Why commercial property won't convert to housing | What's next for the Bay Area housing market | What you get for $1MM in SILICON VALLEY

Why commercial property won't convert to housing

Exploring the Potential of Empty Commercial Properties You probably noticed that there are a lot of Empty commercial properties, big, huge warehouses, office buildings, et cetera. They're just sitting vacant. And a lot of people, including me have questioned why we don't just convert this into housing, into apartments or condos, or convert them into condominium complexes. And there's a lot of talk about doing this. There are a lot of reasons why we should do this, but the holders of that commercial property. Won't do it. And there's a reason why. The Complexities of Converting Commercial to Residential It's because they use it as a tax write-off. It's a tax haven for them to be able to use that as leverage for lowering their tax burden. And if they convert it into housing property, it's considered, it's taxed a different way. So having it set up for you as a condominium ownership, they would lose that right? Even if they converted it into apartments, it would be taxed differently. And until the cities, the local jurisdictions, or the counties decide, hey, this is how we're going to treat this. We're going to let you convert this temporarily into it. Here's your tax incentive. Probably nothing is going to happen Because the people that hold that equity, whether they're a syndication, a REIT, or personal ownership within a trust of some sort, just won't convert that over to living space. So here it talks about why they should do it. I think it's a great solution. However, San Jose or a city, a jurisdiction would have to take it over and convert them over themselves because the owner doesn't see a value in doing that. They actually get an incentive to lose money, even though the value of their house goes up. So just consider that as part of the problem.

What's next for the Bay Area housing market

The Future of the Bay Area Housing Market What's next for the Bay Area housing market in 2024? 2021 was the last of our firestorm. It was normal to see 30 offers on every property or more buyers. That was when it was two and a half percent. Now it's up to seven, seven and a half. We see it down as low as six. Navigating the Challenges of High-Interest Rates and Loan Options If you fit, every square peg into a square hole, your rates can come down considerably and you can buy down the rate as well. The target rate that we're looking at is five and a half to make it more appealing to buyers to come out and play. However, the inventory problem is just not going to go away. Even though we have high rates, there's still a lot of demand out there. And yes, some other types of loans are out there. There's hard money. Be creative in financing. There a one, two, and three buy downs. There are all sorts of different types of loans that are coming out that have the opportunity for you to get into a house, and make it affordable for the first couple of years. It won't be a bar market except for downtown San Francisco. And if you look at yesterday, you see the bank-owned properties are even stepping up in San Francisco because nobody wants to live there anymore. They're just walking away from it because of the way the living conditions there. People are going to start walking away from properties in San Francisco, even though the last couple of weeks we saw prices go up a bit. The Dilemma of San Francisco's Housing and Insurance Crisis Insurance is a huge problem, guys. I don't know how to tell this to you other than California. And Florida, especially Texas is next, but their insurance companies are just walking out of those States, not writing any policies. State Farm said that they're canceling 70, 000 policies in the next year. So try to get new insurance on a house that you're buying. It's going to be problematic. There are different ways of going about it. But when you. Go to the traditional route to a broker or to a big company like State Farm or Allstate, they're going to charge you more. And they allow you to buy Insurance through the state, which is far more expensive. I understand it's about three times more expensive. And if you're thinking about buying a property in the mountains, where there's a high fire problem, probably not going to have anything, but the fair play fair, whatever called, we're not going to see that problem go away anytime soon, not until there's some kind of mandated regulation stating that you have to be here. If you're going to play, you have to offer affordable insurance. To the people. And now we all heard that state farms lost 14 billion last year. That's just part of the game, right? Sure. That they lose money every year. Hey, you got to really dig into that. So whatever it is I don't see us San Francisco rents rebounding anytime soon, which is another reason why properties are gold. You're going to see inventory grow there, but what's going to happen is the industrial, I call it industrial investors, the big guys with 70, 80, 000. Single-family homes, they're just buying up properties and turning them into rentals. That's the reason why we have an inventory shortage, period. And it's all across the United States. A Deep Dive into a Silicon Valley Home Listing What'd you get for a million dollars in Santa Clara County or Silicon Valley? This one right here, there are 24 of them that are ranged around a million dollars, but this one is a list price decrease. I want to show it to you. And it's 95111. This is not my listing. And it's right here. Valley Christian High School. I used to live here off a railway right here. And it's on Costa Mesa, which is not a filter street. It's a nice slow street, three bedroom, two bath, 1, 100 square feet built in 1959 on market 21 days. The original list price was 9. 98. They took 20, 000 off the top to see if they could get any buyers. But I think let's look at the condition of this house right now. When you look at the condition of the house, you also have to look at the neighborhood. But the house has to be well maintained for you to sell it. I talked about this on Tuesday, but why do houses stay on the market longer than normal. We looked at one that had, if you can look closely, you can see that garage doors beat up. This fence is meh, the landscaping and the curb appeal are just. Boring. I'm not saying anything about the neighborhood, except that you have to look and see how many renters are there. And you can tell how many renters are thereby how many parking spaces on the streets are available. And if it's hard to find parking, there's a majority of the houses there have renters in them, so the floors are newer, but they're not the styling newer, newer that people are looking for and that's IKEA how cabinets, you can see that they completely flipped this. So people still, it looks like people are still living there or it was just staged with people's furniture. That's all Ikea furniture right there. So the house was updated, but the front yard and the backyard were not touched. That's a huge indicator that this is a flip. That fence needs to be replaced. You're near hell. Your County park, how your County is great. Except for the fact that you have to pay for parking. They have a lot of hiking and pathways. It's a great little park, but that's not really what you're buying. You're buying that. So let's take a look. At this on maps and see if we can look at the street view right here. So that's the subject property. They blanked it out for some reason and I don't see a ton of parking problems so again, your neighbor has their car parked On the grass, which is a huge indicator. That's a renter. It's not guaranteed, but your next-door neighbor on the left side also has a car parked in the grass. That house is probably a rental too. So there you go. Those are the things I point out when I look at it and tell you whether this is good or not. And I would tell you that this house is probably going to sell for a little bit less than what they're listed This episode is brought to you by AIDA. Introducing AIDA: Your CRM Solution AIDA is my CRM. It helps me communicate with you as a client, as a prospect, and as a lead. So if you're looking at. A small business. If you run a small business or you're a real estate agent, this is a great product or service for you. And it's not super expensive. They come out and help you do the marketing funnel, the entire thing. That's why it's called AIDA. AIDA is awareness, intent, desire, and action. So it's a great product. It's great service. They do everything for me. I don't lift a finger. Try it now. Okay, quickly.

