The Mystery Housebuyer

Anticipating an unwanted move: what renters and landlords should think about

A recent rally at City Hall opposing the surge in evictions Photo: steven rhodes / flickr

Harlan is going to be moving at some point; he doesn’t know when or where, but he’s not stupid — he can read the writing on the wall. 

Harlan, of course, is not his real name, but he is a real person. He has lived in a nice apartment with a bay view for a couple decades and would happily remain there if he could. But, like many people in booming San Francisco, he has noticed house after house in his neighborhood get sold for astronomical prices and then remodeled at even higher astronomical cost. Homes on either side of his small apartment building have been purchased, torn nearly completely down, and rebuilt. His own building has not been sold.

Yet.

As I already noted, he can see the writing on the wall. Other tenants in his building who have moved out have not been replaced; any more of this, and he’ll feel like Sebastian in Blade Runner, all alone in his apartment building.

What the situation looks like is that the owner is planning to dispose of his or her asset — the building — and it will be purchased by someone who will either continue to run it as a rental investment property or who will try to convert it into for-sale condominium units. The former is a possibility, but Harlan expects the latter, which is more likely.

There’s no way to get around the hyperbolic political posturing when it comes to renting and owning in San Francisco. Activists opposed to rentals turning into ownership units refer to landlords who seek to do that as “speculators,” which has about as much truth in it as the Bolsheviks calling opposition peasants “kulaks.” (Speculators were once again cited in reports that city leaders were proposing legal changes that would effectively eliminate Ellis Act evictions.) Calling people names is a way in this political environment to make the owners look like criminals. But it is not a logical approach to assume that a rental unit must always remain a rental unit, unless that unit is a publicly owned unit; otherwise, one small section of San Franciscans — landlords, big and small — is being forced to bear all of the burden of meeting a generally approved public good of having accessibly priced rentals within city limits.

Demonization and rent-advocate protests are cathartic, but they don’t actually take care of the problem. A large influx of new rental and for-sale housing will take care of some of the pressure to convert existing rental units, but unless the mayor’s affordable housing initiative is a huge success, it won’t help the renters who are low-income or in many cases just moderate-income. So that’s a political look, but where does that leave Harlan?

According to the San Francisco Tenants Union (www.sftu.org), the per-tenant payment for an Ellis Act-qualified forced relocation is more than $5,000, up to a maximum of more than $15,000, with an additional $3,000 or so for disabled or senior (at least 62 years of age) residents. Seniors and disabled residents furthermore must get a one-year advance notice of eviction; all other renters get 120 days.

There is a movement in San Francisco City Hall to give current tenants first right of refusal to purchase their rental units that are slated to be sold. The units would be market priced. That sounds like a logical move, though what owner wouldn’t have gone with that option in the first place even without the proposed law? It would be faster and would obviate the need for relocation payment.

Another proposal would force landlords to pay for any increased rent their evicted tenant has to pay for a similar apartment for two years. (The evicted tenant could either choose this option or take the relocation fee noted above.) As an added punishment to the kulaks, it might be a popular move, but it does nothing to solve the supply-and-demand problem.

And all this focus on Ellis Act evictions is a marketing strategy, not a solution.

Writing in San Francisco magazine, Scott Lucas notes:

Ellis Act evictions represent only a small proportion of the city’s total evictions — and they’re not even historically high to begin with. In the 12-month period ending on February 28, 2013, the total number of Ellis Act evictions was 116 — an almost twofold increase over the previous year, but a nearly 70 percent decrease since 2000, when such evictions hit an all-time high of 384. All told, the Ellis Act was behind less than 7 percent of the 1,716 total evictions in the city between February 2012 and February 2013. “Isn’t it far more likely,” asks Karen Chapple, a professor of city planning at UC Berkeley, “that more units are being lost [from the market] through Airbnb?”

That could unite people: blame it on the mobile tech revolution. But again, what about Harlan? He is not a low-income tenant, and I’m too polite to inquire whether he’s 62 yet (though let’s just say he must be close enough that I have to be too polite not to inquire), so he’s not going to be championed by the tenant activists.

The problem remains that there is a shortage of inventory, and that puts the landlords in the driver’s seat and makes Harlan and other renters supplicants of a sort. If anything, more kulaks are needed with more rental units at all price points; but if they’re the bad guys, don’t expect City Hall to do anything to breed more of them.

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The Mystery Housebuyer isn’t anonymous, but the people he writes about are. E-mail: john@marinatimes.com