25 More Amazing Facts About Wine

“Beer is made by men, wine by God.” -Martin Luther

In part one of this blog, we covered the first 25 facts about the wine we love so much. Here, we cover the next 25. Please follow us on social media to see more blogs about wine and always feel free to email us if you have any questions - about real estate or wine!

1.  the unique qualities of grapes that make wine making possible, as they are the only fruit that can produce proper nutrition for the yeast on its skin and sugar in its juice for natural fermentation.

2. If you look around a nice restaurant and see the patrons sniffing the cork, let out a little chuckle at their expense. In fact, smelling the cork reveals almost nothing about the wine. But when the server or sommelier hands you the cork from a bottle of wine, look for the date and other identifying information on it, as well as signs of mold, drying, cracking, or breaks in the cork that could mean the wine is compromised.

3. If wine smells musty or moldy, that probably means the bottle is “corked,” which means somehow air got in and it was contaminated.

4. They took their wine seriously in ancient cultures, as The Code of Hammurabi in 1800 B.C. had a law that punished fraudulent wine sellers by death, drowning them in the river!

5. Not everyone was a fan of wine in ancient times, as the prophet Mohammed in the 7^th century A.D. called for a ban on drinking wine or any alcohol, leading it to be outlawed from Arabia and from every nation where he was revered.

6. The Romans used to mix lead with their wine, which they found preserved it well and also gave it a sweet taste and rich texture. Unfortuntely, they didn’t know that drinking lead may not be the best thing for your health, and historians believe chronic lead poisoning was one factor for the decline of the Roman Empire.

7. In ancient Egypt, the kings and pharaohs avoided wine because they thought it was the actual blood of those people who crossed the Gods – and lost. A blood curse from the gods was also a perfect explanation for the temporary insanity and crazy behavior wine drinkers exhibited.

8. The ancient Greeks designed a wine glass that ensured drinking in moderation. If the cup was filled past a certain level, all of the liquid poured out of the bottom of the glass.

9. The Vikings named the North American continent Vinland when they first came around A.D. 1000, which means “wine-land” or “pasture-land,” because there were so many native grapes growing.

10. Still to this day in Vietnam, you can order a wine made from cobra’s blood in certain restaurants. How do you know if it’s really the blood of a cobra? The waiter actually takes a live cobra, kills it right in front of you, and then drains the blood into a shot glass of rice wine for you to drink, garnished with the cobra’s still beating heart.

11. Wine is popular among wealthy Chinese people, who like to show off their taste for luxury by drinking ultra expensive wines…mixed with Coca Cola or Sprite so it tastes better.

12. There was a clever way to sell wine without breaking the law during America’s Prohibition Era; grape juice mix was sold with the attached warning label reading, “After dissolving the brick in a gallon of water, do not place the liquid in a jug away in the cupboard for twenty days, because then it would turn into wine.” Hmmm…

13. A wine tasting competition in 1976 in Pairs compared Californian to French wines in a blind test. But when the Californian wines won and the French organizers found out, they blacklisted the one journalist in attendance from reporting the event.

14. In a wine tasting experiment conducted in 2001 at the University of Bordeaux, a panel of so-called wine “experts” gave the lowest possible score to an average-priced Bordeaux that was served in a cheap bottle. But when the same wine was served to them in an expensive bottle, they gave it some of the highest possible scores.

In the same study, white wine was dyed to make it look like red wine and then served to 54 undergraduates who were studying wine making and tasting, but every single one of them thought it was a good red wine.

15. If that’s not enough evidence that wine “expertise” is skewed by snobbery, a 20005 study revealed that scores of judges rated a wine by up to four points higher or lower just based on the bottle it was served in.

16. In a recent social experiment, it was discovered that wine drinkers would pay more for wines if they had hard to pronounce names. Even those wine drinkers who knew more about wine reported that difficult-to-pronounce wines costs more.

17. A newly planted crop of grape vines needs to grow for about four to five years before it can be harvested and made into wine.

18. When pairing wine with food, rich and heavy foods usually taste better with rich, heavier wines, and vice versa. That’s why red wines are typically served with certain cuts of meat while white wines go with white meats, fish, and seafood.

