PART FOUR: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

Corona Virus and Real Estate

Corona Virus and Real Estate

In the final analysis, we must admit that the Coronavirus crisis is in fact the very last thing we needed in California – given the chronic problems with the job-based economy, and conflicts within various markets – the troubled agriculture business and the real estate market, just to begin with. 

Since 2016, we could clearly see a  downwards cyclical trend in California, revealing shrinking home sales.  And for whatever reason, we’re experiencing a peculiar growing trend, featuring  conflicts between siblings and other family members within estates and trust funds, typically with real estate.. with less and less cash each year that goes by. 

These conflicts between sibling beneficiaries typically revolve around inheriting real property, with one or more heirs and/or beneficiaries wanting to take more than their fair share of inheritance assets… Moreover, we see a lot of sibling conflict  revolving around the question of who will retain inherited property, or will beneficiaries looking to sell that property to an outside buyer win that battle of wills…. Taking the estate into an area involving parent to child exclusion, and transfer of property between siblings, or buying out a siblings’ share of a house, also known as buying out siblings’ property shares or sibling-to-sibling property transfer.

Interestingly enough, it is only in the state of California where you have property tax relief which actually looks like tax savings set up specifically to deal with economic problems brought about by the Pandemic – in every state… Put forth and passed by Lawmakers that actually care about the well being of the American people. 

CA Proposition 13 and Proposition 58 would actually be excellent tax break solutions for folks in every state right now, with a relentless Pandemic causing death and mayhem, both with our health, and with our job based economy.  This type of property tax savings for American home owners would be right on time – where you can keep parents property taxes, transfer parents property taxes, while inheriting property taxes at a low 1978 Proposition 13 base rate… Having the ability to use Proposition 58 property tax transfer benefits, with parent to child transfer or, as lawyers call it, “parent to child exclusion” – covered on trust lender Websites…   Property owners in every state should be learning more about these types of tax benefits, on official Websites such as the official California State Board of Equalization site; or at one of the free, well researched, well vetted niche California tax relief resource blogs like this site.  

It’s important to learn how trust loans work alongside reliable  Proposition 58 or Proposition 193 property transfer tax break benefits, making it possible to establish and retain a low Proposition 13 tax base with parent to child exclusion guaranteed; upon any  beneficiary buyout of sibling property shares, or as realtors call it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender with a solid, reliable reputation.

Learning about these tax breaks, and how they work with trust loans or without… will strengthen residential and commercial property owners’ ability to communicate  the right data points to their so-called representatives in Washington… with the hope that one of these days, sooner than later, we’ll start to see property tax relief being established in every state in this country, just as they have in the state of California. 

And yet  now with all the problems in the real estate market brought about by the Coronavirus Pandemic, with home sales on the wane as potential buyers cancel house viewings, or flat out decide against risking a large down payment and pricey monthly mortgage payment due to fears that they may lose their lucrative  white collar job in the very near future… Or that their investments in the stock market or in CDs may plummet any day soon.

With the Coronavirus crisis literally paralyzing the real estate market, and the retail as well as service industries in California; and elsewhere, doing exactly as it wishes to do with us essentially, as we continue to flounder.  With absentee leadership and misinformation costing thousands of fatalities, and an economic disaster getting more and more serious by the day. 

Looking at this issue realistically, we’re now talking about 45 million people filing for Unemployment. 2,415,000  jobs lost just in April 2020 alone as an example, and similar losses before and thereafter, as months go by and the virus deepens it’s effect on our way of life.  With tens of millions of people out of work.  We’re now talking about almost double the number of Americans unemployed during the Great Depression, which was over 25 million.  Let’s look at California, given the plunge of the real estate market due, to a large degree, to the Coronavirus crisis.  

California home sales fell to the lowest level since the last “Great Recession” as the housing market suffered the full impact of the Coronavirus Pandemic in May and sales remained below 300,000 for the second straight month, the California Association of Realtors informed us recently.   May 2020 home sales in California decreased 13.9% from 277,440 in April and down 41.4% from 12 months ago, when 407,330 homes were sold within that year. It was the second straight month that home sales dropped below 300,000 units. Additionally, the past year’s plunge was the largest drop in home sales since the Recession beginning in November 2007, contributing to a sales drop of 12.9%

It’s odd that experts are warning us that California could see a 20% increase in homelessness if this current economic downturn continues month after month. We may see as many, if not more,  evictions and foreclosures in California than we had during the last  “Great Recession”.   Not only that, with bread lines continuing to mushroom all across America; teeming with Americans in long lines of cars… apparently in their 6th or 10th or 12th week of unemployment, what would help residential and commercial property owners would be property tax relief similar to how it’s done in the great state of California. 

