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THE VALLEY BUSINESS JOURNAL 26 March 2018 The Trump Slump! REAL ESTATE by by Gene Steve Wunderlich Fillingim January was a slow month for housing so why not blame it on something the President said or did? It’s a popular pastime these days. But, of course we knew January was going to be slow anyway. History has proven that, so it wasn’t a big surprise, but it’s still nice to have a scapegoat. Actually, January was a mixed offering – sales dropped 24% from the prior month (894 / 682) and 9% under January 2017 (729) – not an auspicious start. However, cooler sales allowed the market to slow absorption and increase inventory of existing homes by 9% to 1,565 single family units. That’s still 6% fewer homes on the market than last January, but it’s a start. It allowed us to creep back to 2.3 month’s worth of inventory from last month’s 1.7 and staying the same as last January. Pending sales are up nearly 10% in January indicating stronger sales in February. But February is also a short month so some of those sales will fall into March and serve to jump-start the spring buying season. By March perhaps people will be seeing a little more in their paychecks and may decide it’s time to buy a home or buy up a notch. Tax time will add another chapter to the saga as people (outside California) will be seeing a reduced tax bill hopefully, spurring buying decisions. And the long anticipated Millenial buying surge is off to a start. A slow start to be sure, but a start nonetheless. Price appreciation continues to provide a bright spot for homeowners even as it dims prospects for first-time homebuyers. Our regional median price dropped $489 month-over-month but maintained a 10% edge over January 2017 ($330,155 / $368,333). Temecula notched its 9th consecutive month with average prices above $500,000. December’s average price of $554,974 drew within 4% of Temecula’s peak price last reached in June 2006 ($575,935). IF they push past that the next couple months, it will complete a 12- year path to price recovery for the city. Other cities across the region are within 5% - 15% and should hit their previous peaks in the next 12 – 24 months. Assuming no disturbances in the force. That’s never a given. It’s been gratifying to see our cities and county taking pro-active steps to address the lack of housing inventory across the region. Our cities are trumpeting new housing approvals that will help mitigate the demand. It’s probably fortunate that sales increases have been minimal the past five years as it has avoided unsustainable price spikes. Without these new homes coming online the market will become increasingly exclusionary as price appreciation continues to outstrip wage increases. Further increasing price pressure in some cities is the disparity of effective inventory where 90% of buyers are constrained to just 60% of the market. It remains to be seen whether the imposition of a $750,000 mortgage deduction cap will have a noticeable effect on the upper segment of our market. As noted later in this report, the minimum income needed to qualify for a median price home nearly doubled across all California markets between Q1 2012, the peak of recent affordability, and Q3 2017. If your income hasn’t doubled in the past five years, you’re falling behind!! At least in California. The rest of the country’s doing a little better, they’re only up by 2/3. The state Legislature is getting all fired up again. The last of the two-year bills have either moved along or died. Hearty congratulations to our Assembly Member Melissa Melendez for her arduous four-year battle culminating in passage of AB 403, the Legislative Employee Whistleblower Protection Act. So, settle in as another 2,000 – 3,000 bills vie for our time and money and a plethora of Propositions are rushing to greet us this fall. Supply = Solution. Not bills – HOUSES. Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market, please contact me at or to keep up with the latest legislative and real estate trends go to http://

March 2018 THE VALLEY BUSINESS JOURNAL 27 Scott Chappell - Liberty Real Estate Services I’m Scott Chappell, and I’d like to talk with you about the 1031 Exchange process. I was getting my hair cut the other day and my stylist told me she had sold a rental property and they wanted to do a 1031 Exchange to purchase a piece of land. When they spoke with their CPA they were told it didn’t qualify as “like for like” property. I hear stories like this all the time and it sends shivers down my spine. People are paying capital gains taxes needlessly, losing thousands of dollars that could have been saved. The 1031 Exchange process can be stressful. Let my vast experience guide you through this procedure and I will take that stress away. I have been purchasing investment real estate for over forty years, and I’ve spent twenty years as a 1031 Exchange Accommodator. I don’t want to see you pay one penny more in capital gains than you need to. It’s true, what you don’t know can hurt you. Your accommodator plays a critical role in the 1031 Exchange. There are several elements involved in a successful 1031 Exchange transaction. Document preparation is crucial. One single mistake can cost you dearly. The IRS is unforgiving. 1031 Exchanges are an excellent way to defer capital gains. Doesn’t it make sense to work with someone who knows the process inside and out? It’s also vitally important for you to find someone you can trust to receive, hold and safeguard your 1031 Exchange funds in order to prevent constructive receipt of the funds by you. You can count on me and my decades of experience to safely guide you through these tricky waters. The 1031 Exchange is a wonderful tool. You need someone who knows the process inside and out to guide you through. Call me today at (951) 313-4350 or email me at amazingtemeculavalleyhomes@ “ Document preparation is crucial. One single mistake can cost you dearly. The IRS is unforgiving. Exchanges are an excellent way to defer capital gains. EMWD Encourages Customers to Be ‘Sewer Smart’ With Medications, Hygiene Products Disposal Eastern Municipal Water District (EMWD) is asking customers to be “Sewer Smart” and do their part in properly disposing of medicines and personal hygiene products by not flushing them down the toilet or drains and into the sewer system. Unused medications should be returned to a participating pharmacy that can properly dispose of the medications or through a National Take Back program sponsored by a local law enforcement agency, such as the Riverside County Sheriff’s Department or Hemet Police Department. Customers may also use a drug disposal pouch that can be obtained through a local pharmacy or from Eastern Municipal Water District’s Main Office during normal business hours. The pouches are designed to deactivate pill, liquid and patch medications so they can then be disposed of within the household waste. The U.S. Food and Drug Administration also provides steps to making your own at-home drug disposal pouch. Without crushing tablets or capsules, simply mix your medications with dirt, kitty litter, or used coffee grounds; place the mixture in a sealable zip-top plastic bag; and throw the sealed bag away in your household trash. In addition to medications, customers are asked to avoid flushing wet wipes, cotton swabs, cotton balls and other non-biodegradable hygiene products into the sewer system. Many brands of personal wet wipes have packaging that describes them as “flushable” but the wipes are not biodegradable and remain completely intact for many years when submerged in water. The wipes can clog wastewater collection systems and damage filters at wastewater treatment plants, causing potentially costly repairs to facilities. “By not placing medications and hygiene products into the sewer system, customers can help us keep costs low and protect the environment,” EMWD President David Slawson said. “Small steps that customers take have the ability to make the biggest impact and benefit us all. We appreciate the work of our customers in properly disposing of these items.” EMWD is the freshwater, wastewater service and recycled water provider to a 555-square mile area from Moreno Valley southward along the I-215 corridor to Temecula and eastward to Hemet and San Jacinto. Approximately 816,000 people live and work in this area. In addition to its own water customers, EMWD supplements water to six local water agencies and municipalities that have their own water departments. EMWD operates four water reclamation facilities and treats some 46 million gallons of wastewater daily. More information can be found at www.