December 19, 2017

A Xanadu For Tech Capitalists And Developers

A report from CBS San Francisco in California. “Bay Area residents are used to hearing about how red hot the housing market is, but home sales on the Peninsula are taking that trend to a wild new level. Consider a home on Colorado Avenue in Palo Alto. It listed for $2.9 million, but sold for $3.9 million, $1 million over asking price. Another home on Anacapa Drive in the Los Altos hills listed for $2.8 million, but sold for $4.5 million. That is $1.67 million over asking. Finally, there is this home on University Avenue in Los Altos that listed at $7.9 million, but sold for $1.8 million over asking.”

“‘The market has been crazy,’ admitted Deleon Realty CEO Mike Repka. He says it’s a common tactic known as auctioning. ‘Spending three to four million dollars on a 1,800 square-foot house seems crazy. But when you know you’re one of 12 that are bidding on it, you don’t feel isolated,’ explained Repka.”

The Santa Monica Mirror. “It’s already well established that the tax ‘reforms’ now being hashed out in secret by a joint committee of Republicans from the Senate and the House of Representatives will likely cost Californians a net sum of well over $110 billion, an average of more than $2,000 a year for every man, woman and child in the state. The tax change figures to drive prices down by anywhere from 8 percent to 12 percent, says one estimate from the National Association of Realtors, which strongly opposes the bill.”

“But the biggest effect – estimated at about $90 billion by the Budget Committee – will come from eliminating deductions for state and local taxes. ‘The tax incentives to own a home are baked into overall values,’ said Elizabeth Mendenhall, president of the national Realtors’ group. ‘When those incentives are nullified in the way this bill will likely provide, our estimates show home values stand to fall by more than 10 percent, even more in high-cost areas.’”

From “Under Ed Lee, San Francisco was remade into a playground for tech capitalists and real estate developers. Ed Lee died suddenly while still in office. As San Francisco mayor for nearly eight years, Lee presided over the city’s tech boom, doing more than perhaps any other individual to transform it into a Xanadu for tech capitalists and the real estate developers who followed on their heels. Worse yet, many of the condos developed on Ed Lee’s watch remain vacant while people sleep in tents on the city sidewalks. There are more than 30,000 vacant units in the city — most of them luxury condos owned by speculators, second or third homes owned by affluent jet-setters, or short-term rentals in partial use. Meanwhile, it’s estimated that nearly 8,000 people in San Francisco are without homes.”

“‘The perception was that Ron Conway had too much of a say on Ed Lee,’ says former city supervisor and state assemblyman Tom Ammiano. Conway is an angel investor who has backed Airbnb, Square, Twitter, Zynga, and sixty-five other San Francisco-based tech companies. He was the single largest donor to Ed Lee’s campaigns; news reports called the two a power couple.”

From the OB Rag. “The following is a composite from what several observers sent us and from media reports about the long, long hearing Dec. 12th before the City Council on short term vacation rentals – one of the most controversial and divisive issues in present-day San Diego. During the lunch-time recess, pro-vacation rentals folks were treated to a free box lunch, provided by something called ‘Share.’ One report said the lunches each cost $8 and were being provided by a company that services the Convention Center.”

“At the beginning of the hearing, organizers of ‘We Support Short Term Rentals’ handed out green shirts and signs for their people. One OB observer sat next to a man in a green shirt who fell asleep and spilled his coffee; the guy turned to our contact and told him he was being paid for being there but how boring it all was.”

The Los Angeles Times. “She doesn’t need an alarm clock, Carolyn Cherry says. Her brain is programmed, by years of routine, to sound an internal alarm just before 3 a.m. One hour after rising, she leaves her house in Hemet and drives in darkness to the South Perris Metrolink station, the first leg of her daily journey to work. Cherry then hustles to the Red Line, pops out of the ground at the Civic Center station, crosses Hill Street and reports for duty as a clerical worker at the L.A. County auditor controller’s office by 7:30. 9 hours of work, 6 hours of commuting a day”

“Her rent is just $800 a month. In L.A., a home like hers would be twice, three times or four times as much. ‘It’s usually 8:15 or 8:20 when I get home at night,’ says Cherry, who has been doing this merciless long-distance commute for 16 years, getting by on just 4½ hours of sleep each night. ‘Nine hours of work and six hours of commuting. That’s my story.’”

