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EAST BAY
RENTAL HOUSING ASSOCIATION
Volume XXXX Number 33 | Nov/Dec 2024
EBRHA OFFICE
3664 Grand Ave., Suite B, Oakland, CA 94610
TEL 510.893.9873 | FAX 510.893.2906
ebrha.com
CHIEF EXECUTIVE OFFICER
Derek Barnes
aemail@ebrha.com | 510.893.9873 ext. 407
COMMUNICATIONS AND MEDIA RELATIONS
Chris Tipton
communications@ebrha.com | 510.893.9873 ext. 404
ADVERTISING AND MEMBERSHIP SALES
Danielle Baxter
sales@ebrha.com | 510.893.9873 ext. 403
MEMBER SERVICES AND SUPPORT
membership@ebrha.com | 510.893.9873 ext. 414
BILLING AND ACCOUNTING
Ken Lam
accounting@ebrha.com | 510.893.9873 ext. 405
EBRHA OFFICERS
PRESIDENT Wayne C. Rowland
FIRST VICE PRESIDENT Luke Blacklidge
TREASURER Chris Moore
SECRETARY Fred Morse
EBRHA BOARD OF DIRECTORS
Francisco Acosta, Luke Blacklidge, Maya Clark, Carmen Madden, Chris Moore, Courtney Morse, Fred Morse, Joshua Polston, Wayne C. Rowland, Jack Schwartz, Maria Recht, Aaron Young
PUBLISHED BY East Bay Rental Housing Association
PUBLISHER Derek Barnes
EDITOR Michelle Gamble
ART DIRECTOR Bree Montanarello
Rental Housing (ISSN 1930-2002-Periodicals Postage Paid at Oakland, California. POSTMASTER: Send address changes to RENTAL HOUSING, 3664 Grand Ave., Suite B, Oakland, CA 94610.
Rental Housing is published bimonthly for $9.95 per issue by the East Bay Rental Housing Association (EBRHA), 3664 Grand Ave., Suite B, Oakland, CA 94610.
Adds a supplemental Business License Tax on rental property owners for code enforcement, legal assistance, and rent payment assistance.
Imposes a new special tax in a defined Wildfire Prevention Zone for 20 years to reduce the risk of wildfires by implementing a vegetation management plan, enhanced fire patrols, and goat grazing, among other actions.
Extends and increases the existing parking tax surcharge to 10% and the parcel tax to $198 annually for single-family parcels for 9 years to fund citywide violence reduction services and increase police and fire staffing.
Revises City Charter to amend qualifications and restrictions for members of the Commission and set salaries for City Auditor and City Attorney.
Authorizes $919,000,000 in bonds to be used to repair/upgrade local schools.
Continues (without increasing) an existing half-cent sales tax for 20 years, providing $20,000,000 annually that cannot be taken by the State to continue providing essential City of Hayward services.
Establishes a half-cent sales tax, providing approximately $10,000,000 annually for 10 years, keeping all funds local, to maintain city services.
Imposes a one cent sales tax, providing approximately $16,000,000 annually for 10 years, to provide local funding to maintain City of San Ramon programs, services and facilities.
Authorizes $140,000,000 in bonds to repair, upgrade and expand local schools.
Establish direct rental payments and amendments to rent stabilization ordinance
Reaffirm the right of same-sex couples to marry Prop
local governments to impose rent controls - Repeals Costa Hawkins Prop 34 California
Require certain providers to use prescription drug revenue for patients Prop 35 California
Prop 36 California
Make permanent a tax on managed health care plans
Increase penalties for theft and drug trafficking
provisions)
Welcome
A LETTER FROM
EBRHA CEO DEREK BARNES
As we close out 2024, it’s been a year filled with significant legislative and pre-election activity that will continue to shape the East Bay rental housing market. In this issue, Ron Kingston reviews key state bills signed into law and others that were vetoed or failed to pass with the lobbying efforts of EBRHA and its eight (8) CalRHA affiliates. Readers can also check out the EBRHA 2024 Voter Guide to see what’s hot and what’s not on state and local ballots.
This year, local legislators have advanced housing policies that will reshape an already complex rental market. Albany, Antioch, Berkeley, Concord, Oakland and other surrounding cities continue to strengthen renter protections and rent control. Unfortunately, these efforts will do little to address California’s 3.5M housing shortage that is contributing to the Bay Area's housing crisis. But how did we get here? Let’s take a look at our journey over the last 12 months in preparation for 2025.
2024 RENTAL TRENDS
Remote work preferences, fewer retail and business options, high taxes, increased costs of goods and services, crumbling infrastructure, degradation of schools, and public safety concerns have driven resident behavior and will certainly determine the outcome of many key races this election cycle. These conditions continued pushing renters out of urban cores like Oakland in search of safer, more affordable, and spacious living arrangements in suburban and rural areas of Contra Costa, San Joaquin and Santa Clara counties – according to recent SF Chronicle article. Single-family home rentals and build-to-rent communities gained popularity, and institutional investors who adapted their portfolios to meet this demand saw increased interest and occupancy rates in more competitive rental markets. Neighboring cities like Alameda (featured in this issue RH
Magazine) and Emeryville seem to be inoculated from the challenges we see in Oakland, and Berkeley.
Throughout 2024, the East Bay rental housing market has been influenced by broader economic trends, including rising labor and material costs, increased insurance premiums (policy cancellations), high interest rates, work-fromhome policies, and shifting renter preferences. East Bay rental prices saw modest advances in most areas compared to previous years, but Oakland saw rates soften by up to 10% due to prior years’ success in producing more market-rate and luxury rental units. Higher costs and tighter regulations place financial pressure on renters and rental property owners.
Vacancies have also increased in more densely populated urban corridors with a noticeable uptick in turnover rates as savvy renters, who seek lower-cost affordable housing, constantly move from property to property in search of move-in incentives offered in new large multi-unit buildings. This activity has created competition in the market between older and smaller multi-unit properties with historically below-market rents and larger new buildings with a plethora of amenities and move-in incentives.
Housing providers are experiencing longer lease-up times, increased renter turnover, and more resident relocation to outside areas, adding to the inventory of vacant rental units. Other conditions include owners/operators who remove rental units (the most affordable) from the market and do not want to take the risk of renting in prohibitive and highly restricted markets. Additionally, some housing units may not be compliant with state and local habitability guidelines, and owners may not have sufficient capital to make major repairs or updates – keeping more units off the market.
LOOKING AHEAD IN 2025
Next year, the economic forecast for the rental housing market suggests a mix of opportunities and challenges. Incoming new legislators, impending housing legislation, rising operating costs, and continuing labor shortages are likely to keep pressure on rental rates and operating costs. However, the demand for housing, especially affordable (below market rate) and single-family rentals, remains
Derek Barnes
“The demand for rental units is expected to continue outpacing supply.”
high, suggesting that well-positioned rental property owners could continue to see consistent return on investment. This outlook should leave some feeling optimistic and hopeful about the potential opportunities in the 2025 rental housing market.
The housing supply in many parts of the East Bay (Contra Costa County and surrounding areas of Oakland in Alameda County specifically) remains tight due to resident migration. Alameda and Contra Costa counties have lost over 320K residents between 2020-2023. Due to continuing macroeconomic headwinds and restrictive housing legislation and policy, many municipalities are finding it hard to meet current Regional Housing Needs Allocation (RHNA) targets this cycle as required by the state’s Housing Element plan. The demand for rental units is expected to continue outpacing supply. This imbalance should help maintain rental prices in 2025 despite ongoing and tighter regulations on rent increases. However, it will be necessary for property owners to keep a close eye on migration and construction trends, particularly around affordable housing developments, which could impact rental demand and pricing over time in the more competitive parts of the market.
The remote work trend will likely subside in 2025 as employers will require employees to work more days in the office. As a result, demand for rentals outside of traditional urban centers may recede. However, suburban and rural areas may continue to offer more attractive returns for property owners willing to diversify their portfolios. Additionally, renter preferences for larger, more flexible living spaces will likely remain a driving factor in rental demand – which gives owners of older and smaller multiunit properties greater incentive to invest in amenities and improvements to remain competitive, which will be good for renters long-term.
From a financial perspective, interest rates and capital market conditions will be critical considerations for rental property owners. While interest rates have remained high throughout 2024, forecasts suggest they may begin to sta-
bilize or decrease slightly in 2025, providing relief for those looking to finance improvements, acquire more rental units, or refinance existing properties.
To succeed in 2025, rental property owners should stay informed of the latest statewide and local legislative developments, adjust their business strategies accordingly, and get engaged politically at the local levels of government. Learning from trade associations like EBRHA, investing in technology to streamline property management activities and renter communication, and making property updates/ improvements to meet changing renter demands, especially those related to remote work, conservation, and energy efficiency will be key to attracting and retaining renters.
Using a customer-focused approach should put you in the driver’s seat running your business while integrating the following activities:
• Monitoring state and local policy changes; maintaining compliance and avoiding costly penalties.
• Working with legal counsel to ensure all leases, forms, and business practices are current.
• Reviewing your portfolio to make strategic investments in properties to meet changing market demands.
• Upgrading existing properties to attract younger renters, remote workers and elderly residents.
• Diversifying into suburban and less restrictive rental markets with thoughtful planning.
• Tracking economic indicators such as interest rates, inflation, and employment trends.
• Staying nimble and adjusting your business strategy to align with the market.
On behalf of EBRHA’s board of directors and staff, here’s to a healthy and joyous holiday season. We look forward to supporting our community of housing providers in the new year!
