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Unlocking California’s Housing Gold: AB1033 and SB9 Offer New Avenues for Homeowners to Tap Equity

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In the golden state of California, homeowners now have the opportunity to unlock a wellspring of home equity through two groundbreaking pieces of legislation: Assembly Bill 1033 (AB1033) and Senate Bill 9 (SB9). These laws are not only reshaping the real estate landscape, but also providing homeowners with innovative means to capitalize on their most valuable asset: their homes.

Governor Newsom recently signed AB1033 into law, marking a significant milestone in California’s housing evolution. This legislation enables owners of single-family homes in the state to not only build Accessory Dwelling Units (ADUs) in their yards, but also to subdivide their properties into two condominiums. “This game-changing move,” notes Matt Lucido, founder and CEO of Yardsworth, “permits homeowners to sell off the ADUs, effectively tapping into the value hidden within their yards for decades due to restrictive zoning laws.”

AB1033: The condominium option

The core feature of AB1033 is its allowance for homeowners to not only construct ADUs in their yards, but also subdivide their lots into separate units — each designated as a condominium. The revolutionary aspect of this is that homeowners can independently sell the ADU, presenting an innovative approach to utilizing home equity that deviates from traditional methods like selling and moving, or borrowing against one’s home with second mortgages or cash-out refinancing. These conventional avenues typically involve high interest rates and the potential for displacement from one’s neighborhood, making AB1033 a refreshing and much-needed alternative.

“Historically, there were only two ways for a homeowner to tap into the equity of their homes. One, by selling and moving, but that’s not a great option with today’s interest rates; or two, borrowing against their home with a second mortgage or cash-out refinance — which is also untenable with today’s interest rates,” Matt Lucido shares.

However, it’s crucial to recognize that AB1033 primarily benefits homeowners who already possess ADUs. For those seeking to sell a portion of their yard and access the opportunity without pre-existing ADUs, SB9 remains the best option. Additionally, AB1033’s full potential hinges on its implementation by local municipalities, which may vary across the state. This means that the extent to which homeowners can benefit from AB1033 depends on the discretion of local authorities.

SB9: A state-wide mandate

SB9 focuses primarily on allowing the subdivision of single-family lots into two separate units, and facilitates the construction of additional dwelling units. The essence of SB9 lies in its potential to expand housing options, while allowing homeowners to tap into the previously dormant value within their properties.

SB9’s provisions are designed to address some of the persistent challenges associated with housing in California. It permits the subdivision of single-family lots, creating opportunities for the construction of up to two additional units, whether in the form of ADUs, or even a new house or duplex. This not only encourages greater housing density, but also allows homeowners to maximize the use of their land, thereby capitalizing on their home equity without selling their homes or incurring high-interest mortgage debt.

Implementation challenges

While AB1033 and SB9 offer promising avenues for homeowners to tap into their property’s hidden value, several challenges and uncertainties must be considered in the implementation of these legislative measures.

AB1033, for example, has additional costs other than those associated with lot subdivision and construction. Homeowners opting for this route will also need to pay for legal counsel to establish a Homeowners Association (HOA) for the newly created two-unit condominium. Operating and maintaining such an association in the years to come adds complexity and expense to the overall expense, making AB1033 a potentially costly option compared to SB9.

Under SB9, the cost of subdividing a lot can range from $50,000 to $75,000. These expenses primarily arise from the need to create a new parcel map compliant with the Subdivision Map Act, city fees, and the involvement of consultants and surveyors. These costs can be prohibitively high for many homeowners, potentially limiting the accessibility of these opportunities. Companies like Yardsworth have stepped in to mitigate this challenge by covering all these fees and expenses for their SB9 clients, making it a more financially viable option.

Furthermore, AB1033 is not yet fully implemented, and its uniform application across California remains uncertain. Municipalities possess significant discretion when it comes to adopting and implementing the provisions of AB1033. Consequently, the extent to which homeowners can leverage this law may vary greatly depending on their location. In contrast, SB9 is a state-wide mandate, ensuring consistent implementation across all municipalities, making it a more dependable option for homeowners.

California’s housing crisis and unlocking home equity

“California homeowners are still sitting on near-record home equity,” Matt Lucido points out.  “The value of California homes has more than doubled in the last 10 years.”

