Southern California home prices jump 12% to record high

[rcjordan]

https://www.dailybreeze.com/2020/09/23/southern-california-home-prices-jump-12-to-record-high/

[Travoli]

No evictions until January also keeping inventory low (for now).

[rcjordan]

>No evictions

Good point!  And, yes, we also want to punish those evil, evil landlords for as long as possible.

[ergophobe]

We're seeing a lot of people looking for second homes or taking early retirement and looking for a country home.

The desire of people to have a place where they can walk and get outdoors in a lockdown seems to be driving a lot of sales, especially as people start realizing what winter might look like. That might be driving things in SoCal - people want a yard this winter (I presume you can actually use your yard in the winter in SoCal). Also people who are trying to get investment money out of urban areas.

The guy up the street finished building his house about a year and a half ago for $600K. It sold last month for $1.5 million. I just don't get how this pencils out for people (except for Keith, who is beyond happy with the way that turned out).

I think the other thing is we are seeing the Two Americas show up again in real estate. Basically, if you have a high-paying job that did not get destroyed by Covid and you have a lot of money in the stock market, you're doing well. But you might be nervous about that money in the market, so you plow it into real estate. Even for me, a very modest earner all my life, my in-theory-on-paper net worth peaked a couple of weeks ago before the round of market corrections and it had us talking about real estate as an investment.

And then there's the second America, who is doing worse than ever and has been utterly hollowed out by Covid.

[ergophobe]

This was already posted elsewhere

Zoom Towns And The New Housing Market For The 2 Americas
https://www.npr.org/sections/money/2020/09/08/909680016/zoom-towns-and-the-new-housing-market-for-the-2-americas


Also, I found this

The only downside to this Boom America is the imbalance of home supply and home demand that is driving up home prices. Jeff Tucker, an economist with Zillow, said, "There's a tremendous shortage of homes on the market. We see about   -29% fewer homes that are actively listed compared to this time last year."

Along with these -29% fewer homes on the market this year, more than +7% of all active mortgages are now taking advantage of the CARES Act forbearance relief plan.

https://timandjulieharris.com/2020/09/15/housing-market-for-two-americas.html

I think the loan forebearance is a more direct impact than the ban on evictions (which I would think would push demand and prices down).

But it looks like the big move is that people are staying put.

Meanwhile, my sister-in-law who is a realtor in Vermont is working insane hours trying to keep up. After Fauci said that Vermont "should be the model for the country" on September 15, it has been off the hook. A non-stop flow of customers from out of state. She had been planning to wind down her business this year and does no advertising or promotion. It's all word of mouth and she can't keep up.

[rcjordan]

Wall Street's New Suburban Subdivision Is Full of Renters - Bloomberg
https://www.bloomberg.com/news/articles/2020-09-23/wall-street-s-reimagined-suburban-subdivision-is-full-of-renters?srnd=premium

[buckworks]

>> building his house about a year and a half ago for $600K. It sold last month for $1.5 million

So ... where does he move next and at what price point? How much of his profit will he actually get to keep?

[ergophobe]

>>where does he move next

It was an investment property. He was renting out, but got an offer to sell. AFAIK, he's pocketing well over a million dollars from both sales, which he is rolling into other building projects. Basically, you could say that he is a home builder who has gotten himself to the point that he never has to build for anyone else again, but has not gotten to the point that he doesn't have to build at all. I think Plan A was to collect rent and mostly live off that, but the offer was too good to turn down.

[rcjordan]

Since he held it for a year before selling and assuming he's married, he'll likely pay 20% LT Cap Gain tax to the feds and as high as 13.3% to Cali, depending on his tax bracket.

married couples who earn between $80,001 and $496,600 will have a capital gains rate of 15%. For those with incomes above $496,600 will find themselves getting hit with a 20% long-term capital gains rate.
https://www.forbes.com/sites/davidrae/2020/01/13/new-capital-gains-rates-for-2020/

https://pocketsense.com/capital-gains-taxes-state-california-8405869.html#:~:text=Finding%202020%20California%20Income%20Tax%20Rates&text=Because%20California%20does%20not%20give,tax%20on%20your%20capital%20gains.