* NOVEMBER American Heritage Month
* NOVEMBER 3
Daylight Savings Time Ends
* NOVEMBER 5 Election Day
NOVEMBER 7
3-4:00PM Emerson Equity Presented by Maria Arega
* NOVEMBER 10-11
Veteran’s Day Office Closed
NOVEMBER 12
2-3:30PM The Roundtable Presented by Wayne Rowland
NOVEMBER 19
3-4:30PM Member Meeting
* NOVEMBER 23-24
Thanksgiving/Native American Heritage Day
DECEMBER 10
2-3:30PM The Roundtable Presented by Wayne Rowland
DECEMBER 11
5:30-7:30PM Member Holiday Party
DECEMBER 12
2-3:30PM The Forum Presented by Dan Lieberman
DECEMBER 17
2-3:30PM Member Meeting
* DECEMBER 25 Christmas Day
* DECEMBER 31
New Year’s Eve
If you would like to submit an event, please send an email to editor@ebrha.com . * NON-EBRHA EVENTS
The Alameda Theatre is an Art Deco movie theatre built in 1932 in Alameda, California
(Tier
Out & About
EBRHA MEETINGS, SPECIAL EVENTS, AND MEMBER MIXERS
Professional Engineer Cade Osborne, Atorney's Charles Alfonzo & Jonathan Madison, CA Lobbyist Ron Kinston, NAA Director, Federal Legislative Affairs Maria Spencer, and Moderator Rae Beam
Sikaroudi with West Coast Premier Construction and Wolfram Arnold
Expo
Homayoun
EBRHA Trade Expo team: Gurleen Kaur, Danielle Baxter, Derek Barnes, Kiana Bryels, Chris Tipton, and Mark Malaspina
EBRHA CEO, Derek Barnes introducing Alameda County Assessor Phong La at the Trade Expo.
attendees enjoying the PixalShot photo booth at the Trade Expo
EBRHA Board Member Maya Clark networking with Trade Expo exhibitor PFN Insurance
Trade Expo attendees networking with Trade Expo exhibitor ESA Multifamily Energy Savings
EBRHA Member John Caronna networking with Trade Expo Exhibitor NAI Northern California
Out & About
EBRHA MEETINGS, SPECIAL EVENTS, AND MEMBER MIXERS
Derek Barnes, EBRHA CEO Chadwick Spell, Wachira Wines Petra Brady, EBRHA member -- 2024 EBRHA 360 Trade Expo at the Rotunda Building, Oakland
Peter Gamez, Visit Oakland CEO, and EBRHA CEO Derek Barnes -Block15 for Oakland Style Gala
Derek Barnes, EBRHA CEO; Judge Brenda Harbin-Forte, Candidate Oakland City Attorney; Carol Wyatt, Community Leader & Activist — McClymonds Alumni picnic at DeFremery Park, Oakland
Thompson, EBRHA
CEO
Leronne Armstrong, Kanitha Matoury Charlene Wang, Rowena Brown - Oakland NAACP At-Larger Candidate Forum at Scott’s Seafood, Oakland
Malia Cohen, California State Controller; and Derek Barnes, EBRHA CEO -Alameda Economic Forecast Event at the USS Hornet, Alameda
Deleign
Member Derek Barnes, EBRHA
- NAACP Annual Awards Gala at the Oakland Marriott
Oakland Forum with D3 Candidates, Baba Afolabi, Carroll Fife, Michelle Hailey, Warren Logan - Kinfolx Coffee Bar, Oakland
Legislation
UNLAWFUL
DETAINER PROCEEDINGS ARE GOING TO GET A GREAT DEAL MORE COMPLICATED
BY RON KINGSTON
Aproperty owner’s attempt to remedy an unlawful detainer is about to get muddy.
Assembly Bill 2347 (AB2347) was authored by Assemblymember Ash Kalra, who represents the San Jose area, and extends a renter defendant’s time to respond to an unlawful detainer action by taking extraordinarily easy steps.
These two steps were motivated by what the author called “sewer service” of unlawful detainer actions on renter defendants. So instead of fixing the problem of sewer service, the next most reasonable response was to modify procedures in an unlawful detainer action…
STEP 1: DO ABSOLUTELY NOTHING
Existing law gives a renter five business days (Monday – Friday, excluding “court holidays”).
However, AB 2347 extends a renter defendant’s response time by five more business days. So, renters have been given “a gimme”; meaning, by merely being a renter of residential real property, the new default is no requirement of a renter to respond before about two weeks.
In some instances, this extension could provide a renter with almost three calendar weeks to respond to an unlawful detainer action.
By extending a defendant’s time to respond to ten (10) business days (Monday – Friday, excluding “court holidays”), property owners can expect to add approximately one more month to the already lengthy UD litigation process.
STEP 2: TELL THE JUDGE THE COMPLAINT IS DEFECTIVE.
AB 2347 also permits a renter defendant to respond by “demurring” or “moving to strike” the filed unlawful detainer complaint or portions of it.
This means that after a property owner has waited for approximately
one month before seeing a judge for the first time, the case will likely be delayed for at least an additional week because the defendant is now permitted to file documents that challenge a property owner’s unlawful detainer filing by either demurrer or motion to strike. A demurrer is a defense used by
renters – not to refute the allegations made in the complaint, but rather to challenge the legal sufficiency of the “face value” of what has been alleged in a cause of action. Basically, this means that even if the property owner alleges true facts in the unlawful detainer complaint, the renter
essentially objects by claiming there is a legal defense to negate the property owner’s assertions. (For example, a defense to not paying rent is a renter’s claim of habitability issues.)
A motion to strike is also a defense used by renters – to remove the unlawful detainer complaint in its entirety or remove portions of the complaint. Basically, this means that a defendant can claim that the complaint or portions of it are irrelevant, false or improper.
Both a demurrer and a motion to strike are tools the law now gives renters to delay a case by essentially challenging the pleadings, themselves, to determine whether the case can be heard on the merits (what the case is about).
If a renter defendant files a demurrer or a motion to strike with the court, then the judge will continue the case for not less than five business days, but not more seven business days; however, it could be more if the court has good cause to continue the case for longer than seven business days. One example of what could be considered “good cause” is a full court calendar that does not have any openings for a hearing any sooner than seven business days from your original hearing.
Oppositions and Replies can be made orally at the second hearing date, but if a property owner intends to file an Opposition to a renter defendant’s demurrer or motion to strike, then the written opposition can be filed on the day of the first hearing (before the hearing) or it can be filed the day before the hearing. The property owner’s Opposition must be served in a manner, however, that ensures the renter defendant receives it no later than close of business the day before the hearing.
An Opposition is a rebuttal to a renter defendant’s demurrer or motion to strike. A Reply is a renter defendant’s rebuttal to a property owner’s opposition. So, in order of court filing, the list is as follows:
2. Defendant Renter Files Demurrer or Motion to Strike
3. Property Owner Files an Opposition
4. Renter Files a Reply (not mandatory) AB 2347 permits renter defendants to also file an oral reply to a property owner’s opposition. There is no language that addresses whether a renter defendant is permitted to file a written reply, but it can be assumed that a renter defendant will likely advise the judge that he/she did not have ample time to review the opposition, thereby needing more time to file a reply either orally or written. Either way, there is a potential for another continuance be given based on the renter defendant’s need for more time to review and provide a reply.
Before you know it, once an unlawful detainer action is filed, the case could be continued two times just to address a renter defendant’s ability to challenge a property owner’s unlawful detainer complaint, and that is even before the case is heard on the merits of the case (what the case is all about). And based on a renter defendant’s extended time to respond, not to mention the delays, that newly added process will have the potential to extend your unlawful detainer case by two months.
Ron Kingston is president of California Strategic Advisors.
Legislation
RENTAL APPLICATION SCREENING UNDER QUESTION
BY RON KINGSTON
Assemblymember Gail Pellerin has joined the legislative bandwagon addressing a significant issue that affects every owner/manager business operation with the introduction of Assembly Bill 2493.
The bill changes existing law by no longer permitting residential rental applicants to authorize property
owners to run an application screening process with written permission. The bill also proposes to require residential property owners to return application screening fees to applicants not chosen for tenancy; thereby requiring property owners to absorb costs related to vetting the best applicant for tenancy based on eligibility requirements. AB 2493 intends to
discriminate against property owners from all other business owners in California that charge application fees necessary to choose the best applicant based on legitimate business reasons.
There are several reasons AB 2493 will be problematic for property owners, but below are among the most important:
I. APPLICATION SCREENING FEES SERVE AS A TOOL FOR BUSINESS OWNERS.
• Property owners are business owners, and an important part of the rental process requires a thorough screening of applicants to determine several factors, which include ability to pay and safety of other renters.
• Application screening fees are non-refundable for the property owner. When a request is made to a third-party entity that conducts the screening, a charge is incurred, which must be paid by the property owner regardless of which applicant is chosen.
• The application screening fee can also be used for, “the reasonable value of time spent,” by the property owner to secure and review the report, references, etc.
II. BUSINESS OWNERS MUST ALSO BE PERMITTED TO MAKE DECISIONS IN THE BEST INTEREST OF THE BUSINESS IN A NONDISCRIMINATORY MANNER
• Property owners set baseline eligibility requirements to qualify for a residential rental unit. In instances where there is more than one applicant for one rental unit, a property owner should not be penalized for choosing the best applicant – if the best applicant is not the first applicant eligible.
• Removing a business owner’s ability to make decisions based upon a legitimate business reason undermines a property owner’s
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discretion to decide what is in the property owner’s best interest and what is in the best interest of the community or renters already in occupation of a rental unit.
III. AB 2493 DOES NOT CONSIDER THE EXPONENTIAL INCREASE IN
RESIDENTIAL RENTAL APPLICATION FRAUD.
• The availability of photo editing software, high-quality digital cameras, and personal scanning devices is tempting your average applicant to engage in the submission of fraudulent residential rental applications.
• Applicants easily purchase or create fake pay stubs, credit score paperwork, social security numbers, and bank account statements online to qualify for rental units they otherwise wouldn’t be eligible to lease.
• Some applicants go so far as to falsify background checks and provide fake reference contact information to hide possible criminal activity or
sensitive information that would disqualify them as potential renters.
• The submission of residential rental units has more than doubled since the COVID-19 pandemic, which have deleterious effects on property owners who have to engage in litigation to evict renters who submitted fraudulent applications based on an inability to pay rent.
If property owners are bound by a mandate that prohibits them to make the best decision based upon a legitimate business reason by choosing the best applicant for a dwelling unit, then it is foreseeable the provisions of this bill will force property owners to make applicant eligibility requirements more stringent. The application process will become more burdensome for applicants to answer additional inquiries such as a renter’s income to debt ratio and further research into an applicant’s creditworthiness based on the ever increasing amount seen in fraudulent applications received by applicants. Additionally, studies find that people of color statistically have lower
“The bill changes existing law by no longer permitting residential rental applicants to authorize property owners to run an application screening process with written permission.”
credit than caucasians. If eligibility requirements make it more difficult for applicants to qualify for residential rental housing, property owners will undoubtedly be exposed to defending litigation relating to discriminatory practices, should people of color find it more difficult to acquire rental housing based upon stricter eligibility requirements. This practice would considerably unravel the Legislature’s intent to permanently house Californians.
Moreover, if AB 2493 is passed by the Legislature and signed into law by the Governor, property owners will have two options to give residential rental applicants notice of how property owners intend on collecting an application screening fee and when those fees are required to be refunded to applicants, even if a background screening report is conducted – and paid for by the property owner – when there are multiple applicants.
If property owners are to avoid absorbing fees to screen the best applicant for tenancy, property owners ought to get creative when providing applicants notice that application fees will not be refunded in the event multiple applicants submit for one particular rental unit, so that property owners have the ability to make decisions in the best interest of property and other renters.
One thing we can assure our members. Look forward to a fully revised application form and at least a heavily promoted webinar regarding the impact of the bill.
Ron Kingston is president of California Strategic Advisors.
Housing Provider RESOURCE CENTER
Key Features
Resource Website
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Benefits for the Community
Improved Housing Quality: Creating safe and compliant rental properties.
Support for Property Owners: Fostering a healthier rental market with rental housing provider resources.