This is precisely the tax relief model that should be reviewed by Congress as a serious non partisan, non political Emergency Disaster Relief Measure… being that California the only state in America where you can still  avoid property tax reassessment at current rates; capped at 2% taxation, thanks to the original 1978 CA Proposition 13.

Websites that focus on California Proposition 58, on property tax transfer and on how trust loans from trust lenders work for estates   with property conflicts between siblings… equalizing distribution of cash, as real estate attorneys put it – so all beneficiaries walk away feeling they got what they wanted, and that it was win-win for all concerned.  This would give beneficiaries and home owners alike enough info on property tax transfer and parent to child exclusion, and property tax relief in general, to put their demands in writing to Congress…  and demand property tax relief as part of the Coronavirus Stimulus Package!  It would certainly make a great deal of sense right now, no question about it.

Proposition 13 & 58 Tax Relief Still Popular with Californians, Despite Critics

Is Proposition 13 & 58 in demand despite critics… Without hesitation, the answer is yes. On June 6, 1978, 42 years ago, California voters passed Proposition 13 with 65% of the total vote. And to this day, interestingly enough, 65% of “likely voters” in California still support this tax relief initiative.

This popular and unique property tax break immediately froze California home owners’ real estate tax rate at 1% of the assessed value of their property – i.e., the assessed value on the day they bought the property.

So if you were a California resident at that time, you clearly saw that taxes on your home and land were no longer reassessed at current market value – and no longer went up more than 2% in total. And home owners in California are fortunate enough to be benefiting from the same formula 42 years later.

Moreover, the ability local governments had to raise money for city and town running budgets, including school funding – by arbitrarily raising real estate taxes whenever they felt it was needed – was all of a sudden severely restricted. And restrictions remain popular with consumers to this day.

The only parties perhaps not so thrilled with these restrictions and everything else associated with Prop 13 are political parties motivated to destroy Proposition 13 regardless how many critical protections for commercial and industrial properties are  guaranteed by Proposition 13, not to mention raising their commercial property taxes by billions… Plus certain individuals involved within the political arm of the educational system in California… as well as conventional executives, realtors, brokers, and other functionaries involved in the real estate market.

Click Here: For More Discussion on Critics of Proposition 13, at the Taxpayers Association… and on the stability home owners, renters & businesses have from Proposition 13, being able to avoid property tax reassessment; plus the positive affect Prop 13 has on local CA government – bearing in mind robust tax revenues pouring into local government coffers since Proposition 13 was passed.

Unfortunately, these folks in the California real estate business will simply have to continue riding the merry-go-round affecting the real estate market, with up-and-down sales cycles.  Let’s face it, they have had their mega profitable bull years, and now they’ll just have to learn how to cope with a bear market for a few years.

And pinning the blame on Proposition 13 and Prop 58, as well as blaming  “elderly home owners who don’t wish to put their house on the market”, simply isn’t going to fly. The shrinking numbers of homes becoming available to buy and sell is a natural business cycle.  And that’s just the way it goes.

Proposition 13 & 58 in demand despite critics?  It certainly is…

Click here for more on polling data and the vast popularity of Prop  13 in California, among middle class and upper middle class home owners of all ages…

With so many property owners inheriting property taxes – yet urgently needing to transfer parents’ property taxes so they can keep parents property taxes the way they are, and not fall prey to egregious tax increases. Hence, that 65% to 70% approval for Proposition 13 in California will only go up, and up, as the  reality of the real job market and the real job-based economy in general becomes clearer and hits home, in stark direct contrast to the sunny unrealistic TV news stories people are subjected to every night on CNN and MSNBC and network news,  citing the “strongest economy is 50 years!” while ignoring the millions of under-employed people with PHD’s waiting on tables and bar-tending…

Or, we’re forced to listen to uninformed politicians  breathlessly decrying the “lowest unemployment numbers in decades”, based solely on how many people are signing up for unemployment checks, while completely ignoring the millions of workers no longer receiving unemployment checks, who have fallen into the cracks and disappeared off the grid.

Perceiving all this realistically, and personally experiencing the ups and downs of real estate in one of the key property states in the union, middle class Californians realize the importance of saving every dollar they can – and this is where Proposition 13 and Prop 58 and 193 step in and provide such critical, often life-saving, support in this regard.

Please feel free to provide your thoughts below.  We are always interested in your comments and ideas, and will continue to publish your interesting feedback: