Compared to 2018, sales have dropped 14.6% in Santa Clara County, as prices have hit a point where people have stopped responding. Median sale prices have dropped 5.3% in June with higher days on market than in years. One of the key factors has been the new tax law, which resulted in most people paying between 25 to 30% more in federal income taxes. As a result, these buyers increased their W2 deductions to avoid being hit next year, resulting in less net cash flow for higher purchases. Also, the tax law has reduced the amount of property tax deductions to $10,000, so those new buyers without Prop 13 benefits, are paying more taxes as their deductions are reduced. Keep in mind that the property tax is calculated at 1.1% of the purchase price, which can mean that less than half of their property taxes can be deducted annually.
With the market softening, it is even more critical to list the prices lower to attract more buyers and prepare the home to it’s optimal level, so it stands out against more inventory too. Remember that whatever you invest in improving in your home is deducted against your capital gains. You will usually realize at least 5 times this amount in your sales price in only 30 days, which is an incredible ROI! The economy is still strong and job hiring is still up, so there are buyers, but strategically you have to differentiate yourself from others on the market.
I believe there will continue to be a strong demand for housing with continued struggles of less inventory and pent up demand. Many seniors and baby boomers are not moving because of their capital gains and the need to keep their property taxes down with Prop 13 (currently they can only transfer it to 11 counties). Frequent needs in the cycle of life are first time home buyers, young families moving up, baby boomers downsizing and selling their parents homes, along with people from all over the world here for new jobs. Our main concern is buyers being priced out of the market as well.
With 5 world-leading industries headquartered here (see list below), we continue to be a buoyant economy with jobs requiring many skill sets & healthy appreciation rates:
She is personally committed to her clients’ success and her impressive results are in selling her listings within 10 days with multiple offers! Contact Lynn for a free consultation on your home.