Collaborative Effort: Partnering with Alameda County to enhance rental housing experiences.
Access to Education: Providing workshops and trainings for best practices and compliance.
Enhanced Communication: Fostering healthier, better relationships between residents and rental housing provides by providing resources and support.
Stronger Community: Building a network of responsible housing providers committed to maintaining quality living environments.
Evaluation and Growth: Benchmarking and planning for future expansions and improvement of programs.
Industry Partner
KERN INSURANCE ASSOCIATES
THE CURRENT STATE OF PROPERTY INSURANCE IN CALIFORNIA
Kern Insurance Associates is a premier brokerage specializing in property and casualty insurance, dedicated to providing robust insurance solutions for property owners, investors, and management firms. With decades of experience, Kern Insurance has developed a deep understanding of the unique challenges faced by property owners in today’s complex insurance landscape. We’ve worked diligently to cultivate an exclusive insurance program designed specifically for property owners, offering tailored coverage options that meet the needs of even the most hard-to-insure properties, particularly in California’s challenging market.
The market for commercial property insurance continues to be challenging, especially in regions like California that are highly susceptible to natural disasters. Several factors contribute to premium increases for commercial property coverage, and these are particularly pronounced in California due to its unique climate and geographical characteristics.
FACTORS CONTRIBUTING TO PREMIUM INCREASES
1. Catastrophe Losses: California faces an array of natural disasters, including wildfires, earthquakes and floods. The frequency and severity of these catastrophes have significantly stressed the insurance industry. Over the past four years, annual insured losses globally have exceeded $100 billion, with California contributing substantially to these figures due to its wildfire seasons and seismic activity. In 2023 alone, total insured losses globally were a staggering $118 billion, with severe convective storms accounting for 58% of the losses globally.
2. Reinsurance: Although reinsurance capacity improved in 2023 and into 2024, the cost of available reinsurance capacity remains high. The continued impact of catastrophic events is a major factor driving up costs, along with the increasing cost of capital, financial market volatility, and inflation. These expenses inevitably get passed on to consumers. For California, which has a high exposure to natural disasters, reinsurance costs are a significant burden on insurance carriers.
3. Underinsurance: Due to the high cost of living and material costs in California, insured property replacement values continue to lag. Just 43% of business owners nationwide have increased their policy limits to accurately reflect current replacement costs. In California, this issue is exacerbated by the high costs of construction and rebuilding, which can lead to significant gaps in coverage after a loss.
4. Property Replacement Costs: Nonresidential construction costs in California have soared, driven by a 65% increase in fabricated structural steel and a 37% increase in the price of concrete products over the past four years. Machinery and equipment costs have also risen by 22%. These increases are compounded by a lingering supply chain disruption that continues to affect rebuilding efforts post-disaster.
5. Skilled Labor Shortage: Nearly half of construction costs are wages and salaries, which have increased by 22% over the past four years. Despite higher wages, 77% of contractors are struggling to find skilled labor. This shortage results in higher rebuilding costs and longer delays, potentially increasing business interruption losses.
6. Property Rate Need: Escalating loss trends, particularly from catastrophes, severe weather, and large fires, have outpaced rate increases. Insurers are expected to raise rates again this year to close the gap between escalating costs and premiums.
“With decades of experience, Kern Insurance has developed a deep understanding of the unique challenges faced by property owners in today’s complex insurance landscape.”
CALIFORNIA: A HOTSPOT FOR BILLION-DOLLAR DISASTERS
2023 was a historic year for billion-dollar weather and climate disasters in the U.S., with California bearing a significant brunt of these events. There were 28 weather and climate disasters costing at least $1 billion each, surpassing the previous record of 22 in 2020. The total cost of these disasters was $92.9 billion, with California experiencing notable impacts from wildfires and floods.
WILDFIRES
Wildfires are a persistent threat in California, with the 2023 wildfire season being particularly devastating. The historic town of Lahaina on Maui Island was destroyed by a firestorm exacerbated by winds from Hurricane Dora, resulting in $5.6 billion in damages and making it the deadliest wildfire in the U.S. in over a century. California’s vulnerability to wildfires is heightened by prolonged droughts, high temperatures, and strong winds, which create perfect conditions for fires to spread rapidly.
FLOODING
California also faced significant flooding events in 2023, particularly in areas that were unprepared for the deluge. Flooding in California and Florida accounted for substantial portions of the total disaster costs for the year. The state’s complex topography and variable climate make it suscepti-
ble to both coastal and inland flooding, which can cause widespread damage to properties and infrastructure.
THE IMPACT ON INSURANCE CARRIERS AND RATES
The increasing frequency and severity of natural disasters have led some insurance carriers to withdraw from the California market, unable to sustain the high losses and claims payouts. This exodus reduces the competition in the insurance market, leading to higher premiums for consumers. In some areas, property owners struggle to find any coverage at all, pushing them to rely on the state’s insurer of last resort, the California FAIR Plan, which often comes at a higher cost and with limited coverage options.
WAYS PROPERTY OWNERS CAN MITIGATE RISKS
Property owners can mitigate risks and protect their properties by focusing on proactive maintenance and safety protocols. Some key strategies include:
1. Regularly updating electrical, plumbing, and HVAC systems to reduce fire and water damage risks.
2. Implementing fire prevention measures, such as installing fire-resistant materials, trimming vegetation, and creating defensible spaces around the property.
3. Installing advanced security systems, including alarms, cameras, and light-
ing, to deter theft or vandalism.
4. Conducting regular property inspections to identify and resolve potential hazards such as roof damage or foundation cracks.
5. Keeping insurance appraisals current and ensuring building valuations align with actual replacement costs, reducing the risk of under-insurance.
TOP ISSUES IN PROPERTY INSURANCE FOR 2025
In 2025, the top issues facing property insurance will likely include continued premium hikes due to the increasing frequency of natural disasters, especially in high-risk areas like California. Carriers may continue to pull out of certain regions, forcing more property owners into expensive, surplus lines. Additionally, rising construction costs and inflation will further drive up the costs of rebuilding and replacement, making accurate valuations more important than ever. Lastly, regulatory changes could impact the market as state governments grapple with balancing consumer protection and insurer sustainability. The challenges facing the commercial property insurance market are multifaceted and particularly acute in disaster-prone areas like California. With the increasing frequency of billion-dollar disasters, both insurers and property owners must adapt to a rapidly changing environment. By understanding the factors driving premium increases and taking steps to mitigate risks, stakeholders can better navigate the complexities of the property insurance market and work towards a more resilient future.
Local Spotlight
ALAMEDA COUNTY
BY MICHELLE GAMBLE
Rent Cap Increases: All multi-family properties built before February 1995 are subject to a cap on the amount of a rent increase. Each year, the rent may only increase by the Annual General Adjustment (AGA), calculated at 70% of the percentage change in the Consumer Price Index for the 12-month period ending April of each year; provided, however, in no event will the Annual General Adjustment be more than 5% nor less than 1 percent. All other rental units are not subject to a cap. (Source: Alameda Rent Program)
In Unincorporated Alameda County, 31 percent of residents identify as Hispanic or Latinx, a higher share than the County (22 percent) and Region (24 percent). A smaller share of Unincorporated Alameda County residents (24 percent) identify as Asian or Pacific Islander compared to the County (31 percent) and Region (27 percent). (Source: Alameda County Housing Element)
COUNTY GOVERNMENT
The local government is composed of the elected five-member Alameda County Board of Supervisors (BOS) as the county legislature, several other elected offices and officers including the Sheriff, the District Attorney, Assessor, Auditor-Controller/County Clerk/Recorder, Treasurer/Tax Collector, and numerous county departments and entities under the supervision of the County Administrator. In addition, several entities of the government of California have jurisdiction conterminous with Alameda County, such as the Alameda County Superior Court. (Source: Wikipedia)
Is Alameda County Property Owner Friendly? No, not when put in context with statewide laws. One of the main reasons why California is considered renter-friendly
is its strong rent control laws. These laws limit how much property owners can increase rent each year, protecting renters from sudden and drastic rent hikes. Another factor that contributes to the state’s reputation is its strict eviction procedures.
ALMEDA COUNTY
The county describes Alameda as the seventh most populous county in California, and has 14 incorporated cities and several unincorporated communities. The total population is estimated to be 1,628,997 as of July 1, 2022.
The county is located near San Francisco Bay and is situated in the west near the East Bay Hills. The county as a whole spans 738 square miles, with 1.5 million people who live in Oakland and Berkeley. It features both urban and natural territory that appeals to a wide demographic of citizens who work and play in the Bay Area.
It does have strict housing regulations and ordinances. During the pandemic, Alameda had one of the strictest Eviction Moratoriums that didn’t get resolved until 2023. The moratoriums led to many property owners suffering through difficulties in collecting rents. After the moratorium was lifted, most legal recourse for nonpayers got forced to go through civil litigations to collect back rents. In this respect, many property owners ended up financially challenged after the moratorium was lifted.
However, it is one of the most beautiful regions to own rental units. Many people consider it a good community, with mixed-use housing, nice bars and restaurants, parks and recreational opportunities. The rents are competitive for the Bay Area, and it offers wonderful opportunities for property owners interested in starting their businesses or expanding their property portfolios.
Michelle Gamble is the editor of Rental Housing Magazine.
DEMOGRAPHICS
Caucasian: 44.82%
Hispanic: 31%
Asian: 24%
Mixed: 11.86%
Black: 6.86%
Average Rent (1-2 Bedrooms): $2,726
Vacancy Rate: 3.4%
Rent Control: Yes
Rent Registry: Yes Just Cause Ordinance: Yes
Educate
5 TIPS TO PREVENT LEGAL PROBLEMS
BY BREA HARPER
Legal fees and litigation can be costly to property owners. The average per hour legal fees cost between $200 and $400. In other words, one significant lawsuit can be expensive to resolve, and it eats away at your net profits. As a result, it’s important for property owners to know their risks when it comes to potential legal problems. So, what are some of the top legal issues that can arise when running a rental housing business?
RENTER SCREENING FOR PREVENTION
The best way to prevent potential legal hassles should be before the prospective renter has a chance to get in the door. This means proper renter screening is used as a measure to en-
sure that potential renter won’t cause unforeseen problems. “As an attorney, my top legal concern for property owners regarding renters is ensuring proper screening and vetting,” said David Greiner, Esq. “Run background and credit checks, call references, and trust your instincts. If something feels off, keep looking.”
“I advise owners to thoroughly screen renters, use a standardized lease clearly outlining responsibilities, and properly maintain the property,” said Michael Kootchick, a real estate developer. “For example, I’ve seen owners face legal trouble after renting to renters with a history of issues or providing subpar living conditions. Standard leases that specify pet, noise and parking policies, as well as moveout terms, can prevent confusion. Regular inspections and repairs show good faith, and documented evidence of issues reported and addressed proves due diligence.”
AIRTIGHT LEASES
The rental leasing terms play an important role in protecting property owners’ units or houses. Many attorneys strongly advise against making any verbal agreements. All terms and conditions should be appropriately addressed in writing in the lease, no exceptions.
“A major legal concern as a property owner is ensuring proper lease agreements,” said Joe Stance, Stance Real Estate. “Without clear terms, you open yourself up to potential lawsuits over maintenance, repairs and renter responsibilities. To prevent issues, have an experienced real estate attorney review all lease documents.”
TAXES
All businesses have to pay taxes, and sometimes property owners don’t stay on top of it, which can open up their business to be audited. As much as people don’t like dealing with taxes, it’s critical to get it done – and done by tax professionals, which reduces risk of being audited, too.
“As an experienced tax professional, my top concern for property owners is staying on top of the latest tax laws and regulations,” said David P. Fritch, CPA, PC. “Compliance issues can easily arise if you’re not vigilant, and the penalties for mistakes can be severe. I always advise property owners to take a proactive approach to managing their tax obligations. Work closely with experts, implement strategies to maximize deductions and tax efficiency, and monitor updates to ensure continued compliance.
“With frequent changes to tax codes, what saved you money last year may now trigger penalties,” continued Fritch. “Property owners should never delegate tax matters to inexperienced individuals or make assumptions. Taxes are complex, and oversight or improper planning can lead to expensive lawsuits and audits. It’s far better to invest in professional guidance upfront. If issues arise, have experts ready to represent you. Their support can mean the difference between minor corrections and major legal trouble.”
PAPER TRAIL
“The most important legal issue that property owners have with regard to renters is observance of renter rights and fair housing regulations,” said Da-
vid Weisselberger, founding partner at Erase The Case. “Noncompliance may result in expensive discrimination litigation.
“To avoid lawsuits, renters should: Establish a Paper Trail: All correspondence with property owners, lease agreements, rent payments, and maintenance requests should be kept on file. Renters are shielded from possible reprisals and wrongful eviction lawsuits by doing this, which also helps to settle conflicts. Property owners and renters can reduce risks, guarantee a cordial relationship, and steer clear of expensive legal disputes by emphasizing fair housing compliance and keeping detailed records.”
PROPER INSURANCE COVERAGE
Property insurance doesn’t come in a one-size-fits-all blanket policy. Different levels of coverage exist, and depending on the natural disasters in a region, certain types of coverage, like flooding, should be addressed in the policy.
“As an insurance consultant, my top concern for property owners is ensuring their insurance coverage is adequate and appropriate for their needs,” said Bill Boersma, OC Consulting Group. “I have seen countless cases where owners were underinsured, leaving them exposed in the event of a loss. Specifically, make sure liability limits are high enough, policies are
“ To avoid lawsuits, renters should: Establish a Paper Trail ...”
not lapsed, and coverage matches the property usage. Always address issues with the property promptly to avoid potential claims. A leaky roof or broken step may seem minor, but could lead to an injury and subsequent lawsuit. Document any issues reported along with remedies taken. Stay on top of required inspections and certificates to avoid legal consequences.”
Brea Harper is a Bay Area writer.
Educate
CALIFORNIA SB-721 BALCONY AND DECK INSPECTION PROGRAM
BY CADE D. OSBORNE, PE
Following the fatal 2015 balcony collapse in Berkeley, the state of California passed SB-721 in order to better protect public safety. SB-721 requires that certain “exterior elevated elements” be inspected. This includes balconies, decks, porches, stairways, walkways, and entry structures that:
1. Are in a building with three or more multifamily units
2. Structurally rely on wood-based products
3. Have a walking surface >6 feet above ground level
4. Extend beyond exterior walls
5. Are designed for human occupancy
The exterior elevated element inspection must be conducted by a qualified professional by the recently updated deadline of January 1, 2026 and every six years thereafter. The inspection entails visual review of 15% of each type of “exterior elevated element”. The inspection pertains to evaluating the performance of the load-bearing components and the waterproofing elements which protect those load-bearing components. The primary objective of the inspection is to determine whether the exterior elevated elements are free from hazardous conditions caused by fungus, deterioration, decay, or improper alteration that could result in the endangerment of property or public safety.
The regulation stipulates that an
inspection report shall be prepared by the inspector and that it shall be kept on file by the building owner to compare with future inspections. If emergency conditions are present, immediate action which may include installation of shoring or restricting access is required. For non-emergency repairs, submission for permit is required within 120 days of the report and the repair must be completed within 120 days following permit approval. Contact Borne Consulting for additional information regarding the inspection requirements. We would be happy to schedule a meeting to discuss the inspection requirements in more detail with your team.
Cade D. Osborne, PE works for Borne Consulting.
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Inform
TIPS TO HELP GEN Z RENT THEIR FIRST HOMES
BY LYNN KREHER
Young Gen Z renters face serious affordability issues when it comes to moving out of their parent’s home and into their own place. Moving out on one’s own is supposed to be a rite of passage into adulthood; however, Gen Z is coming of age in one of the toughest economies we’ve seen in decades. The challenges for young adults to successfully find and rent their own places are difficult, especially when rent costs have skyrocketed by 40 percent over the last several years.
“The most pressing issues for Gen Z renters are the soaring cost of rent and the stringent requirements property owners often set,” said Kenneth Sesley, CEO, Top Ranked Home Buyers. “In cities like Los Angeles and San Francisco, it’s not uncommon for rent to take up a substantial portion of a young person’s income. Furthermore, their shorter credit histories and entry-level jobs make meeting the income and credit score criteria difficult.”
Just consider the affordability issues for this age group when crunching the numbers. According to Zillow, the median rent in the Bay Area is $3946, which is $1846 higher than the national average. The real question when you look at those numbers involves actual affordability. Income plays an important role in whether or not a young person has enough income to cohabitate with roommates let alone live independently.
So, let’s examine the minimum wage in California, which is $16 an hour and equals $2,773 a month in gross income. Now consider recent college graduates who typically have more earning potential. According
to Ziprecruiter, “The average salary for a new college graduate as of Sep 17, 2024 in San Francisco is $50,170 a year. Just in case you need a simple salary calculator, that works out to be approximately $24.12 an hour. This is the equivalent of $964/week or $4,180/month.” Neither one of these
estimates includes taxes. So, takehome pay is less than the gross.
As property owners, it’s important to realize that Gen Z is the next generation of renters. Designing programs to assist these young people in obtaining their independence is a smart investment in the future. Afterall, the
Millennials will predominantly age out of the renter market and merge into the homeowner category in the next five to 10 years. The Millennials are the largest demographic since the Boomers, and their exodus into home ownership will leave a hole to be filled. Thus, ignoring the plight of Gen Z isn’t
“ The biggest challenges they face are lack of credit and rental history, as well as limited budgets...”
good business if you expect to harvest opportunities down the road.
So, how does a property owner go about supporting Gen Z to be able to rent their first place, whether it’s an apartment, condo, ADU or home. Many strategies and tactics can be used to assist first-time renters and help them gain their independence. Before getting started, here is some solid insight shared by Sal Dimiceli, owner/broker, Lake Geneva Area Realty, who suggests some practical advice for those young renters. “To rent your first apartment as a Gen Zer, you must start small and only rent what’s necessary. If you are living alone, there is no point in renting a two-bedroom condo with high-end amenities. Renting an expansive house fills young professionals with the urge to decorate it with furniture and décor items – ruining their overall financial health. Also, picking a lavish neighborhood for the sake of living upscale might end up in an eviction due to rent rises and high area living costs.”
Dimiceli also added, “What many tech-savvy Gen Zs overlook has to be the power of human connections. Not all rental units are listed online – meaning there are hidden gems you can find through meeting people. For instance, you might have someone in your circle who will relocate and end the lease soon. That person can transfer the lease or hook you up with the property owner for the rental, and in the majority of the cases the property owner will agree to rent to avoid staying vacant.”
LACK OF CREDIT AND RENTAL HISTORY
We all have to start somewhere, and young people haven’t had much opportunity to build credit. If they’re a first-time renter, the second issue involves rental history, which they will have no past examples. The question becomes, how do property owners work with Gen Z to help them overcome these hurdles?
“The biggest challenges they face are lack of credit and rental history, as well as limited budgets,” said Ashley Galey, vice president of Strategic Growth and property owner. “To help mitigate this, I offer flexible terms like six-month leases, lower security deposits for those with references, and payment plans to make rent more affordable. I also suggest Gen Zers use co-signers, look for income-restricted housing, and check for rental assistance programs.”
“Recently, we had a Gen Z couple who were struggling to find an apartment due to their limited credit history,” said Ronald French, founder, I Will Get It Done. “They applied for one of our properties, and we allowed their parents to co-sign the lease. Additionally, we offered a slight reduction in their security deposit. They were ecstatic to secure their first home and have since referred several friends to us. This not only filled our vacancies but also created a community of young renters who support each other.”
Other techniques can be applied by using thoughtful planning to over-
come these problems. “I’ve worked with a few Gen Z clients who transitioned from being renters to first-time homeowners through financial planning and careful saving,” explained Shaun Bettman, director, Eden Emerald Mortgages. “One story that stands out is a client who started by sharing a rental with three roommates in a small space. Over time, they built their credit and saved for a down payment, using budgeting tools and sticking to a plan. Within five years, they were able to move from a crowded rental situation into their own home with a mortgage that was, in fact, cheaper than their rent.”
WORKING TO CREATE AFFORDABILITY
Affordable housing has come to the forefront in general. As noted earlier, Gen Z doesn’t have as much income as older, more experienced renters. “Gen Z renters make up a growing portion of the rental market,” said Sesley. “In my experience, they are highly motivated to establish independence but struggle with the financial demands of renting.”
Sesley added, “As property owners, there are several steps we can take to make renting more affordable and accessible for Gen Z. One approach is
offering flexible lease terms, including shorter leases or options for shared living arrangements. Another method is offering rent-to-own or tiered rent plans that ease renters into higher payments as their income grows.”
Realtor Adam Chal said, “It’s important to create flexible and realistic entry points for young renters. Property owners could consider:
“Flexible lease terms: Offering shorter-term leases or room-by-room rentals could make renting more accessible for Gen Zers, who may not be able to commit to long-term leases due to the unpredictability of their financial or career situations.
“Incentives for co-living: Encouraging shared living situations by designing spaces that cater to multiple roommates can make housing more affordable. Offering rent discounts or lower security deposits for co-living arrangements could help lighten the financial load.
“Building credit through rent: Partnering with services that report rent payments to credit bureaus could be a game changer for Gen Z renters who need to build their credit while they pay rent.”
