Proposition 19 - How It Affects You

Proposition 19 is constitutional amendment that limits people who inherit family properties from keeping the low property tax base unless they use the home as their primary residence, but it also allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster to transfer their assessed value of their primary home to a newly purchased or newly constructed replacement primary residence up to three times. The new law replaces Proposition 58 and Proposition 60

How Long Can This Market Last?

Housing is definitely not an exception to increasing prices. In the first quarter of 2013, there were 4,675 closed sales below $750,000, 89% of all sales. It was 83% of all sales in 2016, and 71% last year. In 2021, only 61% of all sales were below $750,000 in the first quarter. As home prices have appreciated over the years, the lower price ranges have dwindled and became a smaller percentage of the housing stock. It is not merely the fact that fewer homeowners within these more affordable price ranges have not placed their homes on the market; instead, it has more to do with home values appreciating and surpassing the lower range thresholds.

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What Zillow's Results Reveal About Its Momentum Towards Zillow 2.0

Zillow assessment > News - California Real Estate Expert Robert Wolf - Page #4 - California Real Estate Expert Robert Wolf >

The coverage of Zillow's latest results is fantastically uninspiring. Lots of big numbers, devoid of context. But when the dots are connected they reveal a rich story about the business's evolution to Zillow 2.0.

Perhaps most impressively, Zillow just had its third consecutive profitable quarter! For a business that's basically operated at a net loss since inception, this is a noteworthy achievement.

The move towards profitability is driven by Zillow's premier agent program -- the engine room of the company -- which is firing on all cylinders and back to impressive growth (fueled by record-breaking demand during the pandemic).

On an absolute revenue basis, Zillow's premier agent program has set a succession of all-time record quarters for the past 12 months. Zillow is generating more money from its premier agent program than ever before, which is especially noteworthy after the program ground to a halt in early 2019.

Zillow's iBuyer business is back to growth mode, purchasing and selling houses at pre-pandemic levels, and still operating at a loss. But the net loss per home has dropped to its lowest level yet, a reflection of improving economics at scale.

Last week I looked at the Ecosystem Disruption in Mortgage, and how global leaders Zillow and REA Group have spent hundreds of millions of dollars expanding into mortgage through the acquisition of broker-heavy, 20 year old traditional businesses -- and not technology companies.

Zillow's mortgage business continues to grow, but it is being driven by refinancing (90%), and not new purchase (10%), business. To fully believe the one-stop-shop Zillow 2.0 narrative, new purchase volumes should grow in the future.

But while overall mortgage revenues increased, the business remains unprofitable. This is another sign that mortgage is hard, difficult to scale profitably, and tough to "reinvent" with technology. Like the Zillow Offers business, Zillow Mortgage appears to be another high revenue, low margin operation.

The evidence reveals a business -- in my humble opinion -- that is still in the early innings of reinventing real estate. Zillow is clearly benefiting from the current red-hot real estate market, with its premier agent program leading the charge and funding the evolution to Zillow 2.0.

But the promise of new, adjacent services is still an aspirational goal. The various pieces are being built, but still need to be assembled in a credible way that reinvents the transaction at a meaningful scale. Momentum is on its side, and Zillow's evolution continues.

Source

Vanishing Houses ...

finding a home > News - California Real Estate Expert Robert Wolf - Page #4 - California Real Estate Expert Robert Wolf >

A mind-blowing 32% fewer homes have come on the market below $750,000 so far this year. Over time, just about everything becomes more expensive. After a while, society digests the higher values. Gasoline was $1.12 per gallon back in 2002, compared to $4.20 today. A visit to the Magic Kingdom would set a Mickey Mouse fan back $41 back in 2000, a lot cheaper than the $114 Disneyland ticket this month. In 2010, mouth-watering, sliced bacon was selling for $3.86 per pound versus $5.85 today. Change is inevitable, and so are higher prices.

As home prices have appreciated over the years, the lower price ranges have dwindled and became a smaller percentage of the housing stock. It is not merely the fact that fewer homeowners within these more affordable price ranges have not placed their homes on the market; instead, it has more to do with home values appreciating and surpassing the lower range thresholds. These ranges are vanishing.

The erosion of more affordable housing has been going on for years. This trend will continue as long as the market remains hot. With a depressed, unfathomably low inventory and unrelenting demand fueled by record low rates, this sizzling market is poised to continue for quite some time. The torrid pace will remain through the end of 2021 and is poised to endure through 2022 as well.

For buyers anticipating more homes in the affordable price ranges coming on the market soon, it is just not going to happen. The number of opportunities is diminishing over time. Buyers who wait will be confronted with fewer available options to purchase. More and more homes are surpassing the $500,000 and $750,000 thresholds.

The bottom line: while it may be challenging to find a home in the lower ranges today, as homes appreciate, it will only become more challenging in the future.

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