The City of San Diego No Longer Requires a WATER CONSERVATION CERTIFICATE At the Point of Sale

The City of San Diego no longer requires property owners to file a Water Conservation Certificate when selling their property. The City Council approved the change to the Municipal Code which went into effect on February 27, 2022.

In 1992, the City of San Diego developed several permanent water conservation provisions which were more stringent than industry standards at the time. The provisions were added to the Municipal Code and required property owners to remove non-conserving water devices and install ultra low-flow toilets and other low-flow fixtures in all new construction or permitted remodels. The City also required property owners to submit compliance disclosure information upon the sale of a property. The City determined that review and enforcement of a Water Conservation Certificate are no longer necessary nor legally required.

California approved Senate Bill 407 in 2009 and requires owners of residential single-family, multi-family properties, and commercial properties to replace all non-compliant plumbing fixtures with water-conserving plumbing fixtures. SB 407 requires the disclosure of non-compliant fixtures between the seller and buyer at the time of property transfer. This requirement can typically be disclosed on a Real Estate Transfer Disclosure Statement (TDS.)

Learn more about water conservation laws and disclosure obligations at CAR in the risk management section under legal Q&As and disclosures here. (Log-in required.)

For more information, visit the City’s website.

The Board of Supervisors will meet on Wednesday, February 9th at 9 am to discuss the implementation of a Vehicle Miles Traveled (VMT) Policy which could end hopes that San Diego will meet the housing needs of its residents.  

Please urge the Board of Supervisors to keep housing a top priority in San Diego County.  

You can submit written comments by clicking here: submit comments.

This proposal is item 7 on the Agenda, if you would be willing to testify on this, you can sign up here:  Sign up to speak

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Recently, PSAR sent a three-page letter to the San Diego County Board of Supervisors expressing our opposition to the Vehicle Miles Traveled (VMT) proposal.  See a copy of the letter by following this link.

VMT is a proposal that would slap new fees on housing development in car-centric communities. The fees would be calculated based on the additional “vehicle miles traveled.” Housing developments in rural or suburban areas would face fees that would disincentivize their construction.  Any homes that do get built would need to factor in those additional fees, pushing the dream of homeownership further beyond the reach of most aspiring buyers.  

Under the proposed VMT, to get approval for a project, a housing developer would have to show that their project would generate fewer vehicle miles traveled than the area’s average. 

PSAR’s letter to the Board of Supervisors states: “Homeownership is the bedrock of building strong communities and intergenerational wealth. REALTORS® know firsthand that buyers are moving to Riverside, Imperial Valley, and Mexico to own a property and build a future. They subsequently commute for hours on San Diego freeways, defeating the intent of the VMT policies.

“There are numerous economic and regulatory barriers that discourage developers from building both attached and detached “for-purchase” housing for all levels of income. If the County is forced to adopt a Vehicle Miles Traveled (VMT) planning tool that is being considered with a regional planning focus, the cost of new housing in the unincorporated portions of our region will be increased significantly, adding to the current housing shortfall.

“This policy will severely restrict future generations from realizing the dream of homeownership and a better quality of life for themselves and generations to come.”

The letter also states that PSAR is supporting six recommendations from the Building Industry Association (BIA) of San Diego County. BIA’s recommendations include an Infill Area Option, VMT Mitigation Program Options, and a programmatic Environmental Impact Report (EIR) to analyze VMT impacts.

PSAR is opposing VMT implementation because of the potential impacts on historically disadvantaged communities who would find it harder to realize the dream of homeownership.

PSAR’s letter states: “Homeownership is an essential steppingstone for families to build wealth. By adding requirements that will make homeownership opportunities more expensive for working families to purchase, we will be removing a crucial steppingstone for those who have not already had an opportunity to purchase a home. We would essentially be closing the door behind those who have already been fortunate enough to purchase a home.

“Society has been making a lot of strides towards providing historically disadvantaged communities with opportunities that had previously been denied to them. We should not be halting that progress by limiting access to homeownership opportunities. The book `The Color of Law’ by Richard Rothstein provides a very detailed analysis of how unequal access to homeownership due to government policies directly resulted in economic harm that continues to hold back communities of color to this day. Considering the fact that communities of color in San Diego are still suffering from the multigenerational impacts of redlining and segregation, we should not be implementing policies that cement these impacts by stopping the creation of new opportunities for homeownership or confining new housing opportunities for lower-income residents to certain areas.”

At their Jan. 26 meeting, the Board of Supervisors received a report from county planners that laid out ways to implement VMT. The board directed the planners to return on Feb. 9 with additional details on VMT options.

Please urge the Board of Supervisors to keep housing a top priority in San Diego County.  

You can submit written comments by clicking here: submit comments.

This proposal is item 7 on the Agenda, if you would be willing to testify on this, you can sign up here:  Sign up to speak

PSAR is proud to announce that 15 PSAR members have been approved by the PSAR board of directors for recognition by the California Association of REALTORS^® (C.A.R.) as honorary members for life.

The 15 members include:

Congratulations to each esteemed member for your long-term commitment to professionalism and excellence in the real estate industry.

This latest 2021 group of new C.A.R. life members will receive a waiver of C.A.R. dues beginning in 2022. They will continue to receive a dues waiver for as long as they remain eligible for REALTOR^® membership or until retirement from the field.

Requirements to be honored as a C.A.R. life member include remaining as a C.A.R. member in good standing for a minimum of 25 years and attaining the age of 75.

Acceptance as honorary members for life also requires approval of the C.A.R. Membership Committee and the C.A.R. Board of Directors at one of its three annual membership meetings. Applications for the honorary member-for-life designation must be received in advance of the meetings in order for the dues waiver to be effective the following year. Applications will not be processed without the signature of the member’s local association executive.

Applications are available on the C.A.R.website and using THIS FORM

For additional information, send an email to hmfl@car.org.

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The U.S. Department of Housing and Urban Development (HUD) awarded $47.4 million to fair housing non-profit organizations around the country.  At least two of the organizations are based in San Diego. In September these testing organizations received  $653,000 for the Private Enforcement Initiative (PEI).  According to HUD, these organizations will conduct intake and testing.  They will investigate and litigate fair housing complaints under the Fair Housing Act. According to the Department of Justice website:

"Testing refers to the use of individuals who – without any bona fide intent to rent or purchase housing, purchase a mortgage or vehicle loan, or patronize a place of public accommodation – pose as prospective renters, borrowers, or patrons for the purpose of gathering information. This information may indicate whether a provider is complying with federal civil rights laws. The primary focus of the Section's Fair Housing Testing Program has been to identify unlawful housing discrimination based on race, national origin, disability, or familial status in violation of the Fair Housing Act. The Section also has responsibilities to enforce Title II of the Civil Rights Act of 1964, the nation's public accommodations law; the Equal Credit Opportunity Act, which prohibits discrimination in credit; and the Servicemembers Civil Relief Act, which provides protections for military members as they enter active duty. The Fair Housing Testing Program also conducts testing under these statutes, as well as under the Americans with Disabilities Act, which is enforced by the Disability Rights Section of the Civil Rights Division."

Agents must also understand that California has additional protected classes including Ancestory, CREED, Gender Identity, Medical Condition, Source of Income/Occupation, and "Other Arbitrary Discrimination."  The definition of a "Protected Class" is all-inclusive in California.  Agents need to be aware of their unconscious biases and be careful to treat everyone equally.

In March of 2021 HUD Published the 2021 civil penalty amounts for fair housing violations. Civil penalties may reach a maximum of $54,157 and respondents who had violated the Act two or more times in the previous 7 years could be fined a maximum of $108,315.

PSAR, NAR, and C.A.R. have been diligent and have provided fair housing resources for Realtors for many years. During the past two years following the Newsday Investigation called "Long Island Divided" the Associations doubled down the efforts.  PSAR has hosted or promoted at least eight opportunities this year for agents to better understand fair housing.  NAR also prepared a "gamified" training to help agents understand the law.  The game is called Fairhaven.  More information may be found here.

Testers may be reaching anonymously to agents and property managers in the field.  The best practice is to understand and obey the law.  PSAR agents are the most professional in California and the Nation. PSAR's staff and volunteer leaders are available to help our members with resources and training. This law is important and there is no room for error.

Watch this video to see how real estate agents treated undercover clients on Long Island.

CRMLS launched a new IDX transparency initiative on September 1st, 2021.

What is IDX?  “Internet Data Exchange” is a means by which each MLS Participant (AKA Broker In the MLS) subscribing to the (IDX) program permits the limited electronic display of Participant’s listings appearing in Internet Data Exchange Database on each Participant’s (Other Broker's) IDX Internet websites and on applications for mobile devices that said participating Broker Participants and R.E. Subscribers control.