Chahl also shared this success story: “A young renter in Vancouver was struggling to find a place but
“As property owners, there are several steps we can take to make renting more affordable and accessible for Gen Z.”
had a good job and reliable income. The issue? He didn’t have much of a credit history yet. For me, it was about looking at the bigger picture. Instead of focusing solely on his credit score, we took his employment stability into account and structured the agreement so he could build credit through rent payments. A year later, he’s not only in good standing with his property owner, but also he’s built up his credit and is now in the process of saving for his first home!”
“With rents skyrocketing in places like California, many young people are pooling resources just to secure a place to live,” said Michael Hess, owner, Your Koh Samui Villas. “This isn’t just about rent prices; it’s about meeting income requirements, saving for security deposits, and navigating strict lease terms, which can be especially hard for those just starting their careers or still building financial independence.
“As property owners, we can play a role in mitigating these challenges by offering more flexible leasing options and considering co-living setups that better suit their financial realities.
For example, creating multi-bedroom units designed specifically for shared living or offering shorter lease terms could make renting more accessible for Gen Zers. Also, implementing rent bundling services (like including utilities or Wi-Fi in the rent) can simplify their budgeting and reduce the stress of managing multiple bills. Transparency about fees and expectations can also make a huge difference in building trust and creating a positive renting experience for younger renters.”
Lynn Kreher is a Bay Area writer.
Advocate
AFFORDABLE HOUSING AFFECTS EVERYONE
BY MICHELLE GAMBLE
In the state of California, we have two pressing issues when it comes to rental housing. First, we have a shortage of homes. According to the McKinsey website, “California ranks 49th among the 50 US states for housing units per capita. Benchmarked against other states on a housing units per capita basis, California is short by about two million units. To satisfy pent-up demand and meet the needs of a growing population, California needs to build 3.5 million homes by 2025.” Second, we have an affordability issue. In the Bay Area alone, the average median rental cost is $3,900 while renters’ incomes have not stayed commiserate with high costs.
So, not only do we have limited
housing supply, which drives up rents, but also those high rents mean the average person/family cannot afford those homes. Meanwhile, we have an overwhelming homeless problem that the state government recognizes but has mismanaged $24 billion allocated to homeless programs that got distributed to non-government organizations (NGOs) that seemingly evaporated into the organizations with no results, which shined a spotlight on the question: Where did the money go?
So, now we have a shortage, a high cost in rent, and money geared toward solutions being misused to line NGO pockets to which no accountability has been demanded to address the
missing funds. And who loses in these scenarios? Everyone including property owners who get targeted as the problem-solvers when it’s not the owners’ faults that we face these social challenges.
Property owners, many of whom wish to be helpful to renters and even facilitate homeless people being housed, are not to blame for the problems. And policies geared toward bringing the housing industry into account and putting the responsibility on providers to fix it doesn’t make sense. If they didn’t break it, why should they fix it? That statement doesn’t preclude the point that many property owners actually do care and want to help regardless of who created
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the mess. They do care about their renters and humanity in general. As a result, some property owners take leadership roles in advocating for solutions and finding answers.
“As a commercial real estate professional, I see the housing crisis daily. Supply is severely lacking while demand continues rising, and the median home price in my county is over $500,000,” said Matt Morgan, a licensed California Real Estate Salesperson.
WORKING TOGETHER
Let’s take out the finger-pointing of who should be responsible for housing or resolving affordability issues. Property owners are people, too. They are often vilified for rent increases or perceived as irresponsible for discriminatory practices. This statement doesn’t imply some property owners are completely innocent and can do no wrong. However, most property owners truly care about their fellow citizens, neighbors and the community at large.
That said, the reality has been a difficult experience over the last several years since the pandemic. Rent moratoriums, Just Cause ordinances, Costa-Hawkins, squatter’s rights, and many other pieces of legislation that are pro-renter and not favorable to providers and have put a dent in the
business of housing. Renter friendly policies do not tend to favor property owners’ rights. In some cases (e.g., squatter’s rights), the rules, restrictions and regulation come across as downright discriminatory and costly toward property owners.
Even with these often untenable circumstances, property owners don’t give up and walk away. Some do, but most, especially those who own legacy businesses want to stick it out. They care about their communities, because many small- to midsize owners reside in the communities where they own rentals. They do care about their renters and community members. They do recognize affordability issues. They want to help. In the Inform article on Gen Z (in this issue), property owners demonstrated their compassion and desire to step up for younger renters and design programs to welcome these renters often into their first homes.
Property owners do show generosity and concern toward renters and want to help solve the shortages and unaffordable rents. “I see California’s crisis daily,” said Michael Kootchick, real estate developer and leader at OneStop ADU. “New supply is desperately lacking. My company builds ADUs, which provide affordable rentals and boost owners’ income, helping address the
crisis in a small way. We work closely with cities like LA and San Diego to streamline ADU permitting and waive fees, incentivizing homeowners.”
David Greiner, Esq. who owns Greiner Law Corp., uses creative ideas to help house renters with affordability challenges. “I’ve worked with policymakers on initiatives like zoning for higher-density, mixed-income housing near transit centers. One added 200 below-market rentals by a rail station. We need public-private partnerships and reduced regulations to spur affordable development.
“Rent control and inclusionary zoning help, but supply is key. Fees and red tape discourage building and increase costs. I’ve helped nonprofits acquire land for affordable housing by leveraging my knowledge of the market. Streamlining approvals and incentives will motivate developers to build attainable housing.
“There’s no simple fix, but collaboration can help. Government, business and nonprofits must work together to increase supply, cut costs, and help people find affordable places to live. With determination, we can make progress.”
“There is no simple fix, but by collaborating we’re making progress,” explained Morgan. “Private companies, nonprofits and the government must work together to increase supply, reduce costs, and help those in need find housing.”
Property owners like Greiner and Morgan continually demonstrate a commitment to help not hinder housing opportunities for their fellow citizens to find habitable, affordable housing. The industry needs to look to property owners not as their opponents, but rather as their partners to fix a statewide social and economic issue to ensure everyone can afford safe, secure homes. We need to get out of these push-pull and often punitive relationships designed to be adversarial and instead build strong collaborations to help everyone.
Michelle Gamble is the editor of Rental Housing Magazine.
Connect
REINVENTING REMOTE WORK SPACES
BY MICHELLE GAMBLE
“Sometimes it’s not just about four walls and a desk and chair...”
The pandemic pushed many professionals to work remotely from home. Now in 2024 after the pandemic has ended, remote work continues to be popular, especially among white collar professionals. According to USA Today, “Overall, the American Opportunity Survey reports that 35% of respondents have access to full-time remote work, while 23% of respondents have access to part-time remote work. This represents a total of 58% of respondents having access to some type of remote work.”
This workforce pattern change has created an increased demand for effective, efficient and often innovative ways to design remote work spaces to attract renters who work from home. In order to keep vacancy rates low, property owners always need to consider what renters demand from their homes to make it easier to work and play. As a result, many interior designers and architects are now designing domiciles to offer the added benefit of remote work spaces. And remote work spaces don’t always mean a spare room to transform into an office. Today’s clever designers go beyond the basic concept of an office and have imagined unique ways to create interesting and unique spaces suitable for all remote work.
FLEXIBLE WORK SPACES
When you have limited square footage in a house, apartment, ADU or any domicile, it requires creativity to integrate
the space with the living environment. Sometimes it’s not just about four walls and a desk and chair. Some designers look at it in terms of the room’s “vibe,” which might sound unimportant on the surface, but color and furniture placement can have a psychological impact on the worker. Color designs and layouts can create negative or positive feelings about the space.
“The factors of redesign could not be limited to imposing a desk and chair within the space,” explained Gurleen Kaur, painter and decorator, Gurleen Painting “This process had to involve the integration of beauty and utility, occupant customization, and design features that motivate,” “For instance, with accent walls, I’ve used baby colors, rough finishes and artwork to come up with an energetic workspace that is also calming. The use of lowVOC green paints to avoid any adverse health effects in the environment has been done.”
“That is the difference between the concepts because the former has a clear intention regarding the design,” Gurleen continued. “While before, the goal may have been to place furniture inside of a room without much concern for the overall vibe or experience, now it was to try and optimize the room for those working remotely. Luxury finishes, for example, were important in many of the projects – lighting in particular, where accent and task lighting were used in combination with natural light to reduce eye strain and fatigue. On noise: Some of the cases contained
features of textured walls that acted as soundproofing materials to lessen noise interferences.”
REIMAGINING ROOMS
A spare bedroom doesn’t always have to be considered as the traditional office space. Designers look to what they consider under-utilized rooms to transform them into functional workspaces.
“We embarked on a comprehensive redesign of several properties to create versatile, remote work-friendly spaces,” said Dorin Simchi, interior designer, House Buyers Ohi. “The redesign involved converting underutilized areas – like spare bedrooms, basements, and even corners of living rooms – into dedicated workspaces. We incorporated ergonomic furniture, soundproofing elements and flexible lighting options. For instance, one property featured a converted bedroom that now serves dual purposes: a serene office during work hours and a cozy guest room afterward.
“These transformed spaces are far more than just empty rooms; they’re functional, inspiring environments. We infuse them with elements that promote productivity – like natural light, color psychology (e.g., using
calming blues and greens), and personal touches that reflect the user’s style. Home offices are now equipped with not just desks, but integrated shelving for organization and even small lounge chairs for breaks.”
MULTI-USE ROOMS
Back in the day when property owners were faced with small spaces, designers used things like murphy beds to fold up the bed into the wall to create more space. Today, that concept has been repurposed for home offices.
“I redesigned several spaces with remote workers in mind. We took a more fluid approach by emphasizing multi-functional areas that could be easily adapted to both professional and personal uses,” said Elissa Hall, lead designer at Awning.com. “The goal was to create an environment that promotes productivity while maintaining the warmth and comfort of home.
“The redesign often involved more than just adding a desk and a chair,” continued Hall. “We experimented with built-in shelving systems, soundproof partitions, and even foldable workstations that could be stowed away to return the space to its original use when work was done. Lighting was
another critical factor – we incorporated natural light sources wherever possible, supplemented with task lighting that could shift depending on the time of day and type of work being done.”
“The redesigns often featured foldout doors and floor-to-ceiling windows to open up spaces as well as allow as much natural light as possible to enter,” said Chris Langley, an interior designer and director of Patio Doors. “We applied movable walls, smart storage, as well as multiuse furniture to easily allow users to adapt a living space into a focused workspace without wasting much thought. Acoustic panels, which also serve soundproofing elements, help curb distractions where the people are working remotely from homes with many dwellers in them.”
REPURPOSED SPACES
Many property owners that rent older properties have had to reconsider how to better utilize underused spaces in the home and redo them. “One notable project involved transforming an underutilized breakfast nook into an efficient office area while maintaining the kitchen’s appearance and usability,” said Jack Lorge, founder and owner of Rolli Shades and a full-time ex-interior designer. “We set up a unique, space-saving desk that matched the kitchen cabinets, complete with built-in outlets for electronic devices, to easily power tools without any visible wires.
