Time to rethink housing policy: an editorial

Plan C GraphMike Sullivan from Plan C penned an editorial that ran in Thursday’s Examiner, and is re-run on their own site. In it, he questions the need for the condominium lottery, given the dramatically lower incidence of no-fault evictions (see the graph at the left), and the many current laws that make post-eviction condo conversion very difficult, if not impossible.

From the Examiner,

TICs have been criticized by some who claim that they create incentives for evictions. However, while TIC sales surged over the last year, San Francisco’s rent board reported that evictions decreased in 2006. So-called “no-fault” evictions, such as evictions under California’s Ellis Act, decreased by more than 10 percent in 2006. Out of more than 200,000 rental units in San Francisco, there were just over 500 no-fault evictions in 2006 — a reduction of almost 60 percent from five years ago.

San Francisco passed legislation in 2006 to disqualify condo conversions for most buildings with Ellis Act and other no-fault evictions. This was intended to discourage building owners from evicting tenants to clear buildings for TIC formations (the thinking being that if owners knew that their units could never qualify for condo conversion, they would be less likely to evict tenants in the first place). However, the reduction in evictions reported above happened before this legislation was passed — meaning that evictions were headed downward even before the punitive legislation was passed.

What these numbers together tell us is that San Franciscans are finding ways to create homeownership opportunities through TICs without evictions. That’s a very good thing for San Francisco. [more…]

With more than 1700 TIC units sitting in the lottery queue right now (nearly all of them OWNER OCCUPIED), and only 200 conversions allowed per year, it will still NINE YEARS to clear that backlog, and that’s only if nobody else enters the lottery.

And we all know that won’t be the case.

So if those units are already off of the rental market and will never be rentals again (at least not for any less money than they’d be if they were condo-converted), why punish those who live there? Remember, these are struggling San Francisco families, many of whom have been LONG TIME San Francisco tenants.

I know it’s nothing but pure comedy to think that our current crop of ‘Supes would even so much as read this editorial, let alone consider it (why let reality get in the way of political agenda?). But since people love graphs and statistic, Mr. Sullivan puts them down and argues fairly against condo conversion restrictions.

If only those 1700+ TIC owners (plus probably 2000 more that haven’t met their residency requirement yet, but will be entering the lottery in the next couple of years) had half the time that the tenant activists do to swirl up a storm of publicity. Then we might actually see some changes. But for whatever reason, homeowners in this town just don’t see the importance of the grassroots efforts. They just aren’t willing to take the time.

And until they do, we’ll continue to watch the tenant majority have its way at the polls each and every election.

Time to rethink The City’s housing policy [Examiner]
Plan C SF [official site]

(image courtesy of Plan C)


9 Responses to “Time to rethink housing policy: an editorial”

  1. Hi Matt..do you have the breakdown of how many buildings entered with how many tickets and how many won at each level of seniority?

    Anonymous at March 11th, 2007 at 6:18 am ( )
  2. The list of winners for 2007 can be found here:

    The list shows the building address, how many units are entitled to be converted, and which pool (A or B) they were chosen from.

    Hope this helps!

    Matt Lanning at March 11th, 2007 at 8:30 am ( )
  3. I was actually hoping for the summary that DPW has released in the past (i.e. at each level of seniority how many buildings/units entered and how many won)

    Anonymous at March 11th, 2007 at 6:24 pm ( )
  4. Sorry. I know what you’re looking for now, and I haven’t seen it this year. I’ll see if I can’t track it down and post it here.

    Matt Lanning at March 11th, 2007 at 7:33 pm ( )
  5. Matt –

    What a sham that lottery is – its only purpose, it seems, is to discourage ownership of property. Apparently, to keep as many renters as possible in the middle class supporting the ridiculous policies as put forth by our Supes.

    Also, we know Arthur Louis *cannot possibly* be talking about your market and clients, but I wonder if you do play “Lowball!” these days.

    Or is the market “so good” you and your clients don’t bother?


    “Rent or buy — timing is everything”

    Arthur M. Louis – San Francisco Chronicle – Sunday, March 11, 2007


    “If you have to sell the house when it commands a price of only
    $750,000, your initial equity of $160,000 will dwindle further, to
    around $60,000, after broker commissions and other expenses. No doubt that would make you wish that you had rented instead. It appears that we may be in that perilous kind of housing market right now, which is why I have been warning prospective home buyers lately to consider protecting themselves by making lowball offers.”

    sf jack at March 12th, 2007 at 5:43 pm ( )
  6. Jack – I don’t think that any of the progressive powers-that-be would argue with your assertion that the lottery is meant to discourage homeownership. In their mind, discouraging homeownership is equivalent to ‘protecting’ tenants. And never mind that the folks sitting in line in the lottery were almost all tenants just a few months ago…

    As for ‘lowballing’… I really don’t look at the market that way. The best way to buy in any market is to understand value. If you know what something should be selling for (based on comparable sales, not on rhetoric or media hype), then that’s the offer you should be writing.

    And that’s exactly what I do with my buyers. We look at value and we aim for properties that are value-based, not emotion-based. If it’s a good value now, it’s going to have a much better chance of having higher value when they sell. Regardless of the market or economic conditions.

    Just writing ‘lowball offers’ in this market is foolish. Or more importantly, a waste of the buyer’s and buyer’s agent’s time. If a buyer is unwilling to understand the market and the comps and just wants a ‘deal’, they will likely be shut out in nearly any market.

    And yes, there are still good deals to be had right now, even in a low-inventory market like this one.

    Matt Lanning at March 12th, 2007 at 6:41 pm ( )
  7. Matt –


    I reworked your second to last paragraph:

    “Just writing ‘lowball offers’ in this market is a great strategy. Or more importantly, a way to educate a seller and seller’s agent and a way to protect yourself from losing your ass in the near term. If a seller is unwilling to understand the market and clings to the comps, thereby pricing unrealistically, they could have trouble unloading in this market.”

    sf jack at March 12th, 2007 at 6:57 pm ( )
  8. Again, I disagree. You’re talking about a blanket statement. And since many properties now are properly priced ‘close’ to market value, and perhaps slightly under (only a couple of percent lately), that tactic would waste a buyers time.

    There are unquestionably a stack of properties out there that are just sitting (where your tactic might play out). But remember, we still haven’t cracked the 1000-active-unit inventory mark for 2007 (according to the MLS). And we were never under 1000 units in all of 2006. So as long as we have low inventory, we won’t see many properties languishing.

    So anyone that just throws lowball offers out there will see their time wasted 99 out of 100 times.

    The goal might better be to find the properties where a lowball offer is applicable and work on torturing that seller and listing agent till they realize they are overpriced.

    Biggest problem always is that buyers don’t want those properties at any reasonable price (for many reasons), and the seller is ‘not in a hurry’ to sell, so those deals just don’t happen that often.

    As an aside, the last property I ratified was on the market for nearly 6 months and my buyers are in contract for less than asking.

    Matt Lanning at March 12th, 2007 at 7:05 pm ( )
  9. the Supes that defend rent control and TIC regulations are complicit in government sanctioned theft.

    everytime a building is Ellis’d an angel gets its wings.

    we shall overcome these weak minded tyrants

    Anonymous at March 24th, 2007 at 11:15 pm ( )

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