News

To save affordable housing, Mountain View looks to buy aging apartments

Apartments like 2310 Rock St. have been demolished for costly for-sale homes, which Mountain View is seeking to stop by buying up older apartment complexes. Photo by Natalia Nazarova

In an effort to stave off gentrification and preserve the remaining affordable housing in Mountain View, city officials are working on an unusually direct approach: Buy up housing at risk of being bulldozed.

City Council members agreed Tuesday to back a plan in which the city would buy and rehabilitate aging, rent-controlled apartments at risk of being bought and redeveloped into expensive for-sale homes. The approach is one of several under consideration after the city reluctantly allowed several older apartment complexes to be razed.

Estimates from last year found that Mountain View was on pace to lose an average of 127 rent-controlled apartments each year to redevelopment that council members say is largely impossible to stop. Housing projects that meet the city's zoning rules have been allowed to slip through the approval process regardless of how many so-called naturally affordable apartments are demolished.

Starting last year, the city began exploring the possibility of outright buying existing rental stock when it comes up for sale, potentially rehabilitating the property and preserving it as a public asset for the city. The program could start small, like a 100-unit pilot, or shoot for something more ambitious like a 1,500-unit program, according to city staff.

Council members, though supportive of the idea, were uneasy about setting a target unit count. Councilman Chris Clark said the city should start small and be opportunistic, particularly while the market is down, but was reluctant to hold himself to a specific number of apartments.

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"I'm fine setting a goal, but we're tiptoeing into this," Clark said. "As much as I would love to jump to a world where tomorrow we own a whole bunch of properties, I don't think that's going to happen. We don't really know what we're doing, frankly."

Councilman Lucas Ramirez said he supported the idea as one possible tool for preventing displacement in the city, but that he prefers opportunities to create new affordable housing over keeping older apartments on the market. There are also fewer ways to finance a preservation or rehabilitation project, he said, limiting how far the program can go toward buying properties on the market.

"I would rather expand the pool of resources for all affordable housing initiatives, including new construction, rather than dedicate a source of funding to acquisition and rehab," Ramirez said. "That strikes me as a better use of public funding."

While the idea won support from the council during the Sept. 22 study session, the big unanswered question was how to pay for it all. Early estimates found the city would have to pay about $300,000 per unit, which would mean the city's lightweight 100-unit pilot would need a $30 million subsidy and the 1,500-unit program would cost $450 million.

Where that money would come from is a mystery. The city's housing fees, exacted on new development, have been completely exhausted, as have in-lieu fees for developers that cut a check to the city instead of building required affordable units. Another option is Measure P, the city's 2018 business tax measure that is expected to generate $5.9 million each year, but most of that money has been locked into other uses.

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In the lead-up to that election, city council members pledged to devote 80% of Measure P funds to transportation improvements and only 10% for housing. By the latest estimates, that means only about $400,000 to $600,000 each year, far short of funding the ambitious program. Clark said the council made a promise to the public in how the money would be spent, and that he wasn't willing to go back on it.

Another option is to simply come to voters for help. City Council members unanimously agreed to at least explore some type of ballot measure to generate money for the city's displacement strategies. Mayor Margaret Abe-Koga pointed to a now-outdated poll that found residents would be willing to pass a parcel tax for housing purposes, and said it may be the best way to query support for buying apartments at risk of redevelopment.

"If this really is a community priority then why not have the community participate in helping to fund those opportunities?"

Councilman John McAlister, a longtime proponent of buying older apartments at risk of redevelopment, said the city needs to think outside of the box for ways to fund the program, and floated the idea of using rental income from city-owned apartments to finance the acquisition program. He pushed back against staff's suggestion that the city simply buy and pass off apartment properties to a nonprofit, and said there's nothing wrong with the city being a landlord.

"It looks like we're doing the same-old same-old," McAlister said. "It hasn't worked and it probably won't work because you still have limited funds."

The city arguably has plenty of time to work on its anti-displacement measures. A new state law that took effect this year, SB 330, halts the kind of redevelopment projects that council members have lamented in recent years. The law requires that no housing proposal can lead to a reduction in housing units, and that the developer must offer a deed-restricted affordable housing unit for every demolished rent controlled unit.

The law sunsets in 2025, but until then is expected to halt virtually all redevelopment projects that would raze apartments protected under Mountain View's rent control law. City officials say it would take a huge increase in density or a reduction in parking requirements in order to make any such project pencil out.

"The conclusion is that SB 330 requirements will likely render most, if not all, redevelopment projects that would require the demolition of existing residential units infeasible while the law is in effect," according to a city staff report.

City Council members agreed to consider ways to keep some of SB 330's protections in place once the law expires.

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To save affordable housing, Mountain View looks to buy aging apartments

by / Mountain View Voice

Uploaded: Wed, Sep 23, 2020, 4:17 pm

In an effort to stave off gentrification and preserve the remaining affordable housing in Mountain View, city officials are working on an unusually direct approach: Buy up housing at risk of being bulldozed.

City Council members agreed Tuesday to back a plan in which the city would buy and rehabilitate aging, rent-controlled apartments at risk of being bought and redeveloped into expensive for-sale homes. The approach is one of several under consideration after the city reluctantly allowed several older apartment complexes to be razed.

Estimates from last year found that Mountain View was on pace to lose an average of 127 rent-controlled apartments each year to redevelopment that council members say is largely impossible to stop. Housing projects that meet the city's zoning rules have been allowed to slip through the approval process regardless of how many so-called naturally affordable apartments are demolished.

