Oh my, I am softening my stance against Rent Control...Oh dear, what is happening to me?
I want everyone to have a home, simply that. I think that our society can achieve that desire. Why not? I want to New Zealand twice in the past few years and you do not encounter "street people", or as my partner and I call them, "Outdoorsmen". There is an "added value tax", much like a sales tax that pays for the housing and services for those who have nothing and nowhere to call their own. We are the wealthiest country in the world, even with our deep recession. Our allocation of resources must be in question now, as more and more people are losing their homes. How can that be all right with us? It is no longer all right with me. Sliding into major change, I wish you all good.
Friday, June 26, 2009
Friday, October 12, 2007
Back to 2005 and forward to 2007
Nothing has changed - except Rent Control is now a reality in Oakland, California. Like a virus, it spread to our neighboring city and even became stronger and more prohibitive to property owners.
Are we not "housing providers" to those who cannot afford to own property? Do we not take responsibility for the safety and livability factor for these renters? Should we not be able to be paid for our efforts without the paternalistic protectionism of local governments mired in the 1960's? Should they be able to call themselves "Progressives", when Progressive means one in favor of "Progress"?
One of the aspects of Rent Control in Berkeley is that there is a provision for a new owner to move into a property of one - two units by paying a negotiated amount to the tenant to vacate. To be sure, there is a minimum amount of $4500.00, but a willing tenant and a willing owner can negotiate as two free agents in a democracy. Not in Oakland. It is a crime to approach and suggest a negotiation for the vacancy of the tenant by the owner. Only the tenant can initiate such a conversation. Figure that one out...
As we speak, October of 2007, the housing market for new and resale homes and condominiums is in a stall, except for places like Berkeley and the Rockridge neighborhood in Oakland (interestingly enough - these two locations suffered little loss of value in the early 1990's market correction, almost as if they benefitted from an invisible net below them for safety). Those individuals and family units that might have purchased homes either remain or have joined the ranks of tenants looking for housing. This has made market driven rents higher than they have been for a long time. Ironically, only a year ago, the vacancy rate in Berkeley was known by apartment owners to be higher than the threshhold stated in the "Emergency" nature of the Rent Stabilization Ordinance reason for being. However, this is not really "known" because since Rent Control was instituted in 1979, the City of Berkeley has not paid an outside consulting firm to do an actual count of rentable units in the City. Had they done so, the vacancy factor could be measured on a yearly basis. The fact that they have refused, ostensibly for reasons of cost (The Rent Board has a 3 million dollar annual budget) means that they can avoid the embarassing possibility that the vacancy factor (actual, not fabricated) might show an absence of the "emergency" in housing that created and maintains the credibility of the Rent Stabilization Board. Information is the friend of truth.
Are we not "housing providers" to those who cannot afford to own property? Do we not take responsibility for the safety and livability factor for these renters? Should we not be able to be paid for our efforts without the paternalistic protectionism of local governments mired in the 1960's? Should they be able to call themselves "Progressives", when Progressive means one in favor of "Progress"?
One of the aspects of Rent Control in Berkeley is that there is a provision for a new owner to move into a property of one - two units by paying a negotiated amount to the tenant to vacate. To be sure, there is a minimum amount of $4500.00, but a willing tenant and a willing owner can negotiate as two free agents in a democracy. Not in Oakland. It is a crime to approach and suggest a negotiation for the vacancy of the tenant by the owner. Only the tenant can initiate such a conversation. Figure that one out...
As we speak, October of 2007, the housing market for new and resale homes and condominiums is in a stall, except for places like Berkeley and the Rockridge neighborhood in Oakland (interestingly enough - these two locations suffered little loss of value in the early 1990's market correction, almost as if they benefitted from an invisible net below them for safety). Those individuals and family units that might have purchased homes either remain or have joined the ranks of tenants looking for housing. This has made market driven rents higher than they have been for a long time. Ironically, only a year ago, the vacancy rate in Berkeley was known by apartment owners to be higher than the threshhold stated in the "Emergency" nature of the Rent Stabilization Ordinance reason for being. However, this is not really "known" because since Rent Control was instituted in 1979, the City of Berkeley has not paid an outside consulting firm to do an actual count of rentable units in the City. Had they done so, the vacancy factor could be measured on a yearly basis. The fact that they have refused, ostensibly for reasons of cost (The Rent Board has a 3 million dollar annual budget) means that they can avoid the embarassing possibility that the vacancy factor (actual, not fabricated) might show an absence of the "emergency" in housing that created and maintains the credibility of the Rent Stabilization Board. Information is the friend of truth.
Tuesday, November 08, 2005
Berkeley Investment Property=A Hornet's Nest
Why would anyone want to own investment property in a city that has stringent rent control?
Ask the hundreds of Berkeley landlords. Many have owned their property for many years and even with rent control, they can make a decent cash flow. Some have bought recently and are struggling with the sometimes subtleties of tenant/owner relationships.
A new owner of investment property in Berkeley is treated like a substitute teacher in a classroom of wild children. The established relationship with the previous owner took the tenant as far as they could go and now, fresh opportunity. The tenant in Berkeley enjoys a protected status even when they have the means to buy a home or buy their own investment property. Measure Y protects tenants even further: Seniors, the disabled and low income tenants have what is essentially a "Life Estate" under rent control. Most newer owners cannot afford to upgrade their properties with the "wet blanket" of rent control.
