October Market Update
/Boo!! Happy October folks!
October has proven to be a very busy month in real estate so far. We listed 4 homes on the market this week and held a first round of open houses this weekend. In speaking to other Bay Area brokers, it seems to be the consensus that everyone’s got some listings they’re scurrying to get on the market before the holidays. We are in a phase of the market that I like to call the 4th quarter rally where we try to end the year strong in hopes of closing before the end of the year. I'm happy to report that our open houses were quite busy this weekend...and most of them were not neighbors. That tells me that there are still a lot of serious buyers out there needing a home. One visitor and her family said her free corporate housing was coming to an end, another buyer was looking to move closer to work and some others were having a baby and another looking for their first home as a family. For each of our listings, we’ve priced them at market value and the sellers are reviewing offers as they come in. If you’re a buyer, with my prediction that more listings are about to come on, this is a great time to buy. Prices are now steady. Homes are seeing fewer offers and selling at reasonable amounts in comparison to before. Some agents are still setting offer dates but many, like us, are taking them as they come in. We still have a mixed bag. The last few offers I wrote were all in multiple offer situations, but nothing was bid up too crazy. Having contingencies in place is starting to become the norm (outside of the city of San Francisco and the Peninsula) and buyers are now able to negotiate for repairs. Prices remain stable and despite the fact that many buyers are waiting in the wings, there are still many more others anxious and ready to land a home. To learn more about your specific market, please feel free to reach out. We are happy to help.
AB1482- Statewide Rent Control
Next, I want talk a little about the new statewide rent control bill called AB1482 which was signed into law by Gov. Gavin Newsom two days ago. The law takes effect January 1st of 2020 and is good for 10 years, expiring in 2030.
Let's talk about the evictions first. As of January 1st landlords may only evict for “just cause.” That means if the tenant hasn’t done anything wrong or if the reason for evictions doesn’t fall under any of the exemptions, they cannot be asked to leave and the landlord will be obligated to renew the lease. As it currently stands where there is no rent control in place, at the end of a lease, a landlord has the option to evict a tenant for any reason at all and do whatever they want with their property. However, after January 1st, tenants can now only be asked to leave if they didn’t pay rent, pose a nuisance, are conducting criminal activity, refuse entry or breach the lease. Other than that, only other exceptions are for a relative to move in (limited to parents, grandparents, kids or spouse), a withdrawal from the rental market, substantial remodeling and compliance with government order to vacate property. If any of these above mentioned “no fault” exceptions are used for the eviction, the landlord has to give the tenant one month’s rent for moving costs. This applies to all tenants who have lived in a property for at least 12 months. What happens if a savvy landlord decides to execute 11-month leases in order to keep their options open? According to this new law, they’re off the hook….
Now, let’s talk about the money.
Starting on January 1st. The rate of increase after any lease period can not be more than 5% plus consumer price index or 10% (whichever is lower) . In San Mateo County, that translates to no more than a 9% increase would be allowed at the lease renewal. As someone who hasn’t raised the rent on any of my tenants since move in, that seems like a lot, but what about those who have owned rental properties which are going for less than 50% of market rate and are ready to retire? This new law might make landlords consider raising the rent on their tenants when they really had no intention to for fear of losing the option in the future. Landlords can’t “back raise” the rent, and if they decided to do it now before the law takes effect on January 1st, there’s a stipulation that would include the amount raised in the cap for January 1st. Every area has their own consumer price index, so increase limits are not the same everywhere, but cannot exceed 10% regardless of location. Please note that if there is already a more stringent rent control in place, like in the cities of San Francisco or Berkley, for example, the more stringent of the regulations is enforced.
If you would like to know more and how it affects you personally, please contact us below. There are quite a bit more stipulations involved, but I wanted to share a brief overview for the purposes of getting the word out.
The new law requires that all landlords inform their tenants about this new rent control law. I have the forms you need to provide to them so please feel free to reach out if you own rental property and need to provide this disclosure to your tenants.
Please note that this law does not affect properties defined by “Costa Hawkins” as exempt (ie: single family homes, new construction, a duplex where you live on one side and commercial properties). What it does affect are duplexes or larger, apartment buildings, properties owned by a corporation or LLC and properties older than 15 years old.)