Starting last year, the city began exploring the possibility of outright buying existing rental stock when it comes up for sale, potentially rehabilitating the property and preserving it as a public asset for the city. The program could start small, like a 100-unit pilot, or shoot for something more ambitious like a 1,500-unit program, according to city staff.

Council members, though supportive of the idea, were uneasy about setting a target unit count. Councilman Chris Clark said the city should start small and be opportunistic, particularly while the market is down, but was reluctant to hold himself to a specific number of apartments.

"I'm fine setting a goal, but we're tiptoeing into this," Clark said. "As much as I would love to jump to a world where tomorrow we own a whole bunch of properties, I don't think that's going to happen. We don't really know what we're doing, frankly."

Councilman Lucas Ramirez said he supported the idea as one possible tool for preventing displacement in the city, but that he prefers opportunities to create new affordable housing over keeping older apartments on the market. There are also fewer ways to finance a preservation or rehabilitation project, he said, limiting how far the program can go toward buying properties on the market.

"I would rather expand the pool of resources for all affordable housing initiatives, including new construction, rather than dedicate a source of funding to acquisition and rehab," Ramirez said. "That strikes me as a better use of public funding."

While the idea won support from the council during the Sept. 22 study session, the big unanswered question was how to pay for it all. Early estimates found the city would have to pay about $300,000 per unit, which would mean the city's lightweight 100-unit pilot would need a $30 million subsidy and the 1,500-unit program would cost $450 million.

Where that money would come from is a mystery. The city's housing fees, exacted on new development, have been completely exhausted, as have in-lieu fees for developers that cut a check to the city instead of building required affordable units. Another option is Measure P, the city's 2018 business tax measure that is expected to generate $5.9 million each year, but most of that money has been locked into other uses.

In the lead-up to that election, city council members pledged to devote 80% of Measure P funds to transportation improvements and only 10% for housing. By the latest estimates, that means only about $400,000 to $600,000 each year, far short of funding the ambitious program. Clark said the council made a promise to the public in how the money would be spent, and that he wasn't willing to go back on it.

Another option is to simply come to voters for help. City Council members unanimously agreed to at least explore some type of ballot measure to generate money for the city's displacement strategies. Mayor Margaret Abe-Koga pointed to a now-outdated poll that found residents would be willing to pass a parcel tax for housing purposes, and said it may be the best way to query support for buying apartments at risk of redevelopment.

"If this really is a community priority then why not have the community participate in helping to fund those opportunities?"

Councilman John McAlister, a longtime proponent of buying older apartments at risk of redevelopment, said the city needs to think outside of the box for ways to fund the program, and floated the idea of using rental income from city-owned apartments to finance the acquisition program. He pushed back against staff's suggestion that the city simply buy and pass off apartment properties to a nonprofit, and said there's nothing wrong with the city being a landlord.

"It looks like we're doing the same-old same-old," McAlister said. "It hasn't worked and it probably won't work because you still have limited funds."

The city arguably has plenty of time to work on its anti-displacement measures. A new state law that took effect this year, SB 330, halts the kind of redevelopment projects that council members have lamented in recent years. The law requires that no housing proposal can lead to a reduction in housing units, and that the developer must offer a deed-restricted affordable housing unit for every demolished rent controlled unit.

The law sunsets in 2025, but until then is expected to halt virtually all redevelopment projects that would raze apartments protected under Mountain View's rent control law. City officials say it would take a huge increase in density or a reduction in parking requirements in order to make any such project pencil out.

"The conclusion is that SB 330 requirements will likely render most, if not all, redevelopment projects that would require the demolition of existing residential units infeasible while the law is in effect," according to a city staff report.

City Council members agreed to consider ways to keep some of SB 330's protections in place once the law expires.

Comments

sfcanative
Registered user
Whisman Station
on Sep 24, 2020 at 9:19 am
sfcanative, Whisman Station
Registered user
on Sep 24, 2020 at 9:19 am
131 people like this

Yet again, we see government hard at work trying to kill the very investment which brings vitality to a city. First off, good luck finding "affordable" units for $300k/ea. Most '60's era multifamily housing in Mt. View require extensive rehabilitation; outdated electrical, end-of-life plumbing, soft story seismic retrofitting, etc. Those units that have sold went for over $500k/unit WITHOUT the rehabilitation being done. Stick it to the landlords with a parcel tax they can't pass through to their tenants? Does local government understand anything about what they're doing? Chris Clark said it best, "We don't really know what we're doing, frankly." See you all in 2025.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 10:04 am
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 10:04 am
284 people like this

In response to sfcanative you wrote:

“Yet again, we see government hard at work trying to kill the very investment which brings vitality to a city.”

Nice claim but the City didn’t make poor investors pay too much for the properties, I will explain this leter you said:

“First off, good luck finding "affordable" units for $300k/ea. Most '60's era multifamily housing in Mt. View require extensive rehabilitation; outdated electrical, end-of-life plumbing, soft story seismic retrofitting, etc.”

You are correct except many fools bought these properties in the last 4 years. My building of only 11 units sold for $5M, and it is in the condition you just described. WHY did anyone spend that much money is the real question. Real Estate agents get away with fooling buyers over and over again. The BUYERS should never listen to real estate agents with regrds to any “investment” purchases since they are not licenseed investment profressionals. So when you said:

“Those units that have sold went for over $500k/unit WITHOUT the rehabilitation being done”

That is simply “buyers remorse” talking. These people should have done their homework and demanded a significant price reduction. They MADE their CHOICE and now complain about it, like whe you say:

“Stick it to the landlords with a parcel tax they can't pass through to their tenants?”

WRONG, if the landlords ask for a reassessement of their property, like my building, they would likely at minimum reduce their “parcel” tax by at least 50%.

