McKae Properties Real Estate Market Commentary

"Welcome to the Hotel California, you can check out any time you like; but you cannot leave."  Remember that famous melody from The Eagles? The California Assembly has put that into legislation. AB 2088 will create a "Wealth Tax" on residents and any person who stays in California longer than 60 days.  Then extends the tax for 10 years!   This is certainly an answer to why Ellison and Musk moved to Hawaii and Texas.  In addition to these well known residents David Blumberg and Keith Rabois have left The Hotel California too!  DropBox and Splunk are on their way out the door.  The list most likely will go on, but a "wealth tax"?   Of course, how else is California going to pay off their massive deficit and liabilities?   But a Wealth Tax?  The California Constitution can most likely cover that on State Residents, but going across state border to attach to the wealth of citizen of other states and countries is likely to run afoul of the U.S. Constitution for

Did you ever think you would find yourself reading an article on "Pandemic Real Estate Trends"? This year has been full of surprises.  The Luxury Real Estate market is fortunate to have seen steady growth for 2020. Rather than fall apart, the luxury real estate market quickly adapted to the situation.  There is now a clear pandemic real estate trend emerging.  The real estate pandemic market is evolving as it begins to reach a state of more certainty. There is a new demographic group forming, "Trail Blazers".  Trail blazers, like our forefathers are choosing housing locations based upon family, health, lifestyle.  They adjust that to their business or work proximity.  These "trail blazers" are one of a group composed of: Explorers, New suburbanites and Resort buyers. EXPLORERS: (Trail Blazers) they tend to be younger than 39.  They are ready to seek adventure outside the big cities and suburbs.  They want to stretch their dollar and they value life experie

The Twilight Zone  (marketed as  Twilight Zone  for its final two seasons) is an American  anthology television series  created and presented by  Rod Serling , which ran for five seasons on  CBS  from 1959 to 1964. [1]  Each episode presents a stand-alone story in which characters find themselves dealing with often disturbing or unusual events, an experience described as entering "the Twilight Zone," often with a  surprise ending  and a  moral . Although predominantly  science-fiction , the show's  paranormal  and  Kafkaesque  events leaned the show towards  fantasy  and  horror . The phrase “twilight zone,” inspired by the series, is used to describe surreal experiences. (Wikipedia)" That, I think, aptly describes our situation regarding the current pandemic.  We have experienced disturbing and unusual events that have put us in a surreal state-of-mind. Let us review these issues to date: "California Love it and Leave it!" This was from an Opinion section

 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 see

 The Lock down is now beginning to hit various real estate markets.  Follow that up with various real estate ballots which can do more harm than good. Bay Area Hotel Loan woes are intensifying.  Five Hotels in the East Bay, South Bay, and San Francisco all deemed luxury, high end lodgings are suffering severe financial difficulties per the Thursday October 29th issue of the Mercury News.  What the Pandemic hasn't shut down the ballot measures could.   Proposition 15 will tax commercial properties at market; rather than, the Proposition 13 rules of the past.  This passage will put Proposition 13 for residential in the target next.  Prop15 will raise a pittance of $11 billion of so.  A far cry from the deficits the State of California and counties are facing.  I doubt if raising taxes will replace the loss of business the shut down has created.   Another Ballot measure will stop the transfer of property taxes upon death to heirs.  Under the present law the parents property tax remain

 I recently spoke to a few buyers.  They had the attitude that we will see a bust in real estate for a sundry of reasons.  Yes, people are moving out of state and the area.  Yes, the rental market is collapsing.  Yes, prices of being cut, some drastic and some minor.  Others opine that the Democrat sweep with raise taxes, destroy high tech. Still other like to look back at the Financial Crisis of 2006 and think this is the model of the near future crash like 2006/07. So sorry to disappoint you.  I agree that there are a number of factors that can weigh on the real estate market.  They a not deal busters.  The key is interest rates.  They are  just too low and the Fed is willing to fund capital into the system.  Congress too is willing to send checks and fiscal support to the American Public  That does not seem to me to be the making of a collapse or bubble busting.   Near term I do believe you have seen the drive upward in prices have ceased and the trend is come off the top, but no ne

