HAS THE MARKET STALLED? Inventory UP Taxes on Selling a House in California Rates rise What you get for $1MM in SILICON VALLEY
HAS THE MARKET STALLED? Inventory UP | Taxes on Selling a House in California | Rates Rise | What You Get for $1MM in SILICON VALLEY
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Market Trends: Rates, Inventory, and Taxes Are we seeing a stall in the market? It's weird. Just rates are going up. Inventory is going up all sorts of different things. That's what we're talking about today. So just hang on. We're also going to talk about what taxes you have to pay when you're selling your house.
And then existing home sales, what you get for a million dollars. And what else? Yeah. And then inventory snapshot across the 12 counties. Let's get moving here.
Navigating Rising Rates and Market Predictions
Rates went up crazy, right? The feds were saying, Oh, we're expecting three rate cuts over the next year. And all of a sudden we're in the coming into the selling season and rates go up.
What does that mean? I think it's just because we need to stall the market a little bit more of the inventories coming out. The market The economy is going, getting higher. So to slow down any kind of inflation, any more inflation. Putting a hedge on any kind of consumer spending until we can get better management on this.
We're going to see rates come down again, but that hurts us in the middle of this. The next couple of months, rates at 7. 2, two. We haven't seen that since like last year. That's crazy. We were seeing below seven for a long time and now we're seeing 7. 2, two.
That's going to put a lot of people out of the market. Whether they want to buy a house or not, I have a house for sale and we were expecting a whole lot of offers just didn't really materialize. So now we're going from controlling the tempo to backpedaling and seeing what the market's going to do over the next week.
So lots of things going on. That also means that inventory is going to start going up and we'll show you that at the end. So make sure you watch that. Okay.
Understanding Capital Gains and Taxes on Home SalesSo how does, what's this whole capital gains thing? So everybody always asks me, right? You buy a house, let's say you bought a house for 200, 000 and now it's worth a million.
You get selling costs, holding costs, and all these other different costs that you could throw into the mix, depending on what your tax advisor will tell you. Because this is not advice. This is just a jump on it. The federal government offers up to 500, 000 tax exemptions for any home transfer, as long as you've lived in that house for two of the last five years.
If you're single, you get 250. If you're married, it's 500. You can't add your kid to the title and get another 250. Sorry. It just doesn't work that way. I get to ask that all the time,
But in California, you also have to pay transfer taxes. You also have to pay all sorts of other different taxes because they wanna make sure you get that. Now again, this kind of goes into it, so let's say you take an inheritance of a house. The capital gains work in a different way because let's say your parents passed on and you have this house down.
It's worth 2, 000, 000 or 1, 000, 000 or 500, 000. The tax basis goes up to the value of the house on the day your last parent passed away. So if you bought it for 250, 000, now it's worth a million and your parents passed away, then the tax basis goes up to a million dollars that day.
I know it's some kind of a morbid thing to think about and we don't want our parents to pass away, but it is two sure things in life taxes and death.
California's got you coming and going though, right? California County, you have a transfer tax. You're going to have a documentary transfer tax within the state. And then you also, depending on the city, may or may not have a transfer tax for that as well. So there's a County transfer tax and the city transfer tax, depending.
And San Jose really Gets you hard because of measure E that we voted in. I didn't vote for it. So taxes, and then on top of that, you have property taxes, which are due twice a year, right? It's right there, which is in California, we have Proposition 13, which requires the state to keep it less than 1 percent at any given time.
Your taxes go up to 500, 000 and you pay 2 percent because there's no income tax. So what about selling an inherited home? Again, it goes into a stepped-up basis. And if you want to take that property tax basis, you absolutely can, but you have to make it a primary residence, meaning you have to move into it and then you have to live there for a couple of years and then you can take it and move as long as you're over 55.
But if you're living in a castle and your parents lived in a cabin, those are your choices, right? There are also title fees, settlement fees, and agent commissions, which we're figuring out right now because they used to be, about five or 6%. Now we're decoupling it. So the buyer is going to be responsible for paying the buyer's agent unless the seller continues to pay the buyer's agent's fee
so there's all sorts of stuff. Luckily, we have this thing called a net sheet. And when you go to sell a house, I provide you with the net sheet. I give you a really drafty estimated one. And then we get down to the nitty-gritty. We go to the title company saying, Hey, I think the house is going to sell for X.
Can you send us a net sheet based on what we know? And it's always an estimated net sheet until the day we close, just so you know, so you're prepared, what costs are going to happen. Luckily, there are things that you can write off and there are things that you don't get to write off. And in case you want to know, there are charts here to tell you which county pays which, right? So if you're in Alameda the buyer pays most everything and most cities have a transfer tax right here, this is the big one right here documentary transfer tax and then title fees if we go down to Santa Clara seller pays everything right here and then San Jose Which is measure e if it's less than two million dollars.
It's dollar ten per thousand split fifty Which is the way it's always been or three to 3. 30. The county is 1. 10. And it's 50-50 depending on who pays right now, San Jose, if it's worth 2 million or more, you pay 0. 75%. On top of that. And then if it's three, five to 10, you pay 1%, and if it's 10 million in a month and more, you pay a dollar 50.
So you get screwed. Seller pays 50 50 Palo Alto is 3 and 30 cents. Mountain View is 3 and 30 cents. So it's Santa Clara, Sunnyvale, Cupertino, Saratoga, and Las Gatos. Morgan Hill, Gilroy, et cetera.
So when we go to sell your house, you get a net sheet and we'll show you what it looks like.
Exploring the Value of a Million-Dollar Home
Existing homes are still in February. So we're at three, three months to sell. What'd you get for a million dollars? Let's take a look at this one. Now, this is a big Shea home on Compton Ave Compton Drive and it's nine five one three six. And here is the map of where it is. And this is actually a really great little area. It's right by Communication Hill, with quick access to 87 so you can get to work.
But let's take a look at this house. A major fixer-upper. And I tell you what, this is, I might go buy this thing. I'm not putting an offer on this thing. There's not a whole lot to look at, but it's a five-bedroom. Two and a half, three full baths. There's a whole downstairs suite. So if you have an aging parent, that's perfect for it.
The bathroom downstairs is a full bathroom, but it's shared with the common area too. So it's not like a master suite. It's a bedroom downstairs. And then upstairs you have a master suite, which has its own bathroom and doesn't have walk-in closets, but the other three bedrooms upstairs have a walk-in closet.
I know this one very well. I've sold many of these units and they're great houses.
Introducing AIDA: Your Digital Sales AssistantThis episode is brought to you by AIDA. AIDA is automated intelligence digital assistance. Now, what is AIDA? It is basically a funnel service and in sales.
Your job isn't to sit behind a computer all day long like I do, your job is to be in front of your prospects and leads and customers and networking and being belly to belly yesterday. I was at San Jose State doing a home buyers course. And then I did a job fair and I was talking to a bunch of young veterans.
Students that are looking to get out in the sales force and that's my job. That's where I really shine. That's what I love doing. What happens if I, if they want to do something? They have my phone number, but what happens if I'm doing advertising, et cetera? That's what AIDS does.
If you're doing advertising, you click on a button, you put in your information and the whole workflow is done for them. The entire thing is done for me and that's what this landing page looks like right here, right? It's all done for me. I don't have to mess around with anything. I go, Hey, I have a home buyer's checklist.
Can you put this into a funnel form? And then on top of that, there's a drip campaign that's completely done for me. So I don't have to mess around with it. There you go.
We're going to come back to this real quick.
Market Inventory Analysis and Future Predictions
Because last week, the number shot really high. It was scary, but it's not because that was just the first week or the second week, the numbers are coming down. So if you look at that chart today, you're seeing that it's coming down a little bit and it's coming back to normal because at the beginning of the month, the MLS doesn't know how to give me the right numbers. So over time, we're going to see these numbers come back. However, numbers are going up. So right now we're at 900. If you remember Santa Clara County needs to be about 2000 to be a balanced market. So the good news is at the beginning of the year, we were really low, right?
In the beginning of the year, we're at 400, 500. Now we're up to 900,
Just like it was last year, seven 68 this year. So we're up above where we were last year. What was it two years ago? That's what this charts for right here. Let's get Santa Clara County. That's the yellow. See, a couple of years ago, it was there. And let's take a look at the cities. Again, there's a couple.
