As we put 2020 to rest, I feel an immense amount of gratitude for the countless people who have touched my life with support, service, friendship and community. A bright spot for me professionally has been my clients who let me into their lives during a time we could never have imagined.
Given the state of the world, it seems almost incomprehensible to me that we are coming off a year when local real estate values jumped 8% with homes selling 2 days faster than the year before. For every homeowner whose circumstances resulted in a move elsewhere, there were cramped urbanites who wanted in. And while the leading indicators suggest that there should be a generous number of new homes coming on the market in the first quarter for those of you anxiously on the sidelines, the most consequential impact on our housing inventory may be the recent passing of Proposition 19 which will take effect April 1, 2021. This new law affects the portion of California homeowners that are 55 and over, severely disabled or have lost their home due to a wildfire or disaster.
One significant reason that there are so few homes available for sale has been the impact of California tax legislation (Proposition 13). This bill has long created a disincentive for homeowners to move by sheltering them from rising property taxes even as home values skyrocketed. Prior to Proposition 19, those 55 and over and the disabled could take their tax base with them only once under a very limited set of circumstances.
Beginning April 1, 2021, eligible homeowners may move anywhere in the state and carry their current property tax base with them on a new purchase, even if the replacement property is of greater value. In short, Proposition 19 eliminates one of the major negative financial consequences for longer term homeowners to sell their properties. While other financial and tax considerations remain and should be fully discussed with your tax advisor, I expect to see the impact of this legislation result in incrementally more homes hitting the market in the spring and the latter half of the year.
If the fully booked calendars of home stagers and painters combined with continued bidding wars are any indication, I expect another robust year for local residential real estate values overall. What remains to be seen is the relative interest level in the mix of single-family residences, condominiums and locations as COVID and work-related policies continue to weigh heavily on decisions related to proximity to the urban core, unit density and the flexibility to work remotely on a longer-term basis. At the current time, the condominium market remains soft with excellent opportunities for buyers while single family homes with space and outdoor living are at a premium.
I look forward to the new year with optimism, a renewed perspective on what is important and an inspired commitment to better serve you and your loved ones. It’s time to love where you live.
Happy new year!