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Bernal Heights Agency of Vivre Real Estate
When most people analyze the real estate market in a given area, they only look at the obvious factors. They consider home values, local schools and amenities, property taxes and so on. The reality is, however, that even minor societal or economic changes can be like stones falling in the pond of a community, sending their ripples through the real estate market and beyond.
One of those stones is Proposition 22 or Prop 22 for short. While the legislation itself has been widely discussed throughout California and the US, its impact on California real estate has not.
Proposition 22 is a California proposition that was passed by the state voters in 2020. It is the latest in a tug of war among the state's leadership to decide how to handle the growing gig economy, especially as it pertains to freelance drivers for gig-based apps like Uber and Lyft.
In 2019, California passed Assembly Bill 5, or AB5. AB5 stated that all freelancers or independent contractors who performed more than a minimal amount of work for a company must be classified as employees.
This was meant to address the concern that companies take advantage of workers. Businesses label workers as contractors rather than employees, to avoid giving them benefits like health insurance, paid leave, and unemployment insurance.
However, the true effect this had in many cases was an inability for freelance workers to do their work and earn an income. Prop 22 is a compromise of sorts.
Prop 22 exempts app-based drivers, like rideshare and delivery drivers, from the AB5 employee classification. In exchange, it gives them other protections like minimum pay guarantees, health insurance in some circumstances, and compensation for on-the-job injuries.
Proposition 22 has had a positive reception overall, as it offers some benefits for both contract drivers and their client companies. There are several ways it's likely to impact the real estate market in the process.
With the Prop 22 exemption, there are increased opportunities for contract drivers now that companies can "hire" more of them. This will lead to an overall increase in income because more people are making money this way. Because those drivers will pay state income taxes on the new income, the overall amount of income tax in California is expected to increase.
Analysts also expect that rideshare and delivery companies who hire these drivers will see stock price increases. When their investors sell those stocks, they will pay income taxes on the profits. This further adds to the increase in state income taxes.
This could affect real estate depending on how the state decides to spend that money. For instance, if the state invests the added tax revenue in new developments, real estate prices in that area will increase. Or real estate prices could decrease if the state unveils a new (and sorely needed) affordable housing program.
While AB5 was meant to help gig workers, it sent a wave of fear through many in the freelance community. Many felt that they were overlooked or miscategorized in a way that would prevent them from continuing to operate as their own business. As a result, some either considered leaving or did leave California.
Because 36% of the US workforce does some amount of freelancing, we're talking about significant numbers here. For many app-based drivers, Prop 22 puts them in a better position in California than they would be elsewhere. Not only can they keep operating independently, but they also get benefits they wouldn't receive in other states.
The result is a higher population of earning adults, and that means a higher demand for real estate.
Independent contractors aren't only different from employees in the benefits they receive. Their income predictability is very different as well, and this affects their ability to receive mortgages.
Historically, contractors have had a more difficult time securing mortgages. Because their income is more varied, they need to provide long-term proof of income to qualify.
Now that we expect to see an increase in freelancing in California, this could go one of two ways. We could see a higher demand for rental properties because fewer people may be able to qualify for mortgages.
On the other hand, the number of contractors and freelancers in the US is expected to continue increasing overall. It is possible that we'll see changes within the mortgage industry that accommodate this growing population of solopreneurs.
It's important to note that the gig economy is not entirely made up of people who traded their 9-to-5 salaried job for independent contracting. In fact, many app-based drivers use driving to supplement their existing income.
Now that app-based gig work is a more available and an increasingly appealing option, we expect to see even more people taking advantage of it. This could lead to a higher average income in California.
For the real estate market, this would create a shift toward higher-priced properties. More people would have the income to afford these pricier homes, so the demand would increase.
We've talked about people who use app-based driving as their primary income source and people who use it to supplement their income. There's another common situation, though.
When people lose their jobs due to downsizing or other reasons, gig work can fill in the gaps. It's fairly easy for most people to get work from app-based driving services, because the need is so high. They may not earn the same amount they did previously, but at least they have some income while they hunt for a new, more permanent job.
Now that this on-demand earning potential is so accessible, fewer people may find themselves without the income to pay their mortgages. The result, barring other factors, is fewer foreclosures and short sales on the real estate market.
The real estate market is always complicated, with countless factors coming into play. Prop 22 is only one of many. Fortunately, you don't need to figure it all out on your own.
Contact our real estate team to discuss your options for buying or selling your home and the market circumstances you need to know.
If the dark and dreary days of late fall and winter tend to bring you down, why not brighten your home’s interior with indoor houseplants this year? Once you get one, you'll find it hard to stop acquiring them. That's how uplifting indoor plants can be.
Most indoor houseplants are inexpensive and require relatively little maintenance. However, if you prefer a more significant challenge, there are more needy and delicate options, such as orchids.
