Good for Ownership
I appreciated the insightful and objective article on condominium conversions and the housing market in the City of Los Angeles (“Condo Conversions Create Council Quandary,” May 22, regarding the City Council’s hearings leading to a possible moratorium to prevent apartments from being converted to condominiums).
It is not apartment owners’ responsibility to provide subsidized housing at well below market rates. The rent-control ordinance basically ensures that the quality of the rental housing stock in Los Angeles will continue to deteriorate. The typical apartment property is more than 40 years old and in need of major renovations.
But there is even a more basic problem. Los Angeles has a pathetic rate of homeownership. Outside of California, home ownership is higher than 70 percent. In the state of California, it is 55 percent. In Los Angeles, the home ownership rate is 40 percent.
One of the only ways that the city would conceivable reach (higher) levels of home ownership is through condominium conversions. Our surveys show that 75 percent of buyers of condominium conversions are former renters. Further, conversions typically sell for $200,000 to $300,000 less than newly constructed condominiums.
If Los Angeles really had an interest in fostering home ownership, they would do everything possible to encourage conversions.
Further, if they wish to encourage the development of modern rental housing, the City should take the massive property tax gains when a project is converted and devote those funds to subsidizing the development of rental housing.
Lastly, the City stats clearly show that communities with high homeownership rates are safer, more stable and schools have less turnover, higher grades and less delinquency.
Why don’t the elected officials get it?
Alan Nevin
Chief Economist, California Building Industry Association, Director of Economic Research, MarketPointe Realty Advisors
Bad for Renters
Regarding the May 22 condo conversions article (that focused in part on the pending conversion of a Valley Village apartment complex to condos):
The Valley Village homeowner association recently reviewed a proposed 55-unit condo project to replace the 24 rent-controlled units cited in the recent Business Journal article. The apartments will be destroyed as the consequence of the state Ellis Act, which allows landowners to go out of the rental business as soon as an apartment building escrow closes.
Of course the apartment building is a loser for someone who overpays the market to build speculative replacement condos. The article implied the new owner was one of those beleaguered long-time landlords scraping by on rent-controlled income.
Recent publicity has shed much-needed light on the growing loss of affordable rental housing including the 11,000 affordable rental units lost to condo-mania in L.A. as the consequences of the Ellis Act abuses and loopholes.
Our state legislators need to face up to the consequences of Ellis in this time of extreme housing crisis and repeal it. It’s literally a destructive law.
Tom Paterson
Chairman, Land Use Committee Valley Village Homeowners Association