The Sacramento Bee. “The weekday commute to the Bay Area from the Sacramento region isn’t easy. It can range from a 90-minute train ride to Richmond to a multi-hour slog to Silicon Valley. More than 17,000 Sacramento-area residents make the commute anyway, according to a Bee review of the latest census data. It’s not just IT workers making the commute. In fact, most of the workers who commute from Sacramento to the Bay Area are in the construction industry, census figures show.”

The San Francisco Chronicle. “The law of gravity dictates that what goes up, must come down—but the vagaries of celebrity real estate don’t always adhere to the letter of the law. There’s ‘poor’ 50 Cent, who’s in a class of his own. The longtime housing has-been is still looking for a buyer for his wayward Connecticut mansion. We’re looking forward to a time when the gods of real estate finally smile upon him, which didn’t happen in 2017.”

“Join us as we look back at 2017’s biggest booms and busts in the high-stakes world of celebrity real estate. Beyonce and Jay Z finally found a place to call their own in Los Angeles. Not only did they purchase a 30,000-square-foot estate with eight bedrooms, four pools, a 15-car garage, recording studio, basketball court, and views of the downtown skyline, they also snagged the Bel Air mansion at a $47 million discount. The asking price for the off-market property was rumored to be $135 million, but Bey and Jay offered only $88 million, and a deal was struck.”

“Rapper Eminem, aka Marshall Mathers, is making a triumphant comeback on the music scene, but he can’t claim the same victory when it comes to his real estate investments. He recently sold his 17,500-square-foot mansion in Rochester Hills, MI, for $1.9 million, which seems to be a fair price, considering that it was assessed at $1,763,160 in 2016. However, that sales price is less than half the $4.75 million he paid in 2003 for the five-bedroom, 10-bath property outside Detroit. That’s quite a loss!’

“Retired NBA great Scottie Pippen has had not one, but two luxurious spreads on and off the market for years now, and he hasn’t been able to close a deal on either one. The ex-Chicago Bulls superstar’s Highland Park property is a five-bedroom spread on 2.5 acres. It has an infinity pool, home theater, wine cellar, eight-car garage, and an indoor half-court featuring a rendering of Pippen’s No. 33 jersey. The mansion, which was listed for $3.1 million in June 2016, is currently available for $2,795,000.”

“Then there’s Pippen’s Italian-style waterfront mansion in Fort Lauderdale, FL. The six-time NBA champ has been trying to sell the megamansion, known as ‘Villa del Lago,’ since 2009. Priced at $16 million nearly a decade ago, it was recently languishing on the market for $10.9 million.”

“Country crooner and TV star Reba McEntire is singing the blues. She took a loss on the Nashville-area Starstruck Farm, which she put on the market in 2016 after splitting from her husband and manager, Narvel Blackstock. It turns out, the developer who bought the property is going to subdivide it and likely make a killing. Although McEntire originally listed the 83-acre farm for $7.9 million, the developer wound up paying only $5 million.”

“It took two years, but hip-hop star Lil Wayne finally unloaded his 15,000-square-foot waterfront mansion in Miami Beach, FL, for $10 million—which is $1.6 million less than what he paid for it, and a full $8 million less than the price he listed it for in 2015.”

“Year-end breaking news: 50 Cent has cut the price of his mansion—again! Relisted just this week for $5 million, the albatross on the rapper’s real estate portfolio won’t let go. The mansion with 21 bedrooms, 25 bathrooms, and one stripper pole has spent the past decade on and off the market. He’s now lowered the asking price from $14.5 million to a paltry $5 million.”