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New Tax Law tips and advice from Cromwell Tax and Bookkeeping’s Madelyne Cromwell.

The recently enacted Tax Cuts and Jobs Act (TCJA) is a sweeping tax package. How will it impact you?

 

Rates on the move up? Track the 10 year treasury bill as it climbs higher and higher.

I’ve been licensed and a Realtor since 1978. Look at the chart below and you’ll see I spent 12 years wandering the desert of double digit interest rates. Also note that my first year was my last year of single digit interest rates for some time. How did I do? I was a top producer in my office all through the double digit storm. When we dropped under 10% it was cause for mass celebration in the Realtor ranks! I remember my fellow agents stating, “Man if we could get single digit interest rates we’ll tear this market wide open!” And we did.
Then notice it took almost 20 years to get down to the 4% range. If you’ve been in the business 5,10, 15, years you’ve KNOWN no other rates and experienced a historic low. Well, guess what boys and girls, rates DO go up, markets WILL go down, and recessions will come and go. Enjoy this while you can but remember to stack some cash aside, buy some investment properties with your big commissions today and prepare for the inevitable. I remember some of the infamous phrases used before the BIG BANG of 2007, “We’ll always have appreciation”, “We’ll refinance you out of this loan next year and pull cash out.” We all need to guard against, “Irrational Exuberance”. (thanks to Erik Oquist of Wells Fargo Home Mortgage for the graphics!)

You really didn’t think rates would stay down here forever-did you?

Happy St. Patrick’s Day! Lovin’ the “Green”!

Deciding NOW is the time to leave California? Southern States are VERY affordable!

Special guest on tomorrow’s show will be Russel Lee. Russ lost his home in Fountaingrove during the firestorms of October. He decided to make the move back to Tennessee. We’ll be discussing what you can expect when you visit Tennessee and home prices. WARNING! Tennessee home prices can cause major anxiety among California homeowners!

For instance.

Russel  Lee

Tom Havstad, Permit Consultant, winding your way through the county post fire!

Looking forward to long-term guest, Tom Havstad, permit consultant, and his take on the County of Sonoma and how it is coping with the onslaught of building permitting, septic issues and a post-fire working environment. Tom has great insight also on permitting structures which you might think are illegal or non-conforming. He can legalize your non-conforming lots too. Tune in for some frank discussion on the current state of the Permit Resource Management Division or “permit Sonoma county”!

Tom Havstad

Permit Consulting Services

12651 Fiori Lane

Sebastopol, Ca. 95472

Cell Phone: 707-695-0857

Office Phone: 707-874-2078

Fax: 707-827-8073

Website: www.permit-help.com

Email:   havstad@sonic.net

Want to keep your old Proposition 13 tax base when you move? Here’s how!

Adding more teeth to Prop 13–expanding propositions 60 and 90

C.A.R.’s Portability Initiative
Campaign Talking Points

• GOAL: To create homeownership opportunities for young families and
preserve tax savings for seniors. Expand Proposition 60 and 90 voter mandated keeping of old property tax base.
• Proposition 13. California’s property tax system is based on the purchase price of a
home. Proposition 13 caps property taxes at 1 percent of the purchase price (Prop.
13 property tax base).
• Moving Penalty. When a homeowner relocates, their property taxes will be 1
percent of the purchase price of the replacement home. As a result, homeowners’
property taxes generally increase when they move.
• Seniors. In California, homeowners 55 years of age or older can transfer their Prop.
13 property tax base – only once – to a replacement home located in the same
county so long as the purchase price for the replacement is equal to or less than the
sale price of the original residence. These homeowners can also transfer their
Prop.13 property tax base to a home located in a county that has agreed to the
transfer (only 11 counties have agreed to inter-county transfers).
• Data. Data shows that homeowners are very aware of how their property taxes will
increase when they move. As a result, almost three-quarters of homeowners 55
years of age or older have not moved since 2000!
• Research. Because of the housing supply shortage, 65% of starter homes are
selling at or above the asking price which makes it very difficult for first-time
homebuyers to enter the market.
• C.A.R.’s Initiative. C.A.R.’s Portability Initiative would allow homeowners 55 years of
age or older to transfer their Prop. 13 property tax base to a home of any price,
located anywhere in the state, any number of times.
• Buy Up. For example: Homeowner originally bought for $100K ($1K/year for
property taxes), subsequently sells for $300K, and buys a replacement home for
$400K. The $100K difference between $300K and $400K is added to the original
Prop. 13 property tax base of $100K for a new Prop.13 tax base of $200K ($2K/year
for property taxes). Under existing law, this transfer could not be made and the
Prop. 13 tax base would be $400K ($4K/year for property taxes).
• Buy Down. Returning to the example: If a homeowner buys a less expensive home,
for example for $200K, the property taxes will be proportionally the same as for the
original home. In other words, if the tax base was one-third of the sales price, the
new property tax base would be a third of the new sale price (i.e., 1/3 of $200K =
$67K or $670/year for property taxes). Buying down reduces the homeowner’s
annual property tax bill.

