Depending on the party affiliation the reader may have, they can assign the good and the bad. The Ugly has three points to it.
The first part of Prop 19 is to allow tax transfer of 55 and older when buying a new home. To offset the property tax loss is the curailing of separate tax breaks to inherited property in which the heir would obtain a pass through the property tax basis of the deceased parent. This loss is estimated to bring in another $11 billion to the coffers to schools, local governments and state with a big portion of the funds going to firefighters. The transfer part is a benefit most +55 would use. Sell your Silicon Valley home to move into a planned community with Golf and senior enjoyments on average will cost less than the tax transfer benefit. So the real ploy was to get the first part of Proposition 13 cancelled out, inherited values. Next to fall is the rest of Proposition 13 on residential homes.
As to the heir's loss the consequences are yet to be seen. The adjustment of the property inherited that the heirs do not live in and rent would have a dramatic effect on cash flow and the economics of retaining the property. As an estimate I took the average price of a Meno 2 bedroom 3 bath home of $2.5 million estimated current value and multiplied it by 1.25%. This would mean that the new tax bill would be $31,250. if Mom and dad bought the property years ago at an estimated price of $500,000 the tax would be set at $6250. The increase in tax would be estimated to be $25,000. Now the question is with rents falling what would be the decision of the owners?
Capital gains would be relatively small as the property at death would have had a "step up in basis".
Both parts of the Proposition would put pressure on the sell side as long time owners could move out of the area and transfer their property tax from their residential property. The rental landlord would then look at whether they wish to take a lower cash flow or cash in.
Now point three:
Biden's coronavirus advisor says the U.S. should go into national lockdown for 4 to 6 weeks to avoid 'COVID hell' and the administration can borrow money to pay wages while businesses are closed
- Dr. Michael Osterholm suggests the U.S. should go into a four- to six-week national lockdown to combat the spike in coronavirus cases
- He warns it is needed to stop the country entering 'Covid hell' during the next few months, which he says will be the 'darkest of the pandemic'
- Osterholm claims it is the best way to keep deaths and hospitalizations down as the country awaits a vaccine
- He also claims that the economy can still be revived before a vaccine is distributed, even if this lockdown is enforced
- The Biden advisor states that the U.S. could borrow the money to pay wages while businesses are forced to close
- Osterholm was announced as a member of Joe Biden's coronavirus task force by the transition team on Monday
How Nancy's nephew will handle this will be interesting. Voter resistance has been mounting. Pfizer's vaccine will make this very difficult for many to willing accept.
This is what Dr. Fauci says:
Fauci goes against Biden's new COVID chief and says the US does NOT need to go into a six-week national lockdown because 'help is really on the way' with all Americans set to get access to a vaccine by April
- Joe Biden's new COVID-19 advisor has proposed a nationwide lockdown of up to six weeks to stop the spread of the virus
- However, Dr. Fauci says such extreme action will not be necessary as long as citizens continue to wear face masks, social distance and wash their hands
- He cited that there was 'no appetite' among the American public for another lockdown
- Fauci further claimed most ordinary US citizens will be able to access a vaccine in the first half of next year, which will help slow the spread
- The country reported 144,133 new coronavirus cases on Wednesday - the highest daily number on record
- The number of hospitalizations across the US also continues to spike to single-day highs with more than 65,000 patients currently being treated
- According to one report, 'about 1 out of every 1,500 people in South Dakota is currently in hospital with COVID-19'
- Cases are also on the rise again in New Jersey and New York, which have implemented new restrictions on restaurants, bars and gyms
- In New York City, Mayor Bill de Blasio has threatened to shut down public schools which would throw 1.1 million students into chaos
This may be the real UGLY.
How would you view the "Ugly" Good or bad? Hold or sell?
I would say a buying opportunity for those with a long term view. It does not mean the end to the economics of Silicon Valley.
The end of the year is seeing an increase in price cuts for properties listed. Days on the market will either be extended or remain the same with price cuts stimulating buyers.
We still remain in a seller's market as days on the market remain small.
Only 2021 will tell us how the proposition will affect buyers and sellers.