19. There is also a protocol to when wine is served during a big meal. Generally, lighter wines are served first and then more heavier wines are served for later courses of the meal. White wines should also be served before reds, and younger wines before older, and dry before sweet.

20. When you feel a little tingling in your gums with wine drinking, that’s actually the tannin, which comes from the grape skins, pips, and stalks. In fact, tannins (derived from the word ‘tan’) are only found in red wines and rich in antioxidants. You can spot them as the sediment that settles at the bottom of a bottle of red.

21. Darker colored wines usually come from warm climates, while lighter colored and white wines come from cooler climates.

22. Red wine loses color with age and will eventually be a brick-red color. However, white wines gain color with age, becoming more golden and eventually brownish-yellow.

23. The vast majority of wines taste like some type of fruit, not grapes. Only a select few like Muscat or Concord wines taste like the grapes that originated them.

24. Throughout history, wine was always stored on its side, but never standing upright, which keeps the wine inside from coming in contact with the cork, which could cause drying, shrinkage, and eventually cracking and air getting in, spoiling the wine. But it’s perfectly OK to store wines with an artificial cork on their side.

25. When a wine is referred to as “dumb” it just means that it currently lacks odor, though that may develop over time, like with many Cabernet-Sauvignons. When a wine is called “numb,” on the other hand, it has no odor and lacks any potential to develop it in the future.

California’s property tax rates won’t reflect soaring real estate values next year thanks to controversial Prop 13

Over the past four years, Californians - and especially Sacramentans - have enjoyed soaring property values, and yet property tax rates have just been fixed at a meager increase for next year. Property 13, the controversial ballot measure that was passed by voters in 1978 and limits yearly property tax increases, is either to blame or to thank, depending on which side of the fence you sit on.

Two important reports referencing Prop 13 and property taxes came to light this week, released on the same day, though that is probably only a coincidence. The first was a report by the California Legislative Analyst’s Office that that since hitting bottom in 2011, California’s median house price has increased a whopping 45 percent as of September 2015 – an increase north of 10 percent per year.

 At the same time, The State Board of Equalization released their own report that confirms that those huge increases in value won’t be felt by homeowners when it comes time to pay their property taxes. In fact, Dean Kinnee, the Board’s property tax overseer, sent a letter to county assessors instructing them to raise the taxable values of properties by only 1.525 percent next year, in accordance with Property 13.

But to be accurate, that 1.525 percent cap on property valuation increases is still less than what was possible under Prop 13, which limits such raises to the rate of inflation with a 2 percent ceiling every year.

Prior to Prop 13’s passing in 1978, property taxes were subject to large hikes just as significant as the rise in property values themselves. The state of California only had about a half-trillion dollars of taxable property at the time but the average tax rate was more than 2 percent, generating about $10 billion a year for state coiffures. At that pace, tax revenue would have increased to about $200 billion yearly over the last 37 years. However, the grand total for expected property tax revenues is only projected somewhere just over $55 billion for the 2015-16 fiscal year.

But with Prop 13 set to mirror inflation, the 2 percent cap was put in place and tax rates were initially fixed at 1 percent plus voter-approved bonds. This year, the property valuation increase was set shy of 2 percent because the Department of Industrial Relations calculated California inflation between October 2014 and October 2015 at just 1.525 percent.

That means our tax adjustment will be slightly less than in 2015 and one of the lowest since Prop 13 was born in ’78. We’ve seen that max 2 percent increase most years, including in 1980-81 when inflation hit a whopping 17.32 percent.

It’s important to note that Prop 13’s limits are neither for properties that have changed hands nor new construction, which are added to the tax rolls at their initial price. Taxpayers may also see their property tax valuations increase by more than 1.525 percent if their local agencies issued new bonds or their taxable values were lowered during the Great Recession, as State law allows values to be increased once housing market conditions improve, and also subsequently adjusted for inflation.

Under fire seemingly every year, Prop 13 is may be altered next year, as a proposed ballot measure would remove the 2 percent cap for properties worth more than $3 million, allowing them to be taxed at a higher rate, with the new windfall allocated to fund children’s programs in the state. While that won't impact a significant number of homeowners in the state's capital city, high-priced areas like San Francisco, San Jose, certain Los Angeles suburbs and central coast communities will feel the sting - and certainly fight for status quo. 