Joshua fought the battle of Jericho and the Walls came tumbling down.  For as long as I have been a residential real estate agent the walls of Silicon Valley were impenetrable to the various market and economic cycles that threatened home prices.  The East Bay and communities around us saw prices decline Silicon Valley remained strong.  It was like a wall that surrounded it.  Just as the Biblical Walls of Jericho came down so are ours. I have written in the past of the immigration of residents as the pandemic began.  Employers embraced work from home and as they did employees began to look at greener more affordable pastures. This weekend's San Jose Mercury News and the San Francisco Chronicle have finally put the fact on front pages. It started with Marisha Kendall's article..."Santa Clara County properties valued at $553B before pandemic".  "We have peaked" said Santa Clara County Tax Assessor Stone.  "Next year, Stone expects to see even more propert

 As we have moved through the shut down, movement out of the state and cities single family homes have remained in a "seller's market".  It did not matter if prices were cut homes sold quickly indicating a seller's market.  That condition did not only exist in Silicon Valley it existed throughout the United States. As we progressed through the summer, "The Zillow Market Reports" had low to negative forecasted market values.  Those reports were focused on zip code areas.  The zip codes price values indicated the future price movement based upon current sales. Those prices values are now seeing price increases over the former forecasts. 1. 94061 one year forecast +3.5%, 2. 94061 + 3.2%, 3. 94020 +6.0% (fires be damned: price and quality of life are the winners), 4. 94062 +2.9%, 5. 94027 + 1.7%, 6. 95125  +2.1% As a result here are the sales in San Mateo and Santa Clara County as of September 26th. RESULTS . Sine the beginning of the year home prices in Califor

 I have watched with amazement on how vibrant the real estate market has been in the Luxury level.  (That level being everything over $1 million.)  So when the recent issue of the September 2020 Luxury Market Report came across my desk from the Institute for Luxury Home Marketing I took it up with abandon!   In hopes that I could get some idea of why and where we are going in the Luxury Real Estate Market for myself and my clients.  As you click on the hyper link previously you will note that the entire United State has a commonality of performance, Sales price less than List price but short days on the market.  The Days on the Market indicating a "Seller's Market"!  Irrespective on a sale less than the list buyers were active to jump on price cuts to obtain the house they desired.  The first part of the Report will explain the difference between "buyer's market", "seller's market" and "balanced market".  Then comes the premise of th

I needed a break to review our present situation and look at the various forecasts for real estate values.  The markets I follow indicate to me acceptance of buyers at levels below what has been posted.  The cuts represent the buyers reluctance to accept the idea that prices are going higher.  The buyers do want homes in areas that require move in condition and conditions that they are looking for based upon today's buyer's attitudes. The comments below are those from 2 weeks ago when I decided to stoop and re-evaluate. After the remarks I will post my closing comments based upon my research. TWO WEEKS AGO:  With the movement out of San Francisco and New York City and if we are to believe the media, out of big cities.  Where are they going? Redfin has a great site for those of you who like to do some research in price and market analysis redfin.com/blog/data-center. In the San Jose Silicon Valley market center 77.8% of the searches are within the Bay Area.  22.2% elsewhere with

 Two places I enjoyed living in my youth was New York and San Francisco, or "The City" as it was called.   Lord Toynbee wrote the HISTORY REPEATS ITSELF.     So have no fear.  What we see happening will create opportunities   New York went Bankrupt and the US bailed them out with muni bonds referred to as Big Mac's  For Municipal Assitant Corporation.  New York cleaned up their act and it became the destination spot of the world.  Have no fear it will happen again. The same is for San Francisco.  I came there in 1983 bought a flat in Pacific Heights out of foreclosure and fixed it up and 11 months later sold it for $110,000 more and bought in Woodside at same sales price of SF but $225,000 less than list.  The place in SF is worth more now than the place in Woodside. New York is a repeat of last weeks article on SF: 56% fewer sales compare to a year ago, 30.8 months of supply and 11.3% discount from list.  West Chelsea built a high end boutique condo known as the Getty an

 Some time ago I stated that the Stock Market and the Real Estate Market are related.  They move together on a longer term basis.  Looking back at that comment had me wondering why we are seeing a strong report on housing price increases nationally and how that relates to our Silicon Valley Market. To summarise the inconsistencies I can say that we are in a perfect storm situation.  It is not a buyer's market nor a seller's market.  The perfect market where sale prices are stagnant and buyers do not fight with other buyers in over bidding the home of their choice.  Pushing prices too high puts transactions at risk as lenders and appraisers are under pressure from a risk standpoint and homes do not pass.  The seller is now faced with putting the home back on the market and having to deal with a property that must cut prices to sell. In our present situation we are in a situation where there have been a record number of price cuts on a weekly basis.  Generally speaking for the Si