Episode Transcript
[00:00:01] Speaker A: The Michael Hatfield Remax team presents real estate and more.
[00:00:06] Speaker B: Bay Area real estate is different than all of America. And why? What's up with buyers? What's on sellers'minds? How is the market? And much, much more.
[00:00:17] Speaker C: Now here's your host, Michael Hatfield. Welcome to the real estate and more show. I'm Michael Hatfield. Let's do our day after Thanksgiving better known as Black Friday bay Area housing market update. To help me with this, I have Nancy in the studio to do as she always does, put in her two cent worth. A little later in the show, most know that I like to check in with other locales elsewhere in our amazing country and find out what's going on out there. We have top producing realtor, Robert Welsh to provide us inside details about a magnificent development called Daniel Island in Charleston, South Carolina. Now, let's chat on Bay Area housing markets. Let's welcome Nancy to the show.
[00:01:07] Speaker D: Thank you for having me on.
[00:01:10] Speaker C: Yeah. You know, Nance, you wanted to say a few words on the market itself.
[00:01:15] Speaker D: To get us right, right? We've been talking for some time, Michael, knowing that a somewhat peaceful equilibrium does exist between retirement age possible sellers who are not really motivated to sell, and the millennial age buyers who are not really motivated due to the higher interest rates these days. We've been saying that if any of the factors change, the economics of the housing market will change also. Now, the Federal Reserve has momentarily halted their stairstepping Fed rate hikes they've been traveling on since approximately April of 2022 and entering an election here. Looking at the historical data, it's likely that interest rates may come down the first quarter of 2024. Before buyers get too excited about waiting until they do, they would be very wise to consider what will happen with home prices for a given amount of homes for sale. What are your thoughts, Michael?
[00:02:23] Speaker C: Well, I go back to the loaves of bread on the shelf. If I've only got five loaves of bread on the shelf and I put ten buyers for those loaves of bread, obviously the store guys are going to say, hey, we should charge more for that bread. We're going to change the dynamics if this happens. And we've said for some time now that home prices are going to stay pretty stable because of the fact that there's only so many homes for sale. And why is that? Going back to the point where we have people of retirement age that own these homes, they've refinanced them sometime back at 3% when the rates were there or they've moved out of state. So they're staunchly saying, well, if I sell my home, I've got to pay more in interest if I buy another home. Not exactly correct, but this is what they're thinking anyway in that regard. So they're pretty much entrenched, therefore, the amount of loaves of bread on the shelf or the number of homes that are available for sale in our Bay Area, housing markets are still somewhat limited. So I'm with you there. If the number of homes for sale stays the exact same, home prices will go up if you increase the demand. And this is what will happen if our interest rates start to come down just a little bit, we are going to see more demand by buyers to buy those same loaves of bread.
[00:04:07] Speaker D: Got it.
[00:04:10] Speaker C: I think it was before you and I became a couple. But my first home back in the early I guess it was the can't quite remember when it was, but I do remember that I had to pay twelve and a half percent interest in order to purchase that home and that I also had down payment help from a friend. Well, a few years later the mortgage interest rates came down, which they always do. They go up, they go down, if you look at historical charts.
[00:04:43] Speaker D: Right.
[00:04:44] Speaker C: And when they went down, then I refinanced the property at that time, paid off the partner and I'm going along happy with a much more affordable mortgage. The point being is that when there's so few of loaves of bread for sale on the shelf or correlated to homes available for sale in the market, you have to buy while the buying is good.
[00:05:13] Speaker D: Makes sense.
Now we're at about the second payment due for our house taxes and those of us who have the privilege of paying property taxes twice a year, I know that's coming up. Can you elaborate on that a little bit more, Mike?
[00:05:30] Speaker C: Oh, absolutely. You know that they'll let you pay your house taxes once a year, but some of us just we push it out there and pay them before they're due. The last due date, the last due date is December 10. It's coming right up. Guys, I don't want to ruin your day, but it is what it is. So home property taxes are also called advalorum taxes. I know we went over this once or twice before, but I think sometimes it's good to keep these in mind so that you are an informed buyer or a seller fiscal tax year. The first installment payment is due November 1 and is delinquent December 10. It covers for the period July 1 through December 31.
The second installment payment is due February 1 and is delinquent April 10. Most of us just remember April 10 and December 10. It's kind of the way it goes, don't you think?
[00:06:39] Speaker D: I think so, absolutely.
[00:06:41] Speaker C: And those will cover taxes on your home for the period January 1 through June 30. Now, an important fact is when you buy a home, the seller's tax basis or what the seller has been paying, they pay taxes on what their purchase price was and then very slight increments over the years as time goes on. But the seller's tax basis may be a lot less than what a new homeowner will pay. Well, why is that? Because generally speaking, in counties in California, the new buyer tax will be adjusted on that home to the purchase price times some percentage. Bear in mind that that percentage is just something to help you get a handle on a rough estimate for what your tax bill for your purchase, your home purchase will be. The percentage that we're using as our estimate doesn't include something that some areas may have, which is called mellow roofs, doesn't include that. That would make that percentage that you multiply when you take your purchase price to come out with some estimate. It would make it a bit different in most percentage. I think you're pretty comfortable here in the Bay Area at 1.15 to 1.25% of the purchase price. So if a seller going back for this example, if a seller happened to pay $400,000 for his home when he bought it in 1985, or she bought it in 1985, then turns around and sells it for a million, dollars in 2023. The new owner will pay taxes initially and underline initially, based upon an estimated 1.15% of the purchase price, or roughly $11,500 per year on the new home.
And remember, you can bust those up into two payments, one which is April 10, and the other one which is December 10. For people like me, the seller may have been paying only $4,600 per year on his home. And then you come along and buy it for a million dollars. Now you're going to have to pay more, I'm sorry to tell you. Thus, when you buy a new home for a short while, your property taxes will be predicated on what the seller was paying, and you will pay the amount of the seller's bill and it's prorated at the close of escrow. Meaning that if he's already prepaid taxes, he gets a credit back from your proceeds that you're using to pay for the house. At least for a short time anyway. The important part that to remember is that you are going to get a bill from the tax collector when the tax collector catches up with you and he will adjust from the time that you purchased your home to the current time of the taxes that are due to that point of what you pay for the home times. That wag factor, I call it, of 1.15 to 1.25 of the purchase price.
[00:10:09] Speaker D: And they always find a way to catch up with you.
[00:10:12] Speaker C: They always find a way to catch up with you. And when they catch up with you I know in Contra Costa County, I've seen the bills numerous times, and it seems like they're green in color and they're called supplemental, supplemental tax bills. So when you see that bill think, well, I've already paid my taxes. Well, you probably already paid Mr. New homeowner on the seller's tax basis and not your own. So when that bill, that's colored green that says usually green, that says supplemental taxes. And when it comes in, you don't want to throw it away. Do not throw it away. Don't forget to pay it. They'll give you a little bit of time to pay to bring it to parity. And then from that point on, the local county tax assessor will assess you on your new value that you paid for the home.
And one last point, home taxes up to certain limits. See, your CPA are tax deductible from your taxable income. And that's pretty cool. If you're renting, you do not have home taxes that are deductible. Thus, that factor of home ownership will not help you out if you're only renting, right?
[00:11:31] Speaker D: That's right.
[00:11:32] Speaker C: Right. So there was another thing that you wanted to talk about.
[00:11:37] Speaker D: Yes, I wanted to talk about a hot topic, auxiliary Dwelling Units, or known as ADUs.
[00:11:46] Speaker C: Oh, yeah, ADUs. It is a hot topic right now. Have anybody thought about buying a home that has the attributes to where you can add an Adu to help you with the payment?
A lot of times folks have mom and dad who's elderly or getting older in ages, and an Adu in your backyard just might be the answer to just might be the answer. They're a great thing to have. They're close by. You're not having to pay thousands and thousands of dollars to have them go into an assisted living or some type of a facility such as that. They're a hot topic, meaning that ADUs are placed on an existing property. Mom and dad can be right out the back door. And for permitting purposes, they're on the fast track with the county and the city planners. That means it's much easier to get a permit approval for one of these units. That would be of problem in the past. Generally, the size is 700. Some of these units are quite attractive. I've seen them to where there's two, like, little bedrooms and two bathrooms to go with them. Quite attractive. And it's nice to have mom and dad perhaps out in the back and.
[00:13:10] Speaker D: Not totally underfoot or even Michael, for supplemental income for a homeowner in this day and age.
[00:13:17] Speaker C: Yes. Now here's the big kicker that a lot of people are still not aware of. There's a chapter two in the adu saga. I call it Chapter Two. If a city or a county is opted in to AB 100:33, then you can actually get an address as you would a condo, and later sell it separately from the main address. That's right under AB one zero thirty three. You may be able to get plans easily, build your adu, then get an address, then sell it as a separate home.
[00:13:54] Speaker D: That's fascinating, actually.
[00:13:55] Speaker C: Yeah, it's fascinating because when you go to buy a home, perhaps you should look at it. Wait, if I wanted to or if I needed to, as an option down the road, can I put an Adu on that property. Check with your local city or county planners for the area that you live or the area you're considering buying in to see if they've opted into AB one zero thirty three and also to see they have some preapproved plans available as some planning departments actually do.
