Would-be home buyers can count on frustration this spring as they confront the reality of today’s market: Inventory of homes for sale is at a historic low.
Chris Iverson, a sales associate with Dreyfus/Sotheby’s International Realty in Menlo Park, likes to use the Moscow analogy when advising his buyer clients: Picture a long line of Muscovites out in the cold waiting to buy one moldy loaf of bread.
“It’s the only loaf there is, kind of like buyers here. People are buying homes that need a lot of work, are on busy streets, kind of ‘the bad houses’ are selling now because people just want a house.”
And he takes it a step further: “If (they’re) in the entry-level market, under $3 million in Palo Alto, they’re looking for a place to put their stuff. Finishes, features (they) should be looking for at that price point, they’re not.
“That’s the dynamics of the market,” he said.
And it doesn’t seem to be changing anytime soon, given that big employers Apple, Facebook, Google — are continuing to hire, the geography isn’t changing, post-Proposition 13 tax laws aren’t being revoked and capital-gains taxes are looming.
To top it off, he said, “Palo Alto is a destination city. People don’t sit there thinking, ‘When I make it big, I’ll move to Milpitas.’ That depresses natural turnover of moving up, moving out.”
Sure, I’d like to trade down, but when looking at a 23.3-40% capital gains tax rate, I’d be a fool to sell. Inventory will not increase until the tax laws change.
Given how houses in Palo Alto are selling for at least $2 million, I don’t think that the capital gains tax would keep people from selling and finding something better elsewhere.
Just saying.
The capital gains taxes will certainly prevent me from selling my house. Having to write a check for 500K+ is a huge disincentive. Faced with that I would probably rent out my house and maybe do a rental exchange later.
This isn’t sustainable. We can’t live in a society where everyone decides they’re going to stay in their homes until they die AND we build almost no new housing. I for one have no intention of living in a de facto retirement community. How dull! Young families need a place to live.
A combination of capital gains and property tax keep people from selling. We have good friends who would love to move to Pacific Grove or Monterey, but they bought their Palo Alto homes 25 years ago and the property taxes are so low compared to what they would pay if they moved that they are staying put!
Changing Prop 13 would add lots of homes to the market!
@build – Palo Alto is pretty built out not to mention the “Palo Alto process” and all our additional building related rules make it very expensive to build!
“To top it off, he said, “Palo Alto is a destination city. People don’t sit there thinking, ‘When I make it big, I’ll move to Milpitas.’ That depresses natural turnover of moving up, moving out.””
Two points here: some people may want to adjust their attitudes; the reason why PA is a “destination” is because of what it is today…not a future Manhattan-ized over built, high rise city.
“Uploaded: Fri, Apr 24, 2015, 10:15 am”
“Original post made on May 24, 2015”
Which date is correct?
Dear Build!
I invite you to take a roadtrip this summer. Just get in your car and drive for a few weeks in every which direction. The point being, this is a large nation, and we do not have the water right here nor the infrastructure to build for everyone to move here instead of vast areas of this nation that would really benefit from renewal. Plus, usually “build!” means, build for other people to leapfrog any of the hard work others did to scrap for housing here, while making them pay for their quality of life being compromised.
What’s not sustainable is building without regard to the impact on the natural environment, the infrastructure, and the available resources, like water. Instead of build, I would say, adjust your sense of entitlement and remember that sustainability used to involve prioritizing the environment (not developers).
Those of you who have owned for a long time and claim they cannot sell due to taxes, have terrible tax accountants.
There’s no reason to sell, now that you can rent your house out at the high and ever-increasing market rates; that way you get an annuity on your home while retaining title and future market increases for your heirs. I’ve seen articles trying to convince seniors to sell, and they’re entirely self-serving, written by real estate agents. Hold on to your property, seniors, and buy or lease a second home with your rental income.
Renting makes a lot of sense for seniors, especially if a good property manager is hired to handle day-to-day issues and to collect the rent.
A capital gains tax rate of a maximum of 15% would help loosen up the supply of houses for sale. A 10% rate would help much more…there must be a good incentive to give up ones ownership of a home in Palo Alto, and then to face higher property tax rates in a new home somewhere else in Calif.
There are always negative consequences when a “tax the rich” tax scheme is forced into law by the liberals. The paucity of homes for sale in PA is just one such effect.
I thought you could transfer your property tax basis one time.
@question – If you are over 55, you can transfer your appraised value to another property once in your lifetime. The new property must be of equal or lessor value. The other property has to be in the same county, or one of the following:
Alameda Los Angeles Riverside San Diego Santa Clara
El Dorado Orange San Bernardino San Mateo Ventura
More details:
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1
Do you know if there is a limit to how much you can roll into another property without tax?