“Space Optimization: In a separate initiative, our attention was directed toward vertical spaces that were not being fully utilized. Tall shelving units stored work materials, reference books, and decor, creating a tidy floor space and a roomy feel.
“These projects showcase how with thoughtful design, even limited spaces can become robust, inspiring work areas that cater to the demands of remote work while maintaining the comfort and style of a well-loved home.”
Michelle Gamble is the editor of Rental Housing Magazine.
NO ON PROP 33 Protect Costa-Hawkins 2024 Contribution Campaign
UNDER ATTACK...AGAIN
To help stop the so-called "Justice for Renters" initiative, which will be Proposition 33 on the ballot in November, the East Bay Rental Housing Association is asking for your support. We need to fight this third attempt to repeal Costa-Hawkins, led by the same anti-housing activists who failed twice with Propositions 10 and 21 in 2018 and 2020. We are helping our state affiliate, CalRHA, raise $5 million towards this campaign, so we are all in this together.
Protect Vacancy Decontrol
Protect New Construction, Single-Family
Homes, and Condos from Rent Control
WHAT IS COSTA-HAWKINS?
The Costa-Hawkins Rental Housing Act is a California state law that It also protects VACANCY DECONTROL - a policy that allows rental housing providers to reset the rental rate on any rent-controlled apartment after a renter moves out. Costa-Hawkins is extremely important because it exempts single-family homes, condominiums, and new construction built after 1995 from RENT CONTROL.
To learn more AND determine out how much you could lose on your rental property after 5 years if Costa-Hawkins gets repealed, scan the QR code.
Inspire
EMERGING TECHNOLOGY TO IMPROVE PROPERTY MANAGEMENT
BY MICHELLE GAMBLE
When new technology is released, it’s not always easy to decide when to upgrade or adopt new solutions. Will the upgrade improve the existing program? Will the new technology actually work the way it’s described? Good questions to consider during your decision-making process. Thus, pragmatic property owners/operators can solicit opinions from those experienced users who know the latest technology and whether to use it. So, here are some technologies worthy of exploring and some industry leaders’ thoughts about it.
ARTIFICIAL INTELLIGENCE
Artificial intelligence (AI) has taken off in the last few years. It has become a much-discussed next generation technology that many experts predict will flourish in the coming years, especially with industry giants like Elon Musk expanding his operations and many other leaders following suit.
“AI is probably the biggest new technology that I’ve noticed becoming popular in this industry lately,” said Larry Snider, VP of Operations of Casago. “I’ve seen it mostly being implemented in areas like renter communication or inquiries. It can be very useful in chatbot or even assistant form, as a way to handle simple renter requests, booking for shortterm rentals, etc. This can take quite a lot off your plate as a property manager and ensure clients also have a more convenient and faster experience.”
So, what are some other artificial intelligence applications in the property industry? One such tool uses AI renter screening capabilities to assist owners
during the rental process. “I’ve adopted several technologies to streamline operations and improve the renter experience,” explained Daniel Rivera Owner, real estate investor with Proactive Property Management. “For example, AI-based renter screening tools allow for faster, more accurate background and credit checks.
“Smart home systems provide 24/7 monitoring and control over thermostats, lighting, and security,” continued Rivera. “Maintenance management software receives and schedules renter repair requests in real time, using an interactive property map. It reduces emergency dispatches by over 30 percent and response times by 15 percent. My favorite innovation is virtual reality walk-throughs. They provide an immersive way for potential renters to view properties from anywhere. Since launching VR tours, vacancy rates have dropped by 18 percent as viewers feel like they’re already inhabiting the space.”
MOBILE APPS
Mobile apps have emerged in popularity since nearly everyone has a smartphone and can use instant information and services. Property managers are investing in either customized apps with developers or using off-the-shelf apps that contain desired features and capabilities.
“My favorite new tech is a mobile app that lets our managers submit photos during quality inspections,” said Austin Jones, CEO of Millennium Facility Services. “The app automatically uploads data and images, which helps to validate service delivery in real-time and address any issues promptly. We’ve
improved client satisfaction by over 15 points in 12 months thanks to this simple but impactful innovation.”
“Renter apps provide on-demand access to building info and allow photo reporting of maintenance needs. Issues are addressed promptly and client satisfaction rose 15 percent in a year,” said Jake Smith, president of Evo Technologies. “Intuitive, us-
er-friendly tech solves key problems and benefits property managers. When solutions cut costs, increase productivity and strengthen client relationships, the rewards are huge. Seamless communication and real-time validation of service delivery are my favorite innovations.”
“My favorite new tech is an e-signature app letting clients sign agree-
ments anywhere,” said Vincent Cerniglia, CEO of Noreast Capital. “It automatically uploads signed docs, helps validate deals in real-time and address issues fast. We’ve cut turnaround 20 percent and boosted satisfaction using this simple innovation. Technology improving communication and accountability benefits any finance firm. When solutions are in-
tuitive, user-friendly, and address key pain points, the benefits are substantial. The future belongs to businesses adopting smart tools boosting productivity, cutting costs, and strengthening client relationships.”
LEASE MANAGEMENT PLATFORMS
Lease management systems offer property managers the ability to track information and data related to lease/ rented corporate real estate and equipment. These systems simplify complex tasks of real estate management.
“I’ve seen property management software streamline operations and boost client satisfaction,” said Joe Stance, CEO of Stance Commercial Real Estate. “Tools like lease management platforms provide real-time updates on payments, maintenance requests and document storage in one place.
“Within six months of adopting new software, related costs dropped 15 percent while service rose 10 points. My favorite feature is e-signature functionality. It lets clients sign agreements remotely and automatically uploads documents. We cut turnaround 20 percent and improved satisfaction with this simple tool.
“When solutions intuitively address key pain points, the benefits are substantial. While some property managers remain hesitant to adopt new technology, those embracing smart tools will thrive. When software boosts productivity, cuts costs, and strengthens client relationships, it transforms how firms operate and serve customers.”
Michelle Gamble is the editor of Rental Housing Magazine
LESSONS LEARNED
to Build a Successful Property Business
Failure or doing things that don’t reap great results offers an opportunity to learn, grow and succeed. We can learn a lot through failures or mistakes. When it comes to property owners and operators, these challenges mirror the same issues faced by any business. However, it’s all how you look at it. You can take lemons and make lemonade to ensure your business soars to new levels. So, what are some valuable lessons property owners learned in 2024? How can those mistakes be course-corrected to produce desired results in 2025?
STAFFING SHORTAGES
Austin Jones, CEO of Millennium Facility Services, shared: As a property owner/manager, my biggest challenge in 2024 was staffing shortages due to economic uncertainties. Many renters faced financial difficulties and needed rent relief or flexible payment plans. Keeping facilities fully staffed required offering additional incentives and benefits to attract candidates.
To solve this, I restructured roles and responsibilities to optimize resources. We cross-trained staff and invested in technologies to enable remote monitoring and management. We also renegotiated vendor and supplier contracts to reduce costs. These measures increased productivity and cost-efficiency despite staffing shortages.
I learned the importance of having diverse revenue streams and building operational resilience. Diversifying beyond a single property type or renter industry helps minimize risk exposure. Fostering a culture of adaptability and innovation ensures the ability to quickly pivot strategies as needed.
In 2025, I foresee ongoing economic volatility and shifts in work environments influencing property demand. There will likely be interest in flexible office spaces and co-working facilities. Environmental sustainability and energy efficiency will also drive renter and investor preferences. The ability to anticipate and cater to evolving needs will determine success.
RESOURCE SCARCITY AND SUPPLY CHAIN DISRUPTIONS
Josh Payne, Classic Landscaping, said: As a landscape architect, my biggest challenge this past year was resource scarcity and supply chain disruptions delaying project timelines. We had several large commercial landscaping contracts where materials were backordered for months. To avoid penalty fees, we reallocated resources and renegotiated contracts with alternative suppliers to fulfill obligations. This experience reinforced the importance of diversifying suppliers and maintaining strong relationships across our network.
Looking ahead, I see increasing demand for sustainable and eco-friendly landscaping. Renters and property owners want spaces reflecting their environmental values. We’ve invested in developing expertise around native plant selection, water conservation and hardscaping materials with a low carbon footprint.
Our focus on sustainable landscaping positions us to meet the needs of this growing market segment. The pandemic has also accelerated interest in enhancing outdoor spaces. Commercial properties want landscaping that provides an extension of work environments. We’ve designed several rooftop patios and gardens to meet this demand. Our team is working on a concept for a lifted urban park spanning multiple buildings. Projects fusing nature and workspace will likely shape city skylines over the coming years.
EVICTION MORATORIUM ISSUES
Michael Kootchick, real estate developer in San Diego said: As a property manager in 2024, my biggest challenge was navigating new eviction moratoriums. Several renters couldn’t pay rent due to job losses, yet we still had operating costs and mortgage payments.
To address this, I restructured payment plans, reduced fees, and cut costs where possible. I learned the value of diversifying revenue and building financial buffers. Focusing on a single property type exposes you to greater risk.
By 2025, I expect demand for flexible, shared office spaces as more businesses offer remote and hybrid work options. Renters and investors will likely prefer energy-efficient, eco-friendly buildings. Staying ahead of trends and adapting quickly is key. My experiences reinforce the importance of community support. Donating services to local events led to partnerships, referrals and new business. Giving back is not only fulfilling but also financially strategic. Strong communities foster business growth.
MANAGING SHORT-TERM RENTALS
Garrett Ham, CEO of Weekender Management, commented: As a property manager, my biggest challenge in 2024 was managing short-term rentals during a downturn in tourism. Many of my properties rely on the vacation rental market, and COVID-19 reduced demand.
To address dropping occupancy and revenue, I renegotiated rates with homeowners and explored alternative uses for each property. For some, this meant renting to local residents or students on extended stays. For others, it meant temporarily using the space for local businesses in need of flexible office space. I learned the importance of diversifying property types and renter bases. Relying on any one market exposes you to volatility. As we emerge from this crisis, I’m focused on attracting both short- and long-term renters to balance risk.
In 2025, I expect demand for sustainable and tech-enabled buildings. Properties with solar power, electric vehicle charging and smart home automation will attract investors and renters. Staying on the cutting edge of proptech and green building is key to future success. Strong communities also foster business, so I will continue participating in local events.
ADAPTING OPERATIONS
Joe Stance, a commercial real estate owner in Riverside, shared: Adapting operations to the impacts of COVID-19 and economic uncertainty was my biggest challenge in 2024. With many renters facing financial difficulties, maintaining occupancy required restructuring leases and finding creative ways to support local businesses.
I negotiated with existing renters to temporarily reduce or defer rent payments. For new leases, I targeted small, resilient businesses and offered longer terms for stability.
Upgrading amenities and optimizing costs allowed me to keep rents competitive despite lower demand. These steps built loyalty and helped renters weather difficulties.
