention of or resultant basis shifting or other avoidance of tax, but such taxpayer-friendly rulings have been very limited.

Conclusion

Given the potential roadblocks to completing a successful exchange when purchasing from or selling to a related party, it is essential that a taxpayer planning on doing so always discusses their transaction and goals with their tax advisor. This way they can ensure they are following any applicable rules to avoid disqualification of their 1031 exchange and a resultant tax penalty, even in a situation where the intention is not basis-shifting. 

First American Exchange Company, LLC, a Qualified Intermediary, is not a financial or real estate broker, agent or salesperson, and is precluded from giving financial, real estate, tax or legal advice. Consult with your financial, real estate, tax or legal advisor about your specific circumstances. First American Exchange Company, LLC makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, and First American Exchange Company are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.