Real Estate

Zillow says region has housing shortage; taxes on the way up

By From page C2 | September 28, 2012

The most frequently asked question of me when I meet folks who are readers of my weekly column is “How do you come up with all those different topics about real estate?”

Writing a weekly column can be a little challenging. For instance, newspapers have hard deadlines. In my business, if I am running a little late for an appointment or when the unexpected happens, I can normally call my scheduled appointment and postpone the meeting to a more convenient time. That’s not a luxury when a writer is up against a hard deadline. The newspaper press runs on a tight schedule. If my column isn’t ready by 4 p.m. on Tuesday my editor Noel is prepared to stick some filler or advertising into my allocated slot.

Putting together 900 words into a coherent provocative format isn’t natural in a texting, e-mail and five-second sound bite world. It often requires hours of research and quiet concentration not usually found in a busy office with ringing phones, and a constant barrage of faxes and e-mails demanding immediate attention.

Selecting an appropriate real estate or financing topic can take as long as writing about it. To help me decide I read two newspapers daily, subscribe to a dozen real estate Internet blogs/newsletters and handle situational questions from clients about every aspect of real estate. When I come across something that I think would make a good topic for my column, I will cut, print and stack it in a pile on my desk, eventually ending up with an assortment of papers on every aspect of real estate.

Despite my stack of clippings I often procrastinate, expecting divine inspiration and enlightenment to reveal some really exciting real estate topic. As the week moves along without inspiration, perspiration begins. If I have not settled on a topic three days before deadline, I start waking up at night thinking about all the endless possibilities. At two days to deadline, without a topic, I grumble to myself about writer’s block and ask why I am staring at a blank word document on my monitor when I should be showing houses. The day before deadline finds me sorting through my stack of real estate clippings worthy of commentary. Here are a few examples.

“Zillow says Sacramento region is in top 10 seller’s markets.” According to a recent study by Zillow, the top 10 best seller’s markets include: San Jose, San Francisco, Las Vegas, Sacramento, Phoenix, Riverside, Washington, D.C., and Salt Lake.

A Zillow Zestimate of specific property values is often inaccurate. Their algorithm assumes that the home that sold down the street is a model match for every other home on the street. However, their compilation of general market data is extensive.

Housing affordability (prices and interest rates) is driving demand in our region with limited inventory while the demand for San Jose housing is driven also by thriving technology employment. Our region will remain a seller’s market as long as half the homes with mortgages are underwater.

In my stack of papers I found a sticky note reminding me to comment on a new tax on real estate to help fund national health insurance, Obamacare.

Beginning in January, legislation will impose a new 3.8 percent tax on some income from interest, dividends, rents and capital gains. The tax will only be on taxpayers with adjusted gross incomes of above $200,000 and couples filing jointly with incomes greater than $250,000. A larger tax increase, regardless of income, will take effect in January when the Bush-era tax cuts expire and capital gains will be bumped from 15 to 20 percent. In addition, California has a 9.3 percent capital gains tax on incomes above $46,750.

The California’s housing market has been rescued in part by investors who have been buying up mostly lower priced properties, fixing them up for rentals with the intent of holding them for long-term appreciation. Let’s not kill that goose laying golden eggs. Every increase in tax decreases the return on investment. When returns are marginalized by excessive taxes, investors will pursue an alternative to real estate.

I had a printed e-mail from the California Association of Realtors, CAR, about its opposition to the Obama Administration’s proposal to auction off thousands of REOs in blocks of 300 to 500 homes to undisclosed investors who would be required to rent the homes for a number of years. The administration’s stated objectives is to further stabilize home values by reducing supply, hold down the anticipated rise in rental prices and reduce financial losses to the housing agencies.

CAR opposes theses heavily discounted bulk auctions to undisclosed investors because they will eventually cost taxpayers more than conducting individual sales. Inventory in many markets is already at historically low levels and the rental market is doing just fine without more government intervention.

Realtors will lose millions of dollars in commission income under the proposal to remove thousands of homes currently listed for sale and placing them into a rental pool owned by undisclosed investors. Conspiracy theorist might think that this move by the administration is another Solyndra example, picking winners and losers in the market place, handing out lucrative contracts and deals to favored entitles.

Next topic is … oops, I am out of space. Next week, however, I will address the boomerang homebuyers and how foreclosed Americans found their way back to homeownership.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his website at

Ken Calhoon

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