Focusing on the local community and long-term partnerships provides stability. Success depends on anticipating trends and adapting to meet changing needs. Adding value through amenities, cost savings and fostering a sense of community will be key to navigating 2025.
There is likely to be ongoing interest in flexible workspaces and support for small, local businesses. Sustainability and wellness are also influencing preferences. Navigating 2024 required a willingness to adapt and support renters through uncertainty. In 2025, the ability to build partnerships and provide value in new ways will determine success as trends shift. Strong relationships and community connections will shape the future of commercial real estate.
RENTER ECONOMIC HARDSHIPS
Daniel Rivera Owner, property manager, Proactive Property Management, stated: My biggest challenge in 2024 was dealing with renters facing financial hardship due to the economic downturn. Several long-term renters fell behind on rent and were at risk of eviction.
I worked with each renter individually to create payment plans. For some, this meant temporarily reducing or waiv-
ing late fees. For others, it meant allowing them to pay a percentage of the rent until they found new jobs. Though it reduced revenue in the short term, it allowed renters to stay in their homes and benefited business in the long run through loyalty and word-of-mouth.
I learned flexibility and empathy are crucial during tough times. Strict policies may seem effective, but hurt relationships and community goodwill. By collaborating with renters on solutions, I built trust that will outlast any single lease term. Focusing on people, not profits, strengthens business foundations.
Affordable housing and job insecurity will likely remain issues in 2025. I plan to continue working closely with renters facing difficulties. Experience has shown that no one benefits from empty units or homelessness. Stability comes from cooperation, not eviction. The challenges ahead can be overcome by understanding we’re all in this together.
LOOKING AHEAD TO 2025
While 2024 taught us many lessons, property managers should prepare for potential challenges in 2025, such as the continued evolution of renter expectations, the integration of sustainable practices, and the impact of economic shifts on rental markets. By applying the lessons learned this year, you can position yourself for success in the year ahead.
7 KEY LESSONS LEARNED IN PROPERTY MANAGEMENT IN 2024
BY SELENAH, CO-FOUNDER OF VIVIPINS
The world of property management is constantly evolving, presenting new challenges and opportunities every year. As we wrap up 2024, property managers and owners have faced unique situations that have taught valuable lessons. This listicle aims to share these insights, helping you navigate the complexities of property management with greater confidence.
1. ADAPTABILITY IS CRUCIAL
Situation: In 2024, fluctuating economic conditions meant sudden changes in renter employment status, affecting their ability to pay rent on time.
Solution: Implement flexible payment plans and digital payment options to accommodate renters’ financial situations.
Lesson: Being adaptable to change isn’t just beneficial; it’s essential. Always have contingency plans and be prepared to modify your strategies as necessary.
2.
COMMUNICATION IS KEY
Situation: A lack of clear communication channels led to misunderstandings between renters and property managers regarding lease agreements and property rules.
Solution: Establish regular communication through emails, newsletters, and a dedicated renter portal to address concerns proactively.
Lesson: Regular and transparent communication builds trust and prevents minor issues from becoming major problems. Prioritize open dialogue with renters.
3. TECHNOLOGY CAN REVOLUTIONIZE MANAGEMENT
Situation: Manual processes for rent collection and maintenance requests were inefficient and prone to errors.
Solution: Adopt property management software that automates rent collection and streamlines maintenance tracking.
Lesson: Leveraging technology not only enhances efficiency but also improves renter satisfaction. Keep up with technological trends to stay competitive.
4.
PREVENTIVE MAINTENANCE SAVES COSTS
Situation: Delayed maintenance led to costly repairs and renter dissatisfaction.
Solution: Implement a preventive maintenance schedule to address issues before they escalate.
Lesson: Regular maintenance checks can extend the life of property assets and prevent costly repairs. Invest in a proactive maintenance strategy.
5. UNDERSTANDING MARKET TRENDS IS VITAL
Situation: An unexpected shift in local real estate trends caught property managers off guard, impacting rental rates and occupancy.
Solution: Conduct regular market research and adjust pricing strategies based on current data.
Lesson: Staying informed about market dynamics allows you to make strategic decisions that optimize occupancy and revenue.
6. RENTER SATISFACTION DRIVES SUCCESS
Situation: High renter turnover due to dissatisfaction increased vacancy rates and reduced profitability.
Solution: Focus on renter retention by improving property amenities and addressing renter feedback promptly.
Lesson: Happy renters are long-term renters. Deliver exceptional service and foster a sense of community to enhance renter loyalty.
7. COMPLIANCE IS NON-NEGOTIABLE
Situation: Changes in local housing regulations led to compliance issues for some property managers.
Solution: Stay updated with legal requirements and seek legal advice to ensure full compliance.
Lesson: Non-compliance can lead to hefty fines and legal disputes. Prioritize staying informed about regulatory changes and implementing them swiftly.
Overcoming New Challenges in the
HOUSING MARKET
BY GRANT CHAPPELL
In these turbulent times, I recall a former CA political leader’s comment that when he was in the National Guard, they noted CA’s four seasons: fires, floods, earthquakes, and riots. With two hurricanes on the East Coast and unseasonal heat waves in CA, the local and national sentiment feels tense with an important election. Insurance rates are skyrocketing with several carriers pulling out of CA. An oversupply of new housing, along with weak demand due to work-from-home policies, causing firms to shed excess office space. The hope is that continued reduction in interest rates will lay the groundwork for a soft landing offer to property owners and developers with adjustable loans.
Going back to 2008, election years tend to prove most challenging given uncertainties in tax laws and local/national legislation impacting businesses and property owners. The year 2024 feels more profound than prior years given
expiring tax cuts (similar to 2012) and Prop 33, the third attempt to repeal Costa Hawkins. By the time you read this, the election will be over, a winner will be crowned on a national level, perhaps a recall or two will transpire, and we’ll have some closure on Prop 33/Costa Hawkins repeal.
The annual EBRHA Trade Show brought vendors, owners, nonprofits, and consultants together to discuss and plan for new challenges in the market. The Expo Legal Panel briefed on new and proposed legislation, often the most sobering hour of the event as the landscape to operate residential properties in CA continues to evolve into a byzantine abyss, much like the Federal Tax code. The stories and discussions with local owners remind me that property owners are often on the front line in trying to deal with public safety in keeping their properties secure, though potential state legislation, a softening rental market and insurance / AB-721 (decks and balcony law) dominated the discussion.
As we look forward to next year, we occasionally hear the “Stay-alive-until-2025” mantra. The hope that interest rates will ease, along with lower construction costs, may help some development projects pencil. The level of new construction in Berkeley in Oakland flooding the market could take years to absorb with rents on existing rent controlled buildings declining as a consequence. With modular and mass timber construction, developers are able to often build larger or offer a faster delivery schedule compared to conventional construction techniques, but many projects going through the development pipeline simply will not break ground.
According to the latest Zumper rent report, median one-bedroom rents in Oakland are down approximately 4.4% over the last year to $2,250. Meanwhile, median one-bedroom rents in San Francisco continue to trend upward to approximately $3,170, a four-year high, yet still well off the nearly $3,500/month experienced pre-COVID. Despite high office vacancy in SF, several AI companies and other firms have secured office space, bringing more jobs and residents back to the area.
On a national level, the Federal Reserve does closely monitor housing costs as part of inflation policy. Per the same report, rents are down 0.1% nationally, which may be seasonal, but it could offer cover for the Fed to continue to lower interest rates. It’s worth remembering that by late 2019 Oakland moved up to the top five for priciest rental market with SF holding the top spot for years and NY #2. New York’s median one-bedroom rent has skyrocketed to $4,500, with New Jersey right behind at $3,300.
Historically, an uptick in office vacancy/layoffs would help predict a weakening in the residential rental market, but COVID and work-from-home policies bucked that trend. With office vacancy rates hovering anywhere between 30% to 38% in both Oakland and San Francisco, a recent law signed by Newsom, AB-2488 provides both financing and a streamlined
process to convert properties to residential under a program called “Homekey+”. Call it a phase 2 of the original Homekey program that assisted in converting highly vacant properties, including low occupancy / rundown hotels, were also a nuisance from a law enforcement perspective. 788 Market Street in SF, a 100+ year old and mostly vacant office / retail building, is one of the first office to residential conversions to materialize. We will likely see more of these conversional projects as office and hotel vacancy remains high and distressed assets move their way through the foreclosure cycle.
Several Oakland office properties have gone back to the lenders, with 180 Grand Ave, an approximately 280,000 Sq Ft 15-story complex that was built in 1981. A local group purchased the existing $90 million loan for approximately $30 million, a substantial discount on outstanding principal balance. Other foreclosures, including 1440 Broadway, made recent headlines. Kaiser sold 1950 Franklin, a 446K sq ft building for $14.35 million and the adjacent parking structure, reflecting a total purchase under $40/foot depending on how the investor values the parking structure. Kaiser’s re-positioning of part of its workforce out of Oakland opens doors for a developer to acquire a prime uptown development site at a substantial discount for residential development or a conversion from office to residential.
From an East Coast perspective, Manhattan currently has about 93 million sq ft of office space available, almost double the 52 million sq ft available at the end of 2019. According to an article in the Real Deal, office to residential conversions have taken off since early 2020 with more than 1.5 million sq ft a year in 2022 and 23’ alone. As we alluded above, NY’s rents are the nation’s highest so these types of projects can pencil. NY’s zoning and approval laws boast fewer red tape and hurdles than CA, especially Bay Area cities. Credit is due to the CA mayors, legislature and governor for crafting legislation to help both with financing and streamlining projects, similar to SB-330 from an approval and density standpoint.
In September, two major foreclosures of newly constructed properties sent the properties back to the lender. A 186-unit property located at 6701 Shellmound in Emeryville with an existing loan balance of $88.7 million equates to about 475K/ unit on the existing debt. At 1700 Webster, a 206-unit property completed in 2019, the property also went back to the lender with existing debt of $90 million or 436K/unit. With other projects under construction, it remains to be seen whether other developers will simply hold off on breaking ground on new projects in both a high interest rate and high construction cost environment.
INSURANCE
Insurance on aging multi-family properties continues to throw a wrench in getting deals done, but at the same time, serves as a catalyst for owners to sell and not deal with the
needed electrical and plumbing upgrades to secure lower premiums. The deluge of non-renewals and double-digit premium increases shows no slowing down in California. In late September, State Farm, the third largest insurer in CA, announced it may not renew approximately one million policies over the next five years due to financial instability. The fires of 2017 and 2018 started this trend as insurers left the state after sustaining losses.
The East Bay has not sustained a major fire since 1991, yet many insurers will not place policies on pre-1980’s buildings, largely due to older plumbing and electrical. The age and appearance of the roof now comes up as drones can easily fly over and look for any signs of decay. And while not often stated, crime rates and number of claims for a particular area can sway whether a carrier will issue a new policy or not.