Inventory And Supply Charts

Analyzing the Bay Area's Shrinking Inventory I wanted to show you the inventory. Inventory is going down everywhere. The last couple of months' inventory actually went down. We're expecting it to go up. These are the 12 counties around the Bay area, including Monterey and San Benito. And then if you look at the cities of Santa Clara County, everything's going down, which is normal, it's the beginning of the month, but this is the height of the market we're supposed to be in, this is supposed to be a selling season, we're supposed to have a huge amount of inventory. All the buyers are coming out to play, but there's just not enough inventory out there. So, I updated the. Inventory versus month supply chart. And I want to show that to you. We're supposed to be at about a thousand, 900 to a thousand active listings in San Jose. Right now we're hovering at about 300 on average, which is just not healthy. Let me see if I can find that for you. I'm going to bring this over. This chart right here shows the active number of houses for sale. And these are all single-family houses and active or the months of inventory, right? The months of inventory. If we were over six months, that's where it is right here. See six months, that would be considered a buyer's market right now. We're still in a seller's market for Santa Clara County to have a balanced market. Not a buyer's market, not a seller's market. We needed to be about 2000. So you have the blue line set at 2000. That's the active number. And we haven't been there since 2013. And that was only a blip. And before that, it was us recovering from the 2008, and 2012 toxic asset housing debacle that we went through. We did have some great deals then, but they're not going to be around for much longer. So until this number comes up here and our inventory comes up or the months of inventory goes up to six months, or the inventory actually gets over 2000 in Santa Clara County, we're going to have a hard time seeing prices come down. That said, if the market crashes probably going to be due to something else. Market Predictions and the Economic House of Cards House of cards. We have the automotive industry with a shadow inventory of a huge bunch of repossessions. We have credit cards, the health industry, and the stock market, everything's tilting on a house card right now. And if something. Falls going to bring down the entire economy as well as possible outside global implications like World War III or China imploding or what have you. So just keep your ears out and your eyes open and see what's out there because you just never really know what the world is going to give you. I have a lot of crash bros talking about the market deciding to take a dump, but there's just too much government intervention propping up the economy until something happens that they just can't control. We just don't know what's going to happen. All right. Conclusion and Recap So today we talked about. Why commercial properties, buildings, and office buildings are not being converted into housing. What's next for the Bay Area housing market, what you get for a million dollars, and the inventory snapshot. I'm Vito with Abitano. Hope you have a fantastic weekend. We'll see you out there.

Vito Scarnecchia Real Estate Broker, Veteran, Dad DRE#: 01407676 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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