California hotel sales plummeted last year, according to Atlas Hospitality Group, which recently released its 2023 end-of-year hotel sales survey.
“The big jump-out is the dramatic or steep decline in number of transactions and dollar volume,” said Alan Reay, president of Atlas Hospitality Group, who’s been tracking California hotel sales for more than 20 years. “This is the steepest decline we’ve seen in the last 20-plus years, except for one year, and that was 2009.”
Rents in Los Angeles have dropped 3% over the past year, marking the sharpest decline of any major city in California, according to a new report from the nonprofit news outlet Crosstown L.A.
CBRE’s latest survey reveals that cap rates in the commercial real estate market are nearing their peak levels, signaling stabilizing conditions on the horizon, despite challenges posed by tighter lending standards and potential market distress.
LOS ANGELES – Prospective homebuyers looking for a good deal – we’ve got some good news for you!
Although home prices rose nationally 0.3% year over year in February to a median of $415,000, according to Realtor.com data, there are some markets out there where home prices are falling.
Homeowners in parts of California are slashing the price of their properties by as much as 40 percent as they leave behind the explosive home appreciation that characterized the pandemic years.
A five-bedroom home in Oakland, California, that was listed for sale for $4.1 million in March 2022 is now once again available on real-estate marketplace Redfin for $2,550,000 after experiencing a price cut of more than 40 percent.
“Oof,” wrote San Francisco Bay Area realtor Matt Castillo, who first spotted the listing, on X, formerly known as Twitter. “This house was sold in Oakland in March 2022 for 4.1M. Now it has been on the market [for] over 60 days and just had a price cut from 3M to 2.55M.”
The dispute involves property taxes on the debts faced by utilities for the funds they obtain from local revenue bonds. Proposition 13, the 1978 ballot initiative, limited annual property taxes to 1% of a property’s value, but the limit did not apply to taxes on bond debt, which is often used to fund construction of physical assets.
Many counties have taxed utilities at a higher rate than other property owners for that debt, but AT&T, Sprint and T-Mobile filed suit in 2020 to challenge that disparity.
The suits were filed in 34 counties, but proceeded as a test case in Santa Clara County, where the tax rate for utility bond debt was about 5 times as high as the rates for other property owners. Superior Court Judge James Monahan ruled in the utilities’ favor, saying the state Constitution requires equal rates for all property taxpayers on bond-related debt. On Friday, however, the Sixth District Court of Appeal in San Jose overturned Monahan’s decision and said counties could impose higher rates on the utilities.
The California Constitution “does not mandate that utility property be taxed at the same rate as other property,” and instead allows their debt-financed property to be taxed at full market value, Justice Charles Wilson said in the 3-0 ruling. While the voter-approved language in the Constitution says utility property “shall be subject to taxation to the same extent and in the same manner as other property,” he said, it does not require the same tax rate.
Instead, Wilson said, once the state assesses the value of debt-financed utility property, counties can “levy and collect taxes on that value to bolster the local tax rolls and relieve the burden on other local taxpayers.” He said the court recognizes “the force of the utilities’ arguments that the tax rates set out by (the law) ask them to pay a disproportionate share of the debt burden of certain counties in California. The remedy for such disparate treatment, however, lies with the Legislature,” which could change the tax laws.
If Monahan’s ruling had been upheld, it would have cost Santa Clara County $44 million in tax revenue for 2020, said County Counsel James Williams, who argued the case before the court.
“The burden would largely end up shifted to the other property taxpayers,” he said. “This is a critical victory for schools, local governments, and residents across the state.”
The county’s population is 1.9 million. At the same rate, the revenue loss in 2020 would have amounted to $900 million in a state with 39 million people.
Jim Kimberly, an AT&T spokesperson, said the company was considering an appeal to the state Supreme Court.
“We are disappointed in the court’s ruling because it fails to address a flawed property-rate formula that results in utilities being charged a rate that is twice of other businesses in the area,” he said.
Some supporters of the utilities have contended the public does not benefit from higher tax rates on companies like AT&T because they can pass the costs along to their customers in the form of higher rates. But Williams said the utilities obviously were seeking a financial benefit at the public’s expense by filing the suit and and paying the costs of litigation.
“Of course every business passes taxes on to consumers,” but they would rather avoid the taxes altogether, the county counsel said.
Bob Egelko is a San Francisco Chronicle staff writer. Email:
Three California metro areas are among the housing markets “cooling off most,” according to a recent study from SmartAsset.
NORTHERN CALIFORNIA — As mortgage rates rise and home sales decline, housing prices have started to drop in Northern California and across the country.
In fact, home prices dropped 0.77 percent from June to July 2022, according to a recent report from Black Knight, a software, data and analytics company. That was the largest monthly decline since January 2011.
“After 31 consecutive months of growth, home prices pulled back by 0.77 percent in July,” said Ben Graboske, president of Black Knight. “Annual home price appreciation still came in at over 14 percent, but in a market characterized by as much volatility and rapid change as today’s, such backward-looking metrics can be misleading as they can mask more current, pressing realities.”
The company’s home price data has indicated a cooling housing market for several months, Graboske said.
