Posted by: Timothy Ellis (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.

18 responses to “Two Years Too Late: Legislature to Address Condo Conversions”

  1. biliruben

    It will help during the next boom. Sometimes times of crisis are the only times you can pass this kind of legislation. Even if it won’t help for 10 years, it will still help.

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  2. jon

    There’s nothing quite like a government mandate to drive up the cost of providing apartments, and thus driving up rents. These provisions will drive down the value of the property to the owners, and will reduce the desirability of building more apartments in Washington. That might not seem like such a problem during a housing slump, but the next upturn will see investors looking to other states to build in.

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  3. biliruben

    “That might not seem like such a problem during a housing slump, but the next upturn will see investors looking to other states to build in.”

    Good. I have no interest in the type in investor who can only turn a buck by screwing folks.

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  4. softwarengineer

    GOVERNMENT WASTE

    Don’t those buffoons in Olympia have better things to do than legislate phony rental shortage legislation [brain washing?]?

    There’s clearly a horrifying rental glut out there now, because a good percentage of the Condos overbuilt in the 2000s are really “just apartments” anyway.

    Our local rosy service economy just got its head axed off too, along with a 300 point meltdown of the DOW just now.

    See the proof:

    http://biz.yahoo.com/ap/080205/wall_street.html

    It defies logic to me why when our manufacturing base is basically gutted and the “sevice economy” [America's new backbone] is just that; hamburger flipping, oil changes, janitorial work, etc, etc….why do we need more and more college educated workers; like engineers and scientitists anymore? To manage the outsourcing, until the mass layoffs and we all go to hamburger flipping?

    Olympia, start working something more logical, like State of Washington growth planning, with hire wages to survive on, than this Service Economy.

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  5. jon

    Some might think that pushing through legislation that changes the terms of existing contracts is screwing people who rent out their property.

    People don’t rent out properties out of the goodness of their hearts. They do it because that is how they earn a living or provide for their retirement. If you want to restrict yourself to renting from people who rent out property for charitable purposes, then you will have a hard time finding an apartment.

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  6. Ira Sacharoff

    It’s going to take an awfully long time to fully absorb the huge number of condos already out there and those under construction.
    But what happens ten years from now ?
    There were a lot of folks displaced in Seattle during this most recent bust who were renters and their buildings got condo-ized.
    To me, a place is better when it has a mixture of people, renters and homeowners, richer and poorer, and all this legislation does is discourage that. I don’t see how it hurts landlords. Apartment buildings NOT condo-ized have also gone up tremendously in value, and everything goes in cycles…If the values for condoizing are so good, then it will be worth the 6 mos notice and the displacement fees.
    If property values continue to fall and rents keep rising, buying apartment buildings will be considered a very prudent thing to do, even if there are restrictions on converting them to condos.

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  7. biliruben

    Nice strawman, Jon. Of course landlords can charge rent and make a profit. I encourage it.

    Tossing folks out with little notice and insufficient relocation funds has nothing to do with a reasonable and ethically derived profit, however. It’s screwing folks, it is the wrong way to pad profit margins, and should be legislatively discouraged. Conversions are all about excessive greed.

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  8. old_B

    I think the unique difference in times of fads like the recent condo-conversion-mania is that all the developers are trying to get in while the getting is good, which creates a market freak-out where renters are out looking for property just as the supply of rental units gets clamped down.

    That particular kind of market failure always corrects itself, and while I’m not so keen on legislation so specific, I can see that some sort of expanded tenant rights balances out the affordable housing concerns with the gold-rush mentality of condo/land developers.

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  9. Runs With Scissors

    “Maybe next you can “do something” about dot-coms with no cash flow that pay their employees in stock options. I hear that’s a big problem.”

    Please Tim, what you note above was accepted as the norm back in my old haunt the Silicon Valley and those .com stocks sure did have their boom ;-)

    Kinda like it was acceptable to have these exotic type loans, that housing values always go up, etc…..yet look at all the finger pointing going on in the RE and banking industries right now. Past performance is no guarantee of what will occur in the future, and once again if something is probably too good to believe and defies all logic, then its probably worth more scrutiny, and 50% off of crap is half a dump, especially in Nevada!

