Realtors Behaving Badly

The Realtors are pissing me off. Not as individuals, mind you. After all, it’s an industry of professionally charming people. And beyond being charming, in my experience most realtors care a lot about the community, and many have very progressive politics. So I like realtors but, as an organized political force, the Realtors are not charming at all; in San Francisco, at least, they are a menace.

On the one hand, I suppose it isn’t surprising that the San Francisco Association of Realtors would pull out all the stops to prevent even the slightest cooling of our superhot real estate market. And yet it seems to me that someone in the Association’s headquarters over at 301 Grove Street ought to figure out one of these days that not every legislative effort to protect tenants from displacement will necessarily result in the Association’s members going on the bread lines.

Remember back earlier this year when Mayor Lee and Senator Leno built a grand and unlikely coalition of business leaders and tenant organizations to try to get a modest reform of the Ellis Act through the State Legislature? The Ellis Act, you may recall, is the State law that allows landlords who want to go out of the landlord business to evict their tenants. In San Francisco, the law is regularly and increasingly used by real estate speculators to clear out entire buildings to allow former rental units to be sold as tenancies in common.

Leno quite modestly proposed that the Ellis Act be amended to provide that an investor buying a building would have to own it for at least five years before evicting the tenants under the Act. Unfortunately, the Leno legislation couldn’t make it out of the Legislature even with that grand coalition supporting it. The Realtors went to work, and they killed Leno’s bill, as they have every year he has introduced it; even with a Democratic supermajority, he couldn’t get the votes.

Meanwhile, back in San Francisco, the evictions continued. And, of course, we continued to read in the paper nearly every week just a few of the thousands of heartbreaking stories: an immigrant Chinese family with a disabled child loses their home in Chinatown; an elderly grandmother gets kicked out of her lifelong apartment in the Mission; an aging gay man in the Castro is evicted and finds himself banished from Oz.

The effort to reform Ellis having failed in Sacramento, San Francisco housing advocates revived the old idea of an anti-speculation tax, which could be enacted locally. Proposition G on the November ballot seeks to discourage real estate speculation by imposing a hefty 24% tax on the sale of rental property re-sold within a year of being purchased. The tax would gradually be reduced each year thereafter and would go away entirely five years after acquisition. The measure specifically exempts single-family homes and condominiums, as well as all owner-occupied homes, including tenancies-in-common.

Now Prop G’s opponents (yup, the Realtors again) have been running around town conjuring up a parade of horribles, trying to convince the voters that, notwithstanding its fine intentions, the measure will somehow impoverish an imaginary group of struggling small property owners. But how many struggling small property owners are flipping multi-unit properties in the hottest real estate market around? And, more to the point, what about those thousands of tenants losing their homes to real estate speculation each year? Those aren’t hypothetical situations; those are entirely too real and too common everyday hardships.

One of my realtor friends recently confided in me that he would be voting for Prop G. I must have looked surprised, because he quickly explained: his business is good, and Prop G won’t affect it much one way or the other. But, as someone who has lived in San Francisco for decades and loves his city, he is sad to see so many tenants forced out of town. This guy sees no necessary conflict between his own financial success and a modest anti-speculation measure designed to keep vulnerable tenants in their homes. He’s a good and reasonable guy, and he knows there’s plenty of money to be made on real estate whether or not Prop G passes. One only wishes the San Francisco Association of Realtors was as wise as some of the fine realtors it claims to represent.

Rafael Mandelman was elected to the San Francisco Community College Board of Trustees in 2012. He is a partner at Burke, Williams & Sorensen, LLP.