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The Dirt on How Money Walks

Posted by John Hathorn on February 18, 2021
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Because so many real estate agents read most every issue of Santa Monica Dirt, I want to start with a message to them: Please turn Showing Time off in your MLS settings for any listing that you control (where you are LA1). You will be helping our industry and if you would like to know why I feel this way or if you follow the news and disagree with me, please call, or email me.

Did you know that California has lost $73.52 billion in annual AGI since 1992? That is the wealth migration 1992-2018. Don’t believe me? Check out this cool website that tracks the info – https://www.howmoneywalks.com/irs-tax-migration/

More detail on this follows.

DID YOU KNOW?  Real estate taxes are jumping around the country, often fueled by local school costs…and lost sales tax revenues due to COVID. In Santa Monica, beginning March 1, it costs WAY more to sell an upper-end home. In addition to the $1.10 per thousand in transfer value that Los Angeles County takes, Santa Monica will be grabbing $6.00 per $1000 for homes that sell for $5M or more. SM says that because business tax revenue (Covid to blame) is so low that they must raise money this way but if you think for 1 second that this tax will ever go back down, well, good luck with that dream. Even after business gets back to pre-pandemic levels, I expect this tax to remain. In Pierce County Washington, taxes will rise 4.8% this year over 2020, a smaller increase than in 2020. State and school taxes add up to nearly 60% of all property taxes in Pierce County. Texas recently passed a law that bars local governments from raising property tax revenues for operations more than 3.5% above the previous year without an election. But that is still almost twice the rate of inflation. Previously, the rate could not exceed 8% without triggering a petition for a rollback election. Some areas around the USA benefitting from large home price increases are simultaneously experiencing rising assessed values too…..and higher property taxes.

Meanwhile – As readers of the Dirt know, home values in Santa Monica and all the beach cities in LA County went up during the pandemic. This was immediately noticeable in Malibu where there is more open space than town. More leases and sales were recorded in Malibu than usual as the DOM (days on market) decreased. This trend is expected to continue in 2021. I expect Venice, especially the Venice beach area that suffered greatly under the strain of the tragic homeless situation, to improve as well. Skid Rose (Rose Ave near Golds Gym all the way to Penmar Golf course) has cleaned up as has Venice Bl near the library. It seems the huge fire at the homeless encampment adjacent to Penmar Golf was the tipping point and the city finally took action.

From How Money Walks – It’s interesting to note that the flight from California to mostly tax friendly states has created space for more New Yorkers to move here, which is exactly what happened during the early days of the pandemic. Now that the rough winter weather has been in the news so much, I am sure we will see even more New Yorkers looking here, though I don’t expect the hard-hit Texans to come here.

The median price per square foot in Santa Monica in 2020 was $1,206. The median price for a Santa Monica home was $2,752,100. The median price for a Santa Monica condominium was $1.05M.

Now to compare that, for those coming from New York or San Francisco who are wealthy enough to afford million dollar-plus mortgages, L.A. still offers a relative bargain. The median home value in San Francisco is $1,447,191 and the median rental price in San Francisco is $4,500 compared to $752,508 for homes in Los Angeles and $3,500 for rentals.

DID YOU KNOW? U.S. single-family rent growth strengthened in December 2020, increasing 3.8% year over year, showing solid improvement from the low of 1.4% reported for June 2020, and up from the 2.9% rate recorded for December 2019. (CORELOGIC)

DID YOU KNOW? U.S. homeowners with mortgages collectively gained about $1 trillion in home equity in the 12 months that ended Sept. 30th. (CNBC)

DID YOU KNOW? About 56% of buyers faced off against a competing bid in January, an increase from 52.5% in December. (MANSION)

In 90402 Real Estate News…

This week four new listings came to market-

425 23rd Street– Listed at $6,295,000. My team and I represented both sides of the sale in 2007 and the owner says that she would have listed it with me last week but that “I did not love the home enough” In fact, I do really like it. It is unique in a really cool way and has the elusive / emotional “wow-factor”. I don’t see it being available for very long. They paid $4,650,000 when we sold it in 2007.

453 Hillside Lane– Listed for $2,595,000. This is a little 3 bedroom, 1,300 sqft home is on the market for the very first time. Built in 1926 it has lots of character, charm, and canyon views.

509 21st Place– Listed for $5,150,000. Built in 2006 this 3-story architectural was recently updated and has a pool. Last sold in 2012 for $3,700,000.

1130 Georgina– Re-listed for $10,950,000. New construction, 10,500+ square foot Traditional on a 12,400 sqft lot. Designed by John Andrews, it is a substantial estate with all the bells and whistles. The lot was purchased back in 2015 for $4,000,000.

Two new properties are under contract-

238 19th Street– Listed just a couple weeks ago for $6,850,000.

544 Euclid Street- Listed most recently for $5,495,000. This one has been on and off the market since 2018, listed as high as $6,495,000.

Have a great week!

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