10 Real estate market trends for 2016

It's been a great year for real estate, both nationally and in our own Sacramento region, but what will 2016 hold? Here are 10 trends analysts,  economists, and housing experts expect to see this coming year. Look for part two of this blog, with trends 6-10

1. Baby Boomers are making changes

Everyone is talking about the Millenials in real estate and the impact they will make on the housing market in years is undeniable, but don’t forget about the Baby Boomers. America’s 55-74 year old generation is expected to start selling their bigger, traditional homes and opt for smaller, more manageable living arrangements. Town homes, condos, shared housing, etc. better fit their needs, including dwellings that are easy to manage, have less stairs, enjoy built-in communities with others like themselves, and close access to medical facilities and public transit.

2. Supply and demand balance

Right now, there is a run on demand for affordable housing, yet supply levels are still below average. But as the banks continue to process and release their inventory from the recession and the ripple of foreclosures, inventory is expected to rise. In addition, buyers may still want to buy, but a small number will be priced out thanks to higher payments from increased interest rates, causing a net effect of balancing supply and demand.

3. Millenial buying power

The group that has the ability to stoke the fires of the housing market is the Millenials, those 80 million Generation Y’ers between 18 and 34. They’ve largely been on the sidelines of home ownership because of reluctance to get burned like so many did during the Great Recession, and more so an inability to save or qualify because of record levels of student loan debt and stagnant wages. But this is the first year the Millenials are expected to start maturing into home buyers in large numbers (six out of Millenials surveyed expect to live in a detached single-family home within five years or less), which will keep demand for entry level, affordable housing high. Those older Millenials who already bought their first home years ago are also expected to sell and look to move to the suburbs as they start families and enjoy stable careers.

Sacramento Housing Market Statistic:

Millennials now make up about a third of the home buying market and roughly about 30 percent in the Sacramento region.

4. Coastal markets slow, Rust and Tobacco Belt heat up

In past years, coastal markets such as San Francisco, San Diego, San Jose, Boston, Washington D.C., and New York have been white hot, but this is the first year we could see a cooling of those real estate numbers. No one is expecting any sharp decline but the insane purchase prices and rents can’t keep climbing forever in those areas, so there should be a dip in appreciation, though it will likely still be positive.

Meanwhile, buyers are still looking for those pockets of affordability around the country and aren’t afraid to relocate as long as there are jobs in those areas. As the overpriced coastal and large metropolitan markets in California and the Northeast take a slight step back in 2016, housing in the Midwest, Texas, and places like North, South Carolina, and Virginia and other areas of the south will become the new housing haven. Baby Boomers are looking to downsize and spend a fraction of what they did in bigger cities while capitalizing on great communities with amenities, while young families in increasing numbers want to escape the prohibitive costs in larger seaboard cities.

5. New home construction reintroduces itself

A profound change in the housing marketing in 2016 will come from the reintroduction of new home construction across the U.S., and particularly in markets that have been severely underserved in the last five years, including our own Sacramento. In fact, Sacramento will rank number four in the nation for new home starts in 2016 behind only Providence, Rhode Island, St. Louis, Missouri, and San Diego. Analysts predict a 12 percent increase in new home starts in 2016 compared to a year earlier, and total new home sales to grow 16 percent over the same period.

Real estate market statistic:

In 2016, total sales for existing and new homes are expected to reach 6 million for the first time since 2006.

Ten financial experts weigh in on how a FED rate hike will affect the real estate market.

How will the FED rate hike affect the real estate and mortgage markets? Will housing slow down because of a slight bump in the FED, or will it continue its steady appreciation based on strong demand and emboldened consumer confidence? We collected the personal thoughts and opinions form ten noted financial and housing experts:

1. Nela Richardson, chief economist for national real estate brokerage Redfin:

"Buyers now don't seem to be all that spurred or driven by a rate increase. That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy."

2. Ralph McLaughlin, housing economist at Trulia:

“When rates do increase, it could be as little as a quarter percent. I don’t expect that to have a big impact on the market, but it could temper home price growth, which is good news for prospective homebuyers. Interest rates won't have much of an effect on the 'rent versus buy' math. Buying would still be cheaper than renting in most metros around the country."

