Public Housing,,, Crazy program

[no_such_reality]

CAR because the renter/unit relationship is neither direct nor linear. We were a good example and know many friends that essentially did the same. When we rented, we settled for a 2/2 townhome. When we bought, like our friends, we went SFR 3 or more/2.5 or more.

The rental market for 3 bedrooms or more is pretty lean. Selling those properties that have low tax rates will disporptionately hit the higher bedroom count of the rental market.. Essentially, you will see slightly less competition for significantly less properties in that property space.

Where today you may essentially have 11 people vying for 10 SFR rentals, after stripping the tax basis, I suspect you will end up with 9/10 vying for 6 or 7 available SFR properties. More competition on those properties will put upward pressure on rents there. While eventually the number of renter at a given property type balances back out, you have more people substituting a lower end good for a higher end good because the higher end unit isn’t available. That in turn actually pulls those rents up on the better quality lower end units which in turn pushes more up.

The second factor is many of those same properties that will get returned to the buyer pool are managed by small time landlords. In general small time landlords value stability in tenants more than the dollars. While your major property management firms will raise rents like clockwork on lease expiration, smaller owners often won’t on good tenants. The tax basis will again shift the property mix more to large landlords, large landlords that will raise rents relentlessly because they are going to have the market vacancy anyway.

Those two factors will create a rental environment that experiences more churn, more instability for the renters, more rent increases and more upward pressure on rent.

[livinincali]

[quote=no_such_reality]
The rental market for 3 bedrooms or more is pretty lean. Selling those properties that have low tax rates will disporptionately hit the higher bedroom count of the rental market.. Essentially, you will see slightly less competition for significantly less properties in that property space.

Where today you may essentially have 11 people vying for 10 SFR rentals, after stripping the tax basis, I suspect you will end up with 9/10 vying for 6 or 7 available SFR properties. More competition on those properties will put upward pressure on rents there. While eventually the number of renter at a given property type balances back out, you have more people substituting a lower end good for a higher end good because the higher end unit isn’t available. That in turn actually pulls those rents up on the better quality lower end units which in turn pushes more up.
[/quote]

I’m not sure why you think there would be such an impact on supply of rentals. Ask yourself what is the alternative? If you have a house the only way for it to be removed for the rental supply is for it to be sold to an owner user (could be a new household/former renter/or move up buyer). It’s not like you are going to leave it empty or tear it down.

Vacancy is what kills the mom and pop landlord in the SFH space. Big apartment complexes just look at vacancy as a cost of doing business and even they make adjustments based on the vacancy rate. If you try to adjust the rent up $50-100 because of increased expense but it ends up sitting vacant a month or two because of that it can take years to recover that lost revenue. So most single family home landlords will take whatever they can get in order to get that revenue flowing in again.

[CA renter]

[quote=no_such_reality]CAR because the renter/unit relationship is neither direct nor linear. We were a good example and know many friends that essentially did the same. When we rented, we settled for a 2/2 townhome. When we bought, like our friends, we went SFR 3 or more/2.5 or more.

The rental market for 3 bedrooms or more is pretty lean. Selling those properties that have low tax rates will disporptionately hit the higher bedroom count of the rental market.. Essentially, you will see slightly less competition for significantly less properties in that property space.

Where today you may essentially have 11 people vying for 10 SFR rentals, after stripping the tax basis, I suspect you will end up with 9/10 vying for 6 or 7 available SFR properties. More competition on those properties will put upward pressure on rents there. While eventually the number of renter at a given property type balances back out, you have more people substituting a lower end good for a higher end good because the higher end unit isn’t available. That in turn actually pulls those rents up on the better quality lower end units which in turn pushes more up.

The second factor is many of those same properties that will get returned to the buyer pool are managed by small time landlords. In general small time landlords value stability in tenants more than the dollars. While your major property management firms will raise rents like clockwork on lease expiration, smaller owners often won’t on good tenants. The tax basis will again shift the property mix more to large landlords, large landlords that will raise rents relentlessly because they are going to have the market vacancy anyway.

Those two factors will create a rental environment that experiences more churn, more instability for the renters, more rent increases and more upward pressure on rent.[/quote]

But the people who would be looking for a 3/2 or larger rental would be able to buy it, instead. Many people are renting out of necessity, not desire. If more homes came out of the rental pool and onto the for-sale market, then prices would come down a bit, and those former renters could buy. IMHO, this is a good thing.

