Conflict over profits and pricing at Del Medio apartments | February 23, 2018 | Mountain View Voice | Mountain View Online |

Mountain View Voice

News - February 23, 2018

Conflict over profits and pricing at Del Medio apartments

Tenants join together to fight landlord's petition to raise rents

by Mark Noack

For Freddie Farris, 60, the golden years aren't going quite as planned. After having to leave her postal carrier job due to a disability, Farris thought she could spend a little more time caring for her family while her pension kicked in. They needed her help — her sister had a debilitating stroke years ago, and her 83-year-old mother, who shares an apartment with her, can no longer walk on her own.

This story contains 1462 words.

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Email Mark Noack at mnoack@mv-voice.com

Comments

8 people like this
Posted by Paul
a resident of Blossom Valley
on Feb 23, 2018 at 3:57 am

You ain't seen nothing yet. Landlords will be filing one petition after another with the pro-landlord majority on the Rental Housing Committee led by anti-rent control activist Tom Means. This is part of the landlords' strategy to have their city council place a "repeal and replace" measure on next November's ballot. This time, landlords will spare no expense to win at the polls. Then, it will be bye- bye tenants. Out with the old and in with the new.


7 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 6:21 am

The Business Man is a registered user.

Just realize that any actions made by the CSFRA RHC are appealable to the courts whether they are pro-landlord or pro-tenant decisions that are not in compliance with the CSFRA

It was predicted that this situation was going to occur, Curt Conroy however did the best in explaining a very important issue. He pointed out that if the rent increases are base on the Vega standard, you cannot pick and chose which apartments will have rent increases. All apartments will be required to perform the same rent increase equally. Not just the rent-rollback ones.

If you want to raise rents individually, the highest rent would be based on the HUD FMR which would set a cap at 1 bedroom $1419, 2 bedroom $1809, 3 bedroom $2551 and 4 bedroom $2892.

Thus if I read this article correctly it said:

Her landlord wanted to raise her $1,200-a-month unit rent by $500. Then she saw the row with her sister's $1,650-per-month, 2-bedroom unit. That would go up by $900 a month.

The highest increase in rent in this situation should be for the 1 bedroom $219 and the 2 bedroom $159. The increases in the petition are simply not following the CSFRA and the regulation. Thus the partitions using arbitrary rent increases should be summarily denied because they are not in compliance with the CSFRA and its regulations


5 people like this
Posted by ROI
a resident of another community
on Feb 23, 2018 at 7:50 am

Where does the 60M come into the picture? Property was bought in 1972 most likely for no more than 2M (based on 18,000 property tax). Shouldn't the rate of return be based on the amount invested (2M purchase + any improvements)?

Also, does the rate of return account for IRS real estate depreciation schedule (27.5 years for building value) and other tax deductions?


34 people like this
Posted by SimpleSolution
a resident of Old Mountain View
on Feb 23, 2018 at 8:26 am

Why not move somewhere cheaper?

She isn't working, and there are plenty of cheaper better places outside Mountain View.

There are lots of places I'd like to live that I can't afford. Why is this different?


7 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 9:05 am

@SimpleSolution

Why don't we get rid of Prop 13 for you and see if you still feel that way.


20 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 11:05 am

"Getting $1 million a year is like a 1.7 percent return on that value, she said."
1. This is very relevant
2. Did voters really expect this outcome?
a) Note that saying they have capital gains really muddies the water. Capital
gains are not realized until you sell. Do voters really want housing
service providers to work for a 1.7% return? 102 unit apartment complex
is a lot of work/risk/expnese. $1 M divided by 12 - $83K per owner for a lot
of risk and work.
3. Did voters really vote for a $2.6 M rental housing committee to administer a
small amount of claims?

4. Measure V calls for allowing rent increases to the Bay Area CPI of 3.4%. But by the time you add in the fees for the Rental Housing committee, Dispute resolution,
increases of garbage, water, the real rate of return is 2.4%.
a) Did voters really vote for a policy which forces housing providers to provide their services at a rate less than inflation?
b) What is going on here? RHC is over stating revenue and ignoring expense line items because they are not using generally accepted accounting principals. On the other hand, housing providers do not have the luxury of ignoring expense items. The reality is housing provider pay the additional expenses. And cannot ignore them by pretending they don't exists. Housing providers pay their bills, the RHC does not.
Is this any way to run a railroad?

