TIC Lottery Bypass Legislation is a Win/Win for SF

I’ve written about the proposed condo bypass legislation before, but Randy Shaw at beyondchron is at it again, flogging his specious falsehood that approval of the condo bypass legislation would KILL JOBS!

Let’s get something out of the way up-front: I don’t believe that people who can’t afford to own a home are lazy, bad people who deserve to be evicted and forced to live in the backseat of their cars or underneath the bushes of our public parks. When I moved to SF, I was a renter. I can tell you some crazy stories about my landlord and rental experiences. I’ll also be honest: I’m fortunate enough that thanks to a variety of circumstances I was able to afford a home in San Francisco. Again, though, here’s the important thing: tenants are not bad people, and I’m not going to spend time calling them names or describing them in an offensive manner that does nothing to help the public dialog about SF housing. I wish Randy Shaw and his editors at beyondchron felt the same, but since he can’t find honest facts to support his hysteria, he instead relies on the time-worn tradition of name calling.

In just the first three paragraphs, homeowners are vilified as “real estate speculators,” a “small segment of the real estate community” and  a “small constituency with money” – if his divisive language doesn’t turn you off, you can read on to find out that homeowners can’t be progressives but are instead the “Ayn Rand crowd” and “the city’s most Paul Ryan-like constituency.” Seriously?

Name calling aside, the gist of his argument seems to be:

  1. Mayor Lee is the consensus Mayor, who would never ever offer legislation like this, and…
  2. We have brand new supervisors who haven’t had a chance to form opinions or talk to voters about housing policy in the city, but really…
  3. Condo conversions would kill jobs because….
  4. San Francisco would suddenly have too much housing supply to make other development financially attractive…

These arguments are so factually weak that you can almost understand why he resorts to name-calling instead of constructive dialog. Let’s look at them:

1) Domestic Abuser Mirkarimi is just one example of a situation in which Mayor Lee was willing to lead, even when it wasn’t politically popular. While his tenure as Mayor may show him to be more consensus oriented, he’s been willing to take principled stands for what is right when the situation called for it.

2) Housing policy isn’t something new to the political debate in San Francisco. It’s been debated and discussed almost ad nauseum for decades in San Francisco. I have a hard time believing that a recently elected politician hasn’t already been in dialogue with his or her constituents about housing policy. Furthermore, the condo bypass legislation was available in draft form for months before the election, so it’s not like some crazy-policy-from-outer-space just landed in San Francisco. More time is not needed for everyone to get familiar with the proposed condo bypass legislation.

And finally, items three and four: condo bypass legislation will kill jobs and destroy the market for new homes in San Francisco! This argument is so specious that I’m almost embarrassed for Mr. Shaw. It is predicated on false assumptions and ignores the facts behind San Francisco housing demand and supply.

Tenancy-in-Common owners are homeowners, not speculators
A large portion of the people living in TICs will remain in them as condos.  Mr. Shaw’s argument rests on his presumption that immediately upon completion of condo conversion, the owner of every single newly converted condo would immediately sell their home. Common sense (and any level of personal knowledge of tenancy-in-common owners as part of the San Francisco community instead of a divisive stereotype relegating them all to Ayn-Rand-Paul-Ryan-Loving-Really-Rich-Speculators) says that the owner occupants of TICs that become condos are not all going to immediately sell. However, if we want to rely on something more common sense, we can look at the stats.

Tenancy-in-Common owners invested in San Francisco because they didn’t want to leave
A search of the MLS reveals that in 2012, there were about 22 sales of condos that were newly converted from tenancies-in-common. Given that 200 units are allowed to convert per year (not including fully owner occupied 2 unit buildings with a clean eviction history that can bypass the lottery), this suggests that only 10% of newly converted homes would be sold. TIC groups started forming when “entry-level” buyers in SF got priced out of the single family and condo market. It was a (relatively) affordable way for someone to take advantage of the benefits of home ownership (tax deductions, build equity) without having to leave the city. Does it make sense that people who chose the most challenging form of home ownership are suddenly going to flee the city, when they chose to buy a TIC because it was the only realistic way for them to remain in San Francisco?

