Don't Buy A House In 2023

Homelessness in Riverside County is rising at an alarming rate. A new survey shows the number of people living on the streets went up 12 percent over the past year. The number of homeless people on the streets and in shelters across the U.S. increased significantly this year. That's according to a review by the Wall Street Journal. New data shows a lot of Californians moved out of the state and out of L.A. County. The California exodus is showing no sign of slowing. In fact, the number of residents leaving. In the last month, national house prices have been falling and rising at the same time depending on which part of the country you live in, something that has never been seen before in history. News such as that house prices have just broken a decade-long streak, that California has just approved a new housing tax. Likewise, Star warns that this new tax on California mansions will be the most affected in the market since 2007 or that a new Biden proposal for 2024 could unleash the country in need of more money, especially since social security is running out sooner than expected. That is why below we will see in detail what is happening in the markets, which markets are being most affected, why right now you should not buy a house, especially in California, and finally what you can do to avoid be affected by all this that is happening. But before going into details, please subscribe to this channel and give it a like if you like this type of content. Now, to understand everything that is happening, we have to understand what is happening in the real estate market, because it is amazing. Well yes, surely you have seen that house prices are falling, in fact, current prices are already 5% lower compared to June 2022, so this also marks a very rare trend that house prices are lower year after year. And the last time this happened was in 2009 after the great financial crisis, and one of the biggest culprits for these prices not to stop falling, is not the rise in interest rates, but rather that there is more supply than demand in the real estate market, since sellers who put their houses up for sale now have 60% more competition compared to last year. What means that if for example, in the previous year 10 houses were for sale and they were all sold. Right now, if 8 houses are for sale, only 5 are sold, which means that sellers have to lower prices even more to try to sell their houses. We can see this reflected in news such as that although the listed homes that went on sale in March came out with a value 30% lower than pre-pandemic levels. The supply or inventory of homes for sale has increased by 59.9% compared to the previous year. But even so, the supply is still lower than what has been seen in crises of the past. Which suggests that in some areas of the country this figure could continue to rise. Since a Black Knight investigation he pointed out that the entire real estate market has practically been cut in half, with the west coast reporting a 10% drop in prices. While the east coast saw a 10% increase, more specifically speaking, homes fell about 7% in Seattle and fell 10.3% in San Francisco. While on the other side of the country home prices rose 12% in Miami and rose 9.3% in Orlando. But why is this? Well, as can be seen in this map, the areas that decreased their price are directly related to the fewest number of customers. Likewise, the areas that have increased their price are related to a greater number of customers. In short, the more people want buying a house more prices in the real estate market go up, while when less people want to buy a house the prices go down. But one state in particular is about to see an exodus of home buyers, and that state is California. As starting April 1st, Los Angeles residents will be subject to an additional 5% tax on all properties sold for more than 5 million dollars. And this is expected to completely destroy the high-end real estate market in the entire state, which could result in more people leaving Los Angeles to live in any other state. To talk more in detail, when you sell a property you have to pay a tax called transfer tax, which is generally paid by the seller. Now, in Los Angeles the transfer tax was approximately 0.45% on the price of the property, and that money usually went back to the county. But now that the measure has gone into effect homes that are sold for more than 5 million dollars will now be required to pay a tax of 4 to 5% on the sale price of the property. This has been a measure taken by the government to finance and provide resources to homeless people who are in that area of the country, and it is said that the long-term effects of this could be disastrous. Of course, for people who don't know, homelessness is a very serious and very common problem throughout California, with more than half of all homeless people in the country found in this state alone. In fact, California has spent close to 10 billion dollars between 2018 and 2021 trying to solve this problem. But the number of people living on the streets continues to grow despite the fact that today California is considered the fourth largest economy in the world. With this new transfer tax, the state is expected to raise about 672 million dollars for affordable housing. However, the problem arises when the 1% of people in California currently pay more than half of the income tax, and lately many of those people are going to live elsewhere, which is a huge problem because the executive director of the California Taxpayers Association said that the top 5% of people who earn pay about 70% of personal income tax. So if these taxpayers feel that California is no longer a good place to live because of too high taxes, this would have a huge impact on the state's economy. And although people believe that this measure will only affect famous actors, athletes and rich people, the reality is that this tax will also affect multifamily and commercial buildings, which also means there is now even less incentive for investors to build more homes. Likewise, businesses will have fewer people to buy, which would result in more reasons for people to leave. In addition, this measure will not only affect people who sell a property of more than 5 million with a profit, but if they sell it at a loss, they will also have to pay that tax. This means that if a property is sold for 4,999,999, they will not have to pay the extra tax, while if the same property is sold for 1 dollar more, they would have to pay about 225,000 dollars of tax. Now, as for whether living in California is still a good option, there are many advantages and disadvantages as in all places in the country. However, you would have to reconsider buying a house in Los Angeles since if it exceeds 5 million dollars you would have to pay a large amount of taxes when you want to sell it, which makes the price of homes in this sector of the country continue to rise and in turn the prices of rents. California has always been a place where the price of homes has been high, but with these new measures taken by the government, prices skyrocket even more, causing an effect completely contrary to what is wanted to be achieved, since the higher the price of a home or the rent, the more people will stay homeless. But what do you think? Would you buy a house in Los Angeles? And are you for or against this new tax? Let me know your opinion in the comments and don't forget to like and subscribe. See you next time!