The California Association of Realtors is applauding the efforts of the California Legislature and Governor Jerry Brown to help make affordable housing more available in California. With the passage of SB 2, authored by San Diego’s State Senator Toni Atkins, on September 14 and the impending signature of the Governor, California will tax new mortgage refinancings from $75 – $225. per transaction.
Joining a plethora of other real estate transactional fees, the proceeds from this tax will be directed specifically at the development of affordable housing in the State. Analysts forecast that SB 2 will generate a permanent stream of some $250M annually to help pay for affordable housing.
Geoff McIntosh, president of the California Association of Realtors (CAR), said, “We must always recognize that until people have the ability and opportunity to buy or rent a home in CA, our work is not done. Homeownership is the vehicle for individual prosperity that can help the state fulfill its economic potential.”
The Building Owners and Managers Association of Greater Los Angeles (BOMAGLA) does not agree. Representing owners, managers, developers and leasing professionals, the BOMAGLA calls SB 2 an “outrageous tax increase” that will increase the cost of lot line adjustment filings sevenfold, from $36 – $261.
Cody Coffman of Redfin believes this new tax is essentially much ado about nothing and that his clients won’t “…bat an eye at (it)…this won’t be anything that will make or break a deal.” Besides, Coffman said, “We need more low-income housing…we don’t have enough.”
New York and Florida already have fees on mortgage recordation. According to real estate research firm CoreLogic’s Alyson Austin, “A $75. tax will slow the volume of refinancing activity but not by a lot…” and speeds by which mortgage payments are made are only “a little slower in those states.”
California’s need for affordable housing, like affordable housing needs in most states, is glaring. State Senator Atkins cites that the State falls short of some100,000 affordably priced homes needed on an annual basis to help stabilize housing costs. Without affordable housing, coupled with historically low inventories, home prices for both buyers and renters continue to rise at staggering rates.
Right now, according to CAR’s August, 2017 report, only 29% of Californians can afford a median priced home ($553,260.) in the State. And, according to the Public Policy Institute of California, 31% of mortgaged homeowners and 46% of renters in the State spend +35% of their income on. housing. Hopefully, CA’s SB2 will help put a dent in those numbers.