Friday, May 30, 2014

Let go or be dragged

Earlier this week, the mayor likened the post-Katrina changes in New Orleans's housing market to a laboratory experiment. WWL asked how that's going
The most recent report on apartment occupancy in the New Orleans area indicates landlords have no reason to lower rents.

Local real estate consultant, Wade Ragas, expects occupancy rates will remain high in the region for, at least, the near future.

"Because we have gone through a number of years, trying to replace the damaged housing stock," Ragas says. "The market here has grown in population, particularly in Orleans Parish, and the result is that all the better quality apartments are pretty much full or they're at 94, 95 percent occupancy."

And, as occupancy rates go up, rental rates follow.

"I don't think we've seen a top in either," says Ragas. "There's not that many new units coming into the market. There's some growth of new units in and around the CBD, but they're very expensive units and they're in high-rise type properties, mostly."
Building nice things for rich people to live in does not relieve the pressure on housing costs for the rest of us.
The real estate website Zillow says the percentage of income spent by New Orleanians on housing was a steady 13 percent during the 1980s and 1990s. That number shot up to 35 percent in the past few years.
It's weird that people who understand what trickle-down economics is don't get that focusing on the needs of the wealthy doesn't magically bestow benefits on the population at large.  All we're doing in New Orleans is building nice things for rich people. The rest of us are being displaced or, as the Mayor enthusiastically put it yesterday, experimented upon.
"New Orleans has become the nation's laboratory for innovation and change," Landrieu said. "The work you see going on especially in housing, from homelessness to low-income housing to the private sector creating public-private partnerships with us, is doing spectacular stuff. You see what it means when I said we did not rebuild New Orleans back the way she was, we built New Orleans back the way she always was supposed to be."
Last month during the height of a controversy over the proposed conversion of the former Holy Cross High School into a luxury condo tower, the PR consultant running a phony campaign in favor of the condos put this more bluntly.
Velocity also created the Revive Lower 9 website and Facebook page. The site notes the connection to Perez. The Facebook group says Revive Lower 9 is “is a group made up of New Orleanians with big plans to bring jobs, community outreach and opportunity to the Historic Lower Ninth Ward.”

The Facebook page has posts about the revitalization of New Orleans and the Lower 9th Ward, as well as calls to support the Holy Cross project. One post Monday:
In just 3 days, this city has a choice to make.

Will you stand in the way of progress, or embrace the development and growth New Orleans has been waiting for?

This is our chance. Together, we WILL ‪#‎reviveLower9‬ !
Another post Monday didn’t go over as well with a few people:
New Orleans named America’s Top New Brainpower City by Forbes. …

This city is taking off – if you can’t keep up, let go or be dragged.
If you've grown up in New Orleans, you tend to have a bad attitude about being told to "let go."  At least that's what any number of songs, T-Shirts, and marketing campaigns would have you believe.   So it follows that a lot of us will just have to brace for being dragged.  One way we are told we can manage this is by, literally, doubling up in our homes. Or.. "sharing" them.. as the term of art goes.
While San Francisco has recently cracked down on some particularly high-volume Airbnb renter-hosts, Chiu and other “sharing” advocates are trying to pass legislation to make the practice legal. In its defense, Airbnb says San Francisco residents need their service so they can afford to pay their rent — ignoring that San Francisco housing costs have been pushed so high in part because of the influx of exceptionally well-paid tech employees who work at places like Airbnb, currently valued at $10 billion.

Across the U.S., high costs of living are driving more of the employed toward “side hustles,” i.e. unprotected freelance work, the kind fostered by the sharing economy. Where workers don’t have the start-up investments necessary to participate — the cars, homes, kitchens to rent — then they can just rent those too. Lyft’s new luxury service is aimed at encouraging non-car owners to drive for the company, giving them a lease option on impractical “custom” “premium” Ford Explorers.

The sharing economy’s success is inextricably tied to the economic recession, making new American poverty palatable. It’s disaster capitalism. “Sharing” companies are not embarrassed by this — it appears to be a point of pride.
If you're a heretofore urban dwelling person of modest means, the message is plain.  Unless you're willing to make some pretty uncomfortable sacrifices, you're just not good enough to be where you are anymore. Let go or be dragged.

Of course the idea of Airbnb as a bootstrapping machine for the downtrodden is mostly bullcrap. While surely some Airbnb hosts are using the service in order to keep from having to "let go" this can't be anyone's permanent solution to escalating housing costs.  It may work as a temporary stopgap for the young and childless but families aren't likely to jump at the "opportunity" to share their homes with strangers just in order to pay bills.

Instead they're likely to ship on out to suburbia sooner or later.  If they're lucky maybe they can commute back to their now gentrified neighborhoods.  It remains to be seen how New Orleans might handle the inevitable strain on transportation.  In San Francisco, line cooks are getting Uber gift cards. So that's nice.

Meanwhile, the real potential of Airbnb is as a means of profiting from residential real estate without having to sell or rent to long term residents. As New Orleans becomes even more dominated by tourism this is an attractive prospect to investors. 

Yesterday the City Planning Commission met to discuss possible revisions to the city's short-term rental enforcement measures.  The Airbnb issue is starting to generate more attention locally as this recent WWLTV report attests.   Thursda's meeting, though, was attended by a "handful" of Airbnb proponents including former City Attorney Bob Ellis (Yes, that Bob Ellis) so you know they're clearly just average folks looking to scrape by.

In any case, NOLA.com cheeringly, as always, saw fit to call them a "movement." Like their counterparts in San Francisco, this "movement" is interested in legalizing and regulating the short term rental market.
The short-term rental supporters, which included some lawyers, identified themselves as members of a new group called the Alliance for Neighborhood Prosperity.

One of them, Bob Ellis, told the Planning Commission that the group was created specifically to come up with a plan to legalize short-term rentals, which have multiplied in recent years thanks to websites like Airbnb.

Ellis said that the group was working on an economic impact study focused on the effects of informal rentals on the economy and an ordinance that would legalize, tax and regulate them.
As of now, the city's plan is to tax the hell out of residential properties whether they are short-term rentals or not.
Mayor Mitch Landrieu’s proposal to nearly double property taxes for police and fire protection got the approval of the state Legislature on Thursday, putting the question before voters statewide and in New Orleans in the coming months. The portion of property taxes that go to police and fire protection could rise from about 10.5 mills to 20 mills. That would cost the owner of a $150,000 house about $143 more a year.

Before that would happen, voters statewide and in Orleans Parish would have to approve the increase in November. Then New Orleans voters would have to approve it again in an election set by the City Council.
The reason the tax increase has to go through so many hoops is because it requires a constitutional amendment.  It's also apparently not subject to the homestead exemption which means property owners will pay this tax regardless of whether they're occupying the property or renting it out.. perhaps via Airbnb.

So obviously they'd want to at least have the option to do that. Otherwise they'd be faced with a choice between cashing out of a superheated housing market now or staying in and paying double their property tax millage. You know, "let go or be dragged."

No comments: