Happenings & Highlights
D E C E M B E R 7 , 2 0 1 4
High Prices, Higher Disapproval Ratings. This pent-up buyer demand plus increasingly inaccessible housing prices have pushed down Mayor Lee’s approval ratings by 16% from this time a year ago according to the San Francisco Chronicle and KCBS.
Hollywood-style, giga-sized NIMBY Battles. For those of you who have encountered the interruption of neighbors remodeling construction (or for those of you who are doing the construction) consider that things could be worse; on a much larger scale at that. In the NYTimes, a feature on the Gigamansion (note, not mega, but giga) phenomena taking place in Bon and and Beverly Hills, shows neighbors complaining about 80,000-sqft projects with scores of dump trucks going in and out every day. Of course these neighbors are complaining from the comfort of their more modest 28,000-sqft mansions. Even Mr. Spock is getting in on the action against a ‘starship’ that was going up in this neighborhood. Indeed. Read the story here.
An interesting idea that would be absurd anywhere else but potentially viable here. Taking the Parklet phenomenon too it’s a illogical next step some housing advocates are suggesting homelets — micro portable housing units — be installed in San Francisco now. Read about it here.
The SF Business Times reports that average rents for a one-bedroom apartment in San Francisco $3,350 per month, compared to $3,000 in New York. The most expensive neighborhood in the most expensive city in America? Russian Hill. Prices for a San Francisco 2-bedroom apartment increased to $4,600 quarter-over-quarter. For comparison, a 2-bedroom in New York City costs an average of $3,500/month.
A couple of closings of note. The massive big baptist church at 601 Broderick at Grove Street with 6500 sqft of re-finished space and a spectacular staircase but somehow lacked a certain sparkle nevertheless did decently. Listed at $5.875M it closed at $4.995M (@$758/sqft) or 85% of list price after 45 days on the market. The most expensive house that closed this week is at 549 El Camino Del Mar in Sea Cliff with 4 bedrooms, 3.5 bathrooms and nearly 5,000 sqft. Listed at $6.390M and selling for $6.08M, cash after 3 month on the market (@$1231/sqft).
Tenant-Buyout Legislation and Unintended Consequences. Did you know that new laws regulating tenant-buyouts by landlords (whereby landlord pays tenants money to leave their rented unit without having to institute a no-fault eviction) are scheduled to come online in March 2015 that may increase Ellis Act evictions? Even 2-unit buildings that have tenants who want to take a buy-out may be impacted by this law. How? Until now, no regulations applied to tenant-buyouts. No records were kept and no bad eviction history that can jeopardize condo conversions was ever recorded. Lucrative condo conversion was only ever put at risk if the tenants disagreed to relocating and an owner had to resort to transitioning tenants out of a property under the Ellis Act or an Owner Move-In eviction. Because the penalty was so draconian, tenants had considerable leverage to exact a higher buyout amount, reportedly averaging $40,000-$75,000 per buyout. In contrast, an Ellis Act or OMI eviction only requires a maximum payout of $20,000-$25,000 per unit (not per person).
The new legislation turns this understanding on its head. Now, if there is more than one tenant being bought out of a unit (i.e., a couple or roommates) or if there is just one ‘protected’ tenant being bought out, the entire unit will be rendered ineligible for condo conversion for at least a decade. Every buyout must now be reported to the Rent Board and comport to legislated requirements regardless. Thus, instead of paying high voluntary buyout costs, if there is more than one tenant who needs to be bought out of a unit (or just one disabled/protected tenant) and take condo conversion off the table, there’s nothing preventing an owner from using the Ellis Act with more impunity. This will radically impact multi-unit building property values and makes it all the more necessary you have the likes of Kevin+Jonathan working for you to sort it all out. Read more here.
New Mortgage Rules Could Make Underwriting Easier. According to the Wall Street Journal, some of the largest U.S. mortgage lenders are preparing to further ease standards for borrowers after the release of new guidelines this month from mortgage giants Fannie Mae and Freddie Mac. The new guidelines, took full effect Dec. 1, resulted from an agreement in October meant to clarify when lenders would be penalized for making mistakes on mortgages they sell to Fannie and Freddie. Lenders have blamed the lack of clarity for tight credit conditions that have made it difficult for many consumers to qualify for a mortgage. For more, read here.