CALIFORNIA LEGISLATURE HAS MOVED TO UNDERMINE THE RIGHTS OF PROPERTY OWNERS AB 1506 – REPEAL OF ANTI-RENT CONTROL STATUES Assemblyman Richard Bloom (D-Santa Monica) has introduced this bill to repeal Costa-Hawkins Act (1995) which barred rent control on SFRs and Apartments built after 1-yr. This repeal is designed to make rent control a state-wide mandate for all residential rental units. The bill reads “Section 1, Chapter 2.7 (commencing with Section 1954.50) of Title 5 of Part 4 of Division 3 of the Civil Code is repealed”. This bill, if adopted will seriously impact all housing in the State of California benefiting only a few and crushing investment in the state as well as the entire real estate industry. RCAOC opposes this bill and any attempt by a government to restrict free market economics. RCAOC urges you to voice your opposition to this bill with your locally elected state assemblyman’s and senator’s office.
***BILL UPDATE*** April 6, 2017 (reported by L.A. Times) This bill has been put on hold by the author for a period of 1-yr amid fierce opposition by landlords. This does not mean the bill is dead!
Tax Law Change Alert
TAX REFORM MEANS THREE TAX BREAKS ARE IN PERIL OF NOT BEING RENEWED
MORTGAGE INSURANCE PREMIUM DEDUCTION
The MI premium deduction will expire 12/31/2017. This deduction has been claimed by 42 million homeowners since 2014
ENERGY EFFICIENT HOME IMPROVEMENT CREDIT
This tax credit allows taxpayers to claim back 10% of the cost of certain energy-efficient home improvements, including qualified window and door replacements with a lifetime limit of $500.
Qualified improvements purchased and installed before Jan 1, 2017, can be deducted for tax year 2017. Unless the credit is extended, any improvements installed in 2017 or later will no longer be eligible for the credit.
MORTGAGE DEBT RELIEF EXCLUSION
The Mortgage Forgiveness Debt Relief Act of 2007 excludes mortgage cancellation or forgiveness from this rule, meaning homeowners who had part or all of their mortgage debt forgiven by the lender don’t have to pay taxes on it. Unless extended this expired on Dec 31 2016.
Vacation Home Sales Retreat, Investment Sales Leap in 2015
April 11, 2016
WASHINGTON (April 6, 2016) — Vacation home sales cooled off in 2015 but remained at the second
highest amount in nearly a decade, while investment purchases increased for the first time in five
years, according to an annual survey of residential homebuyers released today by the National
Association of Realtors®. Mirroring the strong price growth seen throughout the U.S., the median
sales price of both vacation and investment homes surged in 2015.
NAR’s 2016 Investment and Vacation Home Buyers Survey 1 , covering existing- and new-home
transactions in 2015, found that vacation-home sales last year declined to an estimated 920,000,
down 18.5 percent from their most recent peak level of 1.13 million in 2014.
Investment-home sales in 2015 jumped 7.0 percent to an estimated 1.09 million from 1.02 million in
2014. Owner-occupied purchases jumped 15.9 percent to 3.74 million last year from 3.23 million in
2014 — the highest level since 2007 (3.93 million). Sales estimates are based on a national online
survey including responses from over 2,000 U.S. adults who purchased a residential property in
2015, and exclude institutional investment activity.
Lawrence Yun, NAR chief economist, says vacation sales took a sizeable step back in 2015, but still
came in at the second highest amount since 2006 (1.07 million). “Baby boomers at or near retirement
continue to propel the demand for second homes, although headwinds softened the overall volume of
vacation sales last year.” he said. “The expanding pool of buyers amidst a dwindling number of
bargain-priced properties led to tighter supply and fewer sales and caused the price of vacation
homes to rise. Furthermore, the turbulence that hit the financial markets the second half of the year
likely seized some would-be buyers’ available cash.”