INTEREST RATES
The Fed’s official announcement in mid-September of a 0.5% reduction in short-term rates was well-received by the market, although predictions of a 0.25% vs. 0.5% rate cut were almost split by “experts” and economists leading up to it. By early October, yields on the five-year and 10-year US treasuries, commonly used with a spread over their current yields to price loans, were re-approaching higher levels over the summer. Treasury yields had started to decline in early August with more confidence of action by The Fed that the conditions justified the first reduction in short-term rates since March of 2020.
Short-term rates are the main tool the Fed can utilize to tame inflation, although excessive government spending and increasing the money supply via large deficits over the prior two administrations finally led to the highest inflation since the Jimmy Carter/Reagan years. If bond investors demand higher yields in spite of The Fed’s recent action, it shows we are in uncharted territory as persistent inflation remains a concern.
LOCAL ELECTIONS
In times like these, I remind myself that on a national level, independents now outnumber Democrats and Republicans in voter registration. The history of prior Costs Hawkins repeal efforts show that California’s tend to vote more libertarian/to the right on issues that impact property rights and businesses. Our state continues to hemorrhage residents and businesses to lower tax/regulation states, but we’re also seeing signs of rebound in SF via higher residential rents and new office lease executions.
The Oakland mayor and Alameda County DA recall offer some hope to residents, businesses and property owners struggling to survive amidst crime and quality of life issues. SF’s recall of Chesa Boudin offered a path for Alameda county to pursue and remind the City and Council officials of their du-
“The hope is that continued reduction in interest rates will lay the groundwork for a soft landing offer to property owners and developers with adjustable loans.”
ties to prioritize public safety. Unfortunately, these issues have caused many local businesses to close and residents to leave.
Prop 33 would drastically change the housing landscape in CA, but it’s one symptom of a larger set of issues plaguing CA. CA also retains many competitive advantages that draw companies to the region: excellent universities, public transit, major airports, tourist / sporting attractions and substantial commercial and residential real estate to allow for growth.
PROFITABILITY – CASH FLOW
The issues outlined above boil down to common sense and basics: Is there any profit to operate housing/commercial real estate? The large losses incurred on institutional-sized assets show the market believes a significant discount off pre-COVID prices is needed for projects to justify the lease up or re-development risk in taking on a distressed asset.
At the Trade Show, several attendees asked: “Who would actually buy right now?” We noted that higher cap rate deals in excess of current debt cost are getting done. The market became so accustomed to cheap debt and both 1031 buyers and institutional-backed groups scooping up swaths of properties at high valuations predicated on robust rent growth. When the music stopped in mid-2022 and interest rates spiked, property sales plummeted.
2025 AND BEYOND
During the subprime crisis of 2008, I remember a quote from an economist on the foreclosures: “There’s no pain free way to deleverage.” Given the excess of new supply and “shadow inventory” of units not on the market, we have a ways to go before hitting bottom. Investors sitting on cash expect a rate of return in excess of their savings on real estate or it simply does not justify the investment risk.
These highly vacant commercial assets provide a blank canvas for a new group of investors to reshape the property in a post-COVID environment. Cheaper office and retail rents positively contribute to a company’s bottom line and decision on whether to grow their company in the Bay Area or another state/region. I find the developer’s approach to reposition a distressed/neglected asset fascinating based on the market for residential vs. commercial uses. In the meantime, we expect lower valuations on a per/unit and per/foot basis for aging properties with an uptick in sales by mid-2025 if interest rates soften as forecasted.
Grant Chappell is principal at NAI NorCal.
Industry Partners
PARTNERS THAT ARE OFFERING SPECIAL OFFERS TO EBRHA MEMBERS VISIT: EBRHA.COM/INDUSTRY-PARTNERS TO LEARN MORE
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Balanced Asset Solutions
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Hunter Tax Associates
925.362.1350 huntertaxassociates.com
AFFILIATIONS
ALN Apartment Data
800.643.6416 alndata.com
Concord Chamber of Commerce
925.658.1181
ASSOCIATIONS
Berkeley Property Owners Association
510.525.3666
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Barth Calderon LLP
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Bornstein Law 415.409.7611 daniel@bornstein.law
Burnham Brown 510.444.6800 burnhambrown.com
California Strategic Advisors 916.447.7229
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Law Office of John Gutierrez 510.647.0600 jgutierrezlaw.com
Shepherd Law Group 510.531.0129 theshepherdlawgroup.com
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JP Morgan Chase chase.com
BRAND PROMOTION MATERIALS
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R & S Overhead Garage Door 510.755.2717 rsdoors.com
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Pacific Home Decor 510.732.8668 pacifichomedecor.com
US Superior Stone & Tile 510.895.8182 info@ussuperiorstonetile.com
NAI Northern California –Grant Chappell 510.336.4721 nainnorcal.com
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First Foundation Bank 510.250.8133
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Wilkinson Wealth Management 510.625.1400
City of Oakland Rent Adjustment Program
Moratorium on Rent Increases
Oakland's Moratorium on rent increases above the CPI on units covered under the RAP Ordinance ended June 30, 2024. Banking and petition-based rent increases resumed July 1. A new CPI rate takes effect each August 1 and remains in effect for rent increases through July 31 of the following calendar year. The current CPI is 2.3%. Banked rent increases are currently capped at 6.9% (up to 4.6% + the current CPI).
Questions? Contact a RAP Housing Counselor at 510-238-3721 or rap@oaklandca.gov.
Banking
"Banking" is any CPI-based rent increase that the owner delays, which can be imposed at a later date. Owners may bank up to ten (10) years of rent increases but, banked rent increases cannot exceed 3x the current CPI. Banked rent increases must also include the current CPI.
The RAP Notice
Owners of units covered under the RAP Ordinance must include the "Notice to Tenants of the Residential Rent Adjustment Program" form (i.e., "RAP Notice") with every rent increase. Tenants may challenge a rent increase based on an owners’ failure to provide the RAP Notice.
Upcoming Workshops
Taller de Propietaros e Inquilinos: Control de alguileres y desalojos en Oakland Miércoles, 6 de Noviembre de 2024 5:30 pm- 7:00 pm
RAP’s New Appointment
Request Portal
You can NOW request an appointment with a RAP Housing Counselor or for Rent Registry questions or assistance through the new RAP Appointment Request Portal. In-person, phone, and virtual (via Zoom) appointments are available. You can also review the status of your pending online appointment request(s) submitted through the portal. Visit https://apps.oaklandca.gov
Last Look
CELEBRATING THE HOLIDAYS WITH RENTERS
The holiday season offers property owners a chance to give back, celebrate, create goodwill, and connect with renters.
CELEBRATING THE HOLIDAYS WITH RENTERS
The holiday season offers property owners a chance to give back, celebrate, create goodwill, and connect with renters. The following are some creative ideas to show your generosity, especially when the economy is suffering and people need help more than ever.
GROCERY GIFT CARDS
As many people are aware, most Americans are suffering economically as the price of everything has increased including groceries. Show your renters you care and give them gift cards for food. These cards mean some families will have a nice feast courtesy of their property owner. They won’t forget you cared.
ORGANIZE YOUR RENTERS TO FEED THE HOMELESS
As a nice community gesture, organize your renters to join you to feed the homeless. These days homelessness has soared in numbers. You can even visit encampments and personally bring these people some warm food. Acts of kindness show you care, and that your renters care, too. It engenders community goodwill.
COMMUNITY FEAST
You can use a common area or even rent a place to host a community feast. Invite your renters to enjoy some wonderful meal and mingle. Do it between holidays so all religious celebrations are covered and no one is excluded.
GIVE A DISCOUNT ON RENT FOR ONE MONTH
It gets expensive during the holidays. And as noted, many people are financially struggling. A little extra cash in their pockets in Dec. would be a nice gesture. Then people have more money to spend during the holiday season.
ORGANIZE RENTERS TO GO CAROLING
With so much diversity, you can find many universal holiday songs to go out to spread joy through singing. You can post a notice to create a choir and all go out in the community to sing to neighbors and friends. Singing is uplifting and draws people in. Choir practice can also create connections among renters.
OFFER FREE STUFF
One way to kill two birds with one stone is to give renters essentials like free air filters or minor upgrades. It pays off for you, too. How about a free carpet cleaning? Or maybe as gifts free cleaners to help maintain your property. Include a nice gift card and maybe offer a list of what they would prefer and let them check it off. It’s practical, but during tough economic times, you have to play smart.
ATTORNEYS
Zacks, Freedman & Patterson, PC
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EAST
LOCAL KNOWLEDGE, LOCAL SUPPORT, LOCAL ADVOCACY, WHEN YOU NEED IT.
BAY RENTAL HOUSING ASSOCIATION (EBRHA) is a nonprofit trade organization representing rental owners and managers of apartment buildings and communities, small multi-unit properties (2-4 homes), condominiums, and single family homes. EBRHA members range in size from small investors with just one property to large property management companies that own or manage hundreds of units. Our membership consists of more than 1,500 rental housing owners, property managers, attorneys and other service contractors. Altogether, EBRHA represents over 43,000 rental units and serves over 25 cities throughout Alameda and Contra Costa counties.
EDUCATION, NETWORKING, & EVENTS:
• Monthly Mixers to meet other housing providers in our community
• Annual in-person events to learn about industry resources and trends
• Open Q+A sessions with board members, industry experts, and other seasoned providers
• Weekly Webinars featuring new services, products, laws, forms, and more!
INDUSTRY UPDATES:
• Subscription to bi-monthly Rental Housing magazine, monthly Rentrospect newsletter, and weekly digest.
• Newsflash, Red Alerts, and more virtual message updates from EBRHA
COMPLIANCE
• EBRHA RPM Certification Courses included with membership
• 1:1 support to help you navigate current laws
• The latest Rental Forms with optional 1:1 consultations (available 24/7 through our digital library)
• Reliable renter screening services through Intellirent
ADVOCACY
• Committees organized around our efforts and mission
• Legal & Political Action Funds
• Rallies, designated lobbyist efforts, and active bill tracking
WHY SHOULD YOU RENEW YOUR EBRHA MEMBERSHIP? ASK YOURSELF:
Has managing rental property expectations/ relationships been a challenge in recent months? Are there unit vacancies you need to fill right now?
Is it difficult to constantly navigate all the housing legislative changes?
Are you worried about the protection of your property rights?
Do you have at-risk renters who have been paying rent reliably this year? Have any of your renters not paid rent OR are they paying reduced rent?
Are you unsure who’s defending your business interests?
8. Why not join EBRHA?
Are you concerned about the health of your rental housing business in 2023?
If you answered “YES” to any of the questions above, then EBRHA is a partner that you can’t afford to be without. Membership provides endless benefits!
DID YOU KNOW? EBRHA SERVES ALAMEDA AND CONTRA COSTA COUNTIES
