Much confusion has been created by proposals recently put forward in various California counties by politically connected nonprofits that would force rental property owners to sell to these organizations. Misleadingly labeled with names like the “Tenant Opportunity to Purchase Act (TOPA)” or the “Community Opportunity to Purchase Act (COPA)” the proposals promote long-term tenancy as the solution to the housing crisis. Typically, a tenant who exercised his or her “opportunity to purchase” within this framework and partnered with a nonprofit would be entitled to rent from the nonprofit at controlled rates provided their incomes did not exceed a certain threshold.
Such solutions promote the creation of a permanent underclass by further restricting opportunities available to middle- and lower-class Americans to own their own homes. Obstacles to homeownership translate into reduced financial mobility, research shows.
There is a better way to directly support homeownership and promote equal access to wealth. But it is harder to implement, and it requires elected officials to take on entrenched interests. It involves opening up affordable housing that is currently available for purchase only by investors with access to $1 million or more in financing and making those units available for purchase by individuals who are looking for a place to leave.
“What affordable housing?” you protest. It is true. Today, in Oakland, there are apartments listed for sale whose financing costs on a per-unit basis are less than what I paid for a condo in Washington, D.C. twenty-five years ago.
First, the details of that purchase: In 1995, I bought a small one-bedroom condo in a triplex in Washington, D.C., for $90,000 with no money down at an interest rate of 8.3%. My monthly interest payment was about $622.50, which compared very favorably to my rent-to-own payments of $1,200. At the time, my salary was $40,000, and my rent payments made up 36% of my monthly income.
Fast forward to today. Thanks to dramatically lower interest rates, there are multiple buildings currently listed for sale in Oakland and Berkeley, that would require a lower monthly payment than I paid for my condo.
226 Athol Avenue, Oakland, CA. The per-unit cost is $249,791 or $545 in monthly interest payments at prevailing mortgage rates available through Better.com and Selfi.
7717 Ney Ave, Oakland, CA. The per unit is $262,499.75 or $573.12 in monthly interest payments.
540 31st Street, Oakland, CA. The price per unit is $286,600 or $455.44 in monthly interest payments.
Why can’t tenants purchase a unit in these buildings? Because regulations around condo and co-op conversions coupled with a property tax system that grossly penalizes newcomers effectively restrict the purchase of these properties to investors only.
This can be changed by rewriting laws and championing a fairer property tax system. What’s needed is political will and fortitude to overcome the obstacles that have been erected to protect the stakeholders in the existing system. Political will and fortitude are hard to find, but they are not impossible to come by.
As voters interact with challengers in forums like the one we are sponsoring today, please ask them if they are willing to fight to create a real “opportunity to purchase” for Oaklanders.