The newly updated rule Rule 12.16.5 listing credit:

All Listing Brokers grant permission for any Advertising Broker to display any listings submitted to the service by the Listing Broker only if the listing display or advertisement is clear so that a reasonable real estate consumer understands:

a) Who is the Listing Agent & Broker?
b) Who is the Advertising Broker?
c) How to contact that Listing Agent or Broker.

Note: These changes only affect how agent and broker IDX websites display your MLS data in public sites, not any other form of marketing. They are unrelated to communications between you and your clients.

What are the full implications of this rule? How do agents and brokers make sure your IDX feeds are compliant? Where did this rule come from, and why, and how does it benefit you?  To answer these questions and more,

CRMLS’s Vice President and General Counsel Edward Zorn - VP & General Counsel at California Regional MLS (CRMLS), will host a Webinar Wednesday, September 15th at 2:00 PM centered on the IDX Transparency Initiative.

Edward Zorn,  will also review frequently asked questions,  display examples of this new change, and take questions live.

Art Carter, CEO of CRMLS

Provides quick insight into the rule change on this 2:35 minute video.

More than 100 PSAR members learned more about property tax benefits available to clients of REALTORS^® from Proposition 19 during a Zoom meeting earlier this week with Taxpayer Advocate Jordan Marks of the San Diego County Accessor-Recorder-County Clerk (ARCC) Office.

Recorded Video of the Presentation

Attachments from the presentation:

• Jordan Marks Presentation Slides
• Assessor Homeowners Exemption Form
• Assessor Senior Exclusion Form
• Prop 58 Parent to Child Exclusion Form

Prop. 19, approved by California voters in the recent November general election, offers significant benefits to homeowners and sellers. The ballot measure was endorsed by the California Association of REALTORS^® (C.A.R.) and other business and community organizations because it will spur housing economic recovery.

Simply put, Prop. 19 expands the affordable housing tools by allowing senior homeowners over 55 years old, people with severe disabilities and victims of natural disasters or wildfires to keep their low tax base and move or rebuild anywhere statewide.

In addition, Prop. 19 addressed a tax loophole allowing families to pass their homes and affordable tax bases to their children, but no longer allowing them to be used for a commercial purpose.

However, Marks told PSAR members that it’s important to remember that some rules relating to Prop. 19 will change on Feb. 15 and April 1.

Before Feb. 15, in the case of transferring home ownership from parent to child or grandparent to grandchild, the law allows for unlimited transfer of assessed value on a primary resident with no requirement to live in the property and up to $1 million of assessed value on all non-primary residential properties.

After Feb. 15, the law changes with a limit of $1 million transfer of assessed value on a primary resident, plus a requirement to live in the property and no transfer of assessed value on any property not a primary resident.

Before April 1, for relocating homeowners over 55 years old, the current rules limit the senior exclusion from property tax reassessment to one time plus a requirement to live in the property.

After April 1, the senior exclusion from property tax assessment can be claimed for three times for any property in the state (but unlimited times for those whose homes were destroyed or substantially damaged by a wildfire or natural disaster). Filing for the exclusion must occur within two years from the date of the sale or purchase.

Landlords and tenants alike have been hit hard with economic challenges resulting from the Covid-19 pandemic. Fortunately, several local cities and nonprofits who administer federal government programs on behalf of cities, have made rental assistance resources available to both landlords and tenants who have suffered Coved-related economic losses. PSAR members active in their communities should be aware of these following landlord/tenant resources:-- In San Diego, With funding from the federal government, the San Diego Housing Commission (SDHC) helps more than 16,000 households with low income pay their rent in the City of San Diego. Through this rental assistance program, SDHC made payments totaling more than $166 million to more than 5,800 participating landlords on behalf of low-income families during Fiscal Year 2020 (July 1, 2019 – June 30, 2020).

In 2019, SDHC expanded its focus on landlord outreach and engagement with the creation of the Landlord Services Unit. This unit is composed of seven specialized staff who provide quality customer service to landlords and tenants participating in the Section 8 Housing Choice Voucher rental assistance program. For more details about SDHC rental assistance resources for properties located within the City of San Diego, contact SDHC, www.sdhc.org or call 619-578-7131.