3. Selma Hepp, chief economist for Trulia:

“If the Feds decide to increase the rate at their meeting tomorrow, any increases in rates will be nominal and gradual. Impact on homebuyers will be minimal. For example, an increase of 25 basis points on a mortgage loan of $250,000, raises the mortgage payment by $35. I don’t think that will turn people off from buying a home, but they may end up looking to buy a slightly less expensive home.”

“I think the strong economic fundamentals, including robust job growth, better-paying jobs, rising wages and strong consumer demand will, in fact, increase demand for homes. Long term, interest rates may slow home price appreciation but I don’t think it will have a notable impact on home sales.”

4. Mark Fleming, chief economist at First American Financial:

“Of course, we cannot be sure exactly how mortgage rates and the housing market will respond to a Fed rate increase.  But, we can say with some certainty that the Fed will eventually raise rates. When it does, the housing market isn’t doomed to fail, but rather adjust to the reality of interest rates that are reflective of a strengthening economy and certainly more traditional financial conditions. A stronger economy, more or better jobs, rising wages, increased confidence—these factors all increase demand for housing. In other words, rising rates are indicative of increased home sales and upward pressure on prices.”

5. Jonathan Smoke, chief economist for Realtor.com:

“The Fed decision is symbol over substance as far as immediate direct impact to mortgage rates go. Their move will impact the consumer and the broader perception and expectations for rates given how much attention is paid to the Fed and this particular decision.”

“In aggregate I think the near-term impact is negligible if not positive. The 30-year rate already varied by 50 basis points from its low in January to its high in June, and since then we’ve floated back down 20 basis points. No one is expecting rates to move substantially in the months ahead given global economic weakness.  We’re likely to see about 50 basis points of increase over the next 12 months.  The historical perspective shows that even at 50 basis points higher than today, mortgage rates are incredibly low.  Couple that with improving household finances and incomes—especially in the segments who are driving home sales this year—slightly higher rates won’t put a damper on the increased demand we’ve seen this year. We’re months if not years away from the type of high rates that would pose substantial risk to home sales, especially since what’s driving the gradual movement to higher rates is a much healthier economy producing consistent solid gains in employment and household formations.”

6. Svenja Gudell, chief economist for Zillow :

“I don’t think it’s going to have a big impact. It will have a small impact in markets like San Francisco where housing is expensive. It will hit markets where there is very little wiggle room, more than a market like Cleveland or a metro area where home values aren’t so high. It’s not going to be a showstopper. The Fed is not interested in rocking the system; it will be a fairly smooth ramp up.”

7. Lynn Fisher, vice president of research and economics with the Mortgage Bankers Association:

“We think that the fact that they’re ready is a reflection of an improving domestic economy. The jobless rate is at a 7-year low and wage growth is starting to heat up. Both will buoy demand.”

8. Steve East, chief economist and market strategist for Height Securities:

“It’s more clear that the Fed is going to raise rates than that the long end is going to go up because presumably some rate hike cycle is priced in. Even if the Fed’s actions do hit the mortgage market, I don’t think a 25 basis point increase in mortgage rates is going to make a difference in demand.”

9. David Kelly, chief global strategist at JPMorgan Asset Management:

"Aspiring homeowners have to meet three criteria to qualify for a mortgage: sufficient savings for a down payment, an acceptable credit score, and proof that they can make their monthly payments. That final component is the most susceptible to rise along with interest rates, but is also by far the easiest of those hurdles to surmount.”

10. Joe LaVorgna, chief U.S. economist at Deutsche Bank:

"Debt service is not the problem for people who want to take out a mortgage. Lower rates and a flatter curve aren't going to help the housing market too much if you can't get a mortgage because standards are still too tight. How good can the economy be if rates are still at zero?""

"When the Federal Reserve raises rates from low levels it is generally taken as a sign of economic confidence—that the economy no longer needs the Fed’s help—and that rising confidence is generally positive...”

8 More reasons why we're absolutely not looking at another real estate crash

It may seem like just yesterday that we were in the midst of the dark days of the real estate market with little reason for hope, but things are looking downright rosy now. While it’s true that these cycles usually go through 7-10 year trends, we’re here to tell you with 100% certainty that we’re not looking at another real estate crash like in the mid 2000s.

