June 5, 2018

The Deceit, Fraud And Greed Is Breathtaking

A report from the San Mateo Journal in California. “Forty-six percent of Bay Area residents are planning to leave the region in the next few years, according to a survey from the Bay Area Council. The survey results show a 6 percent increase from last year in residents who want to relocate. In 2016, 34 percent of survey respondents said they were planning on leaving. Residents cite housing costs, overall high costs of living and traffic as reasons to move out of the area. ‘These results are tough to report, but we can’t let this growing pessimism become a self-fulfilling prophecy,’ said council president Jim Wunderman.”

From ABC 7 News. “It’s hard to say when residents hit a tipping point, but there have been plenty of reasons the past few years why more Bay Area residents say they want to move out of the area. Last year, we saw one example when an average four-bedroom home in Sunnyvale sold for more than $800,000 over the asking price. The cost of housing continues to rise. Home prices in Santa Clara County jumped 23 percent from last year to a medium price of $1.13 million dollars, according to CoreLogic.”

“A Palo Alto Weekly survey earlier this year found that residents looked at families earning nearly $400,000 a year as simply middle class, still struggling to pay the bills and make ends meet.”

From Palo Alto Online. “One west Menlo Park home’s lease agreement didn’t allow for open houses or Realtor tours more than three times a week for limited times, not enough for a full-blown marketing campaign. Another home in Atherton hadn’t been listed on the market since the 1970s and family members weren’t sure they wanted to list the home to a broad buyers’ market. Both homes were put up for sale ‘off market,’ a type of sales strategy in which the home’s availability is only narrowly advertised to certain real estate agents and potential clients.”

“Over the past five years, Coldwell Banker agent Tim Kerns, who sells in the top 1 percent of agents internationally, said about 40 percent of his sales were ‘off market.’ Realtor Tom LeMieux of Pacific Union in Menlo Park said a big advantage for sellers is that the number of days the home is on the market isn’t tracked unless a home is listed on the Multiple Listing Service, so there is no negativity associated with property if it doesn’t sell quickly. If there is limited or no activity on a home, that someone is trying to sell off market, he said, at some point you need to go to Plan B … an on-market strategy.”

From Quartz. “If you want a gauge the degree of inequality in the US, watch what America’s venture capitalists are funding. One of their most recent is FlyHome, a real estate brokerage that announced a $17 million funding round led by Andreessen Horowitz May 31. It is a service to help people buy homes in America’s hottest housing markets. The problem with these markets is not merely price, which is remarkable since the median home price in San Francisco is now $1.61 million, double the average from just five years ago, and once affordable Brooklyn tops out above $1.4 million. It’s that people, and investors, are making all cash offers.”

“The service is a symptom of a larger global problem. Cities are where the world’s economies are growing, and where opportunities are for those who need them most. Yet housing is now an investment vehicle tied to the financial system, rather than people’s incomes. The expectations of skyrocketing housing prices, and a flood of cheap capital to purchase them, is driving home values beyond actual increases in earnings. That’s created an oversupply of luxury housing at the expense of affordable homes.”

From Business Insider. “In San Francisco, a bedroom at one of the city’s luxury apartment dwellings for $1,290 a month is, all things considered, a steal. A startup called HomeShare offers just that. Founded in 2016, HomeShare leases apartments in expensive new buildings and splices them into additional units, so more tenants can split the rent for less per person. A two-bedroom becomes fit for three after HomeShares installs an upholstered partition in the den, with rents in San Francisco starting at $1,290 per month.”

“The company announced on Monday that it’s expanding to five markets — San Francisco, Silicon Valley, New York, Seattle, and Los Angeles — thanks to new partnerships with major real-estate developers. Jeff Pang, founder and CEO of HomeShare, said the startup has placed over 1,000 individuals into housing, mostly in San Francisco’s white-hot rental market. Pang is of the unpopular opinion that San Francisco does not have a housing shortage. Instead, he says there’s a glut of supply — but it’s all in the luxury housing segment, which is out of reach for some renters.”

From ABC 10 News. “A new web-based rental service called Bungalow has moved into San Diego, offering young professionals a chance to live in a large house in a prime neighborhood for less than what they’d pay for a studio apartment. Bungalow is already in 6 other cities, and now manages three homes in San Diego. One is in Bankers Hill, the other two in Point Loma. The company searches rental listings for large, luxurious homes. They then contact the owner and arrange a three-year lease. Bungalow then rents each individual room in the home.”