The median sales price of both vacation and investment homes soared in 2015. The median vacation
home price was $192,000, up 28.0 percent from $150,000 in 2014. The median investment-home
sales price was $143,500, up 15.3 percent from $124,500 a year ago.
According to Yun, many of the metro areas with the strongest price appreciation in 2015 were in the
South — the most popular destination for vacation buyers – and particularly in several Floridamarkets. While increased buyer demand contributed to the run-up in prices, it also likely squeezedless affluent households looking to purchase vacation properties.
Vacation-home sales accounted for 16 percent of all transactions in 2015 — down from 2014 (21 percent), but still the second highest share since the survey was first conducted in 2003. The portion of investment sales remained unchanged from a year ago at 19 percent, and owner-occupied purchases increased to 65 percent (60 percent in 2014).
“Despite a smaller share of distressed properties coming onto the market, investment purchasesreversed course in 2015 after declining for four straight years,” says Yun. “Steadily increasing homeprices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide torrent out the home.”
This year’s survey found that in addition to longer-term rentals, investors are most likely to attempt toand rent their properties for less than 30 days. Among investors, 42 percent did or tried to rent theirproperty in 2015 and plan to rent their property in 2016. Twenty-four percent of vacation buyers did or tried to rent their property in 2015 and plan to rent their property this year. Vacation buyers are morelikely to use a property manager or social media to rent their property, while investors are more likely to use a traditional real estate agency.
The share of vacation buyers who paid in cash jumped to 38 percent from 30 percent in 2014, while cash purchases by investors decreased to 39 percent from 41 percent a year ago. Of buyers who financed their purchase with a mortgage, over half (52 percent) of vacation buyers and 44 percent of investors financed less than 70 percent of the purchase price.
The overall trend of fewer distressed properties (short sale or foreclosure) on the market resulted invacation buyers and investors purchasing less of them in 2015. Thirty-six percent of vacation buyers(45 percent in 2014) and 39 percent of investors (44 percent in 2014) purchased a distressed property a year ago.
Characteristics of Vacation-Home Purchases
Vacation-home buyers in 2015 had a higher median household income ($103,700) than those in 2014
($94,380) and purchased a property that was a median distance of 200 miles away from their primary
residence (unchanged from a year ago). Buyers plan to own their property for a median of 7 years, an
increase from 6 years in 2014.
With more vacation buyers purchasing single-family homes (58 percent) compared to a year ago (54
percent), the share of those buying a condo (25 percent) or a townhouse or row house (13 percent)
decreased in this year’s survey. Forty-percent of vacation buyers purchased in a beach area, 19
percent purchased in the mountains or at a lakefront and 16 percent purchased a vacation home in
Nearly half of all vacation homes bought last year were in the South (47 percent; 41 percent in 2014),
25 percent were in the West (unchanged from a year ago), 15 percent in the Northeast (unchanged
from a year ago) and 13 percent in the Midwest (14 percent in 2014).
Over one-third of vacation buyers plan to use their property for vacations or as a family retreat (37
percent), 16 percent bought for future retirement plans and only 7 percent purchased to generate
income through renting the property, a decrease from 11 percent in 2014.
Characteristics of Investment-Home Purchases
The typical investment-home buyer in 2015 had a median household income of $95,800 ($87,680 in
2014) and bought a detached single-family home (62 percent) that was a median distance of 22 miles
from their primary residence (24 miles in 2014).
Investment buyers last year purchased property for a variety of reasons, with an increasing share
from 2014 citing rental income as the primary reason (42 percent; 37 percent in 2014), followed by
low prices and the buyer found a good deal (16 percent), and for potential price appreciation (14
Likely reflecting growing demand towards renting in the city, investment purchases in urban areas
increased to 29 percent (26 percent in 2014). Purchased properties from investment buyers were
more likely to be in the South (37 percent) and in a suburban area (41 percent).
