It’s hard to believe another year’s gone by. From a real estate perspective, 2018 had some interesting developments. Here are a few facts, figures and observations to help you make good real estate decisions in the year to come.
HOME PRICES
While the median sales price for a single-family home in Ukiah remained flat at $400,000, interest rates rose about a half a percent, which meant homeowners who bought their house at the end of the year are paying an additional $120 a month for their mortgage. If you’re thinking of buying, I’d do so quickly because I expect both housing prices and interest rates to go up in 2019.
Prices will likely be on the rise in Mendocino County because of the tens of thousands of houses that disappeared from the Northern California housing market, up in smoke as a result of the devastating wildfires in 2017 and 2018. Fewer houses on the market means buyers have to compete, which ultimately leads to higher prices—and we already had a housing shortage before the fires. Also, most economists are predicting higher interest rates this year.
INSURANCE
To buy or even simply renew a homeowner’s insurance policy in 2019, especially for homes in fire-prone or flood-prone areas, insurance will be more expensive, if you can get it at all. Some insurance companies are still paying for losses from the Redwood Complex, Mendocino Complex, and Camp Fires—or the losses from the Oroville Dam bursting—and they feel they cannot afford to cover structures in high-risk areas.
BUILDING REGULATION
If you plan to build a house in the next year or two, be aware that new construction will require solar installations beginning in 2020, which will increase the cost of new homes by approximately $25,000. If you’re building in Mendocino County, I recommend you apply for your building permit early to account for the high volume of cannabis-related building permits that receive priority handling (and enviable discounts). And just so you know, all homeowners were supposed to retrofit their homes with low-flow water devices by 2018.
ADDITIONAL REGULATION
In other regulatory news, the county is still struggling with inclusionary zoning (the requirement that real estate developers give the county a certain percentage of the lots they develop or to pay a fee in lieu of the “gift”). I’m optimistic the county will eliminate the requirement, paving the way for more affordable (but not subsidized) housing.
Those who own investment properties in Mendocino County will continue to feel the effects of price controls. In California counties affected by wildfires, property owners cannot increase rents more than 10 percent a year. This may sound reasonable, and for many it’s fine, but for those whose rents were below market or who purchased an investment property and planned to cover repairs and upgrades by bringing the rents to market rates, the 10 percent cap can be a problem.
The State of California has also become more aggressive regarding who owns water rights—property owners or the state—requiring local jurisdictions to complete groundwater management plans and using the plans to usurp water rights.
MENDOCINO COUNTY CONSTRUCTION CORPS
On a happy note, the Mendocino County Construction Corps is in its second year and thriving. High school seniors interested in learning a building trade can apply for the program (we just finished interviews for this year’s cohort), funded by local contractors and business people in partnership with the Community Foundation of Mendocino County. Last year’s dozen or so graduates were quickly employed by local contractors who were pleased to have skilled help, and I expect the same to be true for this year’s participants.
If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.