BUT it comes with a price, the “lenders” or “mortgage” companies will have to be notified since they actually “own” the building until the loans are paid.

You do know when a building is bought, as long as it is mortgaged the mortgage company owns the true title, and the purchaser has a temporary one under the conditions that they comply with the mortgage terms.

Such a drop in the taxes will unsecure the mortgage or any lending the landlord has, and that would require the creditors to take possession of the property until either a new agreement is made or the creditor simply takes the property.

You really don’t understand the false information you just claimed. So when you said:

“Does local government understand anything about what they're doing? Chris Clark said it best, "We don't really know what we're doing, frankly." See you all in 2025.”

In many ways, the people who bought properties in Mountain View like mine had no idea either, but they CHOOSE to act and are responsible for it. Again your just expressing “buyers remorse”.


sfcanative
Registered user
Whisman Station
on Sep 24, 2020 at 10:53 am
sfcanative, Whisman Station
Registered user
on Sep 24, 2020 at 10:53 am
181 people like this

Steven, why not address the issue rather than unsuccessfully trying to pick apart other's comments with tangential rhetoric about bad investments. The council is fantasizing about their goal of 1,500 affordable units on the city's rent rolls. Another city department/bureaucracy? Where do they think the money is going to come from? That's a 750,000,000.00 acquisition BEFORE doing any rehabilitation which will easily run another $100k/unit. So, it's nearly a billion dollar pipe dream. Start small with a dozen units or so? OMG, the very city that made land worth $10M/acre by recklessly allowing endless commercial development now wants to spit in the ocean.

I'm not a Mt. View landlord (thankfully) but clearly understand the inability of our local, state and federal government to solve any problem other than dream up a new tax and hope it does some good. Hopefully.


Gary
Registered user
Sylvan Park
on Sep 24, 2020 at 11:45 am
Gary, Sylvan Park
Registered user
on Sep 24, 2020 at 11:45 am
409 people like this

City staff consistently has advised the city council that it is not legally required to approve the tearing down and replacement of old apartment complexes. Staff also has suggested that the city council develop and enact criteria for approving or rejecting projects that would wipe out rent-controlled units. But the city council has instead simply approved the projects. Perhaps city council candidate will address the matter. Mostly, candidates are vague.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 12:08 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 12:08 pm
387 people like this

In response to sfcanative you wrote:

“Steven, why not address the issue rather than unsuccessfully trying to pick apart other's comments with tangential rhetoric about bad investments.”

I am allowed to provide facts that contradict off hand comments that aren’t accurate. You said:

“The council is fantasizing about their goal of 1,500 affordable units on the city's rent rolls. Another city department/bureaucracy? Where do they think the money is going to come from? That's a 750,000,000.00 acquisition BEFORE doing any rehabilitation which will easily run another $100k/unit.”

OK you are saying it will cost $750M to achieve the goal of say 1,500 units, ASSUMING you are correct it will cost $500k a unit. BUT you cannot assume that price at all. The GRIM reality is that the City average rent has crashed to a 6 year low. And there is no sign of it stopping given that Google just announced that it will indefinetly not require workers to be onsite. It will move forward to only operating the offices only when there is onsite work needs.

The REALITY is that there is also a permenant population loss occurring. The SFGate did a story yesterday regarding this titled “ Bay Area applicants flood program that pays them $10,000 to leave California “ found here (Web Link).

In effect the cost of purchase is not probably going to be even close to your figures. In fact many owners are going to take ANY offer they can because their “investments “ are collapsing. So when you said:

“So, it's nearly a billion dollar pipe dream. Start small with a dozen units or so? OMG, the very city that made land worth $10M/acre by recklessly allowing endless commercial development now wants to spit in the ocean.”

I agree that the one-trick pony of Google and Tech made the City look foolish, and it should have diversified at least 20 years ago. But the real facts are that there is a major change happening originally because of the Microsoft Federal case, the Dynamex State case and AB5, but COVID has multiplied it and accelerated it incredibly. You said:

“I'm not a Mt. View landlord (thankfully) but clearly understand the inability of our local, state and federal government to solve any problem other than dream up a new tax and hope it does some good. Hopefully.”

The reality is that unrealistic expectations regarding rents in Commercial/Industrial/Residential markets are not going to be solved with taxes, I admit. There is a great video seen here (Web Link) titled “90% of restaurants not making rent in NYC - leases can't be renegotiated. Businesses are dying.” that describes that these expectations will cause massive destruction. It will require them all to submit to the market corrections that are happening, and there is no end in sight as long as COVID is a threat.

Please understand that your making up these numbers, you have no evidence to support them?


AD-MTVResSince2001
Registered user
Another Mountain View Neighborhood
on Sep 24, 2020 at 12:19 pm
AD-MTVResSince2001, Another Mountain View Neighborhood
Registered user
on Sep 24, 2020 at 12:19 pm
162 people like this

The market determines price and supply, and price is inversely related to supply (basic microeconomic theory).

If the City decides to get in the business of rentals as a landlord, it will be a participant in the market. If it sets prices below market, then the demand for the City-owned units will far outstrip the supply, and only a few will be served.

The remainder of the market will hardly be affected. If the City were to go on to restrict the supply of new rentals (this is just a thought exercise, not a proposal or concern), then prices would rise, but neither the City nor the private sector would have an incentive to maintain properties (as happens in rent-controlled scenarios, which Mountain View already has).

The City cannot avoid market pressures.

