-or-
“What do I complain about most?”
Word Press generates great starters for writers, and the one up today is, “What do I complain about most?” and I’d have to say it’s the rent. I’m sure I’m on solid ground with this one after looking at the national charts of rent and housing in major US metro areas. But here’s my rub. Especially after watching Hello from Hawaii’s, “Everything Wrong With Hawaii/ My Response (Viewer Email)–on YouTube:
https://www.youtube.com/watch?v=tLU8fxMKw0M
This video is hilarious in that a Californian cuts into the meat about what’s wrong with the state of Hawaii as compared to California, especially about housing. In it, a viewer states that Hawaii is in a grade B class of California’s policy, that it is just a half-assed replication with little help to those trying to live here by allowing dilapidated run-down building choices with outrageous rents. It’s unbelievably true. I’ve lived in San Francisco for 29 years in five different rent-controlled apartments, and retired early at 62 to move to Honolulu in 2020. What I’ve come to believe is astonishing. While each tenant situation is unique, I am seeing patterns in behavior of realtors representing owners leasing apartments in Waikiki, and I see no difference in owner behavior in a non-rent-controlled cash cow district like Waikiki, from the heyday goldmine of San Francisco’s rent-controlled status as a desired tech city from 2009 to 2019.
As the young man in Hello from Hawaii demonstrates–in the above link–a shortage of housing exists on Oahu. The Democratic Party politicians repeat this mantra in California–everyone needs affordable housing. A new video below, in “Hello from Hawaii,” demonstrates a good solution–building spartan complexes near the new rail line HART to link the westside to the Ala Moana Mall.
This is similar to the idea of building around BART stations in the Bay Area.
I thought I’d use the work-from-home Covid pandemic diaspora from SF to my advantage: I’ll give up my 22 year rent-controlled lease in San Francisco to move into an older 1960’s or 1970’s Waikiki building and take advantage of any cost savings advantage I may get by moving into a less-desired old building on Oahu. To be sure, the brick and mortar reinforced buildings I lived in at San Francisco were way older than those buildings in Honolulu, but the construction and upkeep quality of San Francisco’s proud beauties in the Tenderloin and Lower Pacific Heights shine just as bright as any new tower in Kaka’ako by the Ala Moana Mall. It worked. I’m paying less for rent than in San Francisco, and should I move back, like many do–time is on my side–as rents are still dropping in SF–and the upgrades to rent-controlled buildings are fabulous.
Interestingly, SF rent-controlled buildings are now priced higher than brand new buildings, perhaps because the owners feel they need to make up for the loss in fair-market-value when average rents in new tenant move-ins were up to nine hundred dollars higher than the long term residents still occupying their units. Also management equities groups in SF are very savvy and know what to do to keep value in their buildings. I guess a caveat to the rule of rent control is that when a city or area becomes highly desirable, rent control helps renters in the long run, and actually smooths out sharp upturns when the owner’s golden rule of being blessed with a good tenant falls away into, “What can I do to get fair market value?” This is when rent control works. Landlords have the tendency to turn tenants into mathematical statistics, not human beings and, being unprepared for an increase of three hundred dollars or more–creates a rent crises. To me, rent control prevents this from happening. The shock hearing of south Floridian’s dilemma in rent increases shows how progressive rent control can be when an area becomes hot. My takeaway: the competition between rent-controlled building and newer properties creates a healthy competitive balance. Waikiki doesn’t have this.
I do have compassion for landlords and realty companies. I was shocked at how property rights were placed in forbearance, such that tenants did not have to pay rent. Now, Joe in the White House, wants to spend more cash to make up for this original cause of a shortfall. So does Gavin Newsom in California. This is not the duty of government. Even Milton Friedman in his prologue and first chapter in “Capitalism and Freedom” who discourages rent control, does not believe that it is governments’ duty to subsidize housing. He does, however, start to change his tune in the eighties, such that after 2000 he begins to embrace socialism and shockingly changes his idealogy to “. . .political freedom, desirable though it may be, is not a necessary condition for economic and civil freedom.”
In the first chapter of this book, he acknowledges that although the men who have a concentration of power “initially be of goodwill” they will “attract and form men of a different stamp.” This is a polite way of saying power corrupts. My owner and landlord of my rent controlled building of 22 years, was genuine in upgrading and improving his building as “The Peoples” choice in the 1990’s before the dot com bomb. But when Facebook was going public in the spring of 2014, and the venture capital cash was being pumped into San Francisco like a stimmy check for stay-at-home in 2020, he became like any other impersonal REIT investor group and looked only at the numbers.
I have a new realty company which took over my building here by the Ala Wai canal, and they got burned by the outgoing realtor who had represented an owner who had passed away. Like anything else long term, the desire to make new or improve, fades, as was the maintenance of the building I moved into. The long term residents in this building seemed to be not unlike those in San Francisco who were on rent control. The landlord didn’t really seem to be doing anything to improve the building, and no one had any steep rent increases. The guys who lived here before me went for five years without any rent increase. When they got hit with a two hundred and fifty dollar rent increase they moved–into a similar sized apartment across the street for over nine hundred a month more. Their rent increase was still two hundred less than what I was to pay. In a way, they got fed-up with the rundown building I chose to move into, and used their savings over the years to move into a nice place. I used my twenty-two year savings from my rent-controlled building in SF, and I got a good deal paying $1950 a month for a two-bedroom of 800 square feet, better than anything I could get in San Francisco, and I got down on my hands and knees and scrubbed the place clean. It was so nasty.
I also put in black-out drapes to lower the heat from the sun, and got a new efficient air conditioner. The lack of curtains on the sliding glass doors to a lanai, and the tacky old air conditioners in these funky old buildings in Waikiki never ceases to shock me. The owners don’t do shit to keep the places nice. Photos on Zillow are years old, and Realtors end the tour by saying, “I’m just following the owner’s wishes.” Realtor’s here on Oahu don’t seem to be willing to look after renter’s interests at all. There’s no love lost here on their plight with the effect higher interest rates have for mortgages. There is one real estate agent for every 80 citizens on Oahu. Like the Gold-to-Silver ratio, let’s bring the per capita ratio down to earth! There’s legislation now being considered for home buyers–that now only the seller’s agent will be necessary–to represent them for a buy!
Friends I’m in touch with in San Francisco repeat a similar story. Many of SF residents living in rent-controlled units long term, moved into the nice new buildings built due to the increased tech influx of the previous decade. This then, also caused vacant units in rent-controlled buildings to be completely redone: new kitchens, bathroom fixtures and cabinets, and polished wooden floors or new floors altogether! I laugh when I see an unmodified unit in San Francisco, and the owner is still in denial about price and value, and is still charging 2017 rent prices for that same damn shower curtain holder and gaudy colored bathroom tile. Wake up and smell the Kona coffee! I pause like an Asian Tiger mom, refreshing my Zillow page in San Francisco to see the rents come down. Also very telling is to see how long a previous tenant stayed by looking at history. If someone only lived there for one or two years–don’t do it! They’re going to use psychological tricks to get you to move, like I had to do after my first year here in Hawaii in an Outrigger condo. Owners in flats in Waikiki don’t ever live here and it’s doubtful that they’ll ever see the place they own, much less move back here. They live in the Philippines, Indonesia, or Japan and are like a thirsty Millennial on a new Shopify store, salivating on ROI only as the new God King.
All-in-all San Francisco is being remade into a newer city ready for the next boom. Hopefully, so will Honolulu be–with the new rail line. But I’m not holding my breath!
The Dao of Doug: A Bus Driver's Perspective 