In a city where 33 thousand students vote to make the rules, where the rent arbitration board consists of only rent control enthusiasts, and where everyone else is too ashamed to publicly decry the unhealthy and unfair aspects of the present rent control ordinance, why would someone want to submit to such frustration? Hope springs eternal. Many investors believe that the demographics of Berkeley will eventually change and we will see a change in housing policy that allows supply and demand to determine price (the supply is higher than the demand at the present time, but the allowable rent increase is close to 0%/year). Some even think that the composition of the rent board will change with the changing demographic or that the population will vote to alter or dismantle the present rent control system - that in the privacy of the polling booth, people will vote their true beliefs rather than their guilt driven beliefs. It has been nearly 27 years since Berkeley enacted rent control and no one knows to this day how many available units exist in Berkeley. The city never did a real survey - so we will never know how rent control has affected the number of available housing units for rent. My hunch is that that number is measurably lower than in 1979. Hope springs eternal.
Ask the hundreds of Berkeley landlords. Many have owned their property for many years and even with rent control, they can make a decent cash flow. Some have bought recently and are struggling with the sometimes subtleties of tenant/owner relationships.
A new owner of investment property in Berkeley is treated like a substitute teacher in a classroom of wild children. The established relationship with the previous owner took the tenant as far as they could go and now, fresh opportunity. The tenant in Berkeley enjoys a protected status even when they have the means to buy a home or buy their own investment property. Measure Y protects tenants even further: Seniors, the disabled and low income tenants have what is essentially a "Life Estate" under rent control. Most newer owners cannot afford to upgrade their properties with the "wet blanket" of rent control.
In a city where 33 thousand students vote to make the rules, where the rent arbitration board consists of only rent control enthusiasts, and where everyone else is too ashamed to publicly decry the unhealthy and unfair aspects of the present rent control ordinance, why would someone want to submit to such frustration? Hope springs eternal. Many investors believe that the demographics of Berkeley will eventually change and we will see a change in housing policy that allows supply and demand to determine price (the supply is higher than the demand at the present time, but the allowable rent increase is close to 0%/year). Some even think that the composition of the rent board will change with the changing demographic or that the population will vote to alter or dismantle the present rent control system - that in the privacy of the polling booth, people will vote their true beliefs rather than their guilt driven beliefs. It has been nearly 27 years since Berkeley enacted rent control and no one knows to this day how many available units exist in Berkeley. The city never did a real survey - so we will never know how rent control has affected the number of available housing units for rent. My hunch is that that number is measurably lower than in 1979. Hope springs eternal.
Friday, November 04, 2005
Opportunity Time
Expect mortgage rates to be up to 7% for a conforming mortgage by April. How will that affect the market?
There is a "sweet spot" to smart buying in an adjusting market. This is how it looks.
The intersection of lots of inventory (available houses) and the cost of money rising (mortgage rates). Are we there now? If not, when?
Sidebar: Always buy when the weather is terrible for two reasons:
1. You see the property at its worst - light, water tightness and drainage, mold or musty smells.
2. Fewer buyers are buying - they have hunkered down for the holidays or just for winter. Fewer people want to even get out of their warm and dry cars to look at property in bad weather. Sellers who have to sell (transfers, bought another, can't afford the mortgage because of adjustable rates) sell in any weather.
Always buy when mortgage rates are in the middle of their rise in an adjusting market - if possible. When is that? Now! The Feds have indicated that their activities will pause if not cease at the Spring levels - but now, money is much cheaper, loans are abundant.
In 2005, the Feds raised the overnight rate 8 times, but only the last 4 had an impact on the long term borrowing rates.
Go out on a rainy, dark and cold day to look at Open Houses. Work with eager and creative agents. Sellers and their agents will be glad to see you and your offer - Finally!
There is a "sweet spot" to smart buying in an adjusting market. This is how it looks.
The intersection of lots of inventory (available houses) and the cost of money rising (mortgage rates). Are we there now? If not, when?
Sidebar: Always buy when the weather is terrible for two reasons:
1. You see the property at its worst - light, water tightness and drainage, mold or musty smells.
2. Fewer buyers are buying - they have hunkered down for the holidays or just for winter. Fewer people want to even get out of their warm and dry cars to look at property in bad weather. Sellers who have to sell (transfers, bought another, can't afford the mortgage because of adjustable rates) sell in any weather.
Always buy when mortgage rates are in the middle of their rise in an adjusting market - if possible. When is that? Now! The Feds have indicated that their activities will pause if not cease at the Spring levels - but now, money is much cheaper, loans are abundant.
In 2005, the Feds raised the overnight rate 8 times, but only the last 4 had an impact on the long term borrowing rates.
Go out on a rainy, dark and cold day to look at Open Houses. Work with eager and creative agents. Sellers and their agents will be glad to see you and your offer - Finally!
Thursday, November 03, 2005
What is happening in the real estate market - really...
I just spoke to a real estate appraiser who called me to inquire about a sale of a duplex in Berkeley that I did in April of 2005. I said that it was back in the days of everything selling for more than asking, multiple offers and outrageous offerings for everything - yes, everything.
Now... here is the issue. No one knows if what is happening now is a seasonal slowdown, a short term blip or the beginning of the future of real estate in the SF Bay Area for the next two to five years. So...
I believe that we make our best decisions with lots of information and some opinion. I intend to offer anyone who wants to read this blog, lots of information that is credible. By credible, I mean information that you can surmise a good course of action from. Everything from buying to selling, to investing, to growing a real estate company. stay tuned...
Now... here is the issue. No one knows if what is happening now is a seasonal slowdown, a short term blip or the beginning of the future of real estate in the SF Bay Area for the next two to five years. So...
I believe that we make our best decisions with lots of information and some opinion. I intend to offer anyone who wants to read this blog, lots of information that is credible. By credible, I mean information that you can surmise a good course of action from. Everything from buying to selling, to investing, to growing a real estate company. stay tuned...
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