The SDHC Landlord Services Unit manages the agencies Landlord Partnership Program (LPP), which provides financial and support incentives to landlords who rent to families who receive federal rental assistance through the Section 8 Housing Choice Voucher program within the San Diego city limits (92037 and ZIP codes that begin with “921”, except for 92118). Landlords who participate in the LPP may be eligible to receive up to $500 for each rental unit rented to a Section 8 household and up to $3,000 to help cover repair expenses in excess of normal wear and tear and rent due that exceeds the security deposit following tenant move-out. For more information about LPP, please visit https://www.sdhc.org/doing-business-with-us/landlords/landlord-partnership-program/

SDHC’s services to landlords include consistent and on-time rent payment, access to an online landlord portal, and enhanced customer service.

-- In National City, South Bay Community Services (SBCS) launched a tenant-based rental assistance program in National City. The City of National City has reached out to PSAR seeking assistance in contacting property managers and management companies who have tenants with past due rent.

SBCS is now accepting applications for a COVID-19 Tenant Based Rental Assistance Program funded by the City of National City. This program will assist low-income families in who have suffered a loss in income or are unable to pay their past due rent because of Covid-related financial issues. You can help by notifying tenants that this rental assistance is available. Applications can be found at https://southbaycommunityservices.org/national-city-rental-assistance/. Application assistance is available in person at the National City Family Resource Center (304 W. 18th Street, National City), at  rentalassistance@csbcs.org, or by phone: (619) 336-8360
-- In Chula Vista, the city is developing its long-term strategic plan for housing and determining housing dollars usage, according to the city website. Earlier this year, the  Chula Vista City Council enacted a temporary eviction moratorium in response to Covid-19. The city’s moratorium, which provided eviction protection for residents and commercial tenants, was superseded and replaced with AB 3088, known as “The Tenant, Homeowner and Small Landlord Relief and Stabilization Act of 2020.” The law signed by Gov. Newsom on Aug. 31, protects renters, homeowners and small landlords through January 2021.

Chula Vista used a portion of the $3.3 million it received from the CARES Act to lend financial support to South Bay Community Services (SBCS), who assists residents with rent payments. An additional CARES Act allotment arrived Nov. 1, allowing SBCS to accept additional applications for rental assistance from those suffering economically from Covid-19 effects.-- In El Cajon, several nonprofits who have contracts with the city are assisting El Cajon residents with rent payments. The nonprofits include Home Start (619-430-0032), Interfaith Shelter Network (619-702-5399) CSA San Diego County (619-444-5700). Earlier this year, the El Cajon City Council allocated $800,000 in special block grant funding to those impacted financially by the Covid pandemic.-- In La Mesa, Home Start is overseeing a Rental Assistance Program. Applicants may qualify for up to three months of past-due rent assistance for those who have experienced job loss and/or other Covid-related financial challenges. Earlier this year, the La Mesa City Council approved $1.8 million in Coronavirus Aid Relief and Economic Security Act funding to businesses and residents. A portion of that money, roughly $600,000, was allocated to rental assistance to help people avoid eviction and homelessness. 
-- In Lemon Grove, Home Start is supporting the city’s rental assistance efforts. The Lemon Grove City Council allocated $100,000 of $162,371 in Federal Coronavirus Aid, Relief, and Economic Security Act funds to Home Start to help individuals needing hotel vouchers, transportation, reunification efforts and emergency items such as food, blankets and diapers. Funds are also available to those who need rental and utility assistance.

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California’s housing market remained red hot in November 2020 with statewide home sales reaching the highest level in 15 years. Record-low mortgage rates and flexibility to work from home has driven home-buying interest to levels not seen since the last decade, according to the California Association of REALTORS^® (C.A.R.).

November 2020’s statewide sales total broke the 500,000-units benchmark for the first time since January 2009.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 508,820 for November 2020. It was an increase of 5 percent from 484,510 homes in October, and 26.3 percent higher from November 2019, when 402,880 homes were sold.

The year-over-year, double-digit home sales gain recorded in November was the fourth consecutive month and the largest increase over a year’s time since May 2009.

Meanwhile, California’s median home price for November 2020 dipped slightly after breaking the $700,000 benchmark over the past three months. The statewide median price dropped to $699,000 in November 2020, down 1.7 percent from $711,300 in October 2020.