Now the opinion. The City should not be get involved in competing with the private sector except when the harm imposed by the private sector outweighs the good it provides (this is called a negative externality). Housing is not one of those situations. The City will not solve the problem of high-priced housing; it will just affect it marginally in the very short-term, and in the process impose a large cost on its business and individual residents by having to pay for the City-owned housing from funds from individuals and businesses, effectively attempting to convert tax funds into housing directly.

The only effective method for government to increase the purchasing power of those least able to afford a private market good or service is to redistribute income directly through a tax credit from income tax proceeds. I am no fan of this approach, but it does work, as in the Federal Earned Income Tax Credit. With this approach, those who want to afford housing with the tax credited funds can elect to purchase it.

City should stay out of any direct participation in the supply of or demand for residential housing.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 12:47 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 12:47 pm
379 people like this

I agree that the market would normally be the best method of determining the value of housing.

BUT,

Alan Greenspan clearly testified that the market has a serious FLAW when it comes to housing. He even said so publicly in a hearing in congress. Here is the story titled "Greenspan Admits Free Market Ideology Flawed
" (Web Link)

Remember, there is still no force other than the buyer not buying any property where everyone is inflating costs and values because it is protected "speech" in the state of CA. The CA market has no real market forces when everyone is in on the inflation game. The buyer is the one set up to be the loser no matter what EXCEPT to NOT buy anything.

What the "private" housing providers are afraid of is well run "public" competition, to force more price reductions. Especially if it is "non-profit" competition, which to them is unfair. Because they want no one to out-compete them when they do not need to make a profit.

BUT isn't that the "market"? The "market" is a "free market" and ANYONE is allowed to enter it even if they have an "unfair" advantage, right? You claim to be a "market" advocate but then try to rig the "market" yourselves.


Dan Waylonis
Registered user
Jackson Park
on Sep 24, 2020 at 2:30 pm
Dan Waylonis, Jackson Park
Registered user
on Sep 24, 2020 at 2:30 pm
103 people like this

No. The city should not be in the business of owning residential housing. Instead it should be encouraging development to increase the number and types (all types) of housing. Streamline the process. Liberalize the zoning. Let housing flourish.


Luca
Registered user
St. Francis Acres
on Sep 24, 2020 at 2:46 pm
Luca, St. Francis Acres
Registered user
on Sep 24, 2020 at 2:46 pm
152 people like this

This seems to be a terrible use of public money. I want Mountain View money to be used to provide services to residents, not to be used to run a real estate business at a loss while maintaining old units in bad need for remodel in the city. One wonders if they have even a clear idea of the amount of money they would need to make a dent in the market anyway.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 4:12 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 4:12 pm
358 people like this

In response to Dan Waylonis you said:

“No. The city should not be in the business of owning residential housing. Instead it should be encouraging development to increase the number and types (all types) of housing. Streamline the process. Liberalize the zoning. Let housing flourish.”

BUT all private housing providers dictate they want only luxury and high priced housing. Maybe the city should then DICTATE that all housing projects have price diversity, thus only 25% each project be affordable to very low income, 25 % be affordable to low income, 25% be affordable to moderate income and 25% be affordable to above moderate income. Oh wait, you demand that not happen either. Lets give the market a jolt of real competition and watch what happenes.

In response to Luca you said:

“This seems to be a terrible use of public money. I want Mountain View money to be used to provide services to residents, not to be used to run a real estate business at a loss while maintaining old units in bad need for remodel in the city. One wonders if they have even a clear idea of the amount of money they would need to make a dent in the market anyway.”

Judging by the expression of outrage by you and others, it looks like it makes a VERY big dent in the level of competition in the market. I love that, bring it on, make all these people understand how much they have to work to attract and retain tenants. Even though it seems to already be happening. The mere idea that a non-profit housing solution is discussed is a lot like the “public” option for health insurance. The housing market wants its group of people protected from real competition.

Let it go, Let it go. Time for the market correction to fully commence.


JustAWorkingStiff
Registered user
Another Mountain View Neighborhood
on Sep 24, 2020 at 5:00 pm
JustAWorkingStiff, Another Mountain View Neighborhood
Registered user
on Sep 24, 2020 at 5:00 pm
10 people like this

It sounds like MV City Council wants to get into the public housing business
* This should be voted on by the entire city, not just a decision by council
Frankly, I am not sure they know what they are getting themselves into
Be careful what you ask for, you might get it


sfcanative
Registered user
Whisman Station
on Sep 24, 2020 at 5:13 pm
sfcanative, Whisman Station
Registered user
on Sep 24, 2020 at 5:13 pm
12 people like this

When government owns the housing you have socialism, if not communism.


sfcanative
Registered user
Whisman Station
on Sep 24, 2020 at 5:21 pm
sfcanative, Whisman Station
Registered user
on Sep 24, 2020 at 5:21 pm
6 people like this

Next to go in 2025 . . .
$500k/unit Web Link
$469k/unit Web Link
$580k/unit Web Link
$575k/unit Web Link


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 5:42 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 5:42 pm
243 people like this

In response to JustAWorkingStiff you said:

“It sounds like MV City Council wants to get into the public housing business”

That has always been an option, in fact prior to 1970 most housing project were public housing. What happened is that the private housing business conned the Fed and State governments that it was more efficient and flexible and could do a better job.. By 1980 the signs were there that housing was not coming on line. And the private housing sector just made one false promise after another, NEVER achieving their objectives. You said:

“This should be voted on by the entire city, not just a decision by council”

You are free to get a ballot initiative started. However given the City Charter, it allows this kind of action. What is making certain people nervous is if the election purges both Margaret Abe Koga and Lisa Matichek from the council and people like Nunez and Lashlee take their places along with “public” citizen advocates, the council will work even harder on this kind of action. You said:

“Frankly, I am not sure they know what they are getting themselves into”

And like the one that bought my building had any idea what he was doing too? The reality is that if this program gets started, my building owner will be the first in line. You said:

“Be careful what you ask for, you might get it”

Your assuming it will not work. What evidence do you have? What you are really trying to do is intimidate people. We will at the minimum be in the same place we are in now without it, which is not good, or the program has many options to provide better to the people then the private sector.

