Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Sept. 5, 2023

Explaining the Reasons Behind San Diego's Skyrocketing Housing Costs

Are you struggling to find a home in San Diego County that fits within your budget? You're not alone. San Diego may be known for its stunning beaches, scenic parks and bustling nightlife but it is also a place where buying a home is a nearly impossible task. In addition to low inventory, many people do not realize that big businesses that pay their employees well are moving to the area. With the median yearly income increasing 7.8% in the past year*, the ability for new people moving to the area to afford these homes is present. In this blog post, we'll dive into what is keeping house prices high in San Diego County and what you can do to be better prepared when entering the housing market.

Limited Housing Supply

One of the main reasons house prices in San Diego County are skyrocketing is due to the decreased supply of houses on the market. Available homes for sale remain at an all-time low and new construction homes have not kept pace with demand. 

Local big businesses such as Qualcomm, General Atomics, and Illumina are drawing in a plethora of high-wage workers every year, leading to a shortage in affordable housing options. It's a simple case of supply and demand. As the demand for housing rises, so do the prices. Many ask about foreclosures but fortunately for homeowners, the amount of property owners 3 months or more behind in their mortgage payments is at an all-time low.

Tied to the Tech Industry

San Diego's economy has undergone a considerable transition in the past few decades, shifting from its traditional ties to the military and tourism industries to a more tech-based economy. Companies like Qualcomm and Illumina have a significant impact on the local economy due to their extensive job opportunities and high wages. Think Qualcomm isn’t a big name anymore? Think again, your phone’s hardware and that inflight wifi are a couple examples Qualcomm tech is working on.

Many of these companies also have supporting operations with a full staff that is highly paid. For example, if a corporation has a flight department, that department will have several mechanics, safety attendants, pilots etc. on staff.

As a result, the influx of money leads to an increase in housing demands and prices.

BioTech Industry

Not only are there several large corporations based in San Diego, many blue chips are expanding in the area. Walmart is building an expansive new pharmaceutical campus. Kaiser and Scripps have long held footholds in North County and continue to expand. Life sciences is a large sector in the San Diego economy that is growing and expanding. With the Boomer generation entering their golden years and looming largest transfer of wealth in United States history, it’s safe to say that many will be supporting the products that these corporations create.

Lack of Affordable Housing Opportunities

Affordable housing options are almost non-existent in San Diego County. The price to rent or buy property is exceedingly high, making it challenging for low-to-moderate income families to afford a home. It is important for people who have always rented to keep in mind that rent is reflected in mortgage rates. If the cost of money is higher for an investor to purchase a home< i.e. mortgage interest, then the rent will be higher. Owning a home secures your cost of living over the life of the mortgage.

Some say the lack of affordable housing is due to the failure of local policy makers to implement affordable housing regulations. While local policy makers have created requirements for affordable housing units when new properties are built, there simply are not enough new properties being built to satisfy demand of any economic level. According to several long term housing builders, the new building codes implemented in California have done more to fund construction supply business than provide affordable or safe housing for people.

Fortunately, core housing affordability is actually starting to rise across the nation. Americans on average are spending 29% of their income on housing.

The Looming Recession

While most of America has waited for a recession and a housing market crash over the past year, few have stated we are beginning to see a “rolling recession” or a “tale of two economies.” During the pandemic Americans were spending most of their discretionary income on products and experiences, now we're seeing a shift where Americans are again spending on services. This “rolling recession” is affecting different industries at different times. In the past a recession has affected the entire economy at once, this is not what we have seen so far.

 

What Can You Do?

While it might feel hopeless for homeowners or potential home buyers in San Diego County, you can still take action. Consider interviewing the real estate agent that you work with. Realtors® are not the same. If you are a homeowner you want to find one who can create options to expose your home to the right buyers regardless of volatile interest rates, as we can see from this blog, there are buyers who can afford homes right now. When you are buying a new home for the first time or you are moving into your second or third, it is important to understand the market. Have your Realtor® show you homes slightly above and slightly below your price range, this should help you understand the difference in the value of homes currently.

Ask how well your agent understands housing in San Diego. If you want character charm and a single level ranch under $1.5M you will need someone who knows where to find that. Also, since there are so few homes available for sale, ask how they plan to find you a home and share how that strategy has been successful recently. According to NAR, at the end of Q2 2023 fewer than 8% of Realtors® have 4 or more transactions for the year.

In Conclusion

Big businesses have a double-edged impact on the housing market. While they bring economic growth, they also drive up demand and house prices, leaving individuals and families struggling to find affordable homes. However, with the right guidance and advocacy, it is possible to navigate the challenges presented by big businesses and find a home in San Diego County without breaking the bank. With some research and effort, your perfect home is within reach.