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  10. Grvetti

    Can the state also insure that no Hydrogen filled trans-Atlantic dirigibles are allowed into Washington air-space. This will insure we don’t have another Hindenburg mishap…

    Better late than never, right?

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  11. vboring

    also, it would seem prudent to ban the building of forts in the region.

    there is no telling how many more of these european american invaders might come if we don’t.

    i realize that joke failed badly, but figured so long as we’re looking back for local legislation that would have been wise at the time but useless now, that’d be about as far back as you could go.

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  12. sf_boomerang

    vboring, obviously you’re incredibly ill-informed about the pressing need to impose hunting limits on mastadons.

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  13. TJ_98370

    Portland, West Linn and Seattle are mentioned in the HBB today.

    Rags to Riches Back to Rags

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  14. Deran

    This is by no means sufficient to try and hold on to people stayin in the city who are not technosoftic millionaires,

    It’s always disgusted me that Seattle’s municipal government for always saying Yes! to the same song and dance abt the need for allowing developers to loot and pillage the city at will. The upside is, what? Money for the developers.

    Rent stabilization is really to only historical mechanism that retains working class amd middle class demographics in cities under pressure from rapacious real estate interests. But that is way way to sensible for Seattle. Better to triangulate.

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  15. whats my name

    Imagine; these developers buy the property, then they act as if they own it.

    I thought renters were smart guys who took advantage of foolish owners to enjoy the property at half the cost. Now they need protection? Which is it?

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  16. notabull

    “I thought renters were smart guys who took advantage of foolish owners to enjoy the property at half the cost. Now they need protection? Which is it?”

    An interesting question… In my current situation I’m just about to finish a year lease and then go month to month. At any point either side can say “ok, done now, seeya” and that’s how I want it because I’m hoping to buy a place later in the year (maybe).

    On the other hand, if you’re looking to stabilize the supply of rentals and make developers think a little more about the cost and consequence of conversion, then this legislation might just help with that. We’ll see how this works out in the next boom in 20 years.

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  17. Plymster

    There seems to be a lot of people getting their panties in a bunch on this for no real reason. The House Bill really shouldn’t discourage landlords from converting their condo. Specifically, the changes seem to:

    * Force the landlord to inform the tenants of their rights and access to relocation assistance fromt he city/county, and from the landlord.

    * Expressly provide relocation assistance to tenants if the landlord lets them out of their lease early.

    * Allow cities/counties to determine the amount that the landlord must pay for relocation assistance, and raises the upper limit of this assistance from $500 to no more than 3 months rent.

    * Increase the tenant notice period by a whopping 30 days. The landlord can’t terminate leases anyway, so all it really does it force him to give his tenants as much notice as possible before evicting them. Since I’ve never heard of anyone having less than a 6-month lease, and it probably takes a good 3 months to get their permits etc. sorted out, this probably isn’t much of a burden on the landlord population.

    * Prevent the landlord from “violat[ing] the tenant’s or subtenant’s rights of quiet enjoyment during the one hundred twenty-day notice period”.

    I don’t see anything unreasonable here.

    As for the 2 years it took to do this, better late than never. Considering how long it takes to pass legislation that is supported by billion-dollar industries backing them with lobbyists harrassing Representatives every day, I think it’s pretty good when a populist measure like this is passed in only 2 years.

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  18. explorer

    It is only a good thing when it is TIMELY. The State Legislature played it safe last year, and this year on a lot of things, even with a super majority, because, like their spineless counterparts at the Federal level, the leadership was more concerned with themselves and holding their power, more than reperesenting the majority of their constitutuents best interests. Neither party behaves any differently.

    I noted that even ALLOWING cities to establish rent-contols and stabilization measures was not considered. Guess that one will come after the next big earthquake levels all the new repartments and townhouses that will go for pennies a month, in order to keep the property and services tax rate high, and ensure that profits can still be made by someone. /sarcasim off

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