Last September Governor Jerry Brown signed Senate Bill 1069 and Assembly Bill 2406 that promotes secondary dwelling units aka accessory dwelling units (ADU) which as of January 1, 2017 has gone into effect. Accessory Dwelling Units are defined as housing structures that provide complete independent living facilities and include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as another dwelling. The idea is this will hopefully help defeat the affordable housing crisis in California by creating more affordable housing. So, what’s the difference between an Accessory Dwelling Unit and a Second Unit?
- Not recognized by city or county as a second unit (sometimes it is though)
- The market does NOT consider it a second unit
- Probably does not contribute as much to value
- Inferior to the main unit in size and location (maybe quality too)
- Has kitchen, bathroom and sleeping area
- May or may not be separately metered
- May or may not have a separate address
- May or may not be attached to the main house
- Recognized by city or county as a second unit
- The market recognizes it as a second unit
- Likely contributes more substantially to value
- Zoning allows two units
- It is probably separately metered
- Most likely has a separate address
- May or may not be inferior in size and location to the other unit
- May or may not be attached to the main unit
On a local level, Accessory Dwelling Units supersedes local jurisdiction (until or unless a City adopts a new ordinance) for Secondary Dwelling Units. It’s important to note that projects within the Coastal Zone still fall under the permitting requirements of the Coastal Act.
Researchers at the Middlebury Institute of International Studies at Monterey found that being located within a mile of a surf break adds about $106,000 to a home’s value. Living near a desirable public park or outdoor recreation space boosts it significantly higher — as much as 8 percent to 20 percent.
There are dozens, if not hundreds, of neighborhood attributes that can affect a home’s value. Some are obvious and some are not. Analysts at Houselogic, a website operated by the National Association of Realtors, did some digging recently and uncovered surprising facts. As for the parkland bonus, a recent study examined 16,400 home sales within 1,500 feet of 193 public parks (in Portland, Oregon) and found that nearby natural areas added $10,648 to a home’s value. Golf courses add $8,849, specialty parks add $5,657, and urban parks add $1,214. On the downside, a park that is overcrowded and not well-maintained can drag down nearby home values.
Meanwhile, California homes with photovoltaic (solar) systems sell for an extra $17,000 over homes without solar systems, according to experts at Lawrence Berkeley National Laboratory. Add walkability to the home-value bonus list, too. Being able to stroll to schools, parks, stores, and restaurants will raise a property value anywhere from $4,000 to $34,000, according to a 2009 study from the nonprofit group CEOs for Cities.
Accessory dwelling units are another big attraction. Whether it’s a granny flat, an in-law apartment, or a carriage house, having a separate unit can increase a home’s value by 25 percent to 34 percent, according to a study of 14 properties with accessory dwelling units in Portland. Bonus: A second unit can also provide a steady stream of rental income. Elsewhere in this blog you can find a post: “The Difference between Second Units and Accessory Dwelling Units” that you may find helpful.
On January 1, 2017 a new California Civil Code: Senate Bill No. 407 Chapter 587 requires that all homes built on or before January 1, 1994 must be equipped with water conserving plumbing fixtures including low flush toilets (1.6 gallons per flush) , showers (not more than 2.5 GPMs), and interior faucets (not more than 2.2 GPMs).
The Bill requires that a seller or transferor of a home, multi-residential, or commercial property disclose to a purchaser or transferee in writing the specific requirements to replace these fixtures. The Bill also requires to make specific disclosures in this regard. This most likely will factor into negotiations where the seller could remedy the issues, or the buyer accepts those conditions and takes on the responsibility to make the upgrades. Understandably this should be documented to protect all parties involved.
Locally, the City Council of Santa Barbara on December 6, 2016 passed a regulation banning lawn watering with limited exceptions as we go into our sixth year of a drought. This regulation takes effect on January 1, 2017. Photo Santa Barbara Courthouse by Technopanorama
Recently Zillow jumped in with six predictions for next year’s housing market, touching on some of the more nuanced factors that influence who will be buying and selling homes next year, where they’ll be focused and what challenges they stand to face. Speculation also brought up the potential effect of Trump’s hard-line immigration plans on construction industry labor — and its expectations for America’s historically low homeownership rate. The 2017 predictions:
1. “Cities will focus on denser development of smaller homes close to public transit and urban centers.”
