[quote=livinincali]I think there’s a couple points here to consider.
Tax policy in CA certainly encourages inherited properties to be kept within the family either via heirs moving into the property or as a rental.
I’m not entirely convinced that in 10 to 20 years that we could see significant owner user communities turn into mostly renter communities for a couple of reasons.
1) I just don’t think the market for dated 3/2 smaller properties at @ $2500+/mo is really that deep.
2) I think some significantly portion of properties will get the equity striped out via reverse mortgage or some other means.
3) I think this next generation that inherits these properties may want the instant gratification of selling rather than land-lording even though it might be in their long term interest to do so.
The last point is that there is a significant number of likely dated properties that could potentially hit the market over the next 10-20 years. Might be a flippers dream come true or it might just mean appreciation going forward in housing is much more limited than people are currently considering.[/quote]
livinincali, among these “dated 3/2” (and 2/1) SFR’s, I only see about one-fourth of them being turned into rentals by heir(s) from my street view (and those LL-heirs do reside within SD County and manage the property themselves). What typically happens is that one of the original owner’s boomer (or early Gen X) children moves in the old family homestead to occupy before or after their parent’s death, likely for the rest of their lives. If they are only children, then there is no one else with which to fight over the property. In the case of heir-siblings, there always seems to be at least one sibling who has been down on their luck for many years and/or has never been able to “own” a home and is more than happy to be able to occupy their childhood home (if they haven’t already moved in under the guise of “taking care of the last parent”). I haven’t really looked too deeply on how these heir-siblings are financing the property if there was little cash left in the estate when the last parent died (and I have only examined a couple of probate cases in this regard). Most of these homes were in trust and kept out of the courts. It is very possible that the “successful-in-life heir-sibling(s)” are carrying a low-rate, unrecorded loan (for ten years?) to give the occupying heir time to pay off the non-resident heir(s) their portion of an agreed-upon value of the property before the estate issues them a quitclaim deed. I’ve actually seen this done twice, both times with out-of-state/out-of-county heirs making the loan to the less-fortunate local heir who is already occupying or wishes to occupy the family home.
I don’t think Props 58 and 193 have the effect of actually changing the complexion of single family neighborhoods (ie mostly owners to mostly renters). They have the effect of keeping properties off the market indefinitely because the “more unfortunate heir” wouldn’t be trying mightily to make their parent’s/grandparent’s old property theirs if the taxes were $4000+ …. like mine are …. on the very same block/subdivision. And heirs taking advantage of these Props are on the (undeserved, imho) receiving end of a gross inequity among similarly-situated homeowners living in very similar homes amongst each other.
Inheriting a parent’s old home (no matter what the condition) is absolutely a windfall for those who are 55+ and have not been able (or willing) throughout their lives to earn a pension, have no savings, have never owned a home and perhaps don’t even yet have enough quarters of employment under their belt for a SS (OASDI) award in their own right to begin collecting at age 66+. First and foremost, this group needs stable housing that they don’t have to get on a 3-year+ waiting list for and which they can’t be evicted from and their former family home fills this need.
As far as these homes being desirable to today’s SD millenial buyers, they might be if they were located near the beach (but would then be too cost-prohibitive for them). Millenials seem to heavily prefer new or newer construction to buy or rent (even with HOA/MR added in). And millenials typically do NOT want to mow lawns or do any heavy landscaping. Even my own kids don’t. They just don’t care whether the property they buy has any land around it (even if just for buffer space). I think those are strange values to have while attempting to raise kids, but whatever. SD millenials with school-age kids will buy older homes on blocks where a relative resides who is willing and available to take care of their kids all day (or after school) or both during the business day while they work. Especially if they have relatives willing to help them get the house (usually make the downpayment for them).
In other coastal counties of CA, millenials will buy whatever they can get an accepted offer on, (age be damned) and are thrilled to be able to buy any home at all. SD Millenials (now the biggest buying group) has been spoiled over recent years to “new” and “newer” construction because there is always a lot of it on offer in 3 of 4 corners of this county (excepting the SW corner). I don’t think they care much about difference in commute times, either. “New” or “newer” is king to them.
