FIVE NEW LAWS THAT MAY AFFECT REALTORS®
SEEING GREEN? THANK THOSE PURPLE PIPES!
DID YOU MISTAKENLY SIGN A PETITION TO RAISE TAXES?
THE SUPPLY PROBLEM IS BACK
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We are taking a new approach to “green.” Although past March/April issues of OC REALTOR® have been focused on the environment, this issue is about a different kind of “green”— money — and how to make it, save it, and spend or invest it wisely. on pages 24–32
CONTENTS
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President’s Message 08 T aking a New Approach to “Green” Danielle Corliss explains that the emphasis in this “green” issue of OC REALTOR ® is on money rather than on the environment.
The Money Issue: How to Spend It, Save It, and Make It Inspired more by Tax Day on April 15 than by Earth Day on April 22, this “green” issue takes a closer look at that green stuff called money.
Cover Story
24 Josh Altman Went from Being Broke to Selling More Than $1 Million a Day in Real Estate
Entrepreneur Editorial Director Dan Bova interviews Million Dollar Listing Los Angeles star Josh Altman about his remarkable path to success, failure, and back to success.
28 H ow to Afford Being a REALTOR® During Those Lean Early Years
Michelle McCann tells new REALTORS® how to save money by postponing paid advertising, using free farming materials, taking free classes, and avoiding money pit websites.
30 M aking Money with Investments: Renting versus Flipping
Jonathan Marquez compares the benefits and risks of investing in rental property with those of buying houses to flip.
Features 18 E lection 2020: Did You Mistakenly Sign an Initiative Petition to Raise Property Taxes? HJTA President Jon Coupal tells you how to rescind your signature if you have been misled into signing a petition to “Protect Prop. 13.”
20 E lection 2020: Proposition 13 An infographic from OCTax outlines the ways in which the Proposition 13 that was overwhelmingly passed by voters in 1978 is still protecting all California homeowners today.
34 S potlight: Meet Eileen Oldroyd,
2020 President, Women’s Council of REALTORS®, California Sherri Butterfield asks “Green Eileen” about the leadership journey that brought her to this place and what she hopes to accomplish during her presidential year.
State Update
10 A Quick Look at Five New California Laws That May Affect REALTORS®
C.A.R. 2020 President Jeanne Radsick outlines the provisions of AB 5 (Independent Contractor), AB 1482 (Statewide Rent Control and Just Cause Eviction), SB 329 (Section 8 Housing Vouchers), AB 1110 (90-Day Notice for Rent Increases Above 10 Percent), and the CCPA (California Consumer Privacy Act). p. 8
p. 10
p. 18
p. 38
36 W ater: Seeing Green? Thank Those Purple Pipes!
Irvine Ranch Water District General Manager Paul Cook describes the District’s proposal to improve the Syphon Reservoir, thereby increasing storage capacity for recycled water.
38 T he Orange County Housing Update Steven Thomas explains that, because the lower interest rate has resulted in an increased demand for houses but relatively few homes have been placed on the market, “The Supply Problem Is Back.”
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CONTENTS
ORANGE COUNTY
® REALTOR MAGAZINE
p. 36
25552 La Paz Road Laguna Hills, CA 92653
10540 Talbert Avenue, Ste. 225 West Fountain Valley, CA 92708
949.586.6800
714.375.9313
www.ocrealtors.org 2020 OFFICERS Danielle Corliss President Lori Namazi President-Elect Bob Wolff Treasurer Matt Clements Immediate Past President Dave Stefanides Chief Executive Officer
p. 34
2020 BOARD OF DIRECTORS Olesya Drozdova Joyce Endo Dorinda Francois Michele Harrington Bob Hartman Tim Hayden Len Herman Julie Hile Jeff Jackson Debbie Krumboltz
Departments 12 Names in the News 22 Education Central: Upcoming Classes by Track 27 Become a Director 40 Mentions 42 Affiliates in Action: New REALTOR® Orientation
Sherrie LeVan Liz Lewis Chip McAllister Charleen Nagata-Newhouse Joe Pierce Lacy Robertson Adam Rodell Lisa Schulz Jessica Siguenza Scott White
MAGAZINE STAFF Sabrina Blair
Breanna Reed
Director of Communications sabrina@ocrealtors.org
Accounting Assistant breanna@ocrealtors.org
Sherri Butterfield
Albert Ornelas
Communications Specialist sherri@ocrealtors.org
Multimedia Specialist albert@ocrealtors.org
Online Magazine
Love the Orange County REALTOR®? Did you know that you can read it online, anytime? Read past issues at www.ocrealtors.org/magazine.
Mission Statement
The mission of the Orange County REALTORS® is to promote the REALTOR® Code of Ethics; to provide education, services, and resources to our members; and to advocate the protection of real property rights.
Notice to All Members
p. 38
On the Cover Benjamin Franklin appears on the $100 bill. George Washington appears on the $1 bill, Abraham Lincoln appears on the $5 bill, Alexander Hamilton appears on the $10 bill, and Andrew Jackson appears on the $20 bill. Since 1969, when bills for $500, $1,000, $5,000, and $10,000 were retired, the $100 bill has been the largest denomination printed.
Follow us on social media facebook.com/theocrealtors twitter.com/the_ocrealtors instagram.com/theocrealtors 6
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It is the long-established policy of this Association, the California Association of REALTORS®, and the National Association of REALTORS® to adhere to both the letter and spirit of the federal and state antitrust laws. For their own protection, members should be aware of the antitrust laws as they affect their specific business activities. Any illegal activity under the state and federal antitrust laws is not in compliance with Association policy, nor is it in the interests of the Association or its members. Participation in Association activities must occur only in harmony with these very important laws. Federal law prohibits discrimination based on race, color, sex, religion, or national origin in connection with the sale or rental of residential real estate, in advertising the sale or rental of housing, in the financing of housing, and the provision of real estate brokerage services. The Orange County REALTOR® editor reserves the right to review and edit all submissions. Orange County REALTORS® makes no warranties and assumes no responsibility for the accuracy of the information contained herein. The opinions expressed in articles are not necessarily the opinions of the Orange County REALTORS®. Orange County REALTORS® does not necessarily endorse the companies, products, or services advertised in this magazine unless specifically stated. The Orange County REALTOR® (USPS 025-445, ISSN 1945-2179) Volume 12, Issue 2, is published by the Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653. Periodicals postage paid at Laguna Beach, CA, and additional mailing offices. POSTMASTER: Send address changes to Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653-5127. Annual membership dues include $3.13 for a one-year (6 issues) subscription to the Orange County REALTOR® magazine. The Orange County REALTOR® magazine cannot be responsible for unsolicited materials. Publisher: Orange County REALTORS® Printer: The Monaco Group
PRESIDENT’S MESSAGE
Taking a New
Approach to
By Danielle Corliss 2020 PRESIDENT, ORANGE COUNTY REALTORS®
“Green”
P
erhaps because March is the month of St. Patrick’s Day and the first day of spring and April is the month of Earth Day and Arbor Day, typically the March/April issue of OC REALTOR ® has been billed as the Green Issue. Articles on its pages have discussed the growing interest the National Association of REALTORS® (NAR) is taking in sustainability, described the modern green home, offered tips about how to go green or greener, warned readers about scams that have characterized solar financing, and listed some of the incentives that are available to encourage homeowners to take a waterand energy-conserving approach to their homes and gardens. But this Green Issue is different. Perhaps inspired more by Tax Day on April 15 than by Earth Day on April 22, members of the Communications Staff have put the emphasis on “green” in the sense of money—how to make it, save it, and spend or invest it. For example, Michelle McCann encourages new REALTORS® to save money during those lean early years by postponing paid advertising, using the free farming materials that are available from Orange County REALTORS®, investing their time in the free education that the Association provides, and using the Placester mobile-ready real estate website available through NAR. Similarly, Jonathan Marquez, writing about real estate as an investment, compares the benefits and risks of investing in rental property with those of buying houses to flip. Flipping can yield large amounts of income in a relatively short period of time, he says, but
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it requires intense personal involvement and is subject to housing market volatility; and being categorized as a “dealer” may substantially increase the amount of income tax a “flipper” must pay. Although rental property must be managed, it provides a sustained cash flow, and the costs of repairs, regular maintenance, and even a property manager can be written off at tax time. In addition, Entrepreneur Editorial Director Dan Bova offers an interview with Million Dollar Listing Los Angeles star Josh Altman in which Altman briefly describes his phenomenal successes in the real estate business—and some of the reasons for them—and encourages readers to do what you love to do, put your customers on repeat, avoid spending too much time “trying to perfect the potential of a business rather than just going for it,” and protect yourself from people who bring bad energy to the table by learning when to say no. While the issue emphasis this time is on money, the environmental aspect of “green” has not been ignored. In an article titled “Seeing Green? Thank Those Purple Pipes!” Irvine Ranch Water District General Manager Paul Cook describes how a recycled water system treats water
Photo by www.istock.com/ Altayb
Although past Green Issues of OC REALTOR ® have focused on the environment, this issue is about a different kind of “green”— money and how to make it, save it, and spend or invest it.
PRESIDENT’S MESSAGE
from showers, bathtubs, toilets, washing machines, sinks, and dishwashers so that it can be used to irrigate landscapes, to make concrete, and to meet other commercial needs. IRWD began providing recycled water in 1967 and has expanded these services as the communities it serves have grown and the demand has increased. Each day, the District delivers 28 million gallons of recycled water through 561 miles of pipe that is purple, a color the District pioneered to distinguish recycled water lines from those carrying drinking water. Cook goes on to explain IRWD’s proposed Syphon Reservoir Improvement Project which, when completed, will enable the District to store 100 percent of the recycled water it produces and thus ensure that an adequate supply of recycled water is available for increased irrigation during dry months and to help fight wildfires in the region. And in this Green Issue, the interview Spotlight is appropriately on Eileen Oldroyd, whose enthusiastic involvement in environmental issues has earned for her the moniker “Green Eileen.” Eileen, who says she wants “to bring common sense to the green space . . . to change the way people think about the word ‘green’,” served on and later chaired Orange County REALTORS® Green Committee. She earned NAR’s EverGreen Award in recognition of her ongoing sustainability efforts and green practices, and has been asked to chair NAR’s Sustainability Advisory Group. On February 4 at the Anaheim Marriott, Eileen was installed as State President of the Women’s Council of REALTORS®. Eileen—whose motto is “Live, Love, Lead”— declares, “Leadership is not a destination; it’s a journey, and one that all of us are taking together. Effective leadership requires providing a vision, leading by example, and making everyone involved feel as if they are essential to the effort and derive some benefit from the outcome. That’s what I hope to do in my year as State President of the Women’s Council of REALTORS®.” We at Orange County REALTORS® echo that sentiment and wish Eileen every success during her presidential year.
Event Reminder: Mark your calendar now and
make reservations to attend the Orange County REALTORS® Annual Membership Meeting and Market Forecast on Monday, March 23, from 11:00 a.m. until 2:00 p.m. in the UCI Student Center, 311 W. Peltason Drive A, in Irvine. I’ll be speaking as will Beacon Economics Founding Partner Chris Thornberg, Founder of T3 Sixty Stefan Swanepoel, 2020 NAR President Vince Malta, 2020 C.A.R. President-Elect Dave Walsh, and 2020 Orange County REALTORS® Treasurer Bob Wolff. This event is free, and it includes lunch. I look forward to seeing you there! n OC REALTOR®
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STATE UPDATE A Quick Look at Five New California Laws That May Affect REALTORS® New state laws define the term “independent contractor,” limit rent increases and establish notice periods for them, prohibit refusal to rent to Section 8 participants, describe the circumstances under which tenants can be evicted, and strengthen consumer privacy rights. By Jeanne Radsick C.A.R. PRESIDENT
A
new year brings new beginnings, new opportunities, and new laws that may affect REALTORS®. Among these new laws are the following:
v Assembly Bill 5 (Independent Contractor).
Provides a crystal-clear reconfirmation that real estate agents can continue their half-century practice as independent contractors. The new law recognizes and reinforces Business and Professions Code Section 10032, which allows real estate licensees to be independent contractors for statutory purposes as long as they meet three conditions: They hold a real estate license; substantially all of their remuneration is directly related to sales or other output, rather than to the number of hours worked; and the parties have a written contract stating that the individual agent not be treated as an employee with respect to those services for state tax purposes.
v AB 1482 (Statewide Rent Control and Just Cause Eviction). California landlords
are now subject to statewide rent control with annual rent increases capped at 5 percent plus inflation, up to a maximum of 10 percent per year. This cap applies retroactively to all rent increases since March 15, 2019. Assembly Bill 1482 also includes a just cause provision,
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which means that landlords can no longer terminate month-to-month tenancies at will. Now they must point to one of fifteen specific reasons—some “at fault” and some “no fault”—to justify evicting a tenant. There are exemptions to this law. The just cause provisions only protect tenants who have been in possession for a year or more, and certain types of housing are exempt, including single-family homes and condos if tenants have received notice of the exemption and the owner is not a real estate investment trust (REIT) or a corporation. Other exemptions include homes built within the past fifteen years, owner-occupied duplexes, and more.
v SB 329 (Section 8 Housing Vouchers).
Landlords may no longer refuse to rent to tenants solely based on their participation in a housing voucher program such as Section 8. Doing so would constitute illegal “source of income” discrimination. However, landlords remain free to decline prospective tenants provided they do so on otherwise lawful grounds that are not based on a tenant’s receipt of a housing subsidy. Landlords remain free to charge rents as allowed under law and do not have to reduce rents to make units affordable to voucher holders. Further, landlords can continue to use appropriate
STATE UPDATE
financial and income standards when making rental decisions, such as verifying income levels or checking creditworthiness. But landlords no longer have the option to forgo participation in housing subsidy programs when presented with a prospective tenant who is qualified to rent from them in all other respects.
v AB 1110 (90-Day Notice for Rent Increases Above 10 Percent). Previously, a sixty-day notice was required for rent increases above 10 percent; the new law extends that to ninety days. A ninety-day notice is required when all rent increases in the previous twelve months, including the current one, total more than 10 percent. For increases of 10 percent or less, the notice period remains thirty days. Keep in mind that, with the passage of AB 1482, an increase of more than 10 percent within any twelve-month period will be permitted only for housing that is exempt from the statewide rent cap law.
v California Consumer Privacy Act (CCPA).