For a customized strategy to get the most for your current home while limiting capital gains taxes and a tailor-built strategy to find your next home, contact Scott Stollar today.

 

 

Scott Stollar

760-697-5661

www.sellitscott.com

sellitscott@kw.com

 

Resources for this article:

KW Research 2023

https://www.point2homes.com/US/Neighborhood/CA/San-Diego-Demographics.html#IncomeFinancial

https://sandiegolifechanging.org/blog/year-san-diego-corporate-expansions/

Posted in Homeownership
July 11, 2023

Exploring Your Options When Inheriting a Home Through Probate

One of the most significant assets that people inherit is a home left by their loved ones. In fact, millennials are expected to inherit the largest transfer of wealth in United States history of approximately $68 trillion dollars.

 

However, inheriting a home through the probate process can be a challenging and overwhelming task. Probate refers to the legal process of administering the estate of a deceased individual. During the process, the executor of the estate distributes the funds and assets to the beneficiaries as per the decedent’s wishes or state law if there is no will. After you inherit a home through probate, there are several options available to you, depending on your situation. In this blog post, we will explore some of the options that property heirs have when inheriting a home through probate.

5 Options When Inheriting a Home:

1) Sell the Property

Selling the property is one of the most common options available to property heirs. It allows you to liquidate the asset and convert it into cash. It is important to hire an experienced Realtor® who understands the probate process. An experienced agent can help prevent frustrating delays for the administrator, beneficiaries and heirs. 

When you choose to sell an inherited property there are usually three strategies. The best strategy for you will depend upon several factors, including the preferences of the heirs and whether the administrator has full or limited authority, to name a couple examples. 

 

The right agent is a synchronistic team mate to your lawyer, personal representative and heirs. This agent can help with a few important steps early on such as, compiling a comprehensive opinion of value, discovering connecting properties owned by the decedent, supplying a copy of the trust deed and meeting with the administrator and other heirs for a free strategy session to listen to the needs of the estate, before advising. 

 

Cash buyers and investors often look for homes to buy below market value, repair and sell for a profit. This is often known as house flipping. Although this may not yield the highest sale price, it may be a great option for properties that are in high levels of disrepair. A quick sale can seem appealing to family members who need money for emergencies. Keep in mind though, most costs incurred while administering the estate are paid at the end of the probate process. Even if a home sells quickly, heirs likely would not receive any money until the final disbursement is granted by the court. It is important to ask your estate attorney if a quick sale would translate to money in your hands more quickly. If you need immediate cash, there may be other options for you.

 

Depending on the condition of a property it may be wise to make some improvement before placing the home on the market to get top dollar. Other times the improvements just don't make sense, the people who make that choice also need to evaluate the local market to make sure that it makes sense in their situation. Not every home needs improvement, it is possible to sell a property in probate without making improvements. Contact me to strategize a plan for your situation.

2) Rent the Property

If you do not want to sell the property, you can choose to rent it out. Renting the property can provide you with a steady income stream. However, being a landlord involves a lot of responsibilities, such as keeping the property maintained and finding tenants when there are vacancies. It is important to consider if you are willing to take on these responsibilities before deciding to rent out the inherited home. If there are multiple people inheriting the home, it will become challenging at some point when one person feels like they are doing "all of the work" and want a larger share.

If the property is in good condition, renting may be a great option short term to ensure that it is properly maintained and functioning when it comes time to sell.

 

Many people have rented properties they inherit and even in simple situations, there are issues people who become landlords through inheritance should know about. One of the most common statements that I hear from an accidental landlords is, "The house is paid off, I'm making tons of money and I'm fine." Even though it looks as though cash is coming in you will want to make sure you run this house like the business it just became.

 

One story that comes to mind is about a couple who inherited a home from the husband's parents. Bob and Nancy took money that they inherited and did some smart things, mainly they invested in real estate. They decided to purchase a brand new home and rent out their then current home. All is well in their world, the mortgage on the old house is $1,425 a month including property taxes and they are renting the property for $1,800 per month. Twenty six years have passed by and Bob has died, Nancy is still charging the tenant $1,800 per month because, "They're great tenants, I never hear a thing." The market rent for Nancy's investment is now $3,800 per month. That is $2,000 per month that Nancy is missing out on, the depreciation cycle is running out and the tax benefits from being a landlord will shortly end. To make things worse, when you factor for capital expenditures like a new roof or other costly items the $375 per month "profit" shrinks for several years. No Nancy did not save for a new roof, air conditioner or other expense that homes typically have. Nancy does have a tenant who has reliably paid rent for many years, he also drives a more expensive car than she does.