I just think the people do have a right to be a part of this process, and if it decides to move forward, we all better not try to sabotage it.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 5:46 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 5:46 pm
234 people like this

In response to sfcanative you said:

“When government owns the housing you have socialism, if not communism.”

It is not under duress, it is a voluntary choice by the owners. So there is no “taking” or state control here.

But it may be the best choice for many property owners in Mountain View. That is not bad. In fact it can bail out the “mom and pop” landlords from their losses in the future. If you think the housing market is going to return to 2019 anytime soon, I would not count on it.

Another attempt to “red bait” the situation. But you have the right to try to scare us, it is not working.


Steven Goldstein
Registered user
Old Mountain View
on Sep 24, 2020 at 5:53 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 24, 2020 at 5:53 pm
7 people like this

[Post removed due to excessive and repetitive posting.]


Steven Nelson
Registered user
Cuesta Park
on Sep 25, 2020 at 10:46 am
Steven Nelson, Cuesta Park
Registered user
on Sep 25, 2020 at 10:46 am
234 people like this

Impossible to git a post in edgewise among "the Steve"s? Sorry.
Councilman McAllister is hardly a raging Democratic Socialist / Progressive. But I have usually found him a compassionate BUSINESSMAN. His suggestion is to use - lease revenue based financing - to help buy these properties. This is exactly what I myself, and my parents did, and my sister did when we bought rental housing in the costal (high cost) market during the last 50 years.
Use the lease rent - to pay most of the mortgage. The government can get about the lowest possible borrowing rates (municipal bonds of various types). Instead of the 'sweat equity' that my family put into our properties - the city gov can put in 'small subsidies' in term of 'just balancing' the costs. WHEN THE UNITS and THE LAND they sit on become ready for redevelopment, the government AS OWNERS completely determine what will be built.

Clark and Ramirez? Come on guys, if you don't know what you are doing (on this question) then just snooze-off, and "abstain" when votes come up! Put a Number on what you support. 100 units a year/ave will not quite keep up with the 1))+ units/yr. loss But It Is A Start! Share Shoreline! That source of revenue can be tapped! Use the millions you "steal" per year form the school district revenue stream to fund this.


Steven Goldstein
Registered user
Old Mountain View
on Sep 25, 2020 at 11:06 am
Steven Goldstein, Old Mountain View
Registered user
on Sep 25, 2020 at 11:06 am
212 people like this

Steven Nelson,

I am very sorry to everyone, but it has been too long for the crazy real estate game to not be exposed for what it is.

TOO MANY ASSUMPTIONS, AND ABUSE OF THE MARKET BY THE WHOLE BUNCH OF REAL ESTATE BUSINESSES.

My building buyer in 2016 bought it for $5M being told that AFTER redevelopment it would be worth that much. BUT redevelopment would add as much as $1M on top of the purchase. He then tried to charge us enough rent to pay for the redevelopment of the building when we would not see any of the improvements at all. That would have provided him with the "equity" to take out the "loan" for redevelopment.

I wish I didn't know this stuff, but the people here have the right to know it too.


sfcanative
Registered user
Whisman Station
on Sep 25, 2020 at 11:28 am
sfcanative, Whisman Station
Registered user
on Sep 25, 2020 at 11:28 am
6 people like this

That is some mighty fine analysis paralysis, Steven!


Steven Goldstein
Registered user
Old Mountain View
on Sep 25, 2020 at 11:55 am
Steven Goldstein, Old Mountain View
Registered user
on Sep 25, 2020 at 11:55 am
215 people like this

sfcanative,

I understand.

When people actually do their homework, they find out paralysis is the best defense from foolishness.

Too much silicon valley insanity described as "fake it till you make it".

Real Estate is a lot like Medical Devices, You can't eventually find another fool to try to con.

Your dealing with someone with 2 business degrees, and had to take a course in "quantitative business analysis". It specializes in teaching business professionals to eliminate "qualitative" analysis when possible and to uncover the best practice of computing operational results, or risk analysis.

The key idea I got out of it, is do not trust anyone else's number crunching without disclosure of how it was done.

Yes the results are if the BUYER do their homework, there will be a forced price correction, BUYERS will demand it

The Real Estate Market is always trying to make thing look better than they are here.


sfcanative
Registered user
Whisman Station
on Sep 25, 2020 at 6:45 pm
sfcanative, Whisman Station
Registered user
on Sep 25, 2020 at 6:45 pm
8 people like this

Steven, for starters, a $12,500,000.00 income property requires a 25-30% down payment from institutional lenders. Moreover, the value of Mountain View real estate is the land at $10,000,000.00+ per acre (thank you Google and all the rest), not the improvements thereon. The cap rate for current income generated from a multifamily rental operation is secondary and virtually dismissed by developers looking to scrape a site and build row houses. All of your number crunching is meaningless in the final analysis which is likely why you're still living in an apartment with two business degrees.


Randy Guelph
Registered user
Cuernavaca
on Sep 25, 2020 at 7:01 pm
Randy Guelph, Cuernavaca
Registered user
on Sep 25, 2020 at 7:01 pm
225 people like this

Honestly, sfcanative, why would anyone take you seriously when you rant about Communism while discussing city-owned housing? It's the easiest way to declare yourself someone not worth listening to.


Steven Goldstein
Registered user
Old Mountain View
on Sep 25, 2020 at 7:36 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 25, 2020 at 7:36 pm
229 people like this

In response to sfcanative you wrote:

“Steven, for starters, a $12,500,000.00 income property requires a 25-30% down payment from institutional lenders. Moreover, the value of Mountain View real estate is the land at $10,000,000.00+ per acre (thank you Google and all the rest), not the improvements thereon.”

You still haven’t addressed that the CURRENT structure is still there, and it has not yet gotten any approved development yet. Given that Google is now looking at long term work from remote as a plan, in effect Google is now going to lower land values badly. Again COVID, the Fires, and AB5 is going to relocate most tech contractors out of state, and they will only “visit” for when onsite meetings are absolutely necessary. Thus the 50% of “high income” tech workers are going away for good. You’re really not making any sense yet so far. You said:

“The cap rate for current income generated from a multifamily rental operation is secondary and virtually dismissed by developers looking to scrape a site and build row houses.”

No real estate then should even bring up any CAP rates at all. But so far I demonstrated that most property values advertised are fiction. You also said:

“All of your number crunching is meaningless in the final analysis which is likely why you're still living in an apartment with two business degrees.”

WHY should I own a home? What if I can see that by doing so, it would be a loss? That is in fact very likely in CA given that proposed relocation programs are flooded regarding Californians leaving. In fact, the recent jump in housing sales in the area is also accompanied by price concessions because people want to leave QUICKLY. The reality is you made a major false premise, not everyone wants or needs to own a house.

To me, you demonstrated that I struck a nerve. That it is far better not to get involved with any real estate transactions without doing independent research, in effect ignoring any proposed property values posted by any realtor. If the BUYERS do this, the realtors will have to take whatever offers they get. I proved the false value on that property and you don’t like it. And I can do it for most others.


Steven Goldstein
Registered user
Old Mountain View
on Sep 26, 2020 at 2:29 am
Steven Goldstein, Old Mountain View
Registered user
on Sep 26, 2020 at 2:29 am
212 people like this

In response to sfcanative

The local housing market is in a very unstable place, why? According to San Jose Real Estate Los Gatos Homes found here (Web Link)

In Mountain View there were 25 sales last month 24 this month a loss of 4%, Current Pending sales are good because last month there were 26, and this month there is 34 a gain of 31% and what is good was the Median price had a 5.4% gain in the month.

BUT here is the really bad news, in the previous month there were 42 Active sales, but last month it shrank to 27 a loss of 36%. Also according to this report the top level houses (1/4 of the total) have seen a drop in prices from a peak during March 2020 of $4.32M to $3.3M this year. Usually this is a “leading” indicator.


sfcanative
Registered user
Whisman Station
on Sep 27, 2020 at 9:02 am
sfcanative, Whisman Station
Registered user
on Sep 27, 2020 at 9:02 am
5 people like this

Steven G, perhaps you should read this for a bit of enlightenment . . .
Web Link

"Existing home sales, which have trended upward for the last 3 months since the housing market reopened from shutdown, soared to a 14-year high in August. New home sales are also up."

"Home prices are soaring, too, recording the highest two-month appreciation between May and July — at 2% — in 30 years of record-keeping."


Steven Goldstein
Registered user
Old Mountain View
on Sep 27, 2020 at 9:35 am
Steven Goldstein, Old Mountain View
Registered user
on Sep 27, 2020 at 9:35 am
246 people like this

sfcaNative,

What you do not understand is that those sales were pending prior to the shutdown.

And in fact that artificially made the market look better, because "buyers" and "sellers" were frightened into finalizing sales because of the likelihood of another shutdown of the market with the upcoming new increase in COVID cases.

The GRIM reality is that this was a statistical fluke, not based on the health of the market. It was realtor cramming their paperwork out to avoid the likelihood that they are struggling to avoid going out of business.

The fact that the for sale inventory is shrinking is the most scary element, with nothing to sell the realtors are going to outnumber the housing units that are on the market. Which will put many out of business. If the for sale numbers are only 75% of the numbers of real estate brokers and agents, then 25% of the existing brokers and agents will simply be out of business.

That is an undeniable statistic, these people people know about it. Then there are people like you who will act as a "astroturf" advocate trying to distract the people from understanding this reality.

Again, NO ONE should ever take a real estate broker or agents "proposed" values. BUYERS stop being SHEEP and start being the WOLF.


Steven Goldstein
Registered user
Old Mountain View
on Sep 27, 2020 at 3:09 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 27, 2020 at 3:09 pm
209 people like this

sfcanative,

Your selective perception igonred this part of the story:

"Those who already own homes are holding off on selling, according to Zillow economists, meaning there are fewer homes on the market than normal. There are 20% fewer houses for sale now than there were at this time last year. Uncertainty about employment and the economy among other financial concerns may keep housing supply low for some time, and is exacerbated by the US' failure to keep up with home building needs over the past decade.

Even though record-high numbers of newbuilds were purchased earlier in the pandemic, new-construction listings dropped 33.6% year-over-year in August, according to a Redfin analysis, meaning that not enough homes are being built to keep up with demand.

"Housing demand is robust but supply is not and this imbalance will inevitably harm affordability and hinder ownership opportunities," NAR's chief economist, Lawrence Yun, said in the association's report.

We're already seeing the effects of this — the FHFA reported that home prices jumped 6.5% nationally in July on a year-over-year basis. Separately, NAR found that the national median home price in August was $310,600, up 11.4% from last August.