5. Going forward, there is a 5% cap on adjusting rent to inflation. In the short run, this is not a problem because of extraordinary events following the Great Recession of 2008. But the RHC should re-look at this policy to see if this makes sense going forward. The US Federal Reserve Bank is now executing a policy of QT (Quantitative Tightening) to normalize interest rates and increase inflation. In the future, this 5% cap could also result in a policy of having housing providers provide their services *below* the inflation rate. I suggest that Tom Means, Phd.
explain this to the RHC, since he is very knowledgeable on the subject.

6. Mr./Mrs/Miss Voter, do not see a pattern here? Did you really vote for this
kind of legislation? I think most (but not all) is really well intended. But
I don't think the authors of this legislation know what they are doing. Measure
V is poor quality legislation with poor quality outcomes.

7. To illustrate the point, I asked a young rent control proponent if the housing
providers in Berkeley were able to make enough to pay for big ticket items like
painting, new roof, new electrical panels, re-paving driveway, or re-piping
water lines. Her was response was very perky and enthusiastic. Yes, or course.
Her friend took out a home equity loan to pay for it. Little did she know that
the reason her friend had to take out another loan was he did not have enough
cash on hand to pay for capital improvements. This is piling more debt on
debt and the debt service cost increase, sending more money to interest payments
rather than directly paying for roofs, water pipes ect. The point of this story?
She has no idea what she is talking about. And I think the same thing can be said of the authors of Measure V.



3 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 11:11 am

"Getting $1 million a year is like a 1.7 percent return on that value, she said."
1. This is very relevant
2. Did voters really expect this outcome?
a) Note that saying they have capital gains really muddies the water. Capital
gains are not realized until you sell. Do voters really want housing
service providers to work for a 1.7% return? 102 unit apartment complex
is a lot of work/risk/expense. $1 M divided by 12 - $83K per owner for a lot
of risk and work.
3. Did voters really vote for a $2.6 M rental housing committee to administer a
small amount of claims?

4. Measure V calls for allowing rent increases to the Bay Area CPI of 3.4%. But by the time you add in the fees for the Rental Housing committee, Dispute resolution,
increases of garbage, water, the real rate of return is 2.4%.
a) Did voters really vote for a policy which forces housing providers to provide their services at a rate less than inflation?
b) What is going on here? RHC is over stating revenue and ignoring expense line items because they are not using generally accepted accounting principals. On the other hand, housing providers do not have the luxury of ignoring expense items. The reality is housing provider pay the additional expenses. And cannot ignore them by pretending they don't exists. Housing providers pay their bills, the RHC does not.
Is this any way to run a railroad?

5. Going forward, there is a 5% cap on adjusting rent to inflation. In the short run, this is not a problem because of extraordinary events following the Great Recession of 2008. But the RHC should re-look at this policy to see if this makes sense going forward. The US Federal Reserve Bank is now executing a policy of QT (Quantitative Tightening) to normalize interest rates and increase inflation. In the future, this 5% cap could also result in a policy of having housing providers provide their services *below* the inflation rate. I suggest that Tom Means, PhD.
Economics explain this to the RHC, since he is very knowledgeable on the subject.
I am sure he can do a better job than me on this subject.

6. Mr./Mrs/Miss Voter, do not see a pattern here? Did you really vote for this
kind of legislation? I think most (but not all) is really well intended. But
I don't think the authors of this legislation know what they are doing. Measure
V is poor quality legislation with poor quality outcomes.

7. To illustrate the point, I asked a young rent control proponent if the housing
providers in Berkeley were able to make enough to pay for big ticket items like
painting, new roof, new electrical panels, re-paving driveway, or re-piping
water lines. Her was response was very perky and enthusiastic. Yes, or course.
Her friend took out a home equity loan to pay for it. Little did she know that
the reason her friend had to take out another loan was he did not have enough
cash on hand to pay for capital improvements. This is piling more debt on
debt and the debt service cost increase, sending more money to interest payments
rather than directly paying for roofs, water pipes ect. The point of this story?
She has no idea what she is talking about. And I think the same thing can be said of the authors of Measure V.