Perhaps encouraged by rising housing demand and home prices, over 80 percent of both vacation
buyers and investment buyers believe that now is a good time to purchase real estate.
NAR’s Investment and Vacation Home Buyers Survey, conducted in March 2016, surveyed a
sample of households that had purchased any type of residential real estate during 2015. The survey
sample was drawn from a representative panel of U.S. adults monitored and maintained by an
established survey research firm. A total of 2,053 qualified adults responded to the survey.
Respondents were sampled to meet age and income quotas representative of all home buyers drawn
from the NAR 2015 Profile of Home Buyers and Sellers.
The 2016 Investment and Vacation Home Buyers Survey can be ordered by calling 800-874- 6500, or
online at https://store.realtor.org/product/report/2016-nar- investment-and- vacation-home- buyers-
survey?sku=E186-55- 16. The report is free to NAR members and accredited media and costs
$149.95 for non-members.
The National Association of Realtors®, “The Voice for Real Estate” is America’s largest trade
association, representing 1.1 million members involved in all aspects of the residential and
commercial real estate industries.
1 Vacation homes are recreational property purchased primarily for the buyer’s (or their family’s) personal use, while
investment homes are residential property purchased primarily to rent to others, or to hold for other financial or investment
Home sales were calculated based on a proportion of buyers who bought each respective home type—vacation,
investment, and primary residence. The number of purchases for each housing type were calculated using the total
number of existing home sales and new homes in 2015.
Pending Home Sales Skid in May
June 29, 2016
WASHINGTON (June 29, 2016) — After steadily increasing for three straight months, pending home
sales let up in May and declined year-over- year for the first time in almost two years, according to the
National Association of Realtors®. All four major regions experienced a cutback in contract activity last
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slid 3.7 percent
to 110.8 in May from a downwardly revised 115.0 in April and is now slightly lower (0.2 percent) than May
2015 (111.0). With last month’s decline, the index reading is still the third highest in the past year, but
declined year-over- year for the first time since August 2014.
Lawrence Yun, NAR chief economist, says pending sales slumped in May across most of the country.
“With demand holding firm this spring and homes selling even faster than a year ago 1 , the notable
increase in closings in recent months took a dent out of what was available for sale in May and ultimately
dragged down contract activity,” he said. “Realtors® are acknowledging with increasing frequency lately
that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in
Despite mortgage rates hovering around three-year lows for most of the year, Yun says scant supply and
swiftly rising home prices – which surpassed their all-time high last month 2 – are creating an availability
and affordability crunch that’s preventing what should be a more robust pace of sales.
“Total housing inventory at the end of each month has remarkably decreased year-over- year now for an
entire year 3 ,” adds Yun. “There are simply not enough homes coming onto the market to catch up with
demand and to keep prices more in line with inflation and wage growth.”
Looking ahead to the second half of the year, Yun says the fallout from the U.K.’s decision to leave the
European Union breeds both immediate opportunity as well as potential headwinds for the U.S. housing
“In the short term, volatility in the financial markets could very likely lead to even lower mortgage rates and
increased demand from foreign buyers looking for a safer place to invest their cash,” he said. “On the
other hand, any prolonged market angst and further economic uncertainty overseas could negatively
impact our economy and end up tempering the overall appetite for homebuying.”
In spite of last month’s step back in contract signings, existing-home sales this year are still expected to
be around 5.44 million, a 3.7 percent boost from 2015. After accelerating to 6.8 percent a year ago,
national median existing-home price growth is forecast to slightly moderate to between 4 and 5 percent.
The PHSI in the Northeast dropped 5.3 percent to 93.0 in May, and is now unchanged from a year ago. In
the Midwest the index slipped 4.2 percent to 108.0 in May, and is now 1.8 percent below May 2015.
Pending home sales in the South declined 3.1 percent to an index of 126.6 in May but are still 0.6 percent
higher than last May. The index in the West decreased 3.4 percent in May to 102.6, and is now 0.1
percent below a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association,
representing 1.1 million members involved in all aspects of the residential and commercial real estate
According to the May Realtors® Confidence Index , properties typically stayed on the market for 32 days, which is
below a year ago (40 days) and the shortest time since NAR began tracking in May 2011.
2 Surpassing the peak median sales price set last June ($236,300), the median existing-home price for all housing types in May was $239,700.
3 Total housing inventory at the end of May was at 2.15 million existing homes available for sale, which was 5.7 percent lower than a year ago (2.28
million). The last year-over- year increase in total housing inventory was last May (2.28 million vs. 2.25 million in May 2014).
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of
existing homes. A sale is listed as pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for
existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly
sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to
be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5
million, which is considered normal for the current U.S. population.
LANDLORD/TENANT -- Clotheslines or Drying Racks
May 20, 2016
This law requires a landlord to permit a tenant to utilize a clothesline or drying rack approved by the landlord in the tenant’s private area. (A separate provision of this law applies to common interest developments. See section above.)
The landlord must permit a tenant to utilize a clothesline or drying rack approved by the landlord in the tenant’s private area.
The tenant must comply with the following:
1) The clothesline or drying rack will not interfere with the maintenance of the rental property.
2) The clothesline or drying rack will not create a health or safety hazard, block doorways, or interfere with walkways or utility service equipment.
3) The tenant seeks the landlord’s consent before affixing a clothesline to a building.
4) Use of the clothesline or drying rack does not violate reasonable time! or location restrictions imposed by the landlord.
5) The tenant has received approval of the clothesline or drying rack, or the type of clothesline or drying rack, from the landlord.
“Private area” means an outdoor area or an area in the tenant’s premises enclosed by a wall or fence with access from a door of the premises.
A balcony, railing, awning, or other part of a structure or building does not qualify as either a clothesline or a drying rack.
Assembly Bill 1448. Codified as Civil Code §§1940.20 and 4750.10. Effective date is January 1, 2016.
LANDLORD/TENANT – Victim’s Right to Terminate Tenancy
May 20, 2016
Extends current law indefinitely to allow a tenant to terminate a tenancy if he or she is a victim of domestic violence or sexual assault. Reduces termination notice period from 30 to 14 days.
Existing law, until January 1, 2016, authorizes a tenant to notify the landlord in writing that he or she or a household member was a victim of an act of domestic violence, sexual assault, stalking, elder abuse or human trafficking and that the tenant intends to terminate the tenancy. The tenant is required to attach to the notice to terminate the tenancy a copy of a temporary restraining order or protective order that protects the tenant or household member from further domestic violence, sexual assault, stalking, elder abuse, or human trafficking or to attach a report by a peace officer stating that the tenant or household member has filed a! report alleging he/she or the household member is a victim of domestic violence, stalking, elder abuse, human trafficking or sexual assault.
This law extends these provisions indefinitely and would reduce the time limit for a tenant to give a notice of intent to vacate to the landlord under these provisions from 30 days to 14 days. Thus, the tenant would be responsible for only 14 days payment of rent following delivery of the notice. Having given the notice, the tenant is released from any rent payment obligation under the lease or rental agreement without penalty.
Assembly Bill 418. Codified as Civil Code §1946.7. Effective date is January 1, 2016.
Sellers Happy, But Home Buyers Are Frustrated
May 19, 2016
The number of home buyers who say now is a good time to buy dipped to an all-time survey low in Fannie
Mae’s latest Home Purchase Sentiment Index. Meanwhile, home owners who say now is a good time to sell
soared to an all-time survey high.
The disconnect in the market is likely partially due to the limited number of homes for sale in many markets,
allowing sellers to face less competition and ask for higher home prices. On the other hand, home buyers are
having fewer choices and stuck paying higher prices, sometimes in multiple-bid situations.