“But Bungalow’s neighbors aren’t thrilled. In Loma Portal, where Bungalow manages a six bedroom house, people who have lived there for years say they worry about parking issues. They also fear that the website turns single-family homes into mini-apartment complexes, which could disrupt the feel of the community.”

“‘I know it’s hard to get rentals here that are affordable, but I think this is going one step beyond that,’ says Glynns Mueller, who also didn’t like the idea of a commercial property moving into her neighborhood. ‘I’d like to see it stay residential.”

From the Marina Times. “San Francisco City Attorney Dennis Herrera announced in early May that his office was seeking to penalize two property owners $5.5 million for illegally renting out apartments on Airbnb, a short-term rentals site. Darren and Valerie Lee had used the Ellis Act to evict tenants from a Clay Street property that was then used for short-term rentals, according to the city attorney’s office. The Lees paid $276,000 to the city to settle a suit over the practice, and a court authorized an injunction that prohibits them from using any of their properties in the city for Airbnb in violation of the law.”

“‘However, a painstaking two-year investigation by the city attorney’s office has found that in just the first 11 months that the injunction was in place, the Lees violated it more than 5,000 times, booking more than $900,000 in short-term rentals and pocketing more than $700,000 in illicit revenue from 14 units,’ the city attorney’s statement said. Not a single unit was registered with the city’s Office of Short-Term Rentals.”

“According to the city, the couple got quite creative in eluding city inspectors — but not creative enough. They reportedly used phony leases and staged the apartments so they looked as if they were lived in; dirty dishes in the sink and damp towels from the bathroom. One problem was that ‘every apartment was staged in the same way,’ Herrera’s office noted. ‘This couple’s deceit, fraud, and greed is breathtaking,’ Herrera said.”

From the Mercury News. “How does the low-end pricing on an Oakland rental look these days—and what might you get for the price? This studio apartment, located at 2451 Seminary Ave. in the Bancroft Business neighborhood, is listed for $1,295 month for its 575-square-feet of space. The unit carpeted floors and granite countertops. The building has on-site management. Pets are not allowed. Walk Score indicates that the surrounding area is quite walkable, is bikeable and offers many nearby public transportation options.”

From the San Francisco Chronicle. “In the Silicon Valley, where homes prices are famously skyrocketing, it’s interesting when the price on a home goes down. And it’s especially compelling in the case of a tech mogul’s Los Altos Hills compound that’s now listed for $33 million less than the original asking price. The house at 27500 La Vida Real first went on the market with a big splash for $88 million in November 15, making it one of the most expensive listings ever in the Silicon Valley. It never sold and the price was then dropped to $68 million last May.”

“Still without a buyer, the home owned by entrepreneur Kumar Malavalli is now listed for $55 million, showing it was clearly overpriced when it first hit the market.”

The Los Angeles Times. “A real estate developer pleaded not guilty Monday to charges that he made illegal donations to local politicians while pushing for them to support his $72-million apartment project. Samuel Leung, the developer behind the Sea Breeze project in L.A.’s Harbor Gateway neighborhood, was charged in February with conspiring to launder campaign money and offering bribes to a legislator.”

“Prosecutors with the L.A. County district attorney’s office said Leung and an associate, Sofia David, recruited employees, family members and others as ’straw donors’ to funnel money to local politicians in the hopes of getting a Sepulveda Boulevard lot rezoned so that homes could be built there. The criminal charges came more than a year after a Times investigation into political donations linked to Leung.”

“As of Monday morning, David, who had a warrant issued for her arrest in February, had yet to be arrested in the case, according to Deputy Dist. Atty. Eugene Hanrahan. The Times has been unable to locate her for comment. The Times’ investigation found that more than 100 donors linked directly or indirectly to Leung had made contributions totaling more than $600,000 to area politicians while Sea Breeze was under review. Eleven of those donors denied making contributions or said they did not remember doing so.”

“Before the charges were filed, Leung told reporters who approached him at the Department of Building and Safety that he did not reimburse any donors, but declined further comment. The Sea Breeze project was slated for a vacant site that was designated for manufacturing, not housing. The Department of City Planning and a city commission had opposed a zone change. But Mayor Eric Garcetti and the City Council backed the change, allowing the project to move forward. In the criminal complaint, prosecutors singled out donations from Leung and his associates to political committees that backed eight politicians.”