Condo Conversion Would Lower Mortgage Payments for Many
The benefits to homeowners who convert from TIC to condo financing (which can only happen when the property converts from a TIC to a condo) are that they are no longer jointly liable for a shared mortgage (old-school TIC financing) or for a shared property tax bill (which still exists even with fractional financing). Furthermore, they are all immediate beneficiaries of the incredibly low interest rates that are available to condo owners but aren’t available to tenancy-in-common owners on a group loan (jumbo financing, few lenders, thus higher rates) or fractional financing (boutique financing offered by a few local lenders with higher rates and more restrictive terms).  The homes that remain owner-occupied will be occupied by people who have more disposable income and more security in their homes.  Would the SF economy benefit from a few thousand homeowners who were able to refinance into a mortgage that gave them more disposable income every month? I’d say Yes! Would that kill jobs? I’d say absolutely not! 

San Francisco has Far More Demand for Housing than Supply
San Francisco has a general plan, one part of which is the Housing Element. One part of the document is the Housing Element: Data Needs and Analysis (pdf file) that lays out background data about housing availability, supply, and anticipated demand. It’s a meaty document that was published in 2009, and while the entire document is worth a read, for our discussion I want to highlight a few numbers to show how demand for San Francisco housing far outstrips supply. Case in point:

Accounting for new production, demolitions, and alterations, the City has seen a net increase of over 18,960 housing units – an annual average of almost 2,010 units – in the last nine years [2000 – 2008]. In comparison, a net total of 9,640 housing  units were added between 1990 and 1999 or an annual rate of about 964 units per year. (Page 1.26, Housing Element: Data Needs and Analysis)

From 2000 – 2008, the city added about 2,010 homes per year. It wasn’t enough, even though it was almost double housing creation in the 1990s, which averaged just 964 homes per year!

SF Housing Supply vs Demand

So we’ve got a twenty year track record of producing – at most – 2,010 homes per year. How does that compare to what we should be building to meet demand?

The Association of Bay Area Governments (ABAG), in coordination with the California State  Department of Housing and Community Development (HCD), determine the Bay Area’s regional housing need based on regional trends, projected job growth and existing needs. San  Francisco’s fair share of the regional housing need for January 2007 through June 2014 was calculated as 31,190 units, or about 4,160 units per year. (Page 1.41, Housing Element: Data Needs and Analysis)

Yes, you got that right – according to the SF Planning Department, based on factual research, SF would need to build 4,160 homes per year to meet anticipated demand from 2007 – 2014.

The Condo Conversion Process Creates Jobs & Revenue
The process of condo conversion itself creates jobs for surveyors, construction tradespeople, and attorneys (well, maybe I shouldn’t mention this one) to name just a few. Having personally been through a condo conversion, I can tell you that it is a lot more than just submitting some forms to the planning and building departments. Condo conversions require a professional survey and the appraisal of all the homes in the building that want to refinance into a new mortgage. Condo conversion also requires that the owners correct any items noted by the city during one of three inspections required by condo conversion: a general building inspection, a plumbing inspection, and an electrical inspection. As you can see condo conversion itself creates jobs for plenty of local small businesses.

The condo lottery bypass legislation itself is filled with revenue generating fees that are estimated to create almost $30 million dollars in revenue:

  • $20 million in bypass fees would go to affordable housing
  • $6 million in processing fees for the city’s planning department
  • $2 million in mandated repairs and upgrades for TICs to comply with condo conversion requirements

And for those roughly 10% of newly converted condos that would sell soon after conversion, the city would get additional income from the real estate transfer taxes collected, not to mention that the newly sold homes would be re-assessed at current market value, adding to the city’s annual income from property taxes for years to come.

The End of an Era

The end of an era… a few weeks ago, we got a company-wide email that Peter Stupar was going to be ending his real estate flyer distribution service.

So this post is to mark the end of an era – he started about 23 years ago, and every single week he reliably picked up property statements from all of San Francisco’s top real estate offices and delivered them to all of the other top real estate offices. He was the original sneaker-net, although it was actually more like a “drive-around-town-net.”

Good Evening and Thanks, Peter Stupar!