• Arguments in Favor:

– No moving penalty. The initiative keeps senior homeowners’ property taxes low
when they move.
– Increased supply. As senior homeowners move, they create housing
opportunities for younger, growing families and first-time homebuyers that don’t
exist today.
– Local finances. When a senior moves out and a young family moves in, the tax
revenue to the locality annually increases.

Will MORE Real Estate Inventory equate to MORE Sales? History does not lie!

We seem to be suffering under the MORE INVENTORY WILL EQUAL MORE SALES notion. Granted, more inventory would allow more choice, lower our appreciation rate as we’d have more to choose from with fewer overbidding, but note the sales are NOT that dramatically different when there is more inventory. Looking back 10 years you can see in the light green the huge amount of inventory vs. today’s anemic numbers. However, the sales do not look all that much different.

 

Looking back 10 years inventory and sales-They don't go hand in hand!

Inventory VS Sales–More Inventory = More Sales? Note the amount of Sales do not increase dramatically with MORE inventory.

1 in 4 can afford Median Priced home in Sonoma County, California! Bring CASH!

3rd quarter “affordability” numbers for Sonoma County and the NorthBay. We are now at 25% or 1 in 4 folks can afford to buy the median home priced at $630,000. You payment will be $3,180 per month with total income needed of $127,100. And this was BEFORE the “Fire Storms”. Now throw in scarcity and things are just very, very tight! Housing Crisis

Nov 12th Guest: Richard “Dick” Dowd–Long time Engineer and Development Expert

Northern California Engineering Contractors Association Hall of Fame – Inducted 2014

North Coast Builders Exchange Hall of Fame – Inducted 2002

 City of Santa Rosa Board of Public Utilities, Santa Rosa, CA  1994 to Present

Board Member (Chairman – 1996 to 2013)

Sonoma Clean Power Authority  2013 to Present

“Our region has lost up to 7,000 living units, and we had a housing shortage before the fire.  Also, we already had a homeless issue because of the high cost of housing in the region, and we will need temporary housing for them as well as the workforce from outside the area that will most certainly be needed to supplement the locally available construction workforce. In addition, we will need to provide housing (temporary and/or semi-permanent) for those displaced from their homes while they are rebuilding.

We also all need to recognize that this devastating fire(s) is having a damaging impact on the economy of our region.  Jobs have been lost, businesses have shut down, etc., and property taxes will take a severe hit which will damage the ability of the county and our cities to function in a normal fashion.  I have heard that there will be a 20% reduction in the GDP of our county in the short to intermediate term.

I am the Chairman of a group, currently entitled “Rebuild Sonoma Task Force”, which might change soon so that we can assist rebuilding in the other 3 counties also.  The group is made up of builders, contractors, architects, engineers, business groups, financial institutions, and insurance brokers.

All of these groups have experience, and thus valuable input, to getting our region “back up and running” as efficiently and economically as possible.

This is not going to be an easy task by any stretch of imagination, but our group wants to encourage everyone to be patient and do this recovery correctly, more so than just quickly.”

 

 

Longtime community mover and shaker Dick Dowd joins me this Sunday. Engineering expertise and development experience.

POD CAST! Guest Host Otto Kobler’s Financial Fire Show. Super information for all!

 

Otto Kobler
Summit Funding, Inc.
Branch Manager / Senior Loan Officer
okobler@summitfunding.net

Here’s the podcast for Otto’s show last Sunday. Great information on appraisal and lender perspectives regarding impact of the Fire Storms which hit Sonomoa/Napa counties. CLICK RIGHT HERE TO LISTEN!