5 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 11:15 am

"Getting $1 million a year is like a 1.7 percent return on that value, she said."
1. This is very relevant
2. Did voters really expect this outcome?
a) Note that saying they have capital gains really muddies the water. Capital
gains are not realized until you sell. Do voters really want housing
service providers to work for a 1.7% return? 102 unit apartment complex
is a lot of work/risk/expense. $1 M divided by 12 - $83K per owner for a lot
of risk and work.
3. Did voters really vote for a $2.6 M rental housing committee to administer a
small amount of claims?

4. Measure V calls for allowing rent increases to the Bay Area CPI of 3.4%. But by the time you add in the fees for the Rental Housing committee, Dispute resolution,
increases of garbage, water, the real rate of return is 2.4%.
a) Did voters really vote for a policy which forces housing providers to provide their services at a rate less than inflation?
b) What is going on here? RHC is over stating revenue and ignoring expense line items because they are not using generally accepted accounting principals. On the other hand, housing providers do not have the luxury of ignoring expense items. The reality is housing provider pay the additional expenses. And cannot ignore them by pretending they don't exists. Housing providers pay their bills, the RHC does not.
Is this any way to run a railroad?

5. Going forward, there is a 5% cap on adjusting rent to inflation. In the short run, this is not a problem because of extraordinary events following the Great Recession of 2008. But the RHC should re-look at this policy to see if this makes sense going forward. The US Federal Reserve Bank is now executing a policy of QT (Quantitative Tightening) to normalize interest rates and increase inflation. In the future, this 5% cap could also result in a policy of having housing providers provide their services *below* the inflation rate. I suggest that Tom Means, PhD.
Economics explain this to the RHC, since he is very knowledgeable on the subject.
I am sure he can do a better job than me on this subject.

6. Mr./Mrs/Miss Voter, do not see a pattern here? Did you really vote for this
kind of legislation? I think most (but not all) is really well intended. But
I don't think the authors of this legislation know what they are doing. Measure
V is poor quality legislation with poor quality outcomes.

7. To illustrate the point, I asked a young rent control proponent if the housing
providers in Berkeley were able to make enough to pay for big ticket items like
painting, new roof, new electrical panels, re-paving driveway, or re-piping
water lines. Her was response was very perky and enthusiastic. Yes, or course.
Her friend took out a home equity loan to pay for it. Little did she know that
the reason her friend had to take out another loan was he did not have enough
cash on hand to pay for capital improvements. This is piling more debt on
debt and the debt service cost increase, sending more money to interest payments
rather than directly paying for roofs, water pipes ect. The point of this story?
She has no idea what she is talking about. And I think the same thing can be
said of the authors of Measure V.



20 people like this
Posted by mike rose
a resident of another community
on Feb 23, 2018 at 12:42 pm

mike rose is a registered user.

There goes away the fair return on investment constitutional right.
The problem with rent control is that it is never going to be enough of it for tenants activists and liberal media.
Any meager bits of private property rights left will be clasiffied as loopholes and landlords fraud and constantly attacked.
This won't stop until all of the remaining property ownership benefits will be transferred to the tenants.
SAD!!!!


16 people like this
Posted by Retire instead
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 3:53 pm

"This is only a little better than a savings account," she wrote in an email. "Why would any landlord go through what we do for a 1.7 percent return?"

She is absolutely correct. So my advise to you is sell your apartment for 60 million buy a bond that gives you 3% which will give you 1.8 million and your 12 investors will each have 150k a year. NO MORE HEADACHES!

A developer will buy the apartment building and redevelop it into more Condos.

Be careful what you vote for!


5 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 23, 2018 at 6:30 pm

The Business Man is a registered user.

in response to Mike Rose,

Ok, 1.7% of ROI looks bad. But that is taking all expenses into account, meaning you have “pure” profit, the taxes are already paid for.

Now say your apartment business activity is $3 Mil. That leaves you with a net profit of $51,000 for that year.

Again all other costs have been paid, except maybe for income taxes. But there are so many tax credits and deductions that can be found to negate it.

What you’re doing is taking advantage of such a small number, but not realizing that the scale of this business is large. Any professional apartment company can have as much as $50 Mil in business activity, thus the total net profits are $850,000.

Again realize that this takes into account all business expenses, this is totally free money as long as you can deal with the personal income taxes.

If the business is competitive in efficient management, that rate should increase greatly. You are taking the worst case scenario and basing your argument on the worst of possible performance.


12 people like this
Posted by mike rose
a resident of another community
on Feb 23, 2018 at 7:39 pm

mike rose is a registered user.

