Understanding our past and present, to drive our future.
SAN FRANCISCO - CALIFORNIA - NORTH AMERICA - BEYOND
WHITE TIGER is reinventing the American Dream through property co-ownership in our new paradigm and era.
Housing affordability has been a major issue in the San Francisco Bay Area for decades. It threatens everything that makes the region a great place to live — our ethnic diversity, entrepreneurial spirit, economic competitiveness, cultural vitality, even the environment. The economic hardships caused by the COVID-19 pandemic have only underscored the urgent need for more affordable housing.
A thriving city depends on the availability of market-affordable, entry-level homes that can attract upwardly mobile residents. A city that lacks such housing will eventually lose its economic vitality and fall into decline.
The housing supply for first-time homeowners typically comes from new construction, but new construction alone cannot meet the huge demand for market-rate housing in the Bay Area and beyond. Condo conversion is an essential tool in solving the region’s extreme housing shortage.
Housing is like money: It must circulate and continually change hands to be effective.
Exorbitantly-priced housing is making it increasingly difficult for anyone other than a narrow elite to live and work in our cities. And the problem is only likely to get worse: Two million more people are projected to move into the Bay Area over the next 20 years, according to the San Francisco Planning and Urban Renewal Association.
The median sales price of a home in San Francisco is $1.38 million and the median rent is $4,506— both the highest in the nation according to Zillow. San Francisco is a city dominated by renters and historically two-thirds of households are renters.
How did we get here and where are we heading?
Below is a brief overview of the past, present, and future of home and business ownership in the Bay Area and beyond.
The first thing to understand is that property co-ownership is not a new concept. Old English common law allowed more than one owner on the title and communal ownership dates back to medieval times. Fractional ownership of dwellings began in France in the 13th century and is commonplace across Europe today.
In the United States, buying a home has long been considered an essential step in achieving the American Dream. Over the past century the federal government, financial institutions, and the real estate industry worked together to promote homeownership through subsidized mortgages, loan guarantees, and other incentives. By 1950, more than half of all Americans owned their own homes, and that percentage was increasing each year.
But as the demand for housing increased, so did prices. Condominiums were introduced in the early 1960s in response to the growing demand for a more affordable option to realize the American Dream of homeownership. The popularity of condos was fueled by the passage of the Housing Act of 1961, which allowed the Federal Housing Administration to back mortgages on condos for the first time. Condo construction was also driven by the enactment of state “horizontal property” acts, also called condominium enabling laws, which recognized that the ownership of space between vertical walls at horizontal levels above the ground is ownership of real estate for purposes of property taxes, recording deeds and liens, and other incidents of real property ownership. Those laws also prohibit discrimination against condominium ownership in zoning laws. (For example, if a zoning ordinance permits four-unit homes in a particular district, it cannot prohibit a four-unit building simply because it is a condominium rather than held under a single title.)
The introduction of condominiums in the 1960s and the resulting popularity of condo conversions expanded homeownership opportunities in San Francisco and other American cities. Before then, residents had only two viable housing options: buying a house or renting an apartment. Those limitations created the demand for a third option — owning an “apartment” in a multi-unit condominium building.
In 1979, San Francisco further expanded homeownership opportunities by allowing existing rental units to be converted into condos. Ownership opportunities were expanded even further in the 1980s with the creation of so-called Tenants-in-Common, or TICs, which gave residents who could not afford to buy either a single-family home or a condo the opportunity to share ownership in a multi-unit building. The city established a lottery system that allowed a limited number of units to be converted to condos each year.
In 2013, due to a growing backlog of conversion applications, San Francisco temporarily suspended the lottery and replaced it with an Expedited Conversion Program designed to speed up the application process. However, the ECP ended on January 20, 2020, and most conversions will have to wait until the eventual restoration of the lottery in 2024 or later.
However, most other cities have less stringent regulations and welcome applications for conversion.
Despite the introduction of condominiums and TICs, the high cost of housing in the Bay Area has prevented many residents from realizing the dream of homeownership. Rents in San Francisco have increased more than 75 percent over the past decade, forcing many working-class families to abandon the city. Although rents have fallen sharply since the onset of the COVID-19 pandemic in March 2020, housing affordability is still a major issue in the region, especially for those seeking to realize the American Dream of homeownership. That’s because, while rents have declined significantly, the costs of buying a single-family home or a condominium have continued to rise.
