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Week of April 29th-May 5th
Property Tips and Tricks
Sell Within 18 Months?
California Assembly Bill No. 968 (AB-968) is for you.
This bill, coming effective on July 1, 2024, requires additional disclosures, which could change the landscape for those flipping properties throughout the state, or even homeowners who decide to sell a home shortly after purchasing it.
How so?
If you’ve owned a home for less than 18 months and made repairs or improvements, you’ll need to provide a detailed report to the buyer.
Here’s a simplified explanation of the key points:
Who it affects: The bill primarily affects "residential flippers," who are individuals or businesses that buy residential properties, make improvements, and then sell them for a profit within a short period of time.
Disclosure requirements: AB-968 requires these sellers to provide comprehensive disclosure of all repairs, renovations, room additions, structural modifications, and other alterations made to the property since they acquired it. This includes the names of all contractors involved and copies of any related permits.
Impact on flippers: This law introduces additional responsibilities for residential flippers. They must now meticulously track and report all changes made to the property, even minor repairs (repairs under $500 are exempt), and ensure that all work is properly permitted and recorded. This could potentially affect the speed and profitability of their transactions.
Legal implications: Failure to comply with AB-968 can lead to legal disputes and financial penalties. If buyers discover undisclosed work after the purchase, they may have grounds for legal action, including recission of the sale or claims for damages.
Importance of professional guidance: Given the complexities of AB-968, it's advisable for sellers to seek professional advise and guidance to ensure compliance and mitigate legal risks. Realtors can assist in preparing the required disclosures, and should be able to help with verifying permit statuses.
Real Estate News
Inventory Inequity and More
California is experiencing a resurgence, with its population growing for the first time in three years, effectively reversing the trend of the California exodus. Monterey County stands out among the top ten counties in California, witnessing a population growth of 0.8% from 2023 to 2024. Notably, Carmel-by-the-Sea and Pacific Grove have seen growth rates of 0.5% and 0.6%, respectively.
On the national stage, the housing market is making headlines with a significant 30% increase in active inventory (homes for sale) in April. More homes are entering the market, yet we still find ourselves approximately 35% below pre-pandemic inventory levels.
However, the narrative shifts when we focus on Monterey County. Here, April saw a modest growth of 13% in active inventory, but we remain about 50% below pre-pandemic norms. While the increase in active inventory aligns with the current trend percentage-wise, the total inventory number remains low. In fact, today’s active inventory is only around 5% above pandemic levels and still significantly below pre pandemic levels. This underscores the fact that real estate continues to be a local market.
As we navigate the 2020s, home price growth has already outpaced that of the entire 1990s. Nationwide, home prices have risen by 47.1% so far this decade, surpassing the growth in the 1990s (30.1%) and the 2010s (44.7%). Monterey County mirrors this trend, with home prices up by a similar 46% since the start of the decade.
But what about inflation? The inflation rate for this decade stands at 20.7%, already exceeding the total inflation of the 2010s (19%) but still trailing behind the 2000s (28.8%) and the 1990s (33.1%). The 1970s and 1980s experienced substantial inflation, at 104% and 64.2%, respectively. Let’s hope the 2020s don’t follow suit.
The recent Federal Reserve meeting tempered expectations of a near-future rate cut. The April jobs report that just came out at the end of this week showed a slowing labor market, with the reported jobs added coming up 27% short of expectations, and unemployment jumping to 3.9%. Continued data supporting a weakening labor market could encourage the Fed to cut rates sooner rather than later.
As these elevated rates persist, the supply of available homes for sale is likely to remain low. The market here on the Peninsula remains strong, and the recent growth in population adds another interesting fabric to the tapestry of the local real estate market.
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Jonathan Balog
DRE# 01980970
Broker
M: 831.747.0310
[email protected]
Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.
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