Indeed, “we can partially attribute the sizable gain in April in home selling optimism both to a correction for last
month’s unexpected dip and to typical seasonal strength in housing activity in the spring and summer,” says
Doug Duncan, senior vice president and chief economist at Fannie Mae. “Even after accounting for these
factors, continued tight housing supply has led to renewed strength in home price appreciation, making selling
a home a more attractive prospect this year in particular. This improved sentiment could provide an extra boost
of much-needed supply for the spring selling season.”
Some highlights from Fannie Mae’s latest Home Purchase Sentiment Index:
30% of Americans say now is a good time to purchase a home, a drop of 3 percentage points from the
previous month and now at an all-time survey low.
15% of Americans say now is a good time to sell a home, now at an all-time survey high.
More consumers think home prices will rise over the next 12 months compared to March, and slightly fewer
consumers also expect mo\]rtgage rates to go up over the next year.
The percentage of respondents who say they are not concerned with losing their job increased 6 percentage
points to 74%, nearly a 7 percentage point decrease in March.
The percentage of respondents who say their household income is significantly higher than it was 12 months
ago held at 11%.
April 11, 2016
Assembly Bill: 1. Codified as Government Code §8627.7. Effective date is January 1, 2016.
This law prohibits a city or county from imposing a fine for a failure to water a lawn or having a brown lawn during a declared drought emergency.
The California Constitution requires that the water resources of the state be put to beneficial use to the fullest extent of which they are capable and that the waste or unreasonable use or unreasonable method of use of water be prevented. Existing law, the California Emergency Services Act, sets forth the emergency powers of the Governor under its provisions and empowers the Governor to proclaim a state of emergency for certain conditions, including drought.
This law prohibits a city, county, or city and county from imposing a fine under any ordinance for a failure to water a lawn or having a brown lawn during a period for which the Governor has issued a proclamation of a state of emergency based on drought conditions.
WATER USE – Artificial Lawns (Effective Oct. 9, 2015)
Assembly Bill: 1164. Codified as Government Code § 53087.7. Effective date is October 9, 2015.
This law prohibits cities and counties from enacting or enforcing any ordinance or regulation that prohibits the installation of drought tolerant landscaping, synthetic grass or artificial turf on residential property.
This law states that a city or county cannot enact any ordinance or regulation, or enforce any existing ordinance or regulation, that prohibits the installation of drought tolerant landscaping, synthetic grass, or artificial turf on residential property.
However, reasonable restrictions may be imposed on the type of drought tolerant landscaping, synthetic grass, or artificial turf that may be installed on residential property provided that those restrictions do not do any of the following:
1) Substantially increase the cost of installing drought tolerant landscaping, synthetic grass, or artificial turf.
2) Effectively prohibit the installation of drought tolerant landscaping, synthetic grass, or artificial turf.
3) Significantly impede the installation of drought tolerant landscaping, including, but not limited to, a requirement that a residential yard must be completely covered with living plant material.
Meet Your State Tax Advocate Representative
May 01, 2016
Realtors Commercial Alliance of Orange County (RCAOC) is proud to announce Jordan Marks, Esq., District Manager, 4th District, Board of Equalization will present ‘How the Tax Advocacy Office Represents California Tax Payers.
Mr. Marks will be speaking along with his team of experts on how the BOE’s Tax Advocacy Office works to assist California tax payers with issues involving the California Board of Equalization. In addition to leaning how the Tax Advocacy office works, Mr. Marks will be addressing the hottest tax issues impacting all Californians, such as propose changes to dismantle Proposition 13 (1978 Jarvis Tax Reform Act); Changing the Transportation Tax from Per Gallon to Per Mile Driven; and other pending taxation issues which negatively affect all Californians and businesses operating in California.
This forum will be open to public and will be held on May 11, 2016; 2:30PM -4:30PM at 525 Cabrillo Park Dr. #125, Santa Ana, CA. 92701. Reservations is required – limited seating; Go to: www.rcaoc.org