 

A lesson that many people learn from probate is that they never want anyone that they love to go through that process. While Nancy's story will leave a house to her loved ones when she passes, she is missing some opportunities outside of the $2,000 in rental income per month. She could sell that property at this point and buy multiple properties without paying capital gains through a 1031 exchange. Doing this could earn her more money by having new properties at market rental rates, creating more retirement income for her. She could also be leaving a house to each of her children while she is still alive or even reinvesting in a Delaware Statutory Trust, which would defer the capital gains and provide her a return without dealing with tenants.

3) Move into the Property

Another option available to property heirs is to move into the inherited property. If you are looking for a new home, renting, or selling does not suit your situation; moving into the inherited home may be a practical option. You would need to consider the condition of the property, its location, your personal finances, and the associated expenses before settling on this option.

 

This has many advantages in California, if your parents had a low property tax base, you could inherit that too and which would make owning a home very affordable, even if you had or wanted to make significant improvements.

 

Some people decide against this because of memories they may have at home or it just isn't practical for them to move to the property. When there are several heirs, if one heir wanted o move in, they would have to buy out the interest of the others or come to a mutual agreement.

 

4) Donate the Property

Donating an inherited property can be a great option if you do not wish to keep the home and if there are no other heirs. You can donate the property to a charitable organization, and in return, receive a tax deduction. Before donating the property, it is crucial to ensure that the charity is a reputable organization and that you are aware of the tax implications.

5) Do Nothing

Doing nothing is also an option when you inherit property through probate. If you cannot decide on the next course of action, you can choose to leave the property as it is until you are ready to take action. Doing nothing might not be a wise idea in the long run, as the property may attract expenses such as property taxes, utility bills, and maintenance costs.

 

Deferred maintenance is a concern as well as unwanted tenants. When squatters choose to move in, evicting them could be a challenging and lengthy process, even though they are not paying rent.

What I Chose to do when I Inherited A House

I lost both of my parents at separate times and I was fairly young in life. My mom had owned the home that I grew up in and it was in a great area. She still owed some money and the mortgage was manageable, even for a young person. Despite this, I did not feel comfortable living in the home with all of the memories of growing up with alcoholic parents. I felt that starting a family there would be uncomfortable for me and I did not want to be in the room where my mom spent her last moments.

 

During probate, you also learn about all of the debts that the decedent has that need to be settled. Selling the home, settling all of the debt and starting fresh was the option for me. I chose to do this and purchase a home in a less expensive area so that my monthly expenses would be lower. The Realtor® who helped me back then recommended that I buy a duplex so that I could live in one side and rent the other, I do wish that I would have done that years later. At that moment in time, stability was what I wanted the most, so I chose to buy a home for myself and use this blessing to keep my expenses down.

Inheriting a property can be an overwhelming and daunting process, especially when you are grieving the loss of a loved one. It is important to consider all your options before deciding what to do with the inherited property. You can rent it out, move into it, donate it or even do nothing until you are ready to take action. Whatever you decide upon should suit your current and future situation, as this decision will have a lasting impact. My advice is to consult with experts that understand probate, real estate, 1031 exchanges and property taxes before making any decisions. Take the time you need to make the right choice for you and your family.

 

I hope my story gave you some insight into how I chose to handle my own inheritance, and that you can use this information to help inform your decisions. Please share this with anyone in your life who could find this helpful. For further assistance, contact me at any time! I am a C.A.R. certified Probate and Trust Specialist.

 

Written by Scott Stollar

760-697-5661

sellitscott@kw.com

www.sellitscott.com

DRE 02136497

 

 

Posted in Probate
June 30, 2023

Discovering Your Own Paradise: Tips on Finding the Perfect Neighborhood for You

Buying a home is not just a huge financial responsibility, it is also an important decision. One of the toughest tasks in choosing the perfect home for you is finding the ideal neighborhood to live in. It is crucial that you consider several factors before finalizing a neighborhood, as your decision will have a significant impact on your quality of life. This blog will guide you through some tips on how to find the perfect neighborhood.

 

Consider proximity to work

One of the most critical factors to consider is the neighborhood’s proximity to your workplace. Is there easy access to roads and highways needed for your commute? Can you handle the distance when traveled over time to and from your home to your workplace? To avoid spending too much time and energy commuting, you should look for a neighborhood that is relatively close to your place of work. This way, you will save money on transportation costs and create a better work life balance.

 

Check crime rates

Safety is paramount, especially if you have young children. It is essential to know your neighborhood’s crime rates before finalizing your decision. Visit the local police department’s website or inquire directly at the station to obtain information on the neighborhood’s criminal activity. Do your own research by checking crime mapping websites. Take walks at different times of day and evening to see what the neighborhood is like. A neighborhood may be quiet during the day but loud in the evening when people are home from work. Do your due diligence by researching what is important to you in a neighborhood. Talk to neighbors, mail carriers or people at local businesses to get a vibe for what the area is like before making a decision to move.

 

Look for quality schools