In part one of this blog we spelled out the first five reasons why we’re absolutely not looking at another impending real estate crash.

Here are reasons five through seven:

6. The Millenials are coming as first time buyers

The demographics of homebuyers will change dramatically in the next years and decade, but it’s not just the Baby Boomer selling, retiring, downsizing, and facing new needs that will change the face of real estate. In fact, there are about 80 million Millenials – those aged 18-34 who will make a significant impact on housing. So far, they have been reluctant to buy, perhaps jaded by what happened to their parents during the Great Recession and, more likely, saddled with unprecedented levels of student loan debt. But as time goes on, their jobs will stabilize, incomes increase, and the black hole of rent payments will swing them to home ownership en masse.

7. Housing affordability is solid – and a realistic goal

Not only are interest rates still hovering at very enviable levels, but also banks are lending money again. The strength of loans sponsored by the Federal Housing Administration still allow borrowers to put far less than 20 percent down for a home. Additionally, the FHA reduced its annual mortgage insurance premiums by up to $900 per year, a smart chess move that will most likely spur first time and younger buyers. The National Association of Realtors predicts the dropping of FHA premiums alone will increase sales by up to 5.6 million homes and lure 140,00 new buyers into the market – a diversification that points to cash, not crash.

8. New-home construction remains low

We’ve come a long way, baby, but the levels of single-family new home starts still remain 60 percent below where they stood at the peak of the market in 2006. Those numbers aren’t just anomalies – our current new home inventory is also about 25% less than the average for the last 15 years. Add to that the fact that the supply of existing home sales is lower than it was in 2000 despite a 14 percent increase in population and you have a heavy indication of demand without over-supply.

9. Our banking system is recapitalized, re-regulated, and reloaded

The circus of bank affairs before the mortgage meltdown and financial crash fired most of it clowns and started over. These days, banks are on a much tighter leash, no longer allowed to rapidly grow their balance sheets and make risky bets with borrowed money. A key indicator of the new and improved of the banking system is the fact that credit losses are running at generational lows and U.S. banks are enjoying unprecedented liquidity. If the banking industry hasn’t learned their lesson then the people watching them has, and we won’t see reckless and wanton abuse of the system that facilitated the house of cards collapse again.

10. Savings down, debt up

At the peak of the real estate bubble, the American personal savings rate fell to an all-time low of 1.9%. Those numbers were equally as bleak after the bubble burst and into the financial crisis in the late-2000s. But now, our savings rate has more than doubled to a rate of 4.8%.

While this is still small potatoes compared to the average national savings rates in through past decades and then 10% financial advisors suggest, more personal savings means more money for down payments, mortgage instead of rent, and paying down debt – all key elements of home ownership.

11. Stocks may be in for a bumpy ride

The stock market and real estate market are usually like two trains running on opposite tracks – when one is speeding ahead full throttle, the other is chugging along in the opposite direction. Right now, there are signs of some volatility and over valuation in the stock market, with near record-high corporate profit margins and a slow down in earnings growth something to keep our eye on, as well as the threat of trouble in foreign markets like Europe and China sending shock waves through stocks.  In fact, the S&P 500 has now retraced about 17 percent of its gain since the Great Recession trough of March 2009. All of that is good news for bonds, mortgage rates, and the real estate market – a train that looks to keep its momentum and not be derailed.

12. Our economy has stabilized

Overall, we don’t have much to indicate any sort of crash or volatility to come. The economy is growing at 2 to 2.5 percent per year, jobs numbers are up, debt is down, fuel and energy costs are low, housing affordability is up, and interest rates are still low, with the Fed expected to start a gradual increase of rates to temper inflation. Like we said, there will always be ebbs and flows to the real estate market just like any market or our overall economy, but looking ahead they appear to be gentle hills, not sharp cliffs.  

Bonus: How sound is our real estate market in Sacramento?

Certainly the economic and market factors we just outlined still apply in Sacramento, with some even more pronounced. Right now, the Sacramento region has one of the lowest new construction rates in the country, which is putting huge upwards pressure on rents. Homes have risen in value over the last five years but are still within realistic ranges compared to other areas and options in California. Furthermore, the new down town arena project is likely to boost the economy in coming years – or at least invigorate it enough where a real estate crash is highly unlikely.