When I first started in the business – almost a decade ago – if you had a listing and you wanted to make sure everyone knew about it, you had to make sure that you paid Peter Stupar to deliver your property statements. It went something like this:

  1. Make a lovely property statement.
  2. Print it out in black and white.
  3. Make 700 copies of it on the office copier.
  4. If you were feeling really creative you could use colored paper!
  5. Leave a check for $60 bucks (I think) and a pile of paper 700 sheets thick at the front desk
  6. Wait a few days…

This service continued up until July of 2012! I honestly have to say I’m amazed that he lasted as long as he did. I’m pretty sure that real estate flyer distribution wasn’t his full-time gig, and that his passion in life isn’t distributing flyers, but is rock concert photography. Either way, July 2012 marks the end of paper property distribution for real estate in San Francisco.

So thank you, Peter Stupar, for your years and years of tireless assistance in helping San Francisco real estate agents flood other real estate agents in reams of paper. Before the internet came along and made his service obsolete, his flyer distribution service was the way to get the word out, and his service featured in many a listing presentation back in the day.

 

Agents, Meet Your New Best Friend

I’ve written in the past about my concerns that fragmentation has on the real estate industry, and I also usually write on this blog for buyers and sellers, not my fellow agents.

Today, however, as I get ready to walk out the door on broker’s tour, I want to write about a local startup that I’m cheering for.

The company is Theo, and they have a couple of products. The first is TheoTour, and the other is MyTheo. If you are an agent in San Francisco with an iPhone, you owe it to yourself to download their TheoTour app and make it your new best friend. MyTheo is still in beta testing, but TheoTour has shed it’s beta status and is now available for any agent in San Francisco that wants to do business a little smarter and a lot less wastefully.

TheoTour, in a nutshell, is an app that replaces your old-school 30-page 2-line black-and-white MLS tour sheet with a smart tool for viewing homes on broker’s tour and sharing that information with your clients. Instead of killing trees so you can look at a two-line text description, download TheoTour and take a look at a full color photo of a home before deciding if you want to add it to your tour for the day.

In addition to saving paper, it has a built-in mapping function. While I’ve been touring San Francisco long enough that I can tell you where 95% of our streets are located, every now and again a little alley will come along and trip me up. In addition, it makes it a lot easier for me to put tour in a logical geographic order without having to wrack my brain, juggling six locations in a neighborhood to figure out which one makes the most sense as a starting point.

Finally, it has some basic sharing functions that make it easy to text or email a listing that you’ve seen to a client with your comments. Which is a whole lot more efficient than how I used to do it (which was to write a note on the property statement to email my client about it when I got back to my desk).

And here’s the best part: Until April 25, the app is available for free in the Apple App store. Get it now and fall in love… the pricing is expected to be as follows:

TheoTour will become a paid app starting April 25th, with a 30 day free trial period.  After the trial period, any SFAR MLS member will be able to purchase a subscription under the following plans:

  • $4 Monthly
  • $25 Annual
  • $80 Lifetime

And while I’m definitely a cheerleader for SFTheo, I also worry about them. As I’ve written at agbeat, I worry about small tech companies trying to make it big when the MLS landscape is so fractured that reaching a critical mass can be a real challenge. So in what can only be described as a win/win, go out and download TheoTour. You’ll have a smart tool that makes your tour day more efficient and enjoyable, and an awesome start-up will have one more customer to help them on their quest to build great tools for the SF real estate community.

Disclaimer: I’ve been a beta tester for their programs since last fall. I just found out yesterday that they have generously rewarded their beta-testers with a free one year subscription to the TheoTour app. That said, I haven’t received and wouldn’t accept any compensation for writing this blog post. (although, to be honest, in the spirit of putting my money where my mouth is, I do plan on purchasing a lifetime subscription to the product when it becomes available).

More pics from the TheoTour App:
[portfolio_slideshow width=640 showcaps=true  navpos=bottom pagerpos=bottom pagerstyle=carousel click=lightbox centered=true]

 

Real Estate Times or Angelina Jolie – Which is Skinnier?

In case you missed the Academy Awards last night, here’s what you need to know: A silent movie won the big prize and Angelina Jolie is ridiculously skinny.

Not to be out done, our own local print real estate magazine continues in its efforts to be skinnier than Angelina Jolie. As I’ve written about before, the San Francisco Real Estate Times continues on its skinny spiral towards non-existence.

Back in October 2010, the Real Estate Times was weighing in at a comparatively hefty 60 pages.

For some inexplicably dumb reason, I didn’t count the pages in the January 2011 issue, but compares photos and you’ll see it was definitely fatter!

The February 16 – 29, 2012 Real Estate Times ties the November 2011 issue for fewest number of pages – at least since I’ve started in the business – with just 44 pages.

Real Estate Times February 16 - 29 2012

What else can I say? Buyers and sellers use the internet for their real estate search, its pretty much that simple.

Will 2012 be the end of Real Estate Times? Will it continue on as a mere shadow of it’s hefty self? Did the Academy realize that The Artist doesn’t have any words?

These are the burning questions of our time!

Happy Monday everyone.

Congratulations to 2011 Zephyr Top 10 Producers

At this morning’s Zephyr sales meeting, the company top producers were announced.

Top Producer is one of those terms that might seem straight-forward, but upon closer examination is actually a bit ambiguous. While a real estate Top Producer is exactly that – an agent  that does a lot of business (usually by dollar volume) – the definition varies from company to company. Some real estate companies might recognize their top 10%, or their top 25%. Even if two different companies recognized their top 10%, the dollar volume required to be in that bracket might vary wildly. Top Producer status is certainly a honor and an accomplishment, but just remember that the criteria vary from company to company and year to year.

Now that I’ve explained a bit about Top Producer status, I’d like to take a moment and congratulate the top 10 Zephyr agents (in terms of dollar volume) in 2011. This isn’t the entire list of Zephyr Top Producers, just the top 10.

In no particular order, congratulations to the following Zephyr top producer agents:

  • Tim Gullicksen
  • Chris Sprague
  • Tim Hawko
  • Robin Hubinsky
  • Richard Meyerson
  • Don Woolhouse
  • Bill Kitchen
  • Mollie Poe
  • Danielle Lazier
  • Anna Spathis

I’d also like to give a special shout out and congratulations to Zephyr’s company-wide Top Producer, Danielle Lazier.

Britton and I have both been at Zephyr real estate since Day 1 of our career, and we have a great deal of respect for our colleagues, sales managers, administrative team, and everyone else that is on team Zephyr. We couldn’t be the happy and dynamic team that we are if it wasn’t for the awesome staff that surrounds us, and our fellow colleagues that bring their “A-Game” to their business on a daily basis. To every agent out there (top producer or not) that runs an honest, solid, reputable and awesome business, we say thank you and congratulations!

 

Zephyr is #1… or #2?

Statistics. You know the trite saying. I recently came across some 2011 San Francisco real estate market share statistics by brokerage. Below is the chart, please click on it for a larger image that is slightly easier to read.

Zephyr 2011 Market Share compared to other SF Brokerages

There are an (almost) infinite number of ways to calculate market share. One of the more common is to look at either units (number of sales) or dollar volume (the combined value of all sales). Real estate brokerages that list expensive property tend to look bigger when you compare dollar volume (even with fewer units, they have a higher market share using dollar volume because of their higher list and sales prices).

The above chart uses dollar volume, and since Zephyr does a broad business and isn’t focused exclusively on luxury listings there are firms on the list that have an average list/sale price that is higher that Zephyr.

The other thing to be aware of is the TRI/Coldwell Banker distinction. TRI, in my experience, operates as a distinct brand and client experience. Invite a TRI agent to your home, and I’m willing to bet that they won’t position themselves as Coldwell Banker agents, but instead as TRI agents – a distinct brand with a unique service/value proposition. That’s not to be negative about either TRI or Coldwell Banker, just the reality that I experience in the San Francisco market.

If we consider TRI and Coldwell Banker as two distinct brands, then Zephyr is number one in 2011 real estate market share by dollar volume, coming in just shy of 10% of the total market, with just shy of one billion dollars in total transactions by dollar. If we lump TRI and Coldwell Banker together, then Coldwell Banker comes in as the largest real estate brokerage in San Francisco with about 15% of the total dollar volume and Zephyr comes in second place.

Either way, I think it is a wonderful testament to the strength and spirit that is Zephyr real estate in San Francisco!

Disclaimers: Data source is BrokerMetrics (which gets its data from the SFAR MLS). Geographic area is SF MLS districts 1 – 10. Time frame is January 1, 2011 – December 17, 2011 (the most current data when the report was generated). All data is believed to be reliable but not warranted. Your mileage may vary. Always wear your seat belt. ;-)