Rents continue to decline, Luxury Market gets Soft Commercial in Danger of Major Defaults
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 to the heirs the same as their parents paid. This encourages the heirs to rent the property and economically prosper with low property tax rates. Should the law pass, I bet we see some properties go on the market.
These two Ballot items are considered a" divide and conquer" by Matt Regan, a senior vice present of the Bay Area Council. What's next? Proposition 13 protecting residential homes.
Rents continue to fall. 30% drop in rents as of today. I doubt that trend will reverse.
The movement out of the state continues and with them population numbers to support representation in Congress! San Jose has been replaced by Austin, Texas, the Silicon Valley Hub of Texas in population ranking. Following the move to the "Red State" is Elon Musk and his purchase of 2000 acres to build the largest factory in the world. The technology scene is burgeoning in the Sun Belt Cities and the exodus from California can only accelerate as our cost of living and high tax rates place a burden on raising a family or just simply existing.
The rent issue has more consequences than a simple cut will cure. 10% of California renters face eviction without more aid. The consequences of the Pandemic Shut down is being reflected in those who are most unable to burden it. Another shut down will be more than the undoing of the poor and middle income. Many of the well-to-do will find themselves in the place of the middle income and poor.
This mounting case of unpaid rents is not only a California issue. The The Federal Reserve Bank of Philadelphia calculated outstanding rent debt will reach $7.2 Billion before the close of 2020. Moody's Analytics estimates it could reach nearly $70 billion by year-end if there is no additional stimulus spending. Even some higher income renters are falling behind, UCLA has found.
With all the pessimistic comments Zillow is optimistic for the future. The beach community of Aptos, Rio Del Mar are expect to have a 9.5% 1-year forecasted increase in value. Redwood Shores, that beautiful Planned Urban Development along the Bay is forecasted to have a 7.1% value increase. In the Woodside/Emerald Hills 94062 zip code along a 7.3% increase in value is forecasted for a 1-year basis. Central Redwood City has the same 1-year growth forecast of 7.1%.
OUR LOCAL MARKETS REPORT:
ATHERTON: 7.07% decline from September to October Average Sales Price.
MENLO PARK: 3.6% decline from September Average Sales Price.
PORTOLA VALLEY: 43% decline from September to October Average Sales Price.
REDWOOD CITY: 9.2% increase from September to October Average Sales Price.
WOODSIDE: 40% decline in average sales price from September to October.
High End Luxury Market is getting hit in Portola Valley and Woodside.
This is a snap shot of the entire market as of today October 29, 2020.
Days on the market for the average area is 30 days. This is not a buyers market.
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