Median home prices of single-family homes and condos are currently less affordable than historical averages in roughly two-thirds of the US, according to a Thursday Attom Data Solutions report.

"In a year when nothing is normal, owning a single-family home has become less affordable to average wage earners across the US, despite conditions that would seem to point the opposite way," Todd Teta, Attom's chief product officer said in the report, noting that higher wages and lower mortgage rates "should work in favor of home buyers." The report went on to note that home price appreciation outpaced average weekly wage growth in most — 87% — of the country this month.

Meanwhile, as prices rise due to demand, mortgages are becoming even harder to come by. Lenders are tightening standards due to the coronavirus recession, per the Mortgage Bankers Association. It reportedly hasn't been this hard to take out a mortgage since 2014.

The unfortunate combination is enough to make homeownership simply unattainable for the average American as the pandemic wears on."

Buyers per yuor own source are noticing they are getting conned, did you even bother to read this paragraph:

"Newly minted homeowners are already regretting their decision, too. A late August LendEDU survey found that more than half of Americans — a whopping 55% — who purchased homes amid the pandemic almost immediately reported buyer's remorse. Roughly 30% of those respondents cited financial reasons."

New BUYERS should BEWARE the false values of the properties because you will wind up wit "buyers remorse". DO NOT OVERPAY for a property, AGGRESSIVELY NEGOTIATE at least for the first offering purchase about 50% of the proposed sale price, and do not let them con you into overspending.


sfcanative
Registered user
Whisman Station
on Sep 27, 2020 at 10:35 pm
sfcanative, Whisman Station
Registered user
on Sep 27, 2020 at 10:35 pm
4 people like this

Let all readers understand that Steven Goldstein, with immense business acumen and multiple degrees, is recommending that willing and able buyers of real estate start with an offer price at 50% of the "inflated" list price. I would love for someone to report back to us on this strategy and how the negotiating went, whether using a real estate agent or not.


sfcanative
Registered user
Whisman Station
on Sep 27, 2020 at 10:43 pm
sfcanative, Whisman Station
Registered user
on Sep 27, 2020 at 10:43 pm
4 people like this

And the hits just keep on coming. This time from Forbes . . .

"Here’s Why The California Real Estate Market Is Hot"

Web Link


Steven Goldstein
Registered user
Old Mountain View
on Sep 27, 2020 at 11:10 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 27, 2020 at 11:10 pm
247 people like this

In response to sfcanative you said:

“Let all readers understand that Steven Goldstein, with immense business acumen and multiple degrees, is recommending that willing and able buyers of real estate start with an offer price at 50% of the "inflated" list price. I would love for someone to report back to us on this strategy and how the negotiating went, whether using a real estate agent or not.”

Given that the report indicates that the Real Estate industry abused these buyers is the real important issue. The industry uses hard tactics to inflate prices and intimidate buyers via the “shortage” of housing. BUYER do NOT get ABUSED, simply DON’T BUY, YOU DON’T HAVE TO.

You said:

“"Here’s Why The California Real Estate Market Is Hot"

This is what that report said:

“Describe where the California market is right now?

Mark McLaughlin: The California market is experiencing a record "surge" in home buying. This is driven by three variables: THE DELAY OF THE TRADITIONAL SPRING MARKET, THE COVID SURGE OF HOMEBUYERS SEEKING INTERIOR AND EXTERIOR SPACE, AND RECORD LOW-INTEREST RATES. This combination has fueled a velocity in the market we have not seen maybe since 2006, pre-Great Recession.”

This in fact proves my earlier point, the activity was “Compressed”, Why didn’t you read this, it also said:

“Selma Hepp: The market is certainly not what and where we expected it to be. We are seeing strong sales activity following initial declines. In August there was a 15 percent year-over-year sales activity increase. OVERALL, I THINK ACTIVITY WILL STILL BE SLIGHTLY DOWN FOR THE YEAR. I do think it will still be a solid year in sales and prices. Since inventory is down 50 percent across the state that impacts sales activity. What’s fueling the current demand and sales growth is people are doing more at home so that changes their needs combined with low mortgage rates.”

This is dependent on if COVID doesn’t reemerge and becomes another “shutdown” situation, which many even the CDC is predicting is on its way. I simply am amazed that you only read the headline and do not bother to read the written works which makes assumptions of the best case scenario regarding te rest of the year, The Story went on to say:

“What advice do you have for homebuyers?

Mark McLaughlin: Focus on "home,” BE CONSERVATIVE, AND KNOW THAT REAL ESTATE, overtime is one of the best investments ever. Sprinkle kindness and empathy everywhere.”

Isn’t this exactly what I have been saying? It almost looks like you are just grapsing at straws, it also said:

[Post shortened due to excessive length]


Cogent
Registered user
Another Mountain View Neighborhood
on Sep 28, 2020 at 2:53 pm
Cogent, Another Mountain View Neighborhood
Registered user
on Sep 28, 2020 at 2:53 pm
2 people like this

If it don't make dollaz, it don't make sense. DJ Quick

Bears make money, Bulls make money, Pigs get slaughtered.
Realtors are like stock brokers, if they knew what they were doing they would be on a boat in the Bahamas trading their own account. Sellers are just looking to move on, regardless of their reasons. Buyers have always been the wolves, not always successful, but always looking for a reasonable business deal. The best deal (market value) is where the buyer and seller are equally unhappy. Brokers get paid if they can complete any transaction and are happy to do so.


A “romantic conception of socialism” will destroy our economy.




