Daily Breeze: Condo-conversion moratorium being urged - "It's threatening the middle class"
In an August 9 article in the Daily Breeze, Dan Laidman reports that L.A. councilman Bill Rosendahl is urging a moratorium on condominium conversions, driven in part by conversions in the 11th district (Westchester, Playa del Rey area up to Brentwood and Pacific Palisades). Middle class renters have been forced out to make way for pricey condos.
Business interests greeted the news with "chilly reactions", pointing out that building owners are missing out on opportunities to profit from conversions. The head of the Apartment Owners Association argues that the city should compensate those landlords. "It's immoral and unethical to interfere with the free market and with the property people own", he says. (Note: parts of district 11 are rent controlled.)
OK, I am very much in favor of allowing a free market to operate. If the free market had been operating then some of these landlords would have been all along charging a rent that the market would support. I just wonder - it's all very well and good to talk about free market profit making opportunities but will these same landlords be singing a different tune as the housing market dives?
posted by bearmaster at 9:19 AM
3 Comments:
The link to the original article is here, but I expect it to "go bad":
Condo Conversion Moratorium Urged
in reality he's probably doing them a favor. if what's happening in san diego's conversion market happens here most of them would revert back to rentals. it seems that lots of muli-family untis sold at prices that only make sense if they were to be converted into condos at prices that no longer can attract buyers.
Bearmaster,
In another thread you had asked me why I think things will happen faster this time.
Some numbers that are also influencing my thinking:
~69% of Americans now own a home
40% of Americans own at least two homes.
26% of Americans are too close to the poverty line (or below it) to get credit and thus are out of the home buying market.
That leaves... 6% who could buy in the dips! Normally, We have 20% to 22% sitting on the sidelines waiting to buy into the dips.
I also believe the ~15% of the population whom converted from renters to "owners" in the last five to six years are the ones most at risk. So with almost 3X the population in trouble as those "on the sidelines..." It screems that once the drop starts there won't be much to slow it down.
Lets also talk about the high 2nd home ownership... That will drive down their markets which will impact everyone due to the banking/lumber/retail/etc. impact.
Note: I do assume that the secondary bond market continues to tighten up forcing mortgage lenders to cease loaning on speculative ventures without a down payment. But this seems to be happening; late, but its happening.
Neil
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