Comments by lucas
Page 1 of 3 | Next
Posted on January 31 at 9:27 a.m.
“We here in the USA have forgotten how to have an intelligent argument. I don’t mean a marital spat, I refer to the process of deciding issues through informed argument, discussion, etc. Somehow, zealous advocacy has been replaced with over zealous absurdity.
We seemingly have forgotten the purpose of debate — to engage in a principled argument in order to reach a discernible Truth. It is not, as seems to be occurring more often, to temporarily win, at any and all costs, in short term polling. These policy back-and-forths have become futile, time wasting rhetorical displays, not worthwhile even for their entertainment value.
John Milton understood the long term advantages to any society of pursuing the Truth through a broad and open debate. Thomas Jefferson argued that in “the marketplace of ideas,” the truth will emerge out of free competition in open and transparent public discourse. This was considered so important to any democracy that it was codified in the very First Amendment to the US Constitution.
I am not so sure that Milton or Jefferson would recognize what our discourse has devolved to.”
http://www.ritholtz.com/blog/2013/01/...
To equate an argument for fair dealing with not believing in supply and demand amounts to deliberately missing the point. A tenant who pays the market rent as determined by supply and demand (or any rent) is entitled to fair dealing from the landlord. Fair dealing means that the landlord provide what the tenant is paying for. All tenants expect decent housing, and for landlords to argue that tenants must be happy with their sub-standard housing because they agreed to pay the rent is nothing by callous self-justification.
Throughout this whole thread, those who argue against fair dealing have not addressed the pervasive SB problem of landlords failing to fulfill their contractual and legal obligations,and the fact that landlords get away with it because of the difficulty of obtaining housing of any quality in SB. If SB would proactively enforce the laws already on the books, instead of putting the onus on tenants to take the risk of reporting, it would go a long way toward rectify the situation.
As far as the $300,000 remodel goes, I have said three times it covers materials and labor which should be obvious anyway because when shopping out estimates with contractors, their quote covers materials and labor. There is no valid point to pretending it is not clear.
Posted on January 26 at 4:01 p.m.
Unfortunately, students are too young and inexperienced to realize the effects of their decisions. From their isolated point of view, $700 seems cheap compared to paying $1000 for a studio. However, they do not realize that the landlord sees it as market rent of $2800 for a 2/1 which prices out the single parent I referred to earlier.
Fortunately, most landlords realize the ridiculousness of the situation, and generally charge in a range of $1500 to $1900 for the usual 2/1 regardless of what a group of students end up paying in the aggregate. Sometimes it means landlords are partial to students over the single parent applicants. And as a bonus, that same inexperience often makes students less than savvy, always a positive attribute for the landlord.
As far as the $325K place goes, you are speculating, whereas I actually possess specific knowledge. And I have shown by comparable 2/1 places that $325K was too much. You are correct that the owner is going to have to persuade the city to let him build something more than a replacement 2/1 if he expects to avoid a loss. And he will not be able to take advantage of "legal nonconforming" status.
I am getting tired of typing. Please refer to my previous comments about the $300K. I do not see what is unclear about maximum estimate for "work and materials".
Posted on January 26 at 9:54 a.m.
@willy,for a complete education on the tenant/landlord gap, see this thread http://www.independent.com/news/2013/...
Posted on January 26 at 9:20 a.m.
Between my tenant numbers and your landlord numbers, we have quantified pretty well the "fairness" gap.
On top of your calculations, that $325K would have been a crummy rental in the condition it was in when sold. I doubt even the most desperate tenant would have rented it for $2060. It needed a bunch of deferred maintenance. Perhaps investors need to count the cost (as you have done) before they buy, and realize that even $325K was too much. Sellers also need to be more realistic. Moot point, the house was recently completely demolished and its wonderful garden destroyed. And as Botany points out, apparently it is not too hard to get a "greater fool" to buy at "unfairer" prices.
At least that $325K place was habitable. The unrealistic heir selling 408 W De La Guerra wants $475K for a completely uninhabitable 2/1 house. The problem is even more obvious when considering the comparable 2/1 at 410 Ruth which was recently appraised at $435K in its fixed-up state. Unless the city requires 408 to be restored, it could also end up demolished.
Another investor bought 132 W Haley for $350K,and it is move-in ready. It is a 1/1 with no parking and barely fits within the required set-backs on its .05 acre lot. That investor tried to rent it for $3000/month. Yeah, right. On the other hand, I have met investors who have one or more rentals for the express purpose of taking the maximum allowed $25,000 loss.
As I said, the $300,000 was the maximum estimate for work and materials for the types of projects I described. Merely deferred maintenance comes in at a lot less.
Posted on January 25 at 1:26 p.m.
I have shopped out estimates for a modest 2/1, good quality durable remodel and new construction on its own land. The maximum estimate (labor and materials only) was $300,000. Because of the reasons I stated, the cost per cost per condo unit should be less. I tried to apply it specifically to the condo projects which were under discussion. I accounted for land in the original comment.
"According to government data, the average salary for jobs in Santa Barbara, California is $39,853, and the median income of households in Santa Barbara was $61,182." http://www.simplyhired.com/a/local-jo...
Taking the higher number just for argument's sake, (even though the typical tenant makes less than that), someone making that amount could qualify if the rent for a 2/1 were no more than $1700. Problem is whether the rent is fair or not, most tenants are not getting what they are paying for. I have already described all of the unit conditions that should bring the rent down, but usually does not. Most of the 2/1 units advertised on craigslist have so many problems that the rent should probably no more than $1300. 1/1 and studios are in even worse shape, and should be proportionately less.