“In January, prices rose at 28 times their normal monthly rate before slowing to five times average in February as interest rates began to tick up,” Graboske said. “Even May was still about two times normal, before June growth came in 70 percent below the long-run average. And all the while, annual appreciation continued to appear historically strong, showing double-digit growth month after month. Without timely, granular data, market-moving trends don’t become apparent until they’re right in front of you — like a sudden shift to the largest single-month decline in home prices in more than a decade.”
More than 85 percent of the 50 largest U.S. markets have seen prices come off their peaks through July, with one-third down more than 1 percent and about 1 in 10 down by 4 percent or more, according to the report. As a result, some homeowners are losing equity — especially those in major California metros.
“Some of the nation’s most equity-rich markets have seen significant pullbacks, most notably among key West Coast metros,” Graboske said.
“From April through July, San Jose lost 20 percent of its tappable equity,” he said. “Seattle followed, shedding 18 percent of tappable equity over that same three-month span. Likewise, San Diego (-14 percent), San Francisco (-14 percent) and Los Angeles (-10 percent) have all seen double-digit declines since April.”
Home sales are down almost 18 percent since January 2022, according to the U.S. Census Bureau. But some areas have cooled more than others.
Three California metro areas are among the housing markets “cooling off most,” according to a recent study from SmartAsset.
SmartAsset, a financial advice resource, analyzed the 100 largest metro areas to determine the housing markets that have cooled down the most. The company compared 2021 and 2022 data across eight metrics, split into two categories: price reduction and decreased demand.
Boise, Idaho, has cooled the fastest, according to the report. However, three California metro areas, including the San Jose-Sunnyvale-Santa Clara area, rank among the top 10 places where the housing market has cooled off the most.
“In these areas, homes are staying on the market longer relative to a year ago — nearly double the amount of time,” the report said. “Moreover, all three areas have seen over a 33 percent decrease in the number of houses sold monthly from August 2021 to August 2022.”
The San Jose-Sunnyvale-Santa Clara metro area came in fourth, according to the report. The San Diego-Chula Vista-Carlsbad metro area ranked eighth, and the Stockton metro area ranked 10th.
“San Jose-Sunnyvale-Santa Clara, California ranks in the top 10 for both larger price reductions and lower demand,” the report said. “Houses are on the market for roughly 19 days (eighth-highest), which is a 90 percent increase since exactly one-year ago (18th-highest). There has also been a 43.17 percent decrease in the number of houses sold and 26.81 percent of current listings have a price cut.”
These are the top 10 housing markets that are cooling off most, according to the report:
Home prices across Southern California have slipped for the sixth straight month, the result of increasing monthly mortgage rates.
Prices in the lower half of the state fell for a sixth straight month in November, wiping out most of the price gains during the first half of 2022, the Orange County Register reported, citing CoreLogic data.
The median price of a Southland home dropped to $690,000 in November, up $10,000 from year-ago prices, according to CoreLogic. The median price was down $70,000, or 9 percent, from the all-time high of $760,000 reached in April and May.
While home prices increased on an annual basis, last month’s 1.5 percent year-over-year gain was the smallest in three years. By comparison, annual gains across SoCal averaged 11 percent for the past two years.
Southern California home sales, meanwhile, fell to 13,016 in November, CoreLogic reported.
That’s the smallest sales tally for a November, and 13th smallest for any month, in 35 years. It was the 12th straight month of year-over-year sales drops, with 44 percent fewer transactions than in November 2021.
“It’s shifting. People are shifting their mindsets,” Darin Eppich, an agent with Sotheby’s International Realty in Beverly Hills, told the newspaper. “A lot of it is (interest) rates, and a lot of it is the monthly (mortgage payment). So, those buyers are waiting till the New Year.”
Real estate trends in Southern California match what’s happening across the state and nation.
Home sales fell 47.7 percent from November 2021 in California, according to the state Realtor association, while the National Association of Realtors reported a 35.4 percent sales drop nationwide from the previous year.
“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” NAR Chief Economist Lawrence Yun told the Register.
The main factor was the rapid increase in mortgage rates, which hurt housing affordability, Yun said.
Rates more than doubled in 2022 to more than 7 percent before dropping slightly, causing November’s monthly house payment for a median-priced Southern California home to jump $1,247 from the year before. That’s a 53 percent increase in the “monthly nut.”
Rate shock turned the 2020-21 buying frenzy into a freeze, sending buyers and sellers alike into their separate corners to wait out the slowdown.
“The short and sweet takeaway right here,” said Boyd Roberts, broker-owner of Laguna Gallery Real Estate, “ … (is) there’s almost no buyers out there.”
New home sales also played a key role in the November housing market.
CoreLogic reported 1,955 new homes (which tend to cost more) sold last month, accounting for 15 percent of all homes sold in November. That’s the biggest new-home share since March 2008.
The reason: builders are giving buyers better deals, said Irvine-based real estate consultant John Burns. Builders have been heavily discounting their sale prices and helping buyers “pay down” their mortgage rates since June, he said.
Between November 2021 and last November, home prices in Los Angeles County rose by 0.5 percent, with 44 percent fewer sales, according to CoreLogic. In Orange County, prices rose 4.9 percent, with 45 percent fewer sales. Riverside and San Bernardino county prices rose by 2.2 percent and 0.9 percent, respectively, with 46 percent and 45 percent fewer sales.