The skyrocketing cost of housing has made the need for new housing solutions greater than ever. Condo conversion is a cost-effective solution to increase the stock of market-rate housing. Conversions are legal in almost every community in the Bay Area and beyond, yet this bridge to homeownership is often underutilized because many people are not aware of it or are intimidated by the complexities of the process.
In 2013, WHITE TIGER introduced a major innovation in the condo conversion process in San Francisco — Fast Track Condo Conversion™ (FTCC) — a proprietary program and system that ties the entire conversion process together into one streamlined, comprehensive service. FTCC is designed to create a win/win/win situation for property owners, buyers, and renters (who get first priority and the opportunity to purchase their unit) while reducing both the time and cost of converting. FTCC is helping more people realize the dream of homeownership while at the same time strengthening communities.
It is worth noting that there are more renters today than at any other time over the past 50 years. San Francisco is a city dominated by renters; historically two-thirds of households in the city are renters. Indeed, California and the United States as a whole have been shifting toward a majority “renter” population and "renters" nation in recent years.
Condo conversions help to offset this trend and promote the traditional American dream of homeownership. As housing affordability becomes an increasingly urgent issue in the Bay Area and across the country, condo conversions are growing in popularity — in smaller communities as well as in big cities. In response to this demand, WHITE TIGER is expanding its innovative FTCC real estate program into other communities in the Bay Area and beyond.
The United Nations predicts that by 2050, the world's population will reach 9.7 billion, and nearly 70% of those people are projected to live in urban areas.
Today, there are 74% more renters than there were in 1960. Over two generations, the real estate market has shifted seismically, from changing tastes to economic collapses and global pandemics. Despite the economic toll on our cities caused by the COVID-19 pandemic — with office buildings emptied, shops and restaurants shuttered, and residents relocating to communities offering more space and a lower cost of living — most experts believe that urban centers will bounce back quickly once the pandemic is snuffed out and that the long-term prospects of our cities centers are as bright as ever. Young creatives will continue to be drawn to cities by cultural amenities like restaurants and museums and by opportunities to meet and socialize — and businesses will continue to maintain offices in urban centers to promote collaboration and creativity.
A recent report by the World Economic Forum discusses the four important pillars of real estate and rethinking our approach to buildings and urban life, “transforming buildings and cities to be more liveable, sustainable, resilient, and affordable. Buildings and cities are vital to societies and economies."
Condo conversions will play an important role in this transformation by reshaping the real estate landscape in the Bay Area, across the country, and around the world.
San Francisco — long regarded as the technology capital of the world — was recently ranked by Business Insider as the world’s No. 1 "City of the Future" because of its strength in influence and innovation.
San Francisco ranks #24 on the Global Power City Index (GPCI), which ranks major cities based on their “magnetism” — or their comprehensive power to attract people, capital, and enterprises worldwide. San Francisco’s ranking would no doubt have been higher were it not for its housing affordability crisis, which makes the need for innovative housing solutions all the more urgent.
As the corporate home of Uber, Lyft, Airbnb, Apple, Facebook, Google, Salesforce, Pixar, Lucas Films, and other leading Fortune 500 companies, the Bay Area is at the forefront of the “sharing economy,” sometimes referred to as the Fourth Industrial Revolution. In the sharing economy, ownership gives way to access, sellers and buyers are replaced by providers and users, social capital becomes as important as market capital, and consumerism is upended by sustainability. The sharing economy, along with "sharing cities," offers a framework for citizen engagement and collaboration at the local level, thereby strengthening trust between cities and citizens.
Exponential changes in how we work, live, play, and shop are transforming traditional business models and have the potential to improve the quality of life for all of us. Our new environment along with the sharing economy is forcing antiquated industries to reinvent themselves and rebuild our communities.
WHITE TIGER Fast Track Condo Conversion Program™ is well-positioned to capitalize on this new and exciting economic conversion model by paving the way to make housing and property “co-ownership” more affordable, manageable, and accessible to more people. Jen Chan designed FTCC to be a flexible, highly repeatable model that can be applied in almost every community in the Bay Area, as well as in cities across the country and beyond.
WHITE TIGER is on a mission to make FTCC the gold standard for condo conversion around the country.