Tina
Registered user
Another Mountain View Neighborhood
on Sep 28, 2020 at 3:15 pm
Tina, Another Mountain View Neighborhood
Registered user
on Sep 28, 2020 at 3:15 pm
2 people like this

@Stevengoldstein

I challenge Mr. Goldstein to move into one of these pre 1970's public housing projects with his family.

Why America is pulling down housing!
Web Link


Steven Goldstein
Registered user
Old Mountain View
on Sep 28, 2020 at 3:24 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 28, 2020 at 3:24 pm
162 people like this

Cogent,

WOW, I love it, your are on target.

The reality is that "brokers" and "agents" are only out for the commissions.

The "appraisers" hired by the "brokers" and "agents" will give them exactly what they want to inflate the commissions, because their "opinions" are protected as "free speech". Then they have employers for life.

This is why BUYERS have to have the be strong enough to say NO DEAL if they have any feeling that the deal is not good.

I am not for socialism unless it is absolutely necessary. The laws regarding the market should require such transparency that any attempt to propose a false value will be so easy to detect When this is in place then the BUYERS will be responsible for their own mistakes.

But right now, there is so much going on that is secret, that does cause "bubbles" and these roller coasters are costing the public a very high cost. Thus the BUYER must be made clearly aware they are targets for exploitation.


Steven Goldstein
Registered user
Old Mountain View
on Sep 28, 2020 at 3:33 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 28, 2020 at 3:33 pm
202 people like this

Tina,

I live in a building built in 1960, and it is a fine building when it is maintained well.

But that is the real problem you don't discuss, that many buildings were built well and are good housing. BUT when these building changed hands into the private sector, cost cutting owners let them deteriorate. In fact the report did state:

"David Layfield, an affordable housing expert, says it is important to remember that many of the projects being demolished have been largely abandoned - with vacancy rates of up to 30% in some places - because they were so uninhabitable."

the cause of them being uninhabitable was that the local housing regulators did not strictly enforce building standards to keep the buildings from self-destruction by their owners.

You see once the mortgages are paid off, the public management sells them to private owners, because the owners off them a "offer they can't refuse". Especially after the 2007 great recession where pension funds lost so much value due to the collapse of the housing sector. They had to make money fast to fill the losses.

Tina, it simply is not as simple as your claim.




Steven Goldstein
Registered user
Old Mountain View
on Sep 29, 2020 at 5:16 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 29, 2020 at 5:16 pm
1 person likes this

[Post removed at poster's request]


Steven Goldstein
Registered user
Old Mountain View
on Sep 29, 2020 at 5:32 pm
Steven Goldstein, Old Mountain View
Registered user
on Sep 29, 2020 at 5:32 pm
247 people like this

Sorry made a mistake here is a revision

Let’s give the people here a bit of new information.

I love my videos from Louis Rossman, he posted a video recently seen here (Web Link) What he pointed out was that commercial rentals were at the pre COVID values of above $50.00 a square foot annually.

This video is showing that NEW YORK commercial values are crashing. Now understand that commercial rental rates per square foot are much higher than residential, because you actually MAKE money in those locations.

Now New York commercial rentals is hovering around $40.00 per square foot annually. Thus, it would be pretty good to say it should be half that rate for residential rents. No one should be using a residential unit for commercial use. So the rate should hover around $20,00 per square foot per year.

Now realize that that rate is typically not the value of the building. WHY? Because that take into account the value of the building plus operational costs plus taxes plus managerial costs and plus profit margins. Operational costs are typically 14%, Managerial Costs are typically 7%, Taxes are typically about .8% Typically there is an anticipated 5-10% profit so let’s put it at 10%.

ORRECTION : Thus, 100%-(14%+7%+.8%+10%) should be the cost of the building or the purchase price basis if you looking to invest into the property in the market which is 68.2%. Thus, the real possible value of investments per year are $20.00 – 31.8% which is $13.64 per year.

NOW, if you think your investment is going to manage to work for 30 years, and you do not expect any major disruptions or disasters you would cost account it to be 30 times 13.64 or $409.20 per square foot.

Now if a studio apartment is average 500 square feet that should cost $204,600 per unit, a one bedroom with an average of 700 square feet should cost $286,440 per unit and a 2 bedroom at an average of 1,100 square foot should cost $450,120.

So if the argument is that it costs $500,000 to build a unit in Santa Clara, someone did not update the REAL values given the current situation.

My calculations would be the strong basis to disprove anyone trying to sell building units at the rates reported. Any HARD BALL negotiator should base their purchase decisions on a VERY conservative cost. The values that these websites say are almost nonsense.


Lex Luther
Registered user
Rengstorff Park
on Oct 29, 2020 at 9:27 am
Lex Luther, Rengstorff Park
Registered user
on Oct 29, 2020 at 9:27 am
Like this comment

There is a report of tenant harassment, abuse, discrimination and favoritism all behind the same 4 walls in Mountain View today.
Web Link


Steven Goldstein
Registered user
Old Mountain View
on Oct 29, 2020 at 5:11 pm
Steven Goldstein, Old Mountain View
Registered user
on Oct 29, 2020 at 5:11 pm
32 people like this

Lex Luther,

I love the name, you remind me of the version Gen Hackman played in the original movie. But Luthor is spelled with an o

I suspect that if the COVID return gets bad enough a lot of private housing providers will go bankrupt. The City will be able to attempt to purchase the properties at pennies on the dollar.

The rents will crash because the high paying jobs that were here will be gone.

Now this does possibly suspend the CSFRA, but the COVID and AB5 impact will permanently crush the "market rates" so the housing will be affordable again. Because the demand for housing may be outdone by the supply significantly.

I am watching the situation play out.


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