It has been about a month since Santa Cruz installed temporary rent freeze plus just cause eviction.
Seems that I have seen more apartment buildings listed since then … they aren’t going in contract. Multi family outside the city limits… sells at a premium. Wrote an offer on a 4plex 8% over asking, all cash … did not get it. A similar property in the neighborhood with better remodel had sold for less than this one’s asking… in December!
Tonight 2 Santa Cruz MFs hit the market. Same owner. Priced based on 3.3% cap rates, and that’s not even accounting for the new ptax. The seller bought in… drum roll… 1966. Pays 2k a year. New owner will pay 35k. Looks like 1.9% cap to me.
Gee, I wonder why this family sells after 52 years.
The other 4plex that sold in December… actually sold 50k below asking.
SFR … people can drive the price up regardless of intrinsic value. Emotions (FOMO…)… as long as there are comps, the appraisal will be there.
2-4 units… appraisals rely on comps. That’s why a better 4plex sold in 12/17 sold for ~15% less than this one now.
5+ units… cap rate drives price. Of course what is the right cap%? I bought better properties with 6%… would pay 5% … but under 3%? Only on Capitola’s Depot Hill or ocean front!
Oh, another 0.25% increase today. 5+ units don’t get long term fixed loans. They adjust after 3,5 or 7 years.
Found this yesterday. Bad news for multifamily owners in Redwood City on the horizon. Keep in mind, what is “right” for MF today could be “acceptable” for SFR in the near future.
The only place around San Diego considering rent control is National City, which already has the lowest rents in the county. I guess it is not an economics thing.
Part of Costa Hawkins is single-unit housing and newer housing cannot be rent controlled. The other part is vacancy decontrol (reset to market rent during turnover). If vacancy decontrol is removed, then landlord cannot increase rent to market during turnover in places where there is rent control. In the case of Santa Monica, it needs to be rolled back to 50-years-ago rate. If people do not believe in capitalism and free market, why not just let it roll back to 1970 rents and see what happens.