[no_such_reality]

For the 1 or 2 out of ten that get to buy it, but buying it is more expensive than renting. And frankly, many renters are renting out of necessity. They don’t have the money to close the deal on $500,000.

The other 8 will be squeezed into an even tighter renting pool that is already experiencing signifcant rent increases.http://www.ocregister.com/articles/rent-680104-month-three.html

And then prop 13 elimination plans will universally raise costs to ALL landlords.

What happens when all producers experience cost increases? They raise prices.

BTW, the largest slumlord in California is about to sell off a bunch of properties. CalTrans is going to sell the homes they own in the path of the never built 710 extension in Pasadena.

[bearishgurl]

[quote=no_such_reality] . . . BTW, the largest slumlord in California is about to sell off a bunch of properties. CalTrans is going to sell the homes they own in the path of the never built 710 extension in Pasadena.[/quote]

Thanks for the tip, NSR. Although these properties are likely in pretty rough shape by now (termites/squatter damage), I’m going to look into this. Looks like NIMBYism was/is alive and well in Pasadena and there were enough deep pockets in that town to keep the State’s attorney general in court for YEARS . . .

It’s as it should be . . . lol

[bearishgurl]

Oh, and btw, Prop 13 and its progeny do not affect “California’s largest slumlord” as they are “tax exempt” :-]

I’m sure that fact hasn’t helped the City coffers too much over the last few years.

[bearishgurl]

[quote=no_such_reality]. . . BTW, the largest slumlord in California is about to sell off a bunch of properties. CalTrans is going to sell the homes they own in the path of the never built 710 extension in Pasadena.[/quote]

Caltrans apparently took the Pasadena homes under eminent domain (for the proposed I-710 extension) sometime in the late ’60’s. As such, the neighbors very likely squawked loudly about their lack of upkeep and so most (all?) of the homes were later demolished and their lots razed by Caltrans. A two-lane “parkway-type extension road” (southbound only from the SR-134) currently exists down in a fairly steep, grassy valley just east of the section of about two parcel maps in which Caltrans is auctioning off five unimproved parcels on 9/24/15.

http://www.dot.ca.gov/property/

The option deposits and opening bids for the lots all seem reasonable to me and 4 out of the 5 lots they are auctioning off appear to be almost or entirely flat. They range in size from ~7500 sf to 20,000+ sf.

http://www.dot.ca.gov/property/docs/20150924a/

http://www.dot.ca.gov/property/docs/20150924b/

http://www.dot.ca.gov/property/docs/20150924j/

http://www.dot.ca.gov/property/docs/20150924k/

http://www.dot.ca.gov/property/docs/20150924l/

The end of the option period is 12/14/15 (for the 9/24 auction date). The “winning bidder” would need to perform by then or risk losing their option deposit. The “Director’s Deed” the agency will issue to each winning bidder is likely similar to a quitclaim deed. The auction rules state that buyer is free to take out a title policy if they wish. At the very least, I think it is a good idea to purchase a preliminary title report prior to the auction for the properties you are intending on bidding on … even for just public easement knowledge. Any liens in the late ’60’s against any former owners (who sold to the state) were likely extinguished in escrow from the eminent domain proceeds they recieved. In any case, the statute of limitations has long expired for any prior judgment or collections liens which were on these properties at the time of condemnation, methinks.

Okay, I knew there had to be a catch. From the satellite view on Mapquest, the first five (residential) lots the state is auctioning off are situated in a very beautiful, even “stately” SFR neighborhood. Those (likely mostly longtime) neighbors aren’t going to approve any new owners building garden-variety medium-sized ranch homes (for $250-$300K). And it will likely cost a new owner a minimum of $100K just in repeated architectural renderings (to satisfy the neighbors) and city permit fees (not including the actual cost of the plans) before even breaking ground.

It’s going to interesting to see what these five lots end up selling for (we won’t be able to find out until after the option period is over). There seems to be a never-ending supply of local, deep-pocketed Chinese business people in that area, many of whom will likely show up to bid. If anyone gets these lots for anywhere near the opening bid amount, they will likely do very well, IMO.

If there was even a couple of studs left with an old utility meter dangling between them on any of these lots (qualifying any new construction a “remodel” with the city instead of completely new construction) and these lots weren’t located in such a pretentious area (likely loaded w/deep-pocketed NIMBYs), I may have considered bidding.