As some of you know, I just love taking a look at other areas in the country and comparing them to the housing markets in the San Francisco Bay Area. It's one of my things, I enjoy it. So let's give a big thank you for Nancy at Ten, then go on to Robert Welsh, a top producer in Charleston, South Carolina and it's a specialty development he works on he's with Daniel Island Real Estate. A great place to either retire if you want or live outright and work from home. An amazing place. Nance, thanks for being on the show.
[00:15:07] Speaker D: Thanks for having me, Michael. It's always a pleasure.
[00:15:11] Speaker C: We'll be right back.
[00:15:15] Speaker D: The people of Lahaina Maui have recently experienced the deadliest inferno our nation has seen in more than 100 years.
[00:15:22] Speaker C: Here's Michael Hatfield having recently returned from Hawaii.
[00:15:26] Speaker E: The vast destruction of the town and the shock of it is much greater.
[00:15:30] Speaker C: Than one can believe.
[00:15:31] Speaker E: Those who escape the Lahaina fire itself are left to deal with the devastation that remains the loss of jobs, the loss of homes and the heavy heart from the loss of friends and loved ones.
[00:15:41] Speaker C: Some feel hopeless.
[00:15:43] Speaker E: My prayer is for a strong sense of community to arise from the ashes to begin repairing the massive damage and the welcoming kindred spirit of the Hawaiian people. Help Lahaina victims by giving what you can by going online to Convoyoofhope.org Maui. That's convoyofhope.org Maui or by going to Samaritansperse.org USDR. That's Samaritansperse.org USDR, paid for by the.
[00:16:12] Speaker D: Michael Hatfield remax team. 925-322-7775.
Now back to our show.
[00:16:22] Speaker F: I like to check in with random areas in the US and make comparisons with our Bay Area housing markets to see what national factors affect all markets. With us now we have a top producing broker in Charleston, South Carolina specifically to talk about the unique location in Charleston that he operates and sells real estate. That's Daniel island. Welcome to the show, Robert Welch.
[00:16:49] Speaker A: Hey Michael, it's good to be on. It's good to see you.
[00:16:52] Speaker F: You're looking handsome as ever. If I could see you right.
Robert, can you tell us a bit about Daniel Island? Its features, its attributes, why somebody would want to go there and so forth.
[00:17:04] Speaker A: So Daniel Island is a gem in the city limits of Charleston and it was bought by Harry Guggenheim in the early 19 hundreds and it was a Guggenheim property, it's 4000 acres and it was sold to the Daniel Island Company in the 1990s.
It was hard to access until I 526 was put in and once that was put in in the late ninety s, it made it very easy. It's about ten minutes from the airports, about twelve minutes from the beaches, twelve to 15 minutes from downtown Charleston, two different ways. Plus we have a ferry that goes over there.
The Daniel Island Company started building about 1996, and I think our first home was sold in 1997. We're just about build out now on the 4000 acres.
We have apartments, we have condominiums, we have single family homes, we have deepwater homes, we have marsh view homes, tidal marsh, we have golf course view homes. The island was sold to the Daniel Island Company with the caveat that it would be an island town, a planned community, and they worked with the city of Charleston. It was Mayor Riley at that time and it was pretty much designed as a small town. We're in the city limits of Charleston, so we have natural gas, we have city sewer, city water. We have Charleston police and fire on the island. But we have our own little downtown area with restaurants, shops, grocery stores.
We have lawyers, bankers, DPAs doctors. You pretty much feel like you can do everything on the island that you want.
And the downtown area is central.
What we do, we call their south side of the island and the north side, because it's divided by I 526 as it comes through. It south side has eight neighborhoods, it has the two schools, it has a K through eight school where the children actually ride their bikes to school. You'd see 400 bicycles out there on any school day. It's really neat to see that every neighborhood has a park in it.
The north side of the island is the country club side, and we have a private country club with two private golf courses. They have the Tom Fascio course and we have a Reese Jones course. They just had the Junior Amateur there this summer in August, and they're having a ladies event coming up next year. The Nationwide Tour had its final championship while I was in existence on Daniel Island, and that was there for about three or four years. But it's a great place to live. We're a 90% full time community.
People have come there from everywhere. They've done a lot of focus on the East Coast, I think mainly because people vacation down in the Charleston area. It's probably the biggest cultural center on the southeast. In the southeast.
[00:20:28] Speaker F: So this is a full blown location. It's not just Charleston. The last time that I was on Daniel Island, full blown economy there of people that may be a working family or person. It may be retirement community, it may be country club place, maybe it'd be a great place to retire too, if you were looking in that way. We did a little segment with the financial advisor, Pat Batucci. It was called retire. Here, there or everywhere. And I imagine that a lot of people will focus on going down and seeing some of the beautiful attributes of Daniel Island, where you can live on the marsh and kayak on the marsh and fish if you want. I don't know about swimming, but fishing has got to be outstanding.
