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Posted on January 24 at 4:55 p.m.
Generally, a property owner insures against risk. Landlords generally pass the cost of the property insurance onto tenants through rent. This is true whether the rents are exorbitant or forced to be in sync with the income of typical tenants due to supply and demand.
Landlords should be obligated to provide decent housing for the rent they collect, whatever the amount. In return, tenants should be clean, quiet and leave the property undamaged. The quibbling about "market" rent is a distraction in a town where so many landlords are not fulfilling their obligation to provide decent housing.
I suppose it could be argued that supply and demand in SB does nothing to ensure that landlords fulfill their responsibility. People need housing so bad that they rent sub-standard units. And recent events have taught us that tenants take at least one big risk. They pay rent, but may have no idea the landlord is not paying on the underlying loan until the sheriff shows up.
On Affordable Housing's Prospects
Posted on January 24 at 9:15 a.m.
I think we all have said everything we want to say. Many comments ago, this comment succinctly summed up the problem, "There are two Golden Rules, and I'm betting you each try to live by one of them."
Those who try to live by treating others as they would like to be treated will never see eye-to-eye with those who imply that he who has the gold makes the rules or those who imply that the Golden Rule (the non-cynical one) is fine unless it is unprofitable.
However, in my experience, those who put money motivations aside and follow the Golden Rule, find the money follows and expensive problems decrease.
Posted on January 24 at 8:33 a.m.
You say, "That's the first thing you've said that makes any sense. If he can't sell them at that price, yes he is asking for a price above the market price." And yet earlier, you criticized me (and others for having a "fixation with getting developers to sell for less than market prices?" for suggesting that the unsold condos were overpriced. This circular reasoning is pointless.
You are also implying that my number one main idea, that people (including landlords) should treat others (including tenants) as they would like to be treated makes no sense. In such an unreasonable environment, no useful discourse is possible.
Posted on January 24 at 7:31 a.m.
JL, your words: "the idea that people who have invested in rental property will operate by the Golden Rule is simply ludicrous." Your words again: "It is not ludicrous to expect people to treat each other fairly." Internally inconsistent.
MY definition of fair? I do not know what you are imagining my definition of fair to be since I have told you straight out it is the Golden Rule. Treat others as you would like to be treated. In the present context, this means landlords should treat tenants as they would like to be treated if they were tenants. What you are really saying is people should treat each other fairly, unless doing so is unprofitable for the guy with the power advantage.
I have done my research (as you know from my previous comments). I have shopped out quotes for several projects: 1) total renovation of a fixers 2) restoration of 100-year-old houses 3)total demolition and rebuilding 4) build from scratch on vacant land. The most expensive of these types of projects comes to no more than $300,000 (based on good quality, durable materials, not so-called "high end"). In addition, these condo projects benefit from economies of scale, bulk buying discounts and division of land cost among all the units. These Chapala condos could easily be offered at fair prices relative to the wage demographics of residents at fair profits to the developer. The question remains. Why are developers pricing out the most readily available market in a town desperately in need of "workforce" housing?
"what's this fixation with getting developers to sell for less than market prices?" Isn't the developer's asking price higher than market price if he cannot sell his condos? Interesting how when tenants are compelled to pay unreasonably high rents to put a roof over their heads, those rents are "market" rents. But in the context of true choice, when people choose not to pay the unreasonably high asking prices of these condos, they are refusing to pay "market" prices. Again, internally inconsistent.
Posted on January 23 at 5:40 p.m.
You are of course right, it is ludicrous to expect people operate fairly with each other. The monotheistic religions call it the problem of sin. But if we just give up, we as a society are totally lost. One of the main functions of law is to protect the weak, and encourage fairness, precisely because the "natural economic behavior of landlords" (among others with a power advantage) is exploitative. As you point out, the few laws in place are unenforced. I see the simultaneous holding of inconsistent opinions in many of the comments in this thread.
And actually wages here are not very much higher than elsewhere, as you will see if you compare median wages. In an "enclave of the rich," the median wage is only a little higher than the US median. In fact, wages are so bad in SB, that the city passed an ordinance recently requiring contractors who win a city bid to pay their employees a "living wage," which the city set at a maximum of $15.12 per hour (at least for the hours worked on a city project).
Construction costs are not higher here than elsewhere. Wages are not higher, materials are not higher. What may be higher, but I cannot be sure, is the cost of the permits, but overall, construction costs are not higher.
The big question is why does the Chapala/Guttierez condo developer refuse to sell at what are apparently "market" rates a lot less than his asking price. And why are the developers of the other Chapala condo projects outpricing residents? The only people who will be able to buy are outsiders, completely undermining developer's (and landlord's) stated goals of NOT wanting to encourage more people to come to SB.
It seems to me that residents with jobs in SB should get first crack at these places, then employees living elsewhere, then outsiders.
Posted on January 23 at 3:50 p.m.
