The Human Side of a Condo Conversion

This post is different from the usual fare here, but I think it’s worth taking some time on. I ran across this post in my news alerts. It’s a look at the human consequences that result when affordable apartments are converted into upscale condos.

I was very surprised at the time that I first wrote about Lock Vista at the seeming bias against renters. No doubt this is a small minority who are particularly vocal, but the sentiment seemed to be, “stop whining about being poor because you’re an artist,” or “if you worked harder, you could own a house.”

I learned that renters have very few rights. One such right is sixty days notification if a rent increase will be over 10%. How generous. Buildings can be sold. Rent control doesn’t exist. The people that I’ve met have owned homes and have chosen to become renters at a different stage of their life.

Three hundred sixty-five days in the year but not enough days for the number people being forced to leave Ballard due to economics. The condo conversion at Lock Vista will affect over 200 people; many have already left. Then there are the renters in triplexes and duplexes – most slipping away without any publicity or outcry at all.

Of course, when the alternative to renting costs twice as much and puts you in financial risk of foreclosure should interest rates rise or the value of your home drop, you’re stuck between a rock and a hard place. You can thank your friendly neighborhood housing bubble for putting people in a situation where the only choice is between insecure renting or taking on financially crippling debt.

(Peggy Sturdivant, At large in Ballard, 12.13.2007)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

28 comments:

  1. 1
    Ubersalad says:

    Can we post some positive stuffs, rather than always having “whine” from all corners of Seattle?

    Rate this comment: Thumb up 0

  2. 2
    brettro says:

    I read on Slog that the conversion at Lock Vista isn’t going to happen and the complex has been put back up for sale.

    I think it’s a safe bet that this trend of reversions will continue.

    Rate this comment: Thumb up 0

  3. 3
    brettro says:

    Did i screw up my link? Let’s try this again…
    http://slog.thestranger.com/2007/12/wanna_buy_the_lock_vista_got_32_million

    Rate this comment: Thumb up 0

  4. 4
    brettro says:

    i fail. cut and paste.

    Rate this comment: Thumb up 0

  5. 5
    wreckingbull says:

    While it is sad that Lock Vista is converting, and these folks have to move now, the rest of the story is yet to be told….

    Ballard is absolutely bloated with unsold condos with a massive amount still under construction. Anyone checked in at Hjarta recently? These renters may have some real nice opportunities to rent brand-new condos soon. This exploding inventory and flat-lined sales pace is going to put some serious downward pressure on rents.

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  6. 6
    M Long says:

    “Ubersalad”

    And exactly what part of “Seattle Bubble” sounds like a real estate motivational seminar. This is a blog about negative real estate news because most of the people on this board, like myself, think the real estate industry has become the Amway corporation of the 21st century, and that it has a good chance of destroying millions of Americans. I’m also VERY ANGRY ABOUT IT.

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  7. 7
    Ubersalad says:

    should see downtown Bellevue and the amount of buildings coming out. Bellevue’s price tag is much higher than Ballard, and I don’t see how they can sell these.

    Rate this comment: Thumb up 0

  8. 8
    Ubersalad says:

    There is a million ways to destroy sectors of “American Population”. I mean this blog was great when it was the only one of its kind, now it’s just…

    Rate this comment: Thumb up 0

  9. 9
    Scotsman says:

    Amway destroyed millions of Americans?

    I thought the democratic party got the credit for that.

    Rate this comment: Thumb up 0

  10. 10
    Ubersalad says:

    Alright delete my comments, who cares. This blog went from informative to “same whine, different story”.

    Rate this comment: Thumb up 0

  11. 11
    TJ_98370 says:

    .
    In an effort to accommodate Ubersalad’s request for more positive stuff(s):
    .
    Happy Real Estate and Homes For Sale
    .

    Rate this comment: Thumb up 0

  12. 12
    Chris says:

    “Anyone checked in at Hjarta recently?”

    Hjarta has sold 6 of 80 units thru Oct. according to the best data I can find

    Rate this comment: Thumb up 0

  13. 13
    AndySeattle says:

    For what it’s worth I was a ‘victim’ of a condo conversion… I chose to move because the place just wasn’t worth buying. And because the area had so many conversions going on at the time my choices were limited as to where I could rent. So I ended up paying a premium for a piece of crap. I stayed in the piece of crap for the years’ lease and then moved to my present location… Same price, amazing neighborhood, some of the greatest schools in the nation and an easier commute.

    Looking back… I’m glad that I was ‘forced’ to move. And I take great delight in occasionally driving by my old stomping grounds and seeing that the conversion has still yet to complete and they are desperately trying to sell out. Schedenfreude at its best!

    Rate this comment: Thumb up 0

  14. 14
    off topic says:

    i’m sorry, but i couldn’t resist:

    increasingly house-poor americans turn to their 401ks to pay the mortgage and stay out of bankruptcy. we honestly cannot stop ourselves. we are going to use up every last little bit of credit before we give up.

    http://calculatedrisk.blogspot.com/2007/12/consumers-use-401k-atm.html

    what the hell, people? are our lives really so empty that every resource must be tapped to keep up with the jones’? has nobody heard of making a budget and sticking to it?

    this stuff is beginning to make me mad.