It seems like assembly members Bloom, Bonta and Chiu are determined to make the landlords life as miserable as possible and are coming up daily with new ideas.
Now, even not paying rent is OK, as long as it is no longer than 10 days late instead of 4 currently (who thinks here this is it and it won't be extended to 30, 60 days in the future?) Will there ever be end to these "progressive ideas"?

Another beauty-mandatory landlord training!!!!!
Who can guess fees for that, and who would pay them? I can only guess that The Business Man would be perfect as a teacher there....

Statewide just-cause eviction !!!!!

The most sweeping of those bills promises to by AB 2925 by Assemblyman Rob Bonta, D-Alameda. Although a “spot bill,” meaning it’s yet to be fleshed out with full details, AB 2925 will ultimately propose statewide “just cause” eviction controls.

Under the legislation, rental property owners could only proceed with an eviction after providing the tenant with a written notice outlining the reason for the termination. Such requirements, found in a number of California rent control cities, provide a limited number of reasons for which a property owner can terminate a tenancy.

These limitations can make it difficult — if not impossible — to evict bad tenants, including those suspected of criminal activity, such as drug-dealing – unless other tenants and witnesses are willing to testify at trial. Current law allows a property owner to terminate a tenancy with a 30- or 60-day notice without listing a cause.

Ellis Act

Although AB 2364 now focuses on density bonuses, Assemblyman Richard Bloom, D-Santa Monica, has announced he will amend it to weaken the Ellis Act, a law that protects a property owner’s right to leave the rental housing industry. AB 2365 would triple the amount of notice owners must give tenants before using the Ellis Act.

Currently, landlords must give most tenants four months’ notice; under Bloom’s bill, the notice requirement would expand to one year. This marks the fourth year in a row that lawmakers have targeted the Ellis Act. The other efforts failed amid fierce opposition from the California Apartment Association.

Before the Ellis Act was passed in 1985, rent-controlled cities — Santa Monica in particular — forced landlords to stay in business, even if they were losing money or experiencing other hardships.

Delayed evictions

A third eviction-related bill, AB 2343 by Assemblyman David Chiu, D-San Francisco, would force landlords to wait longer before starting the eviction process. The bill would bring the wait time to 10 days when a tenant has failed to pay the rent, and five days when a tenant has violated the lease. After the process starts, tenants would have an additional 14 days, instead of the current five days, to respond to the eviction lawsuit.



Mandatory landlord training: AB 2618 by Assemblyman Rob Bonta, D-Oakland, would require landlords and property managers to receive training every two years on the topics of fair housing, evictions and notices, and tenant rights.





















6 people like this
Posted by Realistically...
a resident of North Whisman
on Feb 24, 2018 at 2:08 am

Math doesn't quite add up. Selling to another landlord is probably not a viable option, since the property taxes on 60M would make up most of the 1M claimed profit... So the value of the complex is really just what the could get from a developer who would evict everyone anyway.

Fact is, if it weren't for the Prop 13 subsidy, these old apartment buildings would have become unprofitable and been redeveloped long ago. Let it happen now, and ensure some low income housing gets built along the way for the retirees...

The landlord should lay low and keep taking advantage of the free ~700k tax break they have been getting, or just sell, instead of trying to milk the tenants for everything they have. They've already gotten a great return over the years, nevermind the capital gains, and won't find much sympathy.

If on the other hand we did let Prop 13 slumlords charge luxury prices for crappy old apartments, we would still price out most people and we would miss out on the development that benefits everyone. Rent control is needed, BUT MOSTLY BECAUSE IT WILL SPUR DEVELOPMENT BY ROOTING OUT SUCH PARASITIC LANDLORDS.


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 24, 2018 at 6:19 am

The Business Man is a registered user.

In response to Mike Rose you said:

“It seems like assembly members Bloom, Bonta and Chiu are determined to make the landlords life as miserable as possible and are coming up daily with new ideas.”

No, they are trying to establish a balance regarding the tenant landlord relationship. It has been arranged so that the balance of power is not even, it benefits landlords. You said:

“Now, even not paying rent is OK, as long as it is no longer than 10 days late instead of 4 currently (who thinks here this is it and it won't be extended to 30, 60 days in the future?) Will there ever be end to these "progressive ideas"?