Commuting does not help. Ventura is about 30 miles away. Using the conservative IRS allowance of 56.5 cents per mile, a month of round trips costs $745, and that is not considering time costs or additional child care costs. Perhaps it may be possible to rent a 2/1 in Ventura for $1200 (per craigslist). Add the commute cost and it is obvious why tenants whose SB jobs do not actually pay them enough to afford an SB apartment try to make it work anyway. And what if the tenant's employer puts them on a split schedule, a common practice of (for example) retailers and in-home health care companies who pay less than most other employers and employ an awful lot of single parents. I wish landlords could walk a mile in their tenant's shoes.
Sorry, I did not consider the question about forcing developers to sell an honest one. Of course they are free to reject "market" offers and continue to lose money to carrying costs. That being the case, it is hard to know what to do.
A lot of 2/1 houses are put on the market by heirs. As you say, they are sitting on the books with assessments of maybe $50,000. If move-in ready, they are worth no more than about $450,000. A case in point is 410 Ruth. AFTER undergoing extensive work following a fire, it was recently appraised at $435,000 (pretty much the entire house was rebuilt). Most of these 2/1 houses are dilapidated fixers like 408 W. De La Guerra, recently on the market for $475,000. Like the condo developers, these heirs seem to have no reasonable idea what the market value of their houses are. Like the heir who sold 1121 Walnut, first asked $580K, then $500K, rejected $450k, $400K, $350K, and finally sold for $325K.
Posted on January 24 at 7 p.m.
I have already stipulated for the sake of argument that we accept the so-called market rent rate. What about the pervasive landlord irresponsibility in fulfilling their obligation in exchange for that market rent?
I suggested that the condo developers ask market prices for their condos, and the response was that developers are loathe to do so, and would rather leave their units empty than sell for what buyers are willing to offer.
JL asked me for citations and I provided many, and about construction costs which I also addressed. I do not know what to do when supply and demand works against tenants to the benefit of landlords when renting, and somehow works against them again when they try to buy. It seems to overcome gravity in some cases.
If it has not happened yet, I do not see how your suggestion of a decent renter's law can come to pass in SB's landlord environment. They would not like to see their "rents fall like a stone" and would probably fight it tooth and nail, relying on many of the same arguments in these comments. How dare we legislate fairness! But as you point out, many people do not follow the Golden Rule voluntarily, especially if it means leaving some money on the table.
Santa Barbara would probably be very unhappy if all those who cannot afford to live here actually left. As the saying goes, careful what you wish for.
Posted on January 24 at 4:55 p.m.
Generally, a property owner insures against risk. Landlords generally pass the cost of the property insurance onto tenants through rent. This is true whether the rents are exorbitant or forced to be in sync with the income of typical tenants due to supply and demand.
Landlords should be obligated to provide decent housing for the rent they collect, whatever the amount. In return, tenants should be clean, quiet and leave the property undamaged. The quibbling about "market" rent is a distraction in a town where so many landlords are not fulfilling their obligation to provide decent housing.
I suppose it could be argued that supply and demand in SB does nothing to ensure that landlords fulfill their responsibility. People need housing so bad that they rent sub-standard units. And recent events have taught us that tenants take at least one big risk. They pay rent, but may have no idea the landlord is not paying on the underlying loan until the sheriff shows up.
Posted on January 24 at 9:15 a.m.
I think we all have said everything we want to say. Many comments ago, this comment succinctly summed up the problem, "There are two Golden Rules, and I'm betting you each try to live by one of them."
Those who try to live by treating others as they would like to be treated will never see eye-to-eye with those who imply that he who has the gold makes the rules or those who imply that the Golden Rule (the non-cynical one) is fine unless it is unprofitable.
However, in my experience, those who put money motivations aside and follow the Golden Rule, find the money follows and expensive problems decrease.
Posted on January 24 at 8:33 a.m.
You say, "That's the first thing you've said that makes any sense. If he can't sell them at that price, yes he is asking for a price above the market price." And yet earlier, you criticized me (and others for having a "fixation with getting developers to sell for less than market prices?" for suggesting that the unsold condos were overpriced. This circular reasoning is pointless.
You are also implying that my number one main idea, that people (including landlords) should treat others (including tenants) as they would like to be treated makes no sense. In such an unreasonable environment, no useful discourse is possible.
Page 1 of 3 | Next
Previous Month
Posted on January 31 at 9:47 a.m.
Yet again, another project that falsely equates "affordable" with "low income." Affordable is supposed to mean that anyone with at least a median income should be able to afford a median turn-key house. What about people who make between 80% and 200% of the median income.
"In South Santa Barbara County, Inflation-adjusted median income has declined to 1990 levels, but home prices are much higher than in 1990" (www.voicesforhousing.org/images/santa...).
One source says SB's median income is about $56,000. Twice the median income comes to $112,000. At a 38% loan to income ratio, housing expenses (PITI, utilities, repairs) can come to no more than about $3500 per month. Anyone who makes less than TWICE the median income (an income greater than about 85% of all Americans) will have great difficulty finding an affordable turn-key house of typical configuration (3/2, front and back yard, garage).
So people who make less than 80% of the median income have a chance, and people who make more than 200% can buy a house, but the people in the middle, arguably most of the residents, are stuck with dealing with crummy rentals and terrible landlords.
On New Affordable Housing Project Breaks Ground