We’ll see if any lots trickle out in future auction announcements which actually still have an “improvement” still standing on it (tiny old garage or doghouse?) but somehow, in this town, I doubt that. The longtime residents around there have enough clout (and the wherewithal to fund that clout into oblivion) to keep anything even remotely undesirable out …. and I can’t blame them.

Thanks for sharing, NSR. It was interesting to me to see a state gubment foible of this magnitude with my own eyes. It is astounding to me that it has taken this long for Caltrans to finally decide to go thru the process of unloading this valuable inventory! I hope they learned their (very lengthy and expensive) lesson NOT to plan freeways through well-established residential areas where pride of ownership and property values are high. There are plenty of areas they could have successfully gotten this fwy extension through but unfortunately, for them, Pasadena was not one of them.

[bearishgurl]

The only area in SD County I can think of that would be directly comparable (in architecture/lot size) to that area of Pasadena (where Caltrans will begin to auction vacant lots they own) is the Presidio (MH 92103).

There may be others but that area most comes to mind, here:

https://www.google.com/maps/@34.1383186,-118.156186,3a,75y,73.59h,85.12t/data=!3m6!1e1!3m4!1sEMLgNC4vbjqT0SNs8BsqhA!2e0!7i13312!8i6656

The above link is a photo of Bellevue Dr (the 5th link/lot in my previous post).

The Havendale Dr lots might be able to be built with a lesser ranch-style home. The street is somewhat dilapidated and pretty narrow and its homes aren’t a valuable as those on the other streets (links 3 & 4 of my previous post). Nice view lots, though.

see: https://www.google.com/maps/@34.1395503,-118.1556247,3a,75y,129.94h,71.57t/data=!3m6!1e1!3m4!1sOyyq_Myfiuk_ffyI1slH3g!2e0!7i13312!8i6656

[bearishgurl]

Yikes!! On the 24th, Caltrans is also trying to auction off 3 smallish, older single-family homes either abutting the 405 fwy or just a few feet from it! From the photos they supplied, a couple of them appear to be currently rented, lol.

http://www.dot.ca.gov/property/docs/20150924c/

http://www.dot.ca.gov/property/docs/20150924d/

http://www.dot.ca.gov/property/docs/20150924n/

The opening bids are from $590K to $615K. They are all situated in the “Westchester” (Century City?) area of LA on bigger than standard-sized lots.

I can’t completely tell from the map but it appears these homes may be just barely out of a commercial jet landing path but I still feel their opening bids are wa-a-a-a-ay too high, due to the very obvious economic obsolescence surrounding them!

If these opening bids are supposed to be “bargain-priced” for the west side, then I am astounded! I haven’t looked around at all on the west side, only the east side (east of Pasadena and almost to the San Bern County line). If you’re shopping for a home in LA County, you can get a much better deal out there and they are all in mostly very nice, quiet neighborhoods with better than avg-sized lots.

Good L@ord, I wouldn’t pay even $50K for a home abutting an interstate hwy … or even its service road (esp a hwy which is 8-12 lanes wide). The lots these state-owned homes sit on are virtually worthless to me.

It will also be very interesting to see how much these homes end up selling for :=0

[bearishgurl]

Here’s a 8558 sf vacant lot on the same street as two of Caltrans’ other auction listings in my most recent post. It also abuts the 405 (a little above it) and, without the house in the way, you can see Caltrans’ concrete “sound” burm rising a few feet above the level of the backyard.

http://www.dot.ca.gov/property/docs/20150924m/Brochure.pdf

Opening bid is $300K. Maybe a prospective bidder can get away with planting a folding chaise lounge in the middle of this lot and pour themselves a stiff drink from their styrofoam ice chest while trying to fall asleep with the echoing reverberations of the constant tire whir of the 405 beneath them.

A slightly stray overhead jet dropping its wheels and simultaneously dumping a little fuel while attempting to land at LAX will add to the ambiance … :-0

[FlyerInHi]

BG, I’m really curious where you finally end up retiring. You’re casting your net very wide.

Can you just find that one idyllic place and move there? What about friend and relatives?

[bearishgurl]

[quote=FlyerInHi]BG, I’m really curious where you finally end up retiring. You’re casting your net very wide.

