by Gene Wunderlich
For anybody keeping track, our state Legislators introduced over 2,300 new bills this session. That’s 2,300 new ways to tax you, regulate you or otherwise dictate how you run your life and your business. Some, maybe a couple hundred, would impact us positively but most of them probably stand very little chance of passing. The vast majority will impact us negatively, some very negatively. Hopefully most of them won’t pass either but the odds are against us. While Republicans eliminated the Legislative super-majority last November, meaning Sacramento Democrats can’t just pass any tax they want, it only takes a simple majority to pass most other bills, including ‘fees’.
So, while meaningful CEQA reform is probably dead, measures to make CEQA more intrusive may succeed. While easing regulatory pressure on California manufacturers won’t make much headway, the Global Warming Solutions Act will propose they reduce emissions even further – to 80% below 1990 levels. And while a bill to eliminate minimum franchise tax for new businesses may advance no further than it did last year, expanding statewide taxes to include all services is on the table as are discussions to make it easier for municipalities, school districts and water boards to raise our local taxes.
And Wildomar and Menifee probably still won’t get their Vehicle License Fees back. So how about housing? Well, even for a short month, February outpaced January – not that that was much of a challenge. February sales were actually up 3% across the region month-over-month although they were still 5% below last February. Perhaps more surprisingly, prices posted unexpected gains – up 2% over January. The median was also up 7% year-over-year but since last February prices were at their lowest point of the entire year, being on the plus side of that equation is a good thing.
Sales have trended downward over the past three years while median price for the region has flattened after a surge in 2012-2013. We’ll have to see how the rest of the year plays out but if you keep your expectations low you probably won’t be too disappointed.
Finally, look for a few more short sales and bank repo’s in your neighborhood. We’re entering a period where loan modifications initiated during the early days of HAMP and HARP are starting to re-set. And guess which state has the largest number of loans that will re-set? With an estimated 645,872 loans scheduled to re-set over the next four years, California leads the pack. Here’s the scary part of that – 66% of those homes are still seriously underwater. That’s not as bad as Nevada where 84% are still underwater, or Arizona with 77% but Arizona only has 122,000 re-sets and Nevada even fewer.
IF prices continue to climb and IF interest rates stay low, the negative impact of these re-sets to our market will be minimal. But even under the best scenario, we will still see a local increase in distressed properties with the potential for continued price softening.
The nature of our market – big IF’s, AND’s and BUT’s. In Sacramento that’s spelled with two t’s.
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/