2. “More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.”
3. “Rental affordability will improve as incomes rise and growth in rents slows.”
4. “Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.”
5. “The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.”
6. “Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.”
Some of the good things:
- Provides greater listing exposure to millions of consumers.
- The addition of tax records, school ratings and other information to listings is good for consumers and makes the agents’ job easier.
- Levels the playing field for newer agents and agents without many listings.
- Gives consumer access to FSBOs, foreclosures and other non agent represented properties, painting a fuller picture of the available market.
- Creates a new, broadly reaching, advertising platform for agents to advertise their skills.
Some of the bad things :
- A high percentage of their “available” listings are actually sold or off the market. This confuses and upsets consumers and makes agents look bad.
- The sites’ property valuations are often way off, making agents’ jobs harder.
- Promotes non-listing agents alongside listings that aren’t theirs, tricking consumers into believing they know the property.
- Sells to any agent, regardless of experience, the title of “Premier” or “Pro”.
- The “leads” generated for subscribing agents are low quality, non-responsive and a waste of time.
- The cost of being a subscribing agent is too high for what you get.
Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious. “Miramar Beach” by local Santa Barbara artist Chris Potter
Americans are feeling better about the housing market than ever before, though May’s lackluster jobs report could dampen some of that enthusiasm as the summer progresses.
That’s according to Fannie Mae’s most recent monthly Home Purchase Sentiment Index, which climbed to 85.3 last month, the highest in the survey’s history. The number of respondents who reported having more income than they did a year ago increased from the previous month, as did the number who expect home prices to keep rising. The share of respondents who think mortgage rates will keep dropping in the coming year was also up from April.
But the economy may be giving some consumers a case of the jitters, with slightly more respondents expressing concern about losing their jobs than in April. And while May’s disappointing employment numbers do present some cause for concern, there were nearly 5.8 million open positions in April, an all-time high .
CURRENT INTEREST RATES | JUNE 10, 2016
CONFORMING RATES ($200,000 – $417,000) 0 POINT 30 Year Fixed: 3.625% (3.70% APR) 7/1 ARM: 3.125% (3.19% APR)
CONFORMING (HIGH-BALANCE) RATES ($417,001 – $625,500 cap by county) 0 POINT 0 Year Fixed: 3.625% (3.70% APR) 7/1 ARM: 3.125% (3.19% APR)
JUMBO RATES ($625,501 – $2,000,000) 0 POINT 30 Year Fixed: 3.750% (3.82% APR) 7/1 ARM: 3.125% (3.19% APR)
RATE TRENDS Rates are FLAT TO BETTER compared to last week. Rates are SAME compared to last month. Rates are LOWER compared to one year ago.
Click on image above to enlarge. Santa Barbara Market Trends through February 29, 2016. Number of Sales/Closed Transactions by month. Initially it appears we’re following a similar pattern to 2015. This data provided by Fidelity Title Company of Santa Barbara and covers Carpinteria to Goleta (South County of Santa Barbara County)
There was a 24% decrease in the number of Active Listings year to date for January 2016 (317) versus (417) for 2015. In the last three weeks we’ve seen a pick up in new listings which hopefully bodes well for buyers that are frustrated with the lack of inventory. As the inventory increases prices and sales should remain strong although there appears to be some softening in the upper end of the market. Time will tell.
Mortgage rates have declined every week so far in 2016 and are currently at their lowest levels since the fall, a fact that could help motivate hesitant homebuyers who have been sitting on the fence.
- That’s according to the most recent numbers from Freddie Mac, which said that 30-year, fixed-rate mortgages fell to 3.81 percent for the week ended Jan. 21, down from 3.92 percent from a week earlier and up from 3.63 percent a year ago. Fifteen-year mortgage rates displayed a similar pattern, dropping from 3.19 percent to 3.10 percent on a weekly basis but up from 2.93 percent year over year.In a statement accompanying the report, Freddie Mac Chief Economist Sean Becketti attributed the declines to weak inflation in 2015 and global economic turmoil, which is driving investors to treasuries.