However, home prices continued to gain on a year-over-year basis with the statewide median price surging 18.5 percent from $589,770 recorded in November 2019. The double-digit increase from 2019 was the fourth month in a row and the highest 12-month gain since February 2014. The gain was also higher than the six-month average of 9.7 percent observed between May 2020 and October 2020. 

November 2020 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

In San Diego County, November 2020 home sales decreased 7.8 percent, compared to October 2020, but increased 23.2 percent higher than in November 2019.

Similarly, the median home price for a single-family home in San Diego County dropped slightly in November 2020 to $740,000, a 1.2 percent decrease from October 2020’s figure of $749,000, but a 12.3 percent increase from November 2019’s figure of $659,000.

“Home-buying interest is at levels that we have not seen for years, setting the stage for a stronger-than-expected comeback that fully recovered all the sales that the market lost in the first half of the year due to the pandemic,” said 2021 C.A.R. President Dave Walsh, vice president and manager of the Compass San Jose office. “Housing supply remains an issue, however, as we will likely to see a shortage of homes for sale in the near term, which will put upward pressure on prices and dampen affordability for those who haven’t been able to take advantage of low rates.”

“California’s housing market continues to be the bright spot in the economy, but the direction and pace of the recovery will hinge on the coronavirus pandemic and the distribution of the vaccine in the coming months,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The rise in COVID-19 cases and tighter constraints on economic activity recently imposed will likely have implications for the housing market as renters and homeowners face adverse impacts to their incomes, which is why Congress should pass additional relief for renters, homeowners, and workers as soon as possible.”

Perhaps due to rising cases of the Coronavirus, fewer consumers said it is a good time to sell in December, according to C.A.R.’s monthly Consumer Housing Sentiment Index. Conducted in earlier this month, the poll found that 55 percent of consumers said it is a good time to sell, down from 59 percent a month ago, but up from 51 percent a year ago. Meanwhile, low interest rates continue to fuel the optimism for homebuying; just over one-fourth (27 percent) of the consumers who responded to the poll believed that now is a good time to buy a home, up from last year, when 24 percent said it was a good time to buy a home.

Even with low inventory levels, the coronavirus pandemic has increased the demand for spacious, multi-functional homes as more homeowner families are dealing with homebound distance learning for school and working remotely for the job.

Other key points from C.A.R.’s November 2020 resale housing report included:

-- Home sales from a regional perspective continued to increase in November 2020 by double-digits in year-over-year comparisons for most California regions. The San Francisco Bay Area had the highest gain of 34.4 percent over last year, followed by the Central Coast (33.4 percent), Southern California (19.1 percent) and the Central Valley (18.3 percent).

-- Median home prices from a regional perspective also posted double-digit increases in November 2020 in year-over-year comparisons. The San Francisco Bay Area median price remained at its record high in November, rising 18.9 percent from last year. The Central Coast region had the second largest median price increase at 18.7 percent, followed by the Central Valley (17.6 percent), Southern California (14.4 percent), and the Far North (13.6 percent).

-- With a resurgence in Covid-19 cases in recent weeks and the market entering the traditional holiday season, active listings declined from the prior month as expected, contributing to a substantial decline in inventory. Active listings fell 46.6 percent from last year and continued to drop more than 40 percent on a year-over-year basis for the sixth straight month.

-- The unsold inventory of available homes for sale fell sharply from 3.1 months in November 2019 to 1.9 months in November 2020. Statewide inventory in October 2020 was 2.0 months. Inventory levels measured in months refers to the number it would take for the current supply of available homes on the market to sell-out given the current rate of sales.

November 2020 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)

-- In San Diego County, the inventory of available homes for sale in November 2020 was 1.6 months, compared to 1.8 months in October 2020 and 2.7 months in November 2019.

-- Active listings in all major California regions continued to decline in November 2020 in year-over-year comparisons. The Central Valley had the biggest year-over-year drop of 53.3 percent in November, followed by Southern California (49.0 percent), Central Coast (-46.3 percent), Far North (-40.1 percent), and the San Francisco Bay Area (-18.7 percent).

-- The median number of days it took to sell a California single-family home was nine days in November 2020, compared to 10 days in October 2020, 11 days in September 2020 and 25 days in November 2019. The nine-day November 2020 figure was the lowest ever recorded.