Photo by DNY59
Signed into law in 2018, the California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020, strengthens consumers’ privacy rights. The CCPA applies to any for-profit entity that does business in the state of California and collects personal information, provided that entity meets certain requirements. Under CCPA, consumers now have the right to see what personal information covered businesses have collected about them, the right to request that their personal information be deleted, and the right to prevent businesses from sharing their personal information with others. Personal information can include names, addresses, bank details, and purchasing history, and the law does not distinguish between electronic and other forms of records (meaning paper files count, too). Although the CCPA contains no general private right of action, a business covered by CCPA that violates any of its provisions may be charged in an enforcement action brought by the Attorney General with civil fines between $2,500 and $7,500. n
This column is based on and has been excerpted from the Monthly Message by C.A.R. President Jeanne Radsick that was distributed via email on January 17, 2020. It is being reprinted here with permission. OC REALTORÂŽ
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NAMES IN THE NEWS
Leadership Academy Members Have Breakfast with NAR Past President Elizabeth Mendenhal
In early February, during the California Association of REALTORS® Winter Business Meetings in Anaheim, Leadership Academy members had breakfast with National Association of REALTORS® (NAR) Past President Elizabeth Mendenhal. A sixth-generation REALTOR® and resident of Missouri, Elizabeth is chief operating officer for RE/MAX Boone Realty and has been in the real estate business for more than twenty years. In 2003, she was President of the Columbia Board of REALTORS®. In 2004, she was President of the Missouri Women’s Council. And in 2018, she became President of NAR. Pictured here with Rita Tayenaka (on the left), Elizabeth Mendenhal (in the center), and Dave Stefanides (on the right) are Leadership Academy Members (from left to right) Vinil Ramchandran, Sofia Delgado, Mindy Luong, Lata Jobanputra, Conrad Mazeika, Paul Wirth, and Van Nguyen Gordon.
Deadline to File for Property Tax Postponement Program Extended California’s Property Tax Postponement Program gives elderly, blind, disabled, or financially troubled homeowners an opportunity to delay property tax payments without penalty. The filing period for applications for the 2019–2020 fiscal year was from October 1, 2019, to February 10, 2020; however, State Controller Betty Yee announced on February 17 that the deadline had been extended until June 1 for residents affected by winter storms, wildfires, flooding, or other natural disasters. To obtain more information about the Property Tax Postponement Program, either call 800-952-5661 or visit the State Controller’s Office website at www.sco.ca.gov (select “Public Services” then “Property Tax Postponement”). To apply, mail completed application forms and required documentation to
California State Controller’s Office Property Tax Postponement P.O. Box 942850 Sacramento, CA 94250-0001
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NAMES IN THE NEWS
Irvine Named Third Fastest-Growing City in California When the website HomeSnacks ranked the ten fastest-growing cities in the Golden State, Dublin and Beaumont ranked first and second, and Irvine ranked third, having grown 33.3 percent (from 199,117 to 265,502) in the ten years since 2010 and experienced an absolute growth of 66,385 during that period.
Mission Viejo High School Graduate Will Be Inducted into the Astronaut Hall of Fame Astronaut Michael Lopez-Alegria, who graduated from Mission Viejo High School in 1976 and from the U.S. Naval Academy in 1980, will be inducted into the Astronaut Hall of Fame at the Kennedy Space Center Visitor Complex in Florida on May 16, along with astronauts Scott Kelly and Pamela Melroy. Lopez-Alegria, whose first space mission was in 1995, holds the all-time American record for the number of times (10) and the total amount of time (67 hours and 40 minutes) he spent performing extravehicular activity (EVA).
capacity, she is responsible for managing NAR’s Federal Legislative and Political Affairs and Political Representative teams. In addition, she provides strategic advice on public policy issues impacting NAR and helps to direct its Independent Expenditure and Public Advocacy Programs.
Will O’Neill Becomes the Youngest Mayor in Newport Beach History
In mid-December, members of the Newport Beach City Council selected Will O’Neill to serve as mayor. O’Neill, who was first elected to the City Council in 2016, is the youngest mayor in that city’s history. Mayor O’Neill has declared 2020 “The Year of the Volunteer” in Newport Beach and plans to celebrate the people and groups that give of their time and talents for the betterment of the city.
NAR Names Shannon McGahn Its Senior Vice President of Government Affairs Congratulations to Shannon McGahn, who has been named senior vice president of government affairs for the National Association of REALTORS® (NAR). In this
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RISMedia Names Michele Harrington and Randy Rector Among Its Real Estate Newsmakers 2020 Michele Harrington and Randy Rector were among the three hundred Real Estate Newsmakers 2020 listed by RISMedia in its Real Estate Magazine and online Newsmakers Directory. In 2018, First Team Real Estate CEO and Owner Cameron Merage asked Michele and her company Star Estates to join First Team, where she was initially named broker of record and later promoted to chief operations officer, and has dedicated her efforts to coaching and empowering agents. In March 2019, Assemblyman Bill Brough honored Michele as Woman of the Year for California’s 73rd Assembly District. Taking note not only of her past accomplishments but also of her everpresent drive and determination, RISMedia readily recognized Michele as an Achiever. In 2019, Randy, who is chief operations officer and owner of the HomeSmart Evergreen Realty franchise, partnered with Realty One Group to operate its seven Orange County and Inland Empire offices. Rector offers a concierge package of ancillary service companies that provide a one-stop-shop experience for both agents and consumers and says that his creative business choices are examples of the type of entrepreneurial thinking today’s real estate market requires. RISMedia agreed and named him a Trendsetter.
Laguna Hills Chamber of Commerce Presents 2020 Laguna Hills State of the City
When the Laguna Hills Chamber of Commerce presented the 2020 Laguna Hills State of the City featuring Laguna Hills Mayor Janine Heft on January 9, Mayor Heft (center)—who is shown here with (from left to right) Dirissy Doan, Tony Faulkner, Karl Heft (her husband and Chamber president), and Tom Schulze—reported that the city’s finances are healthy and that municipal revenues had been better than expected. She said that the owners of the Laguna Hills Mall plan to break ground during the summer of 2021 on a project that will convert that almost-vacant Mall into a mixed-use development that includes housing, retail and commercial space, a hotel, a movie theater, and a three-acre community park.
Julie Hile Appointed to Assessment Appeals Board
In late December, the Orange County Board of Supervisors appointed Julie Hile to serve on Assessment Appeals Board No. 3 for a term ending September 5, 2021. Also serving on the Appeals Board are Paula Cosenza and Harrison K. Long.
Because of reports that scammers are calling Southern California Edison (SCE) customers, saying that their electric bill is past due and threatening to shut off their electricity unless they make an immediate payment (often by purchasing a gift card and providing the number of that card to the caller or even by supplying debit card information over the phone), SCE reminds all its customers that it will never call to demand immediate payment with the threat of service disconnection.
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Photo by Marion Butterfield
SCAM WARNING from Southern California Edison
NAMES IN THE NEWS
Assemblywoman Petrie-Norris Recounts Successes
As 2019 came to an end, Assemblywoman Cottie Petrie-Norris, who represents the 74th District, listed among her accomplishments having chaired the Assembly’s Accountability Committee, secured millions of dollars for her district as part of the 2019–2020 State Budget, and had eleven bills signed into law. Incidentally, the Orange County Register named Petrie-Norris among OC’s 100 Most Influential.
Supervisor Don Wagner Takes the Lead in Tightening Requirements for Group Homes
In late January, Third District Supervisor Don Wagner proposed to the Orange County Board of Supervisors an ordinance tightening permit requirements for group homes, including sober-living homes with six or fewer occupants. Under this new ordinance, which was unanimously approved by the Board, these homes may not operate within 1,000 feet of each other or of any other state-licensed recovery residence, and they must have a 24-hour on-site manager.
San Clemente Selects Robert Dunek as Its Interim City Manager
In late January, members of the San Clemente City Council voted to appoint former Lake Forest City Manager Robert Dunek as interim city manager while Bob Murray Associates searches for a permanent replacement for City Manager James Makshanoff, who left San Clemente on January 16 to become city manager in Pomona. Dunek has been in public service for 42 years, including 28 years as a city manager. During the 21 years Dunek managed Lake Forest, he added the neighboring communities of Foothill Ranch and Portola Hills and shepherded development of The Arbor, a restaurant and retail complex on El Toro Road near Interstate 5. In casting a yes vote, Councilman Gene James cited Dunek’s impeccable reputation, stellar track record as a city manager, and solid county relationships.
Moulton Niguel Named Top Workplace For the third year in a row, the Orange County Register has recognized the Moulton Niguel Water District as a Top Mid-Sized Workplace in Orange County. “We take great pride in providing the absolute best service to our customers, and that service starts with all our employees,” responds the District. “Whether you have a question about your bill, are interested in signing up for a water efficiency program, or want to learn about our water supply, we are here for you!”
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Speakers at the February LGR-S Committee Meeting Discuss Three Local School Bond Measures
On February 3, the Local Government Relations South (LGR-S) Committee sponsored a meeting at which speakers discussed the pros and cons of the bond measures placed on the March ballot by the Saddleback Valley Unified School District (Measure M) and the Capistrano Unified School District (Measures H and I). District representatives emphasized the need to upgrade and remodel aging schools, remove hazardous materials such as asbestos and lead paint, and tighten security measures. REALTORS® questioned what the total amount of the current District bonded indebtedness was, asked why maintenance was not adequately provided for in the regular budget, and expressed concern about how the resulting property tax increases would affect their older clients who are living on fixed incomes. Pictured are (from left to right) Local Government Relations South Committee Chair Mary Rampone, Saddleback Valley Unified Schools District (SVUSD) Assistant Superintendent Robert Craven, SVUSD Superintendent Dr. Crystal Turner, and SVUSD Communications and Administrative Services Director Mark Perez.
Greater Irvine Chamber Business Outlook Breakfast Features Economist Chris Thornberg
The Greater Irvine Chamber Business Outlook Breakfast on January 10 featured Chris Thornberg, founding partner of Beacon Economics. During his presentation, Thornberg bemoaned the fact that “little effort is being made to deal with the true long-run issues” and told his audience to keep an eye on “the great political disconnect between economic realities and political discourse.” Pictured at that breakfast are (standing, from left to right) Jonathan Hughes, Phil Vandermost, Victor Cao, Travis Baron, Harrison K. Long, Irvine Council Member Farah Kahn, Joyce Endo, Irvine Mayor Pro Tem Mike Carroll, and Steve Claton, and (seated, from left to right) Angela Gomez Jones and Ann Sargent Johnson.
REMINDER: 2020 Is the Year of the Census
Article 1, Section 2 of the U. S. Constitution mandates that the country conduct a count of its population every ten years. For this reason, during 2020, the U.S. Census Bureau will be counting residents in all fifty states, the District of Columbia, and the five U.S. territories (Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and the U.S. Virgin Islands).
This Names in the News column is intended to be primarily a place where Orange County REALTORS® and Affiliate members can share both personal and professional news—about births (of children or grandchildren), graduations, weddings, anniversaries, accomplishments, awards, and other milestones—with one another. If you have news to share, email it to OC REALTOR ® Writer and Editor Sherri Butterfield at Sherri@ocrealtors.org.
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Photo by Marion Butterfield
Each home will receive an invitation to respond to a short questionnaire—online, by phone, or by mail—and participating in the census is required by law. Every year, billions of dollars in federal funding go to hospitals, fire departments, and schools based on census data. Also, the results of the census are used to draw congressional and state legislative districts and to determine the number of seats each state will have in the U.S. House of Representatives.
ELECTION 2020
By Jon Coupal PRESIDENT OF THE HOWARD JARVIS TAXPAYERS ASSOCIATION
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Did You Mistakenly Sign an Initiative Petition to Raise Property Taxes?
OC REALTOR®
ELECTION 2020
Although deceitfully described as a tax on “big corporations,” this $11 billion tax increase will affect almost every business in California, raise the price of the products and services you use every day, and result in the loss of an estimated 400,000 jobs across the state.
We’d
like to make you aware that some signature gatherers are falsely claiming to represent or work for the Howard Jarvis Taxpayers Association (HJTA) and also falsely claiming that their petitions are for initiatives that would “protect Prop. 13.” HJTA is not endorsing any petitions that are out there for signatures right now. There are two in particular that HJTA strongly opposes, and I’d like to make you aware of a method you may use to remove your signature if you have signed them by mistake. The information about how to remove your signature can be found on the HJTA website. Go to www.HJTA.org and look for the flashing red light at the top that reads “Find Out” (if you have mistakenly signed a petition for an initiative that would raise property taxes). Click the flashing light, or go directly to https://www. hjta.org/withdraw-your-signature-forms/. There you can download and print the forms to remove your signature from two initiatives that are actually tax increases:
Initiative #19-0008 would revoke Proposition 13’s
protection from business properties. This is the so-called split roll measure, a massive tax increase that would result in higher prices for everything you buy.
Initiative #19-0003 expands the opportunity for
older homeowners to transfer their current property tax assessment to a replacement property, but it also revokes the protections of Proposition 58 and 193, which currently allow transfers of property between parents and children, and grandparents and grandchildren, without a reassessment. This is, on balance, a significant tax increase. Help us spread the word so California voters are not fooled into signing these petitions. If you see any signature gatherers displaying posters or signs that claim they’re protecting Prop. 13, feel free to take a photo and email it to us at info@hjta.org. Let us know the location and date, and especially if the signature gatherer falsely claimed to represent HJTA. Thank you for your help! n
www.istockphoto.com/Mehaniq
This article was distributed via email to members of the Howard Jarvis Taxpayers Association on Tuesday, December 17, 2019. It is being reprinted here with the expressed written permission of HJTA President Jon Coupal.
When to File Signature Rescission Forms Because proponents must turn in their signed petitions in April, the Howard Jarvis Taxpayers Association recommends that signature rescission forms be turned in no later than the end of March. OC REALTOR®
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COVER STORY
Josh Altman
Went from Being Broke
to Selling More Than
$1 Million a Day in Real Estate
Million Dollar Listing Los Angeles star Josh Altman and his brother Matt built a real estate business that has sold more than $3 billion in properties, but the road to their success wasn’t smooth.
T
hree years ago, I had an opportunity to ask Josh Altman, one of the stars of Bravo’s Million Dollar Listing Los Angeles, about his rise and fall and rise again in the real estate game. Below are his nine lessons for achieving—and maintaining—business success.
1. Y ou can’t predict where your next big idea will come from.
By Dan Bova EDITORIAL DIRECTOR, ENTREPRENEUR
“I moved out to L.A. and started in the mailroom of a music management company called The Firm. I would put half of my paycheck away and use the other half to take out the managers to pick their brains. I found out that they were all making extra money on the side in real estate. So I looked into it and found out that there was something called ‘100 percent financing’ that would let you buy a house with 100 percent financing, which was crazy! This was around 2003. My brother and I had no money—
This article was originally posted on the Entrepreneur website on October 26, 2017. It has been edited gently for publication in OC REALTOR ® and is being reprinted here with permission of the publisher. 24
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Photo by Marion Butterfield / Photoshop: Albert Ornelas
COVER STORY
we paid someone to live on the couch in a fraternity house—but we got qualified for a loan and bought a $400,000 condo. We did some minor renovations, and in six weeks flipped it for $600,000. We thought we were millionaires!”
2. Flipping can flip you out. “We started buying and flipping nicer and nicer places. We were killing it and really knew nothing about what we were doing. I decided to get my real estate
license, and I failed twice. The third time was a charm! Then I decided I would stop paying other people and opened my own mortgage company. I got this huge space in L.A. and I hired all my friends and it was it was insane. You could just give mortgages away at that time. And as fast as we were making money, we were spending it. It’s embarrassing to talk about it now, but we never thought that it would stop. And then it did. The economy collapsed. Our business completely collapsed. We very quickly went from becoming millionaires at the age of 26 to being flat broke within a year.”
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3. Remember what you love to do.
6. Time is money.
“I couldn’t get out of bed for eight months, but I’m lucky enough to have my brother. We motivated each other. We found ourselves on the weekends driving around to check out houses just because it was free. And it was like, ‘Look, why don’t we just become realtors again? We love this!’ So we started doing that and slowly worked our way out of our hole. We sold about $12 million, then the next year sold $38 million, then $88 million, and kept building. In a twentyfour-month period, we sold about $500 million in residential real estate. We built the business now up to selling over a million dollars a day.”
“The worst thing you can do to a wealthy person is waste their time. You can only get so far with ‘fake it ’til you make it’ like we did. At some point, you’ve got to become an expert. We pride ourselves in knowing everything about the L.A. market. I study nonstop. I am on the Multiple Listing Service (MLS) all day, every day. Wealthy people value smart people, and they keep coming back for more as well. Once you make somebody’s money, you are on their speed dial for life.”
4. Ready, fire, aim! “That’s my brother’s and my mentality. Yes, that is not the normal order. It’s all about being able to recognize an opportunity when it’s in front of you and just take a shot before it passes. I see it all the time when I talk to entrepreneurs—there is too much time spent trying to perfect the potential of a business rather than just going for it.”
5. Put your customers on repeat. “We’re in the customer business. Everything we do revolves around the people that we sell houses to. Because you know what? They’ve got a lot of wealthy friends who probably want to buy or sell houses, too. I like to think that we were one of the first people who turned our real estate business into a concierge real estate business. We realized that it wasn’t just about helping people find their dream house. We’re the guys that our customers can come to for anything they need: getting reservations at the hottest restaurants, getting them at the front of the line for a new watch that nobody can get, whatever they want. We have cultivated all kinds of relationships around L.A. with different people over the years, and those put us in positions to help our clients out.”
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7. Don’t let small things spike big deals. “I tell everybody in any business to always look at the big picture. Don’t be small-minded. I see deals get killed all the time over small stupid stuff. A deal with a $200,000 commission dies over $25,000. You’re going to have these people for life, and you’ll have the potential to do ten more deals in the years to come. Don’t worry about making a little less money right now.”
8. Learn when to say no. “In the beginning of your career, you have to take whatever listing or client comes your way. But as I’ve become more established, there’s nothing worse to me than having someone bring bad energy to the table. I always say this to my agents: ‘You’ve got to make money, you’ve got to eat; but at some point, you’re going to get to a point in your career where you can start to avoid these people.’ I find myself saying that a lot more lately now that I have a six-month-old daughter at home.”
9. T here are odd consequences of being on TV. “I’m on a television show where you see us making money and counting our commissions. But you have no idea how many people a day come up to me and pitch me their products. They think I’m on Shark Tank. So you know, I’m friends with some of those guys, but it’s a different show.” n
COVER STORY
How to Afford Being a REALTOR®
During Those Lean Early Years Getting started in real estate is expensive, but free education, farming materials, and classes can ease the cost burden of those early years. By Michelle McCann COMMUNICATIONS SPECIALIST
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re you prepared for how difficult it can be to make a living during your initial years in the real estate industry? No? You aren’t alone! During the first year in business, a REALTOR® racks up many expenses—some optional, some not. Below are some tips about how to cut costs when you are just starting out.
Postpone Paid Advertising Your long-term success as a REALTOR® can depend on your marketing plan and how well you budget your money before you are making a steady income. It is easy to get caught up in spending money on costly online advertising before you really know what you are doing. But according to the National Association of REALTORS® 2019 Home Buyers and Sellers Generations Trends Report, 41 percent of all buyers and 39 percent of sellers found their REALTOR® through a referral from a friend, neighbor, or relative. Pay-per-click ads, search engine optimization, Facebook ads, or other online advertising are an easy way to throw your money away, but your dollars may be better spent elsewhere if you don’t completely understand how online advertising works. When you are a newbie, making good use of established personal relationships might be a more effective way to spend your time. Get those first few clients by tapping into your sphere of influence. Reach out to friends, acquaintances, or anyone with whom you interact on a regular basis. Tried-and-true marketing approaches like building client lists through authentic social interactions still work and are free!
Use Free Farming Materials Placing your image, a witty slogan, and your contact information on magnets, post-it note pads, postcards, and other swag can be a good long-term marketing strategy for establishing your brand in a specific area but may not produce the desired effect when you are unknown and just starting out. To survive your first year as a REALTOR®, you need to attract business in a way that doesn’t cost you a ton of money. Save your money and use free farming materials from your Association. As 28
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a member of Orange County REALTORS®, you can pick up free door hangers from our Laguna Hills or Fountain Valley office to use as farming tools to develop a strong rapport in your specific neighborhood.
Invest in Free Education The course you took to obtain your real estate license was useful in acquainting you with real estate laws, regulations, and statistics, but it did not teach you how to have a competitive edge in the industry. When you are a new agent, continuing education is extremely important. Learning more about your industry will keep you up to date with the latest trends, laws, rules, and standards. But earning more designations and certifications during your first year as a REALTOR® may not be as cost effective as diving head-first into free education and training. Orange County REALTORS® offers free classes that cover everything from navigating the Multiple Listing Service (MLS), completing the Residential Purchase Agreement (RPA), and making effective use of social media to accessing broker management supervision and understanding commercial real estate. To read descriptions of these classes and to register, visit www.ocrealtors.org/catalog.
Avoid Money Pit Websites Many new REALTORS® spend too much time and money on building a beautiful website with all the bells and whistles but then are disappointed when it fails to produce an immediate return on their investment. Even the best website in the world is not going to attract leads and yield sales right away. Until you have an advertising plan in place that is consistently driving buyers and sellers to your site and keeping them engaged, it might be wise to use the free and discounted tools that are available to you as a REALTOR®. Every member of the National Association of REALTORS® can build and launch a discounted Placester mobile-ready real estate website available through the Association’s REALTOR Benefits® Program. For more information about Placester websites and pricing, visit www.ocrealtors.org/placester. n OC REALTOR®
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Making Money with Investments:
Renting versus Flipping Real estate is widely recognized as a solid investment. The question for investors is: What form should that investment take? By Jonathan Marquez DIGITAL MARKETING AND VIDEO SPECIALIST
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hen it comes to making money in real estate, what is the best approach? Should you invest in rental property or purchase property to flip. While both approaches have benefits, there are huge differences between them. Your overall investment strategy and your ultimate goals will determine which approach is better for you. But whether you choose to fix up and flip or to buy and hold, real estate can be a solid investment.
What Are the Differences? One of the biggest differences between flipping and renting is the amount of time you hold onto each property. Flipping is a short-term investment strategy, whereas rental
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properties are a long-term strategy. With flipping, you purchase a house, rehab it, place it on the market, and sell it as soon as possible. On the other hand, rentals require consistent long-term property maintenance and management. Another difference between flipping and renting is that one yields active income and the other yields passive income. Rental units produce passive income, which is the money you receive on a monthly basis from your investments. Flipping properties produces active income for which you must work daily or weekly.
COVER STORY
Each strategy requires a different commitment. If you flip properties, you will need to be involved on a day-to-day basis, making decisions and maybe even doing some of the actual construction work. If you own rental properties, you will need to manage them, which includes screening potential tenants, collecting the rent, scheduling necessary repairs, and paying the bills.
What Are the Benefits? There are benefits to having rental properties. For example, as a rental property owner, you will receive some tax breaks. Expenses such as repairs, regular maintenance, even the cost of a property manager can be written off at tax time. During good times, the value of your rental property will appreciate as a result of inflation. During bad times, the value of your rental property is likely to be less affected by housing market ups and downs. And the most obvious benefit is that you will have a steady and predictable cash flow month after month. Flipping homes has its own set of advantages. If you are successful, you will be able to make large amounts of money in a very short time! According to Attomdata.com, in the second quarter of 2019, most flippers were reporting more than $60,000 in gross profit per flip. That’s a lot of money for what may have been only a few months of work. Another benefit to flipping is that the money you invest is not tied up for a long time. Flipping is a short-term investment, which means you will receive return on your investment quickly and be able to invest in additional properties to flip.
That Characterize Flipping
What Are the Risks?
4Higher taxes
Although having passive income from rental property for the rest of your life may seem like a good thing, it does not come easy and there are no guarantees. Where there is great reward, there is also great risk, and the real estate market is not immune. As a rental property owner, you will need to assume the role of a landlord. You will need to be aware of and follow the laws that govern the landlord-tenant relationship, be responsible for any necessary repairs, collect the rent monthly, and, on rare occasions, evict tenants who keep pets in violation of the conditions of the lease, fail to pay the rent as agreed, or use your property in ways that are against the law or are expressly prohibited in the lease. The alternative is to hire a property management company, but doing so will diminish your profit. These companies can be worth the additional expense because they screen potential tenants, collect rent, and even handle some of the more difficult situations, such as eviction.
4Active income 4Short-term investment 4 Quick return on investment 4Daily management 4Unforeseen costs 4Potential construction delays 4Additional finance fees 4Unpredictable income
That Characterize Renting 4Passive income 4Long-term investment 4Sustained cash flow 4 Regular maintenance and management 4Rent-control laws 4O ther laws that govern the landlord-tenant relationship 4Potential long-term vacancy 4Tax breaks 4Predictable income Continued on Page 32
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Also, the rental income you collect may not be enough to cover your entire mortgage payment on the property. In this event, you will be responsible for making up the difference. And the last risk you will incur is that you will be personally responsible for all expenses during periods when the property is vacant. Flipping produces active income, but there are risks associated with this approach as well. One of the most common risks is the unforeseen costs that may arise during construction. If repairs and upgrades take too long, you may incur additional finance charges, which will reduce the amount of your profit. As a flipper, you may also be required to pay higher taxes. If you flip properties on a regular basis, the Internal Revenue Service will categorize you as a “dealer,” says Fitsmallbusiness.com. As a dealer, you will need to pay ordinary income tax rates of 10 to 37 percent in addition to the selfemployment tax of 15.3 percent. Thus, you may be taxed between 25.3 percent and 52.3 percent on each flip, depending on your tax bracket.
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And finally, your income will be at the mercy of the current housing market. Because the market is unpredictable, one of your rehabbed properties may sit on the market for months, leaving you without active income. Thus, you will need to anticipate the ups and downs of an investment on which the returns can be large but may be inconsistent.
Conclusion As real estate investment strategies, both flipping and renting offer distinct benefits and risks. Which one you choose will depend on what you want and what you are comfortable with. Do you want to make a quick profit on a piece of property without having to look after it for a long time or would you rather create a nest egg that will yield a steady income over time? The beauty is that, when you are investing in real estate, that choice is yours. n
SPOTLIGHT
2020 President, Women’s Council of REALTORS®, California She owns Boston Terriers, rides a motorcycle, is a champion of “green,” and credits the Women’s Council with having helped her discover her personal path to leadership. By Sherri Butterfield WRITER AND EDITOR
On February 4 at the Anaheim Marriott, Eileen Oldroyd was installed as State President of the Women’s Council of REALTORS®. Eileen—whose motto is “Live, Love, Lead”—joined the South Orange County Network of Women’s Council in 2012 and has held offices at the local, state, and national level. In early January, I interviewed Eileen about what brought her to this place and what she hopes to accomplish while she is President.
Where were you born? What was especially interesting or unusual about your childhood? I am an Orange County girl. I was born and raised in Fullerton. My dad was Irish, and my mother was Sicilian. I was the youngest of eight children in a Roman Catholic family. As a group, we were known as the “Troublesome Cunninghams” because we were loud, noisy, and laughed a lot. But I was painfully shy. Being loud and boisterous was not natural for me, and fitting in was a constant struggle.
Tell me about your education. After I graduated from high school, I wanted to go to UC Santa Barbara; but my parents owned a medical device business, my father had a heart attack, and the money ran out. My parents suggested that I go to Cal State Fullerton and live at home, which I did for a while. When I was nineteen, I moved out of the house so that I could live a more independent lifestyle. I paid for my own college education, including tuition and books. I learned that putting yourself though college is one way to develop a strong work ethic! Because I was fascinated by serial killers, I wanted to do something in investigations, maybe with the FBI, so I earned a Bachelor of Arts in Criminal Justice. After I graduated, I got a job selling the services of a private investigation company, which other companies hired to learn if their employees were stealing from the company or doing drugs while on the job. Through a series of twists and turns, I ended up working in the motorcycle industry, where I sold sponsorships and booth space at motorcycle industry shows.
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How did you go from the motorcycle industry to real estate? When I bought my house, the swimming pool had a leak that was not disclosed. The pain of going through that experience made me think about becoming a real estate agent. In 2004, I got my real estate license. At first, I did loans. Then, I decided to become an independent broker because the lender for whom I worked was so unethical. I wanted to run a business with ethics and morals and do the right thing. But I realized that, to do something new, I needed to work my way up gradually—to take small steps at first.
You have built a reputation as “Green Eileen” and have received NAR’s EverGreen Award in recognition of your ongoing sustainability efforts and green practices. Initially, what inspired you to “go green”? Having a connection to nature has always been in my nature. In 2008, when the National Association of REALTORS® came out with its Green Designation, it seemed made to order for me. I earned that designation and chaired the Orange County REALTORS® Green Committee. I want to bring common sense to the green space. I want to change the way people think about the word “green.” I want them to think about ways to weatherize—or “weatherwise”—their homes.
How did you discover the Women’s Council? When I was serving on the Orange County REALTORS® Green Committee, I worked closely with Joanne Frank. She encouraged me to join the South Orange County Network of Women’s Council, and I did so in 2012, when Vivian Vanderwerd was president.
SPOTLIGHT
I believe that leadership is not a destination but a continuing journey. Women’s Council acts as a guide for women who want to make that journey. The members of Women’s Council are friendly, supportive, and successful. Women’s Council has a hashtag that reads “Leaders Made Here,” and it’s true! Although Women’s Council members constitute only about one percent of the membership of the National Association of REALTORS® (NAR), they hold 22 percent of the leadership positions in NAR.
You have been asked to chair NAR’s Sustainability Advisory Group. Is NAR ready to hold a serious conversation about climate change? We have sea-level rise. We have a measurable change in the temperatures of the oceans. We have serious flooding, record droughts, and
“In these alarming times, the National Association has a unique opportunity to help REALTORS® not only to be relevant but also to remain essential.”
Photo by Marion Butterfield
devastating wildfires. And our clients have difficulty obtaining flood insurance and fire insurance, especially in areas that are naturally prone to these types of disasters. All these circumstances affect the ability of REALTORS® to do their jobs and affect the ability of our clients to realize the American Dream of home ownership. In the past, REALTORS® were told that they were essential to the transaction, we were keepers of the keys. But that is changing. Several large corporations— including Amazon, Purple Bricks, and Zillow—are going after our commission. We can make ourselves essential once again by learning what to be prepared for. We can help to build safer and more resilient communities. We can become better positioned to recover and rebuild. In these alarming times, the National Association has a unique opportunity to help REALTORS® not only to be relevant but also to remain essential.
You are broker/owner of Oldroyd Realty, and you are the wife of Terry Oldroyd. How do you balance the demands of career and family? I have a career and a husband. I do not have children, but I do have dogs—Boston Terriers. My schedule is one of priority management. I focus on what I need to do when it needs to be done. I should probably add that
one of the things Terry and I enjoy doing together is riding motorcycles. When I first learned to ride, buying a helmet was a big adventure. But the hardest thing was the gloves. The gloves got in the way of touch. I really had to work to get used to wearing those thick, leather gloves.
On February 4, 2020, you were installed as State President of the Women’s Council of REALTORS®. What motivated you to accept this responsibility and what are some of your plans and goals for the Women’s Council during the coming year? As I spent some time traveling across the state to help various Women’s Council networks, one of the questions that came up was: Why are these ladies having such a difficult time managing a team of volunteers? Why is there so much discord? I realized that the missing piece was understanding the concept of servant leadership. These ladies lacked soft skills. They needed to realize that working with a group of volunteers requires an entirely different skill set from managing a home, a team, or a transaction. They needed to place the emphasis on motivation rather than manipulation, on persuasion rather than power. They needed to learn how to be a lady boss rather than a bossy lady. Leadership is not a destination; it’s a journey, and one that all of us are taking together. Effective leadership requires providing a vision, leading by example, and making everyone involved feel as if they are essential to the effort and derive some benefit from the outcome. That’s what I hope to do during my year as State President of the Women’s Council of REALTORS®. n
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WATER
Seeing Green?
Thank Those Purple Pipes! Recycled water helps keep many Orange County communities beautiful. Seasonal storage reservoirs ensure that it’s available year-round.
Lush
greenery can enhance value. That’s true not Pioneering the Purple Pipe only for individual properties but also for Irvine Ranch Water District (IRWD)—which serves entire communities. all of Irvine, parts of Lake Forest, Tustin, Costa Mesa, Orange County is a robust real estate market, with highNewport Beach, and Orange, and unincorporated demand areas known for resort-like landscaping along portions of Orange County—has streetscapes, medians, and common areas. been providing recycled water since In drought-prone Southern California, how 1967, expanding these services as the do these communities stay so green and communities grew. beautiful while using water efficiently? Today, nearly 85 percent of all parks, For most of them, the answer is recycled medians, common areas, commercial areas, water. ball fields, schoolyards, golf courses, and Recycled water is a drought-proof college campuses in IRWD’s service area resource. It comes from the water we send By Paul Cook are irrigated with recycled water. down the drain—from showers, bathtubs, GENERAL MANAGER Recycled water is also used in more than toilets, washing machines, sinks, and IRVINE RANCH WATER DISTRICT one hundred dual-plumbed buildings in the dishwashers—and is treated so that it can be district, including many of the high-rises used to water landscapes, to flush toilets in dual-plumbed you see in Irvine. It is also used in concrete production, buildings, in construction, and to meet other commercial composting, and cooling towers. It is even used to make needs. the ice at Irvine’s new Great Park Ice arena. Every gallon of recycled water used for these purposes Each day, Irvine Ranch Water District delivers saves a gallon of drinking water, and that helps maintain 28 million gallons of recycled water through 561 miles long-term sustainability and stunning streetscapes in our of pipe that is purple, a color the district pioneered neighborhoods. 36
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WATER to distinguish recycled water lines from lines carrying drinking water. (Today, purple is the national standard for pipes that carry recycled water.) Recycled water makes up about one-fourth of the District’s water supply. Using recycled water helps to keep water bills low by reducing the need to import expensive water from Northern California or from other states.
A Need for Storage Managing recycled water is a balancing act. As long as people cook, shower, flush toilets, and do laundry, recycled water will be produced every day, rain or shine. But the community’s need for recycled water ebbs and flows with the seasons. For this reason, recycled water is collected in seasonal storage reservoirs. In the wet winter months, when demand is low, recycled water reservoirs fill up, and excess recycled water goes to waste. In the dry summer months, when communities start watering again, the storage reservoirs empty, and the water district must buy expensive imported water to make up the difference.
Recycled water is a drought-proof resource that keeps communities green and beautiful.
Syphon Reservoir Improvement Project To ensure that recycled water is available when the community needs it, Irvine Ranch Water District is proposing the Syphon Reservoir Improvement Project, an investment to increase capacity of one of its four recycled water reservoirs. When fully operational, this project will S Prepare for the future by storing more drought-proof water. S Enable IRWD to use nearly 100 percent of the recycled water it produces. S Keep parks, medians, public landscaping, college campuses, and homeowners’ association common areas green and beautiful. S Provide water to help fight wildfires in the region. S Save the District $85 million over fifty years and preserve low customer water rates.
Project Details and Timeline The Syphon Reservoir Improvement Project would increase storage capacity from 578 acre-feet to 5,000 acrefeet. This would include modernizing and upgrading the reservoir’s dam to meet and exceed the latest federal and state standards for design and safety. The project is undergoing a thorough California Environmental Quality Act review that will include opportunities for public input and stakeholder engagement. For more information, visit SyphonReservoirProject.com. n
To ensure that recycled water is available when the community needs it, Irvine Ranch Water District is proposing the Syphon Reservoir Improvement Project.
Support for the Syphon Reservoir Improvement Project Orange County REALTORS® has formally taken a position in support of the Syphon Reservoir Improvement Project, terming it “a forward-thinking water management solution that benefits the District’s customers and the region,” and praising recycled water as “a vital, droughtresilient source of local water that keeps Central Orange County communities green and businesses productive.” For a list of other project supporters, see SyphonReservoirProject.com.
Paul Cook is the general manager of Irvine Ranch Water District, where he is responsible for all aspects of the District’s day-to-day operations. A registered civil engineer, he has more than thirty years of experience in water and sewage system projects in both the public and private sectors.
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THE ORANGE COUNTY HOUSING UPDATE
The
Supply Problem is Back
The better the price of a home, the more activity it generates. And multiple offers drive up the sales price.
Ultra-low interest rates are fueling a major spike in demand that is eating into the active listing inventory.
By Steven Thomas REPORTSONHOUSING.COM
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Life
is a time crunch. Inevitably, important errands are left to the last minute. It’s happened to everybody at one time or another. With Mother’s Day on the horizon, it will happen again. Many will go to the grocery store on Saturday, May 9, and make a bee line to the greeting card aisle, only to find twenty other procrastinators hurriedly looking for the best card. Peering through the crowd, they’ll discover half-empty shelves because the best cards already have been taken. The whole ordeal is frustrating. Similarly, would-be homebuyers are frustrated this year. The Orange County housing shelves are half empty. It is tough being a buyer looking for a home in today’s market. The year 2020 started with 3,692 homes, the third lowest start in decades, behind 2013 and 2018. At the beginning of 2019, there were 5,565 homes, which is 51 percent more than there were on January 1, 2020. There were a lot more choices a year ago than there are today! The trend of the supply problem dates to the beginning of the Great Recession, in 2008. Ever since then, fewer and fewer homeowners have placed For Sale signs in their front yard. This trend is hardly a blip on the radar screen; instead, it has continued for twelve consecutive years. Last year may have seemed like a better year with more homes to choose from, but that was because higher interest rates resulted in diminished demand. Homes that typically would have sold in prior years lingered on the market until interest rates dropped from 4.5 percent at the start of 2018 to below 3 percent by the end of May.
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THE ORANGE COUNTY HOUSING UPDATE
The number of homes placed on the market in 2019 was down by 4 percent compared with 2018, a difference of 139 fewer homes every single month. Yet, the 139-fewerhome difference is nothing compared to the first decade of the 2000s. In 2004, there were 2,099 more homes placed on the market every single month. That’s an additional 25,000 homes for the year and plenty for buyers to choose from. In addition, in December 2019, there were 12 percent fewer homes listed for sale, only 1,339 new For Sale signs compared with 1,534 in December 2018. In fact, it was the lowest number of homes placed on the market since the start of accurate record keeping back in 1999. Fewer homes for the year and a further drop to end 2019 set up the low-inventory start to 2020. Price is determined by supply and demand. For kicks and grins, imagine that demand remained the same. When the same number of buyers are interested in purchasing a home, yet the supply of homes drops considerably, homebuying becomes a bidding war where the highest bidder wins. As a result, prices rise. Essentially, that is what has happened during this housing run, which dates to 2012. In 2012, demand spiked; however, there were not enough homes on the market to satisfy the voracious appetite of buyers to buy. Home values have been on the rise ever since, slowing considerably last year because of muted demand. With the return of historically low mortgage rates and an extremely anemic supply of homes, the bidding wars are back and so is appreciation. Buyers who feel as if they are running out of luck can attest to the need for more choices. Today’s market is vastly different from what it was last year. There are not that many homes languishing on the market. Interest rates are at 3.5 percent. The low-interest-rate environment is the rocket fuel that is propelling the market and igniting demand. Multiple offers are once again the norm. Homes that are priced well and in good condition are selling quickly. In most instances, it is the winning bidder who finds success. But it’s slim pickings, especially in the lower price ranges. As soon as the Kansas City Chiefs clinched their Super Bowl win, Southern California started the Spring Market and housing transitioned to a hot Seller’s Market for the first time in two years. How did we get here? It all boils down to supply and demand. Demand is extremely strong, and the active inventory has been at exceptionally anemic levels. Comparing February of this year with 2019, there were 34 percent fewer homes on the market, and demand (new pending sales over the prior month) was up by 19 percent.
The Supply Problem. The year 2020 started with 3,692 homes placed on the market, the third lowest start in decades, behind 2013 and 2018. The number of homes placed on the market in 2019 was down by 4 percent compared with 2018, a difference of 139 fewer homes every single month. Yet, the 139-fewerhome difference is nothing compared to the first decade of the 2000s. In 2004, there were 2,099 more homes placed on the market every single month. That’s an additional 25,000 homes for the year and plenty for buyers to choose from.
The overall Expected Market Time was more than 100 days last year compared with less than 60 days this year. Advice for Buyers: Be realistic from the start. Do not delay in pulling the trigger to write an offer to purchase a home that piques your interest. Buyers do not have to overpay for a home. They may have to pay slightly more than the most recent comparable sale. Offer the fair market value for a home. Most of all, pack your patience. Advice for Sellers: Be realistic about pricing. Too many over-exuberant sellers initially overprice their homes. Homes do not appreciate rapidly. Orange County home prices are projected to increase 5 percent over the next twelve months. That is 365 days, not 30 days. So price accordingly. A wise strategy is to price a home at its fair market value. The better the price of a home, the more activity it generates. And multiple offers drive up the sales price. n
Steven Thomas has a degree in quantitative economics and decision sciences from the University of California, San Diego, and more than twenty years of experience in real estate. His bimonthly Orange County Housing Report is available by subscription and provides housing market analysis that is easy to understand and useful in setting the expectations of both buyers and sellers. His website is www.ReportsOnHousing.com.
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MENTIONS
Thank You for Sharing a Drowning-Prevention Message Hi Sherri, have been an Affiliate member of Orange County REALTORS® for many years as a mortgage broker, and I enjoy reading the monthly magazine and appreciate the time and consideration that goes into writing and editing it. I also wear another hat—I was elected to the Laguna Hills City Council in 2016 and became mayor in December. I wanted to thank you for taking the time to share with your readers about the importance of drowning prevention in your article, “Drowning is a Preventable Tragedy.” One of my best friends lost her six-year-old son (her only child) to drowning a few years ago, and it affected me profoundly. After learning how surprisingly easy it is for one to drown, I worked with both the Laguna Beach Life Guard and the Orange County Fire Authority to coordinate water safety assemblies in each of our Laguna Hills schools and also encouraged my fellow elected officials to start programs in their own cities. Also instrumental in these assembly presentations was a wonderful nationwide
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educational organization called Stop Drowning Now (stopdrowningnow.org). Julie Lopiccolo, whose son Jasper is mentioned in the article, is a board member. I am excited to share with you that Laguna Hills High School recently implemented its own Stop Drowning Now club, where swim and water polo students learn CPR and how to teach the basics of water safety to younger students. In addition to teaching, the young men and women that participate in the SDN club have an opportunity to develop leadership skills, grow in maturity, and even use and improve their public speaking skills. What a great way to prepare our graduating high school students to become healthy and contributing members of society! Thank you again for emphasizing the importance of keeping our kids (and adults!) safer in the water. Sincerely, Janine Heft Mayor, City of Laguna Hills
Editor’s Note: The drowning-prevention article to which Mayor Heft refers was published in the July/August 2019 issue of OC REALTOR ® on pages 36–37. Also, in partnership with the Jasper Ray Foundation, Orange County REALTORS® made available to its members door hangers featuring a photo of Jasper Ray, which they could distribute in their farms to remind residents about California’s Pool Safety Act and to make them more aware of the steps they can take to prevent drowning. Media postings and emails intended for possible publication in this magazine should be sent either to Director of Communications Sabrina Blair at Sabrina@ocrealtors.org or to Writer and Editor Sherri Butterfield at Sherri@ocrealtors.org. All written material may be edited for content, length, or style and may appear either online or in print. Emails become the property of Orange County REALTORS®. Although some may be answered, none will be returned.
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AFFILIATES IN ACTION
Affiliates Assist at New REALTOR® Orientation in January Orange County REALTORS® thanks the Affiliates who assisted at the New REALTOR® Orientation on January 15 and congratulates the new REALTOR® members who joined Orange County REALTORS® on that occasion.
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Laguna Hills Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on January 15 in Laguna Hills were (from left to right) in the back row, Aaron Rosen, Arc 23 Insurance; Michelle Fairless, Michelle Fairless Photography; Virji Angelo, Angelo Termite and Construction; Elle Daniels, Escrow Leaders; and Gary Bridge, First American Title; and in the front row, 2020 Affiliate South Chair Joe Pierce, Iron Key Escrow, and Kevin Schatz, Caliber Home Loans.
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