Here, though, we'll discuss seven of our favorite indoor houseplants. All are readily available at local garden or home stores. You might even have friends with cuttings to share from their plants.
Important Note! The first four houseplants listed are toxic and should be kept away from cats and dogs. The last three plants listed are safe for pets (although the plants themselves might look a bit ragged after their first "pet vs plant" encounter).
If you love surrounding yourself with vibrant life, you may have both flora and fauna sharing your home. Just watch out that neither is harmed by the other. Avoid tragedy by keeping poisonous plants on a high shelf or in a room with the door closed. Many houseplants are super simple, but there are some essential rules. This may be the most important: Don’t mix pets and poisonous plants! Now, on to the houseplants.
Like many other fast-growing plants, hardly anyone ever pays for the pothos. At some workplaces, you'll find pothos that started as a wee clipping from a coworker’s plant, now growing wildly and taking over a desktop or windowsill. Yes, they do enjoy the sunlight.
As many have experienced, it is possible to over-water the pothos, so be sure to water it only when the soil is mostly dry. You'll enjoy watching its curled-up leaves gradually unfurl, somewhat like an umbrella. Don't be impatient, though. It takes a few days. That’s part of the fun!
The snake plant (Sansevieria trifasciata) is native to tropical climates. These are among the best indoor plants and are sometimes referred to as "pieces of furniture," being so hardy as to withstand even weeks of neglect or the mistakes of plant newbies. Snake plants are great for beginners.
Snake plants don't need frequent watering since their thick, waxy, fibrous leaves store lots of moisture. If anything will kill a snake plant, though, it's cat pee, which alters the soil's pH. So keep your cats away.
Besides, eating snake plant leaves causes nausea, vomiting, and diarrhea in both cats and dogs. No bueno.
The clivia (Clivia miniata) is one of the most beautiful indoor flowering plants. While it can take a few years for this plant's bright orange blossoms to appear, the bloom is truly awe-inspiring and worth the wait. Clivia is fickle, and might not bloom regularly, making it even more special when it happens.
If you see a clivia plant suddenly start looking sickly, check the roots. These plants tend to split into multiples and proliferate, or they can become root-bound just as fast. If this happens, you should either divide the plant or put it in a larger pot.
Be aware that the clivia, especially large amounts of it, can make your pets quite ill, so take the necessary precautions.
With its delicately patterned and brightly colored leaves, the polka dot plant (Hypoestes phyllostachya) makes a welcome addition to any room of the house. While this plant can grow from seeds, it's more often propagated by cuttings. Ask around, maybe your friends have some to share!
With a stunning plant like this, there are sure to be many clippings available.
Although the polka dot plant isn't highly poisonous to pets, it might give them tummy aches if they eat a lot of it. For your pets’ sake and the sake of this lovely plant, try your best to keep them away from each other.
You may be surprised at how many of the best indoor plants are also safe for pets—though you don't exactly want to give any of these to your cat or dog for dinner, either.
But if you want to know how to brighten up your home in a pet-safe way, then check out these and other pet-friendly indoor houseplants.
Who hasn't owned a spider plant (Chlorophytum) at one time or another? Hardly anyone has to purchase these dangling beauties. Most of the ones we've had in our homes began as offshoots or "babies," grown from someone else's original plant. Spider plant is among the most common houseplants, and for good reason.
Since spider plants usually hang from a hook on the ceiling, your cats and dogs will gaze longingly at them. But gazing is all they can do, unless, of course, it grows down to the floor.
In that case, it would be wise to trim off some of those baby spider plants and give them away to people you know.
African violets (Saintpaulia) enjoy low light and moderate temperatures, making them ideal inside plants, as well as easy to care for. A soil-free potting mix and a balanced fertilizer help African violets stay healthy.
An African violet produces beautiful bright purple flowers among its thick and fuzzy leaves. And even though it won't harm your pets if they ingest it, this is a delicate plant that you should display on a high shelf.
Another of the indoor flowering plants is the Calathea, also known as prayer plant, zebra plants, and peacock plants. There actually are several different species in the Calathea family, some with intricate patterns of parallel lines on the leaves.
Since plants in the Calathea family come from the tropics, they require warmth and a certain level of humidity to flourish. Given this, it does seem odd that they prefer limited water and indirect light. They are what they are. And they are great as houseplants!
Indoor houseplants don't just brighten your home. They also clean the air, release moisture, relieve stress, promote relaxation, and even increase our attention spans. What's more, the presence of plants can give anyone's spirits a boost.
If you're thinking of selling your home but not planning to fully stage it, houseplants are a nice way to liven up your interior for photos and prospective buyers. Houseplants can even be a heartfelt little welcome gift for the buyers of your home. So try one of the hearty plants we've discussed here!
If you're interested in buying or selling real estate in Bernal Heights, San Francisco, and beyond, give us a shout! We're Bernal Heights top real estate agents, and we'd love to hear from you.