-- In San Diego County, the median number of days an existing, single-family home remained unsold on the market was seven days in November 2020, which was the same number in October 2020 and September 2020. The timeframe a year ago in November 2019 was 17 days. The November 2020 seven-day figure compares to eight days in August 2020, 10 days in July 2020, 12 days in June 2020, 11 days in May 2020, eight days in April 2020, 10 days in March 2020, 12 days in February 2020 and 23 days in January 2020.

-- The housing market in California’s mountain resort areas has generally outperformed the state during 2020’s first 11 months due to increased demand in second homes and vacation homes, as available supply continues to decline. In a comparison of home sales between November 2020 and November 2019, Mammoth Lakes saw a 400 percent increase, followed by South Lake Tahoe (81.4 percent), Big Bear (73.9 percent) and Lake Arrowhead (58.1 percent). Similarly, median home prices jumped in Big Bear by 40.8 percent from last year, followed by South Lake Tahoe (39.6 percent) and Lake Arrowhead (32.0 percent). In contrast, home prices declined by 2.5 percent Mammoth Lakes in November 2020, compared to 2019.

-- The 30-year, fixed-mortgage interest rate averaged 2.77 percent in November, down from 3.70 percent in November 2019, according to Freddie Mac. The five-year, adjustable mortgage interest rate was an average of 3.0 percent, compared to 3.41 percent in November 2019.

In other recent real estate and economic news, according to news reports:

-- The average rate for a 30-year, fixed-rate mortgage continued to plummet, dropping to 2.67 percent in the second week of December. It was the lowest rate since Freddie Mac began tracking the data in 1971. A year ago at this time, it averaged 3.73 percent.

-- Mortgage applications increased 1.1 percent for the week ending Dec. 11, according to the Mortgage Bankers Association’s week-over-week comparison report. Refinance applications also increased 1 percent during the same week and 105 percent in a year-over-year comparison.

-- CoreLogic said San Diego County median home price in November remained unchanged from October and September at $650,000, which is 9.3 percent higher than a year ago. It was the second consecutive time for no monthly price increase since May. The price represents all homes, including single-family, condos and townhomes.

-- A group of top real estate economists speaking at a forecast forum hosted by the National Association of Real Estate Editors recently predicted that home prices will continue to rise in 2021 fueled by low mortgage interest rates and lack of homes for sale.

-- Californians are pessimistic about their economic future with 73 percent of survey respondents in San Diego and Orange counties anticipating bad financial times during the next 12 months, according to a report released in early December by the Public Policy Institute of California. The survey of 2,325 Californians conducted after the November election showed the statewide average of pessimism at 68 percent.

-- Realtor.com is predicting prices for existing single-family homes will continue to climb in 2021, making affordability a continued problem. San Diego is projected for an 11.3 percent year-over-year increase in existing home sales and a 5.5 percent rise in home prices. Realtor.com also expects mortgage rates to climb from 3 percent at the beginning of 2021 to 3.4 percent by year’s end. Realtor.com admits there are numerous wildcards that could shake up the housing market, including what happens with Covid-19 vaccines or more government-imposed shutdowns.

-- Rental applications in San Diego County were lower by about 7 percent for the third quarter in a year-over-year comparison as many grown children moved back in with their parents, or doubled up in apartments to make their dollars go further, according to the data firm Rent Café. The report said in 18 of the 30 largest U.S. cities, including San Diego, more renters left than moved into rental properties. The firm also said apartment rents decreased in 2020 in the nation’s top 10 most expensive cities.

All PSAR members should be aware of the significant benefits available to homeowners as a result of the recent passage of Proposition 19 in the November general election.

Approved by California voters by a 51.1 percent to 48.9 percent margin, Prop. 19 is considered by many as a landmark property tax exemption law that is now part of the California constitution. Thanks to more than 8.5 million voters who marked their ballots “yes” for Prop. 19, homeowners will be able to take advantage of tax relief while providing much-needed revenue for schools, fire districts, cities and counties as they face budget shortfalls due to the harmful economic impact of Covid-19.

Prop. 19 was endorsed by C.A.R. and many others because it will spur housing economic recovery.

Prop. 19 limits property tax increases on primary residences for family transfers, homeowners over 55 years old, people with severe disabilities and victims of natural disasters or wildfires by removing unfair location and price restrictions.

Prop. 19 also limits property tax increases on family homes used as a primary residence by protecting the right of parents and grandparents to pass on their family home to their children and grandchildren for continued use as a primary residence.

Overall, Prop. 19 will open up tens of thousands of housing opportunities, making homes more readily available for first-time homeowners, families and Californians throughout the state.

There are two major benefits of Prop. 19, both dealing with what’s called “tax basis portability,” which means homeowners can enjoy an exemption from a reassessment of property taxes when they move to a new residence.

New Rules for Homeowners Over 55 Years of Age

With the passage of Prop. 19, a homeowner who is over 55 years of age, severely disabled or whose home has been substantially damaged by wildfire or natural disaster may transfer the taxable value of their primary residence to a replacement primary residence anywhere in the state within two years of the sale and up to three times, regardless of the value of the replacement primary residence.

According to the California Association of REALTORS® (C.A.R.), Prop.19 makes three significant changes to the portability of one’s tax basis from the sale of a principal residence to a replacement principal residence.

First, Prop. 19 allows a seller of a principal residence to transfer the tax basis of that principal residence to the purchase of a replacement principal residence anywhere in the State of California. Under prior law, the seller was limited to transfers either within the same county (under Proposition 60) or between a limited number of counties that specifically permitted such taxable value transfers (under Proposition 90).

Second, Prop. 19 allows the transfer of the tax basis of the sold principal residence to the replacement principal residence regardless of value with certain adjustments to the tax basis if the replacement principal property is of “greater value” than the sold principal residence. Under prior law, only transfers of “equal or lesser value” were eligible for the exemption.

Third, Prop.19 permits such transfers up to three times (but unlimited for those whose homes were destroyed or substantially damaged by fire). Prior law allowed such transfers only one time

There still remains some questions about the timing of tax benefits under Prop. 19 applying to transactions and sales before April 1, 2021.

According a statement from C.A.R., “Although we believe that the tax benefits under Proposition 19 apply to transactions where either the sale or purchase of a primary residence takes place before April 1, 2021, as long as the subsequent sale or purchase takes place within two years and on or after April 1, 2021, others have taken the position that both the sale and purchase must occur on or after April 1, 2021. C.A.R. will seek official clarification of this issue.”

New Rules on Intergenerational Family Transfers After Feb. 1, 2020

Prop. 19 also changes the rules on exemptions from reassessment for intergenerational transfers by limiting the exemption to the transfer of a primary residence to a child (or grandchild) only when the property continues to be used as a family home by the child (or grandchild). However, if the divergence between the taxable value and the actual value is too great, a partial increase in the new taxable value will be imposed.

Prop. 19 also includes provisions that would allow the transfer of a family farm to retain its taxable value.

These new rules apply to any purchase or transfer beginning Feb. 16, 2021.

Here are a few questions-and-answers relating to intergenerational family transfers and family farms:

Q: If I pass my principal residence on to my children or grandchildren, will the property be reassessed?

A: So long as the property continues to be used as a family home (primary residence), and the transferee claims the homeowner exemption, the property tax basis will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.

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Q: If the property is transferred to a child or grandchild and used as a family home, what will the new tax basis be if at the time of transfer the property value is less than $1M over the original tax basis?

A: The new tax basis will remain the same as the original tax basis. For example, if the original tax basis was, let's say, $500,000, and at the time of transfer the property is valued at $1.2 M, then the tax basis will remain at $500,000. This is because $1.2M is not more than $1M over the original taxable basis.

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Q: How are family farms included in Proposition 19?

A: Family farms have the same exemptions as family homes (principal residences). “Family Farm” means any real property under cultivation or which is being used for pasture, or grazing, or that is used to produce any agricultural commodity. It does not require the transferee to live in the property as a principal residence.

PSAR members who have additional questions about the benefits of Prop. 19 are encouraged to contact either C.A.R. or the office of San Diego County Assessor-Recorder-County Clerk (ARCC) Ernest J. Dronenburg, Jr. The ARCC office oversees assessing the value of real estate and personal property (property taxes constitute the largest share of revenue for the county). The office also involves registering business names and issuing marriage licenses, birth and death certificates. 

For assistance from the Assessor’s office please contact Taxpayer Advocate Jordan Marks. Jordan is a PSAR member and welcomes calls and emails from PSAR members. He can be reached at Jordan.Marks@sdcounty.ca.gov. For emergency assistance you can reach Jordan on his cell phone is (619) 372-0226.The website for the ARCC office is www.SDARCC.com.