This one's San Martin. I can tell you that. See, San Martin, straight up. So you can look at it. So the numbers are still jumping up, but they will average out by the end of the month.
I've been dieting. I've been going to the gym really hard. I'm going sailing for a couple of 10 days, 11 days, and I'm just super pumped and excited about it. And the intention is I'm not going to do any work. I'm not bringing my computer, I'll bring my phone, but I'm bringing a GoPro and my iPad.
So that's pretty much it. So I will have access, but probably not a whole lot of access. Okay. I want to bring this up for you. So it's a little bit big. Remember this number right here is 2000. And that's not scientific fact. It's just my opinion from being in the business for 20 years. This number right here, 2000 is what we would consider a balanced market.
It's not a buyer's market. It's not a seller's market. It's what we need to be in a healthy market. And if you see over a couple of years, we get close to it, but we really haven't been to it. We want to shoot for about 2000 single-family homes on the market at any given time in Santa Clara County. We just don't see that.
We're just not seeing that and we're not going to see it. Not for a long time. We have institutional and industrial investors coming up to buy swaths of houses right now. That's hurting the chances of home buyers, right? There's lower competition than there was from years before.
But the inventory is so much lower that even buyers can't really be choosy today because there's just not a lot of inventory out there. They're being aware of where the market is. They know rates are going up. So buyers are smart. Buyers are intelligent.
They're buying million-dollar, 2 million homes. So they have to be very educated on this, on where it is and months of inventory. We need to be at. That's good because it's six per six, six months or more, which is about this line right here. After that becomes a buyer's market. But if you look, really hasn't been a buyer's market since 2011.
And that was because of that 2008 to 2010 toxic asset, toxic loan debacle, the whole economic crash. Could it happen again? It absolutely can happen again. There's a lot of talk about bank-owned properties jumping up, but the charts that I looked at, I can tell you straight up, that we're not seeing anything right now.
The amount of defaults might be going up a little bit, but not compared to what it was, not even back in 2006, or 2007. Absolutely could happen tomorrow. I don't think it will right now.
Closing Thoughts and Market Snapshot
So today we talked about rates going up. Inventory is still low.
Demand's coming down a little bit. So maybe buyers are going to be choosy over the next couple of weeks. That doesn't mean the market's going to crash. At least not the way I'm seeing it right now. We talked about taxes and what it costs you to sell your house, be educated on that, and understand the process.
And if your agent can't produce a net sheet that can show you what all the costs are, maybe find another agent. I have that inside me. little worksheet when you go to work with me. And then we talked about that house that I'm going to go buy five bedrooms for a million dollars. It's not going to sell for a million dollars.
It'll probably go up to one, two, or one, three. We'll see. And then yeah, the market snapshot. Thanks for watching.
Vito Scarnecchia Real Estate Broker, Veteran, Dad DRE#: 01407676 We’re Hiring! 408-705-6817 Vito@abitano.com Website: abitano.com https://www.onereal.com/vito-scarnecchia-1 update your home value: https://hmbt.co/bT7qRJ RELOCATION@ABITANO.COM FREE DESKTOP APPRAISAL https://www.propertyrate.com/agent/vitoscarnecchia If you are moving ANYWHERE in the world - Let me know! I know a LOT of AMAZING Agents! Book appointments here: https://calendly.com/abitano/15min Home Buyers Course YT YouTube.com/SanJoseLiving IG https://www.instagram.com/abitanogroup/ FB https://www.facebook.com/vito.scarnecchia/ LI https://www.linkedin.com/in/vito-scarnecchia/ Blog http://blog.abitano.com/ POD https://spotifyanchor-web.app.link/e/oxdH1Hwfcvb Professional Photography by Kim E https://photosbykime.com / Local Real Estate Market and Home Value Report https://hmbt.co/bT7qRJ Financial Intelligence https://docs.google.com/forms/d/e/1FAIpQLSc0R5pjHIAPguZ5GDEB-fTbGJXKpWK3coK9Khymv_GTWkMnyQ/viewform?usp=send_form https://www.onereal.com/vito-scarnecchia-1 Willow Glen's five most expensive homes https://youtu.be/3A_E2ck0ePg
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