A third eviction-related bill, AB 2343 by Assemblyman David Chiu, D-San Francisco, would force landlords to wait longer before starting the eviction process. The bill would bring the wait time to 10 days when a tenant has failed to pay the rent, and five days when a tenant has violated the lease. After the process starts, tenants would have an additional 14 days, instead of the current five days, to respond to the eviction lawsuit.”

How about a compromise, if 10 days is too long, one could strike a balance and make it 7 days? Forcing tenants out with or without cause costs thousands of dollars worth of damage to the tenant. However the CAA would wish it be free for the landlords. You said:

“Another beauty-mandatory landlord training!!!!!

Mandatory landlord training: AB 2618 by Assemblyman Rob Bonta, D-Oakland, would require landlords and property managers to receive training every two years on the topics of fair housing, evictions and notices, and tenant rights”

If anyone enters a business without the required skills to practice it, that IS A PROBLEM. The worst situation is those going into business with no understanding about how to run it. You said:

“Statewide just-cause eviction !!!!!

The most sweeping of those bills promises to by AB 2925 by Assemblyman Rob Bonta, D-Alameda. Although a “spot bill,” meaning it’s yet to be fleshed out with full details, AB 2925 will ultimately propose statewide “just cause” eviction controls.”

Why not level the playing field regarding the state, why should some citizens be treated differently than others simply for their location? This should be state-wide policy. Otherwise you have unequal protection under law. You said:

“Under the legislation, rental property owners could only proceed with an eviction after providing the tenant with a written notice outlining the reason for the termination. Such requirements, found in a number of California rent control cities, provide a limited number of reasons for which a property owner can terminate a tenancy.

These limitations can make it difficult — if not impossible — to evict bad tenants, including those suspected of criminal activity, such as drug-dealing – unless other tenants and witnesses are willing to testify at trial. Current law allows a property owner to terminate a tenancy with a 30- or 60-day notice without listing a cause.”

Until one is in fact convicted of a crime, they are innocent, isn’t that in the Federal and State constitution? Being a suspect doesn’t mean you are in fact a criminal, that requires a proof beyond reasonable doubt. What you’re saying is that those who could be in fact innocent of anything should be penalized without trial and evidence. A landlord is not a policemen nor a prosecutor. They should not be taking actions without proof of a crime, simply put. And as far as “no-fault” eviction, that simply has been a unfair practice of business, enough said. You said:

“AB 2365 would triple the amount of notice owners must give tenants before using the Ellis Act.

Currently, landlords must give most tenants four months’ notice; under Bloom’s bill, the notice requirement would expand to one year. This marks the fourth year in a row that lawmakers have targeted the Ellis Act. The other efforts failed amid fierce opposition from the California Apartment Association.”

When landlords simply want to get out of the market, it exacts thousands of dollars of expenses to tenants. Landlords do not want to discuss that their actions cost others in ways that are not beneficial to CAA point of view. The Ellis Act is simply a tool to penalize tenants and force upon them high costs of rushed moves and increased rents due to high rents in other locations they MUST move to in order to do their jobs.


13 people like this
Posted by mike rose
a resident of another community
on Feb 24, 2018 at 11:48 am

mike rose is a registered user.

THB,
You said:
....they are trying to establish a balance regarding the tenant landlord relationship. It has been arranged so that the balance of power is not even, it benefits landlords...

What makes you think the balance of power should be "even" between the private property owner and a temporary occupant? Should the balance of power be even between a taxi owner and person who is getting a ride?
And even putting this aside, how is the balance "even" when legal property owner does not have ANY rights as to who occupies his property, for how long, and for what price?


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 24, 2018 at 1:53 pm

The Business Man is a registered user.

In response to mike rose you said:

“What makes you think the balance of power should be "even" between the private property owner and a temporary occupant?”

In the free market, the consumer and suppliers are equal. That is common sense regarding business and economics. Where the is an imbalance on either side, the business model fails and you either have undemocratic socialist or authoritarianist market models. I am not for either of these. I just understand that you must have equal respect for your customer as you would yourself. You also said:

“Should the balance of power be even between a taxi owner and person who is getting a ride?”

Yes, the safety and benefit of the taxi driver and the passenger are equally necessary. What are you suggesting, the taxi driver have the freedom to take the riders laptop or cell phone simply because he drives the car? You also said:

“And even putting this aside, how is the balance "even" when legal property owner does not have ANY rights as to who occupies his property, for how long, and for what price?”