[00:21:19] Speaker A: Mike the fishing is great whether it's in the creeks or in the rivers, or you can go out to the ocean from Daniel Island. But what makes it so unique is that it's very diverse in age. You have people that do retire down there, but they were able to work out of their house. Everybody wanted to leave the colder climates or would come down for taxes. Base is a lot lower here than it is in the Northeast or in DC or in Chicago. We're about $7,000 per million for a primary home.
We have a marina private yacht club with 100 mooring balls where it's starting to grow up. This is fairly recent.
The marina has its own boat club. You can join the boat club and reserve a boat.
The golf great.
There's a lot of horses nearby that are semi private, so if you don't join the club, that's an option.
[00:22:25] Speaker F: Wow. There's a really nice golf course down there.
I think the last time I was down there was to actually hang out with friends and they had raised the old submarine, the Hunley, I think it was.
[00:22:39] Speaker C: Yeah.
[00:22:40] Speaker F: And I remember it sitting on a barge in the nearby harbor and you could actually see it. I don't know if it was from Daniel Island or if it was from nearby Charleston roads, but it was just an amazing part of world culture there. And it seems like Daniel Island has picked out the best portions of it. Would you say that the lowest value or price range would be from where to where in Daniel Island? On Daniel island.
[00:23:09] Speaker A: So right now, a single family home, probably the lowest, would be in the mid eight and up to 10 million. Plus you can get a condominium a lot lower than that. You can get a condominium anywhere from the three to 3 million.
There's a development down in our waterfront called the Waterfront di.com, that's by East West Partners, and they're doing a really nice job down there.
We have one island left called the Retreat, and it's thereretreatdi.com. There'll be 30 lots that will release next year, and that's going to be the final lots on Daniel Island. These all come with the ability to get a full golf membership and there's deep water available. They all have a view. They'll probably start in the million range for the lots and go up into the mid three S for the ones that have deep water. But it's gorgeous. And we sold Captain's Island a number of years ago with 99 home sites, and that took off, and people love it over there. It's island off of an island. And we're not a barrier island, we're an interior island. So we're surrounded by the Wando and the Cooper River and.
[00:24:42] Speaker F: Been a you've been a broker a long time. You've been a real estate realtor pardon me there for a lot of know. The time has went so fast. I remember when you first really got involved with it and you lit off and you do such great jobs. You're pretty much like Nancy and I. We take the client, put the client.
He's very, very good at representing people, buyers and sellers alike. But how's the market out there now, Robert?
[00:25:13] Speaker A: Usually the spring is when it picks up because people want to sell their houses and people want to move and be in their house. So their kids are in school in August.
We have a small window in October, November, but then it just usually slows down a little bit. There are always houses for sale and a lot of times people get their best deals this time of year.
[00:25:40] Speaker F: Absolutely. Totally agree. Have you found that the interest rates being stairstepping from 2022, from around April have affected your sales there, or do you feel that you're more cash buyer purchasers?
[00:25:54] Speaker A: We have a lot of cash buyer purchases, but I think it has affected the lower end market because a lot of the individuals that are buying homes in that market are going to need to take out a loan and they're going to get less of a house than they could have with the 3% interest rates that we had a while back.
I see people coming in and buying older homes and then fixing them up because there's nothing else. And we're in such a great location.
[00:26:25] Speaker F: Absolutely.
[00:26:26] Speaker A: People are moving farther and farther out for lower prices, but then they're along our way to the beaches, they're along our way to downtown Charleston, which has some of the best restaurants in the country and great culture. And we've been the number one tourist city for many years.
[00:26:45] Speaker F: I know one thing I have to tell you, it's really an amazing place. Robert Welsh, Realtor top producer, an excellent realtor to help you out in the Charleston Daniel Island area. Robert, thank you for being on the show.
[00:27:01] Speaker A: Thank you, Michael. It's great talking with you.
[00:27:04] Speaker C: A big thank you for being on the show, Nancy.
[00:27:06] Speaker D: It's my pleasure, Michael.
[00:27:08] Speaker C: And a big thanks also to realtor Robert Welsh daniel Island Real Estate, daniel Island Charleston, South Carolina And what a great Black Friday weekend it's been. See, Nance, we don't have to shop and spend all our money. There is life without always Black Friday shopping. It's time for a short break. You've been listening to real estate and more interesting people topics of the day and of course, real estate. You can listen to archived real estate and more shows by going to Michaelhatfieldhomes.com slash radio. That's Michaelhatfieldhomes.com slash radio. I'm Michael Hatfield. We'll be right back with our next special guest. Stay tuned.
