GREEN REALTOR NEWS | Vol. 23
Market Update | News | Photo Contest
The winner of our January photo contest was Dan Frost of Mill Valley! On receiving the good news Dan’s response was: “Seriously????? Last time I won anything (besides the wife of course) was in 1975 when the DJ in Santa Rosa said he'd play a song I requested if I streaked the parking lot so he could see it.” Congratulations, Dan! That lovely waterfall is Cascade Falls in Mill Valley, an easy walk from downtown Mill Valley and just a half mile round trip from the Cascade Falls trailhead on Cascade Drive.
Scroll to the bottom to see if you can identify the location of the February photo. As always, the winner receives a $25 gift card to a local green business, Good Earth Natural Foods.
Market Update
In a nutshell, it’s slow out there! The housing market hasn’t come to a complete halt — people will always need to move for an assortment of reasons — but it has slowed considerably, largely due to the increase in financing costs and the aftermath of the buying frenzy from mid-2020 to mid-2022. As the rate of inflation slows the federal government is shrinking interest rate increases to .25%, signaling that rates might start coming down by the summer. While it appears that the recession many feared is unlikely, we seem to be entering a period of slower economic growth. The same is true of housing prices. While real estate remains one of the best long term investments, values are expected to increase more slowly than the dramatic spikes of the past few years. The biggest challenge the local market faces right now is a major lack of inventory. In January, San Francisco single family home inventory declined to just above the record low reached in December, 2017. Inventory remains low in Marin as well, though word on the street is that many realtors are holding listings back, planning to hit the stronger spring market in March. While it’s true that prices have dropped from their peak in April 2022, they are still above where they were in January 2021 and likely to climb again as the economy settles and interest rates start to drop.
Important Changes to Residential Solar in California
If you are considering adding solar to your home, you should know about recent changes at the national and state level. On the upside, President Biden’s Inflation Reduction Act, passed in August 2022, increased the tax credit homeowners can claim from 26% to 30% for systems installed between 2022 - 2032. According to Lawrence Berkeley National Laboratory, the average price a California homeowner pays for their system is $28,410. At this price, a 30% tax credit would reduce one's federal income tax by $8,523, up from $7,387 under the old rules.
On the down side, the long fight over net energy metering in California finally ended on December 15, 2022 with a unanimous vote by the California Public Utilities Commission to approve NEM 3.0. Net energy metering allows homeowners to earn credits for any excess energy sent to the grid when a solar energy system generates more than needed. The new rules will cut the compensation rate by about 75%, from 30 cents per kWh to about 8 cents per kWh. This will significantly increase the length of time it takes for the reduction in energy bills to offset the cost of installing solar.
All hope is not lost! The new rules do not go into effect until April 14, 2023, giving homeowners a short window to be grandfathered in under the former NEM 2.0 rules. According to Energy Sage, by this date “you must have a complete interconnection application, a signed contract, a single-line diagram (a basic electrical drawing of the system), and an attestation if you’re oversizing your system by this date to be grandfathered into NEM 2.0 for 20 years.” If you meet this deadline, you have until April 14, 2026 to install and connect your system. The new rules change the calculus around including battery storage. Adding a battery to store and use your own energy maximizes the value of your system and reduces the amount sold back to the grid at the lower price. The payback period will still be longer than it would have been under the NEM 2.0 rules, but it will be better than without added storage. If you, like us, purchased only solar panels without battery storage, you can still add a battery at a later date without jeopardizing your NEM 2.0 status.
Marin and San Francisco residents are big adopters of solar! According to San Francisco’s Environment Department there are 3,489 solar installations, meaning that within the city limits there is more solar power generated than 29 individual states. As of February 2020, the last date the data was collected, Marin County had 4,308 systems. Why are we so committed to clean energy? According to Melanie Nutter, Director of San Francisco’s Department of the Environment, we have a culture of sustainability, coupled with local incentives and financing options, where people can save money and make a difference. And perhaps, just perhaps, our incredible surroundings could have something to do with it?
Home Improvement and Joy Score
What are other popular home upgrades? The 2022 Remodeling Impact Report published by the National Association of Realtors looks at the typical cost of 19 popular remodeling and replacement projects, how much appeal each project is likely to have for buyers, and how much realtors estimate homeowners can recover on the cost of the projects if they sell. They also measured each project by the joy score, which is based on how much happiness homeowners reported with their renovations. The project with both the highest percentage of cost recovered and the highest joy score was refinishing hardwood floors, with a rate of return at 147%. With my own clients I almost always advise refinishing the floors when preparing for a sale. It’s amazing how much it changes the look of a room for a relatively low cost. Perhaps surprisingly, upgrading insulation was the next thing on the list, with a return of 100% of the cost and a joy score of 10 out of 10. I can tell you that our big insulation project has definitely led to increased enjoyment of our house this winter. It also led to the need to repaint almost the whole interior, which is also a 10 out of 10 on the joy score and something that most realtors (including this one!) recommend before a sale. Other popular projects include kitchen and bathroom remodels, with an average rate of return of 75% and a joy score of 9.8 for kitchens and 71% and 9.6 for bathrooms. Click the button below to read the full report.
February Photo Contest
All of the gorgeous local photos in our photo contest are provided by the Green Realtor News Artist-in-Residence, Esther Vermeer. Esther is a Mill Valley resident with a background in branding and graphic design. Originally from the Netherlands, she moved with her family to Montreal, Canada for a while, and came to the Bay Area 14 years ago, where she has since established herself in the world of interior design. She loves to journey around California and discover the lush natural beauty the state has to offer. You can reach her at esther@prevalentprojects.com.
If you know the location email me at lucinda@lucindaotto.com. The first person with a correct guess wins a $25 gift card to Good Earth Natural Foods!
I hope you enjoyed the Green Realtor News! If you know anyone buying or selling, or if you are curious to hear more about the market, please don’t hesitate to reach out. I’d love to help you or your friends make moves. As one of my happy clients loves to say:
Everyone Needs A Lucinda!