    Rate this comment: Thumb up 0

  15. 15
    Bellevue Ave says:

    where is angie? I’m sure she will have something inciteful to say about this.

    Rate this comment: Thumb up 0

  16. 16
    TJ_98370 says:

    increasingly house-poor americans turn to their 401ks to pay the mortgage and stay out of bankruptcy….

    Wow! What are these people thinking? Aren’t 401K’s protected from bankruptcy?

    Rate this comment: Thumb up 0

  17. 17
    off topic says:

    i really have no idea why anyone would do this.

    you have to go through a whole “proof of financial hardship” process to get access to the 401k and then you have to pay taxes on it at your incremental rate.

    it really seems like such a bad idea

    then again, most of these people had to make at least a few poor decisions to get to this point

    you’d think that the process of filling out the paperwork would get people to think about whether it is really such a great idea

    Rate this comment: Thumb up 0

  18. 18
    explorer says:

    I too was a condo conversion casualty. I spent all of last summer in a very frustrating search, battlling (not just competing) with others both in the same position– or saying they were for an artifical “edge” that did not hold water, or newcomers with a job/no job, and no place yet. There were 50 people lined up for an open house lasting 30 minutes last August at my current rental. I learned to despise any landlord that uses a lease from the Rental Housing Assn. of Puget sound, for good reason.

    I was very fortunate to find a place in the same neighboorhood, where the rent was fairly reasonable for what you get and in the current market. And it’s a triplex nest egg for a California couple/owners. Renters were treated like unwased surfs, regardless of income or history. And contemptable so.

    My short term consolation is also the fact that only three out of 14 units converted have sold. The rest are definately on the road to repartments, at certainly much higher rents that what I am paying now, for less space and ameniteies.

    Barring rent control, It is karma in a way for speculators and the greed that has been going on in the rental markets in-city especially over the past 3 years.

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  19. 19
    TJ_98370 says:

    An interesting recent development:

    Ben Must Be Worried

    …At least Congressman Vito Fossella of Staten Island is thinking straight.
    ..
    Earlier this week he proposed allowing homeowners with adjustable-rate mortgages who are facing interest-rate resets to withdraw up to $25,000 penalty-free from their retirement accounts to avoid foreclosure…..

    .
    Apparently, some of our elected gooberment officials are in support of mortgage holders withdrawing funds from their retirement accounts.
    ..

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  20. 20
    patient says:

    That’s just crazy. If you can’t afford you home get rid off it. Sell, short sale, foreclosure whatever is needed. Get something you can easily afford or rent and start rebuild your finances. To live in serfdom and enslaved by a lender forever is not the way to live your life.

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  21. 21
    Angie says:

    where is angie? I’m sure she will have something inciteful to say about this.

    Inciteful?

    I think it’s sad that people are raiding retirement funds as they try to hang on to their homes.

    Mmm, that’s about it. Have fun with the strawman arguments, guys.

    Rate this comment: Thumb up 0

  22. 22
    declinest says:

    “Buildings can be sold. Rent control doesn’t exist.”

    what is so bad about buildings being sold? it’s a good thing rent control doesn’t exist.

    Rate this comment: Thumb up 0

  23. 23
    Bellevue Ave says:

    wheres the strawman? also that wasn’t very inciteful.

    Rate this comment: Thumb up 0

  24. 24
    Mike2 says:

    It’s amazing 401K’s and IRA’s still exist in the current environment. The temptation to stimulate spending through holding penalties and withdrawl incentives has got to be intense. Having people put away pre tax income is as bad or worst than not spending home equity.

    Rate this comment: Thumb up 0

  25. 25
    Buceri says:

    From off-topic link:
    “What has happened with housing and the economy has really blown up for people at the lower end of the spectrum.”
    Oh please!!!! With the way medical insurance premiums have gone up in the last 5-8 years; not even “people in the middle of the spectrum” have been contributing to their 401K for a while…

    Rate this comment: Thumb up 0

  26. 26
    Gary says:

    This thing will all shake out and the market will re-allot rent levels and which condos should be re-partmented but there will be a lot of unnecessary suffering in the process. We recently moved up from Portland and watched the market for a year and half before buying. We’d expected prices to go down for a long time and when the price reductions and the deal we got met an equilibrium with our desire to get out of an apartment we bought. So I speak from a now less biased view when I say that Washington state needs better tenant protection laws. I’m a conservative. Washington seems to be run of, by and for the wealthy – surprising in such a liberal state. Housing prices here would probably come down more quickly if rents were lower but there is so much vacant space out there waiting to be sold that we have a pincer effect between home prices and rents. Ultimately, we need far better economics educations in high schools and colleges so people have a better understanding of what’s going on and can make better individual decisions, which are ultimately what drive the market. Then maybe we’ll be less prone to such bubbles. The bottom line is that the housing frenzy never made economic sense.

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  27. 27
    jon says:

    Here’s another tragic case of a family caught in the bubble:

    http://iowahawk.typepad.com/iowahawk/2007/12/please-dont-des.html

    Rate this comment: Thumb up 0

  28. 28
    WestSideBilly says:

    jon… you do realize that’s an entirely satirical blog entry?

    Rate this comment: Thumb up 0

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