State lawmakers are now making moves to alleviate California’s soaring rents and home prices. The bills being deliberated cover permanent housing for the homeless, new zoning rules to allow apartments on BART parking lots, and workarounds for the $10,000 federal cap on state and local tax deductions.
Assembly Bill 2162 would fast-track housing developments for the homeless and disabled that can be delayed or derailed by local politics. The bill would also allow for affordable leases on apartments.
Assembly Bill 2923 aims to allow housing development on BART’s parking lots. David Chiu, who leads the Assembly’s housing committee, states that “Given the twin housing and congestion crises, building housing next to major transit is simply common sense.” However, this bill faces stiff opposition from many of the affected cities.
Senate Bill 227 seeks to create a workaround the on $10,000 cap on state and local tax deductions that came about as a result of the federal overhaul of the tax code earlier this year. The bill would allow for Californians to make contributions to school districts, charter schools, and community colleges in exchange for state tax credits, which could be fully deducted from their federal taxes.
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Huntington Beach Assemblyman Travis Allen, Republican: Allen has a goal for developers to build at least 1 million new homes in his first four years as governor. He believes the state needs to strip away many of the regulations around home building, which he says would allow developers to increase the housing supply. He doesn’t support subsidizing low-income housing, arguing developers will build for people of all incomes if taxes and fees are lower.
The Huntington Beach Republican is also opposed to a potential November ballot measure to allow for the expansion of rent control. He believes rent control leads to housing shortages and says he’d work to eliminate all existing rent control policies across the state.
State Treasurer John Chiang, Democrat: Of all the candidates, Chiang is calling for the most government spending on housing. He would set a goal for the state to help finance 1.6 million homes for low- and moderate-income Californians from 2019 to 2030. He has also proposed a future $9-billion bond measure to subsidize new low-income construction, property tax breaks for developers who agree to set aside part of their projects for low-income families and additional tax revenue to cities that approve more housing.
Chiang is opposed to the potential rent control ballot measure, and believes that the state could change Costa-Hawkins, the law prohibiting the expansion of rent control, to allow for its broader use in certain circumstances.
Businessman John Cox, Republican: Cox, who owns a real estate investment and property management company, has a goal for developers to build 3 million new homes over the next decade. He said that the state needs to reduce regulations on builders, including replacing its primary environmental law governing development, the California Environmental Quality Act, with a less comprehensive measure. Cox also wants to allow Californians to be able to take the property tax benefits they receive under Proposition 13 with them when they move. In addition, Cox is against a potential November ballot measure to help rent control expansion.
Former state schools chief Delaine Eastin, Democrat:Eastin would set a goal of developers building 1 million new homes in her first four years in office, and would prioritize construction around transit hubs. She wants to rezone a lot more land for housing, including current commercial properties, increasing land available for duplexes and townhomes, and making it easier to build homes on smaller lots.
Of the top candidates in the race, Eastin has been the most supportive of expanding rent control as well as advocating for the repeal of the Ellis Act, which allows for the eviction of rent-controlled tenants if landlords convert their buildings to for-sale condominiums.
Lt. Gov. Gavin Newsom, Democrat: Newsom wants developers to build 3.5 million homes from when he takes office through 2025, which would be an unprecedented building boom compared with modern California history. He wants a fivefold increase in a state tax credit to finance low-income housing, bringing the state budget cost to $500 million a year. And Newsom supports eliminating regulations that he contends make it difficult for developers to produce middle-income homes.
Newsom is against the potential rent control ballot measure and believes that the Costa-Hawkins law should be changed to add more renter protections.
Former Los Angeles Mayor Antonio Villaraigosa, Democrat: Like Newsom, Villaraigosa calls for building 3.5 million new homes through 2025. He wants to create a new version of a program that allows cities and counties to set aside some property tax dollars to help finance low-income housing. And he plans to set up a $10-billion revolving loan fund to help homeowners convert garages into separate houses or build stand-alone second units in their backyards.
Villaraigosa is against the potential rent control ballot measure and says that he would use potential changes to Costa-Hawkins as a bargaining chip in a larger package of policies to address housing affordability.
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Mortgage rates surged to their highest level in almost five years this week.
Unlike the extremely mild and uneventful day-to-day changes seen for most of the past 2 months, rates are actually putting some distance between themselves and the March plateau.
Whereas a well-qualified borrower with 25% down may have been quoted a conventional 30 yr fixed rate of 4.5% a few weeks ago, they’d already be looking at 4.75% today for most lenders. Of course this can vary a bit from lender to lender, but the point is that all lenders have experienced that sort of delta.
Today’s Most Prevalent Rates – 4/26/2018
30YR FIXED – 4.58%
FHA/VA – 4.25%-4.5%
15 YEAR FIXED – 4.02%
5 YEAR ARMS – 3.74%
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New residents to the Bay Area are earning far more than the people they’re chasing out, pushing up home prices and highlighting the gap between owners and renters in Silicon Valley. Lower income workers moving out of the Bay Area were being replaced by younger workers making about $12,640 more annually from 2005 to 2016, according to a national study released by BuildZoom. The Bay Area income gap has accelerated from 2010 to 2016, with the average newcomer out-earning the typical former resident by about $18,700. Bay Area newcomers had a median annual household income of about $70,000, while those leaving had a household income of $57,400. About 60 percent of the newcomers had at least a four-year college degree, while about 50 percent of the outgoing residents had that level of education.
The Bay Area represents the extreme edge of a national trend: higher paid and educated professionals moving to large, coastal cities like San Francisco and New York, while lower paid workers are moving toward less expensive metro areas. This migration has driven up housing prices in coastal cities, while others in the Rust Belt have seen home prices drop.The median sale price for a single-family home in prime Bay Area counties has climbed for nearly six years. The median price for a home in Santa Clara County in February was $1.3 million, in Alameda County $750,000, in San Mateo County $1.45 million and San Francisco $1.5 million, according to real estate data firm CoreLogic
Houses in San Francisco earn more per hour than most of their owners – or anyone else, for that matter, – do at work, a new report finds.A study released by real estate site Zillow finds that houses in the Bay Area city typically appreciate at a rate of $60.13 for each working hour, calculated based on a 40-hour work week. Minimum wage workers in San Francisco currently take home $15 an hour and the average hourly wage in the San Francisco-San Mateo metro area was $36.61 in 2016, reported the U.S. Department of Labor.
In San Jose, the typical homeowner is gaining $99.81 of equity in their home every working-hour, but minimum wage in the city is just $13.50. That means the typical home in San Jose is “earning” over seven times local minimum wage. Even still, the average hourly wage in the San Jose metro is $43.71, which is over two times less than local home value appreciation per working-hour.
San Francisco and San Jose are poised to be among the most expensive markets in the nation throughout 2018, reported Zillow, with median home values of $1.1 million in San Jose and $893,000 in San Francisco. A renter or prospective buyer would need to earn at least $170,000 a year to live comfortably in either market, according to HSH.com.“The way the economy in the Bay Area is right now, it’s like the demand is on steroids,” Michael Rawson, director of the Public Interest Law Project based in the Bay Area, told Newsweek. “It drives the land prices through the roof.”
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