Within a mile of the corner of Anapamu and Castillo, 72.37 % of the residents were renters in 2000, and there is no reason to think that percentage has change appreciably (http://www.cityfeet.com/Commercial/Fo...).
Posted on January 23 at 3:46 p.m.
People who keep putting "supply and demand" out there as an supposedly acceptable response to the Golden Rule are defending a very strange and possibly unethical position.
Posted on January 23 at 3:42 p.m.
JL,assuming your analysis of factors outside supply and demand as correct, you lend weight to the unsustainability of current conditions in SB.
One of the many valuation metrics is based on rents. Landlords who bought property relatively recently failed to consider all the metrics wholistically and paid too much, creating for themselves the conundrum where fair, Golden Rules rents put them in a negative cash flow position. The high rents could possibly be tolerated with less resentment if at least landlords fulfilled their landlord obligations. But as you point out, with lack of enforcement, and also the unacceptable risk to tenants who "complain," SB rentals are generally in terrible shape. You see, landlords characterize tenants who notify, as trouble-making complainers.
Job loss: that is easy. Look around. Middle class jobs have been replaced by lower-paying service jobs. Do Santa Barbara landlords really want all these employees (read: tenants) to become commuters (as some posters have suggested)? If these employees followed the landlord advice in this thread, they would leave. And that would be great, right? Because then there would competition and rent would have to come down and landlords would have to provide decent housing to get a tenant. Then maybe SB, a very sick community, would have a chance to recover health.
Posted on January 23 at 7:41 a.m.
"...which I think is generally understood to mean relatively low rent." The big problem with SB is that phrase,"generally understood." Illegal dumps cost the same as legal dumps. While illegal is not automatically substandard, they almost always are. Again the exception does not invalidate the rule. (Otherwise you begin to sound like the foolish high student who, in the face of all the evidence of the health risks of smoking, steadfastly maintains it is all bunk because HIS two-pack-a-day uncle lived to be 94).
SB landlords generally have the process backwards. First you determine a fair rent, then you qualify the tenant. You do not require an unfair rent and then require the tenant to make 3 times the rent. The landlord who told me that it was perfectly reasonable to expect it would take two wage earners to afford her 1/1. Really?
And what about the single mom working as a receptionist in your doctor's office and making $15/hour? The most she can qualify to pay is $880. She cannot afford to live in Ventura or Lompoc and commute. She cannot afford the extra child care the commute time would require. Maybe she can find a "sympathetic" landlord who will "allow" her to spend at least 50% of her gross income on rent for a crummy rental.
Even business relationships need to be fair, not exploitative. Landlords should charge what they would be happy to pay if they were a tenant and provide a home they themselves would want to live in, and tenants should be the clean, quiet, and faithful tenant they would want if they were a landlord.
Posted on January 21 at 9:05 p.m.
First of all, affordable does not mean "low income." It means affordable, as in-- within the means of a typical tenant. Housing should pretty much be affordable for all. If for example, an employee makes $12-15/hour (which the city of Santa Barbara has deemed a "living wage"), they should be able to afford at least a modest, good quality 1/1. Taking the middle number of $13.50, this implies that the apartment should cost no more than about $800 since it is reasonable to expect the rent to be about 1/3 the salary (although real estate investment consultants recommend landlords charge no more than an average one week salary as rent). Even allowing a generous so-called sunshine premium of 25% would make the rent about $1000. Single parents usually need at least a 1/1 and they need to be able to pay for it with a single salary. It should never require two salaries to afford a 1/1.
Right now there is this terrible affordability gap between low wage earners and high wage earners. If your wage is low enough, you qualify for low-income housing (which comes with its own set of problems). Too many of SB's vital workers make decent wages, but cannot afford to live here, and make too much to qualify for help. Affordable housing almost by definition should be available to just about everyone, except low income people. There are already programs in place for them.
Many destitute people in SB actually have income. A number of the older ones are on Social Security. Average social security benefits in 2012 was about $1230 (http://ssa-custhelp.ssa.gov/app/answe...). It is quite possible for someone to have been born and raised in SB, worked their whole life here and still be in sad shape upon retirement. I know an SB native in precisely this situation. Luckily, she managed to secure a position as on-site manager of an apartment building. Her apartment is her monthly "wage" and that is the only reason she is doing okay on her social security benefits.
As far as actually providing affordable housing, the city could look more carefully at proposed projects, instead of squandering opportunities. It is ridiculous that the housing going up on Victoria and Chapala is being offered at $1.2mil/unit. Perhaps if the Chapala and Guttierez condos had been offered at reasonable prices, the developer might have sold them. The new condos at Chapala and De La Guerra are also being offered for over $900k (and their interiors are poorly designed to boot, featuring lots of wasted space). Then there was Veronica Gardens whose ballot initiative failed very likely because the developer billed it as luxury housing. The one thing Santa Barbara does not need more of is luxury housing. Providing affordable housing would not require new laws. If developers priced these downtown condos affordably, they could fill them and exert much-needed competition on the SB rental market.