Governmental regulations arise when the voluntary free market fails to establish equality in the marketplace. That has existed in the state of California for a long time. So either through legislation or ballot measure (collective bargaining) will balance the scales. It is unfortunate that the current industry has lost sight of the bigger longer picture and has invited intrusion via regulations.

But the industry could have prevented it.

And as a side note, in the story the complaint was that getting a $1,000,000 profit in a year is unfair. Just realize the complainer is drawing a salary prior to the profit. Even if one worked 16 hours a day every day no holidays that would result in an hourly pay rate of $173/hr. The median income in Santa Clara County is $95,000 a year or $16.00/hr in the same 16 hr work week. So this landlord is earning 10 times the rate of earnings than the median worker in the county. Does this sound like the landlords are being treated unfair?


3 people like this
Posted by Alice
a resident of Blossom Valley
on Feb 24, 2018 at 6:57 pm

"Every month that I'm not getting rent increases, I'm just bleeding money." Aaaah gotta love delusional landlords.


16 people like this
Posted by mvresident2003
a resident of Monta Loma
on Feb 25, 2018 at 9:12 am

mvresident2003 is a registered user.

Alice, feel free to step up and take those risks, make that investment and rent to everyone you'd like.


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 25, 2018 at 10:33 am

The Business Man is a registered user.

In response to mvresident2003 you said:

“Alice, feel free to step up and take those risks, make that investment and rent to everyone you'd like.”

You just stated the truth, it was a risk to invest. Thus there is no guarantee of a ROI of any kind.

The landlords knew the risks, the fact that their investments are not resulting in the “expected” ROI.

The fact is no one is entitled to profits in the market.

Please remind your friends that they should be more careful in their investments?

As far as the statement:

“"Every month that I'm not getting rent increases, I'm just bleeding money."

I thought the article said:

“"At the end of the day, we're trying to uphold Measure V as the voters intended it to be implemented," said Nan McGarry, a Community Law Services attorney on the case. "This landlord is making over $1 million on this property each year. That raises questions for us about the propriety of this rent increase."

Thus, where is the money bleeding?


4 people like this
Posted by Howard
a resident of Monta Loma
on Feb 25, 2018 at 12:44 pm

Howard is a registered user.

Lotta cryin goin on here. Sell your buildings and buy in non rent controlled areas.
I did and it was the most profitable move I've made in years and I've made many.

There's too much property thats appreciating out there for you to sit hands and lose money with the stupid negative returns Mountain View allows. Come on people?


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 25, 2018 at 1:43 pm

The Business Man is a registered user.

Howard,

I am in total agreement.

But some people bought properties in the last 3 years where they paid a price based on future value of the property.

For example, the property I live in was in the Santa Clara Tax Appraisal before purchase was worth only $1.15 Mil. But the person who bought the property on Feb, 2016afreed to buy it a $4.95 Mil. Now why he did so I do not know. Why did he accept any propositions from real estate agents instead of having an independent assessment done prior to purchase I do not know. Why he thought he could count on a real estate agents financial forecasts I do not know.

I agree he should sell out of the property as soon as possible. But when he does so, he will have to sell it at far below his purchasing price.

The fact is that landlords stretched price elasticity in the rental market to the point it is snapping back with equal force. Price elasticity is the ability to sell a good at either higher the expected true market value or below it based on demand and supply. The reversal of price inflation will occur because of those moving out of the state of California, which is happening, or by voter “collective bargaining” that is likely to repeal the ban on rent control in the state and engage rent control all over the state.

Unfortunately, this is a normal micro-economic response to this kind of market manipulation. This is unavoidable unless the market itself regulates its actions so that the “rubber-band” is not stretch enough to create an equal opposing force to correct its stretched state. But it appears that most property owners do not understand this concept.


6 people like this
Posted by mike rose
a resident of another community
on Feb 25, 2018 at 6:05 pm

mike rose is a registered user.

[Post removed due to disrespectful comment or offensive language]


5 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 25, 2018 at 6:42 pm

The Business Man is a registered user.

In response to Mike Rose you said:

“Your theory there is great TBM, almost as good as the theory behind your frivolous lawsuit that got kicked out of court in a hurry recently.”

The simple truth was I was trying not to be lengthy, but you forced my hand and now I present you with this article from Harvard Business Review:

“What is price elasticity?