Can you just find that one idyllic place and move there? What about friend and relatives?[/quote]

brian, there are several “idyllic places” that I’m considering for retirement. However, I have been “priced out” of 2-3 of them since I’ve started seriously looking.

LA County isn’t/wasn’t one of them. But I had originally looked into buying a house for my youngest kid to live in who is attending college there and let them take care of my dog. Then collect enough rent from 2-3 other student-roommates to pay the taxes and utilities on it (so it doesn’t cost me anything to keep it). Then, if I end up selling my own home, I myself could just go rent a small place in a snowy locale to see how I like it year round before committing to it with a home purchase. If I don’t like my new area, I would at least own a house of my choosing in SoCal to return to beginning Fall ’18 or Jan ’19 (after my kid graduated and took their first job elsewhere).

I didn’t buy anything in recent months because my youngest kid (currently a college soph) is still too immature (and too busy with their fellow “greeks” and a PT job) to take care of a SFR AND DOG every day (ie, make sure the property is watered, report needed repairs immediately, mow the lawn, set the trash on the curb regularly, walk the dog and collect roommates’ portion of rents and utilities and forward those monies to me).

My kid currently has a one-year lease on 1/4 of a large remodeled 4 br condo (w/3 roommates and their parent(s)) with all amenities and a right of renewal. It’s in a nice area just 4.5 miles from campus and right behind a LA metro station. My kid’s portion (1/4) of all expenses is a pretty good deal for me so I can’t complain.

My other kid(s) only want to live in SF proper and I can’t afford that … and, for a variety of reasons, I don’t want to take title with any of my kid(s) … just by myself.

I have many other relatives out of state but I have decided that I don’t want to leave Cali.

[bearishgurl]

Here’s a street-view pic of the three Caltrans’ owned properties on West 74th St (LA 90045) all abutting the concrete burm built up along the side of the 405 fwy (vacant lot on the left):

https://www.google.com/maps/@33.9738301,-118.383103,3a,75y,42.73h,74.63t/data=!3m6!1e1!3m4!1s-SRWfhU1_tqV0rHSJ-2C7Q!2e0!7i13312!8i6656!6m1!1e1?hl=en

To me, the streaks in the sky over the house on the right resemble very recently-dumped jet fuel :=0

[bearishgurl]

[quote=bearishgurl][quote=urbanrealtor]Per my Aunt (broker of Cassidy Real Estate in Los Altos):

“Pretty easily. Depends on location of course- does it back to highway 85?”

Apparently, backing on to 85 is bad for value.[/quote]

UR, I only saw one listing that was within a block and a half of the 85/Jct I-280. The rest were far enough away not to get the noise and traffic exiting on and off. But right in town (95070), I had a filter on for one-story ranchers, only. Obviously the 85 was always there, albeit probably a two-laner when these homes were built. Of course, the I-280 was not there and IT is the sole reason for all the traffic around there now. . . . [/quote]

This 1833 sf (upgraded) rancher listing on a 7901 sf lot in Saratoga just went pending in the last 24 hrs. Listed at $1,585,000, it was one of the lowest-priced listings in the area.

http://www.realtor.com/realestateandhomes-detail/18631-Harleigh-Dr_Saratoga_CA_95070_M29704-09721

“Market time” so far has been 9 days. If it closes in the next two weeks, it will very likely be an all-cash sale.

It is 6+ blocks from the 85 hwy and will be assessed for the (yet-unbilled) FY ’15/16 at $87,233 (if it is still in escrow in 3 weeks, when tax bills are mailed out). This was one of my saved listings from last week of current listings in this area which still had an assessment dating back to the original rollback of Sept 1975 pursuant to the enactment of Prop 13 (which has increased at 2% per year since then).

Absolutely gorgeous home and lot, especially the landscaping, huge back patio/deck and fireplace.

[bearishgurl]

Property Taxes Tax data from local public records.

Year Taxes Land Additions Total Assessment
2015 N/A $32,654 $54,569 $87,223
2014 $1,598 $32,015 $53,501 $85,516
2013 $1,480 $31,871 $53,260 $85,131

Holy smokes! The above is the assessor record for the Harleigh listing (now pending) in Saratoga. The property tax rate for this property is about 1.87%! Did the voters up there vote in some wickedly expensive bond measures that they’re now paying through the nose for??

I wonder how high taxes will be for the new owner of this property (who pays $1.5M+ for it)!

[Author]

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