Action Alert: Support Home Ownership

Discussion
1

Hi Ron/Morey,

I hope this sheds some light on the matter:

Ellising a building and following with TIC is the reaction to the absurd
limits placed on owners being able to move into their own property. Since SF
does not permit more than 1 owner from living in their (rental) building, the
only alternative is to Ellis the building and have it be 100% occupied by
owners.

The difference between the low value of property as a rental (due to rent
control and low relative demand) and the high price/cost of new ownership units
(due to hi demand and low relative supply, a result of the stranglehold of
the nonprofit housing groups and the RBA acting in concert with labor unions in
limiting permits for new construction) leads to the arbitraging of units
from the rental pool to the ownership pool.

Demand for rental units has fallen by over 30% in the last 3 years, and
rents have dropped like a rock. But low interest rates have made ownership an
increasingly viable option. Except in SF.

This entirely arbitrary distinction between rental and ownership units
should be erased, and then the problem of low demand for rental units and high
demand for ownerhsip units could be simultaneously solved. If units were allowed
to move freely from rental to ownership pool and vice versa, as demand
fluctuates, price swings/increases would be dramatically moderated.

As each renter turns into an owner, there is one less unit of demand for
rental units, so there is no additional strain on the demand-supply equation for
rental units.

In fact the huge pent-up demand for ownership coupled with SF's limitations
on supply of ownership housing have been responsible for huge price increases.

Nonprofit housing groups benefit by reducing supply of housing and driving
up rents, for which they get taxpayer subsidies to buy/build and rehab, then
rent to "the needy". They now own and control some 30,000 rental units in SF,
with annual revenue of $ 360 million paid from your pockets. Their subsidy
tenants realize that they are being used as pawns, so that the nonprofits can
charge the taxpayer exhorbitant rents (eg $ 1000/mo for an SRO, which is far
more than could be obtained as market rent). Those tenants have demanded
ownership of the units for which government/taxpayer has been paying rent in many
cases for 10, 20 or 30 years. If conversion to ownership units was allowed,
then the nonprofits would lose their excuse to exist, as each building would
be converted to ownership units and the taxpayer-funded gravy train ride would
come to an end.

The politicians (like Leno) whose campiagn workers are the employees of
nonprofits, need the continued existence of the nonprofits to win their
elections. They work hand-in-glove. They cannot afford to lose their cosy system which
guarantees tenant-majority electoral victories and a LOT of $ for them and
their patronage-funded allies and fellow-travellers.

That is why Leno (and Daly, and Jake, etc etc) opposes an increase in home
ownership in SF. Its all about political (and therefore financail) control.

Best wishes,

Sarosh

2

Dear Sarosh;

What source did you use to get the 30,000 units and $360 million figures for rental properties controlled by nonprofit housing agencies? Is there a list of those nonprofit housing agencies and the amount of funds they receive and the funds actually distributed and to whom are those funds paid?

And I do not believe that rents have dropped like a rock in San Francisco because demand is off 30%. Using Craigslist as a bellwether if rents have dropped like a rock then virtually all 2 bedroom rentals would be from around $800 - $1000 and non higher. I believe the demand is still there but the number of new construction rental units has some ridiculous small number of only 2,00 units in the pipeline.

San Francisco actually needs to build some 25,000 new rental units. This would include some 10,000 SRO; 5,000 two room; 5,000 3 room; 5,000 4 room. With non-union labor so the construction cost factors to build will be 1/3 - 1/2 of labor union built rental units.

For home ownership some 5,000 - 10,000 affordable condos and townhouses need to be built. With non-union labor so the construction cost factors to build will be 1/3 - 1/2 of labor union built condos.

Yours In Competitive Market Rate Housing For Renters and Homeowners

Ron Getty
SF Libertarian

saroshk@... wrote:
Hi Ron/Morey,

I hope this sheds some light on the matter:

Ellising a building and following with TIC is the reaction to the absurd limits placed on owners being able to move into their own property. Since SF does not permit more than 1 owner from living in their (rental) building, the only alternative is to Ellis the building and have it be 100% occupied by owners.
The difference between the low value of property as a rental (due to rent control and low relative demand) and the high price/cost of new ownership units (due to hi demand and low relative supply, a result of the stranglehold of the nonprofit housing groups and the RBA acting in concert with labor unions in limiting permits for new construction) leads to the arbitraging of units from the rental pool to the ownership pool.

Demand for rental units has fallen by over 30% in the last 3 years, and rents have dropped like a rock. But low interest rates have made ownership an increasingly viable option. Except in SF.

This entirely arbitrary distinction between rental and ownership units should be erased, and then the problem of low demand for rental units and high demand for ownerhsip units could be simultaneously solved. If units were allowed to move freely from rental to ownership pool and vice versa, as demand fluctuates, price swings/increases would be dramatically moderated.

As each renter turns into an owner, there is one less unit of demand for rental units, so there is no additional strain on the demand-supply equation for rental units.

In fact the huge pent-up demand for ownership coupled with SF's limitations on supply of ownership housing have been responsible for huge price increases.

Nonprofit housing groups benefit by reducing supply of housing and driving up rents, for which they get taxpayer subsidies to buy/build and rehab, then rent to "the needy". They now own and control some 30,000 rental units in SF, with annual revenue of $ 360 million paid from your pockets. Their subsidy tenants realize that they are being used as pawns, so that the nonprofits can charge the taxpayer exhorbitant rents (eg $ 1000/mo for an SRO, which is far more than could be obtained as market rent). Those tenants have demanded ownership of the units for which government/taxpayer has been paying rent in many cases for 10, 20 or 30 years. If conversion to ownership units was allowed, then the nonprofits would lose their excuse to exist, as each building would be converted to ownership units and the taxpayer-funded gravy train ride would come to an end.

The politicians (like Leno) whose campiagn workers are the employees of nonprofits, need the continued existence of the nonprofits to win their elections. They work hand-in-glove. They cannot afford to lose their cosy system which guarantees tenant-majority electoral victories and a LOT of $ for them and their patronage-funded allies and fellow-travellers.

That is why Leno (and Daly, and Jake, etc etc) opposes an increase in home ownership in SF. Its all about political (and therefore financail) control.

Best wishes,

Sarosh