Most customers in most markets are sensitive to the price of a product or service, and the assumption is that more people will buy the product or service if it’s cheaper and less will buy it if it’s more expensive. But the phenomenon is more quantifiable than that, and price elasticity shows exactly how responsive customer demand is for a product based on its price. “Marketers need to understand how elastic, sensitive to fluctuations in price, or inelastic, largely ambivalent about price changes, their products are when contemplating how to set or change a price,” says Avery.

“Some products have a much more immediate and dramatic response to price changes, usually because they’re considered nice-to-have or non-essential, or because there are many substitutes available,” explains Avery. Take for example, beef. When the price dramatically increases, demand may go way down because people can easily substitute chicken or pork.

How is it calculated?

This is the formula for price elasticity of demand:

Price elasticity of demand = Percentage changed in quantity demanded/Percentage change in price

Let’s look at an example. Say that a clothing company raised the price of one of its coats from $100 to $120. The price increase is $120-$100/$100 or 20%. Now let’s say that the increase caused a decrease in the quantity sold from 1,000 coats to 900 coats. The percentage decrease in demand is -10%. Plugging those numbers into the formula, you’d get a price elasticity of demand of:

-.10/.20 = -.5 or 5

Note that the negative is traditionally ignored and the absolute value of the number is used to interpret the price elasticity metric, as it’s the magnitude of distance from zero that matters and not whether it’s positive or negative.

“The higher the absolute value of the number, the more sensitive customers are to price changes,” explains Avery. As she explains in her “Marketing Analysis Toolkit: Pricing and Profitability Analysis,” there are five zones of elasticity. Products and services can be:

PERFECTLY ELASTIC where any very small change in price results in a very large change in the quantity demanded. Products that fall in this category are mostly “pure commodities,” says Avery. “There’s no brand, no product differentiation, and customers have no meaningful attachment to the product.”

RELATIVELY ELASTIC where small changes in price cause large changes in quantity demanded (the result of the formula is greater than 1). Beef, as discussed above, is an example of a product that is relatively elastic.

UNIT ELASTIC where any change in price is matched by an equal change in quantity (where the number is equal to 1).

RELATIVELY INELASTIC inelastic where large changes in price cause small changes in demand (the number is less than 1). Gasoline is a good example here because most people need it, so even when prices go up, demand doesn’t change greatly. Also, “products with stronger brands tend to be more inelastic, which makes building brand equity a good investment,” says Avery.

PERFECTLY INELASTIC where the quantity demanded does not change when the price changes. Products in this category are things consumers absolutely need and there are no other options from which to obtain them. “We tend to see this only in cases where a firm has a monopoly on the demand. Even if I change my price, you still have to buy from me,” explains Avery.

Marketers should know where their products fall on this spectrum, but “the actual number is less important than knowing which zone your product falls within and what will happen to consumer demand if you change your price,” she says.”

(Web Link)

The people of Mountain View deserve to be educated, and not misinformed. As usual you will complain about my length of response. I tried to keep it short, but you needed proof. So here it is.

You also said:

“The reality however is that your landlord won't sell, CSFRA will be repealed (just a matter of time) and you will be on your way out of state looking for housing.”

You should be very concerned because the Costa Hawkins Ballot initiative now has more than 200,000 signatures based on the following news article (Web Link)

Thus the likelihood of it being in the next election is creeping up. They need only 170,000 more signatures to get it done. It has only taken them 4 weeks to get this many. And since the pools indicate 60% of the electorate are in favor of repeal found here (Web Link)

The City of Mountain View must be informed of this information, which simply does not agree with you.


7 people like this
Posted by mike rose
a resident of another community
on Feb 25, 2018 at 6:47 pm

mike rose is a registered user.

All of this for my 4 lines? Really?


7 people like this
Posted by mike rose
a resident of another community
on Feb 25, 2018 at 6:54 pm

mike rose is a registered user.

The good thing is though, that the uneducated masses reading this forum will forever know the difference between perfectly elastic, relatively elastic, unit elastic and perfectly inelastic.
Perfectly enlightening!!!!


10 people like this
Posted by mvresident2003
a resident of Monta Loma
on Feb 25, 2018 at 7:23 pm

mvresident2003 is a registered user.

TBM, just as there's no guarantee for ROI, there should be no guarantee for your rent.

The audacity of your posts is astounding.


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 25, 2018 at 8:20 pm

The Business Man is a registered user.