The confluence of AB1033 and SB9 takes on added significance in light of California’s pressing housing crisis. Governor Newsom has persistently underscored the state’s need for 3.5 million new homes by 2025. These legislative measures, AB1033 and SB9, represent significant steps toward addressing this crisis. They offer pathways to unlock the latent potential within California’s housing market. They provide homeowners with innovative ways to access their home equity without the need to sell their homes, a practice often linked with gentrification-related displacement.

One of the central challenges in California has been the spiraling cost of homeownership. Today’s 20-year-high interest rates only make buying a home (or selling, moving, and rebuying) more expensive. As a result, homeowners are staying put in their homes, with no viable way of accessing their home equity. It is essential to find ways to access this wealth without resorting to high-interest borrowing, such as Home Equity Lines of Credit (HELOC), with rates as high as 10 percent or more. This is where AB1033 and SB9 emerge as compelling alternatives. These laws facilitate homeowners in staying in their homes and neighborhoods while selling a portion of their property, thus allowing them to access their home equity without incurring considerable financial burdens.

The new California laws AB1033 and SB9 offer innovative solutions to unlock home equity for homeowners in the state. By permitting the subdivision of single-family lots and the construction of ADUs that can be sold independently, these legislations allow homeowners to tap into the dormant value within their properties. This not only provides a pathway to access much-needed funds without displacement, but also encourages housing density to help alleviate California’s crisis. However, potential barriers like municipal discretion over AB1033 implementation and high subdivision costs associated with SB9 must be addressed to ensure these laws fully deliver on their promise.

Overall, AB1033 and SB9 represent promising steps in the right direction to empower homeowners, stimulate housing growth, and inject liquidity into the state’s housing market. While uncertainties remain, their passage indicates California’s commitment to pursuing creative approaches that benefit both homeowners and the broader community.

Rosario is from New York and has worked with leading companies like Microsoft as a copy-writer in the past. Now he spends his time writing for readers of BigtimeDaily.com

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Lifestyle

Sara Zaimi Vies for Miss NJ Crown

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The Miss NJ competition seeks a leader, a role model who inspires with both brains and heart. Enter Sara Zaimi, a trailblazing pharmacist with a Doctorate (PharmD) whose passion for women’s health and community empowerment burns brightly.

A brush with mortality at a young age – chest pain and a concerning blood test – ignited a fire in Sara. Witnessing the unwavering spirit of women battling cancer in the oncology ward solidified her desire to make a difference. It was her mother’s unwavering support, the way she held her hand through fear and doubt, that propelled Sara to answer that call. Overcoming self-doubt and depression, she embarked on a remarkable academic journey, graduating with her PharmD at the prestigious Rutgers University at the early age of 23, placing her among the top 10% of her class.

As a first-generation Algerian American, she’s a testament to the power of hard work and perseverance. Her academic achievements, including valedictorian honors and consistent Dean’s List placements, stand as a testament. This translates further into her successful business, where she champions women’s health awareness. Her impact extends far beyond the pharmacy walls. Sara dedicates her time to NJ Sisterhood, empowering young women and inner-city communities. Her fluency in Spanish further highlights her commitment to inclusivity and understanding.

Driven by personal experience and empathy, Sara aims to leverage the Miss NJ platform to tackle critical women’s health issues. From early detection of breast cancer to advocating for increased resources, she seeks to empower women to take charge of their health. Her work with NJ Sisterhood complements this mission, focusing on projects that empower women and address their specific needs. Her advocacy includes promoting 3D areola tattooing for breast cancer survivors, a powerful example of how science and art can converge in the healing process.

Sara’s strength lies in the synergy of her diverse experiences. Her business acumen and her work with NJ Sisterhood position her to champion women’s health and community well-being on a grander stage. She envisions using the Miss NJ platform to create tangible change, increasing resources for those affected by breast cancer and other women’s health issues.

The demands of a successful business, active volunteer work with NJ Sisterhood, and the rigorous training for the Miss NJ competition require exceptional time management skills. Sara thrives under pressure, meticulously juggling her commitments without compromising on quality.

Her multifaceted personality, unwavering commitment to women’s health, and passion for community empowerment make her a strong contender for Miss NJ. She embodies the true spirit of the competition: a woman who is not just beautiful, but a force for good, inspiring young women to reach for their dreams and embrace their unique talents.

Follow Sara’s journey and learn more about her mission on Instagram: @pharminked_laser and @njsisterhood. Let’s cheer her on as she vies for the Miss NJ crown!

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