In response to Mike Rose you said:

“The good thing is though, that the uneducated masses reading this forum will forever know the difference between perfectly elastic, relatively elastic, unit elastic and perfectly inelastic.

Perfectly enlightening!!!!”

Whenever I have expressed myself to the City of Mountain View and yourself it has been with respect, dignity and sincerity. I would think that the City of Mountain View citizens deserve more dignity and respect than you expressed here.

In response to mvresident2003 you said:

“TBM, just as there's no guarantee for ROI, there should be no guarantee for your rent.”

That depends on what becomes public policy, if the public chooses to establish governmental regulation, due to exploitation of the industry, you might find that the regulations may establish such a guarantee. You also said:

“The audacity of your posts is astounding.”

The audacious situation I am in astounds me, I am posting information that does not agree with multiple individuals that are acting as advocates of an industry. I am just a regular citizen, who seems to be debating with most likely professional representatives of the said industry. In effect, I am not audacious, just humbly posting information the public has the right to know.

It is only the situation that makes it appear that my behavior is audacious.


11 people like this
Posted by mvresident2003
a resident of Monta Loma
on Feb 25, 2018 at 8:44 pm

mvresident2003 is a registered user.

TBM, you flatter me. I'm not a realtor or a landlord. I'm just a homeowner who feels very very strongly that rent control is the worst thing that can happen for affordability in a city. And as has been posted over and over, statistics and economic study backs it up.

I just hate seeing my beloved Mountain View being dragged into this gutter. But it's too late, you and your tenant advocacy group have brought us here and now we all have to deal with your inability to realize when it's time to go (to a new) home.

You sound like a sincere person, but one with a very big chip and a very big sense of entitlement. It's sad really.


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Feb 25, 2018 at 9:24 pm

The Business Man is a registered user.

In response to mvresident2003 you said:

“TBM, you flatter me. I'm not a realtor or a landlord. I'm just a homeowner who feels very very strongly that rent control is the worst thing that can happen for affordability in a city. And as has been posted over and over, statistics and economic study backs it up.”

As it has been demonstrated, the science of economics has been tainted by continual conflict of interests by those doing the “scientific” study. As much that the American Economic Association had to create a new policy after the film “inside Job”. Please read (Web Link).

The facts are that for example, Tom Means has not complied with this policy since adoption in 2012. When he published his study used in the recent Pacifica anti-rent control campaign, he did not follow this policy found here (Web Link) and here (Web Link). Even though it was paid for by those whose interests were very clear SAMCAR.

Thus the past studies and even present ones that do not publically disclose these issues cannot be given any consideration until disclosure is made. My point of view is that any study where this disclosure is not performed and verified cannot be trusted at this time. The public should not take the information discussed at face value. You also said:

“I just hate seeing my beloved Mountain View being dragged into this gutter. But it's too late, you and your tenant advocacy group have brought us here and now we all have to deal with your inability to realize when it's time to go (to a new) home.”

Since when was Mountain View the exclusive ownership of home owners. I have resided here since July 2007. To me the fact you claim ownership of the city with no regard to the fact that a tenant or a homeowner are both equal citizens of the City. We pay taxes, we work hard, and we contribute to the economy of the City just as much as any homeowner.

It is simply not feasible or beneficial in the big picture that only homeowners should reside in a city like Mountain View. In fact the tech economy is based mostly now on Temp workers, thus long term investment in owning a home simply is not economically viable.


12 people like this
Posted by Howard
a resident of Monta Loma
on Feb 25, 2018 at 9:57 pm

Howard is a registered user.

What The Business man has missed is that when I left Mountain View.. I took my Money and my investment in his community away.
I'm not alone and when we leave, so does his housing.

I feel nothing for anyone, landlord or tenant only for my interest as I am a true Businessman that operates in my own interest.
If Mountain View voters want to destroy their town and I'm invested in it.. I leave.

Too many other communities want to thrive and build and that's where I want to be.
I will invest millions there because it is in everyone's best interest especially mine.


7 people like this
Posted by Randy Guelph
a resident of Cuernavaca
on Feb 26, 2018 at 9:26 am

Randy Guelph is a registered user.

[Post removed due to disrespectful comment or offensive language]


7 people like this
Posted by mike rose
a resident of another community
on Feb 26, 2018 at 9:39 am

mike rose is a registered user.

[Post removed due to disrespectful comment or offensive language]


Sorry, but further commenting on this topic has been closed.