A RARE SIGHTING

IN SAN FRANCISCO THESE RENTS ARE  TRIPLED 

I saw something last week that has been rarer than a republican in California, a model home sales center. And not just one, but eight of these nearly extinct complexes and all in the same master planned development. And to top it off, the project, Mountain House, was once the poster child of poor planning, speculative buying, and rapacious development. East of Oakland, California and next to Tracy and in the same county as Stockton, Mountain House is the first master planned community a home hunter finds when they climb the Altamont summit on I-580 and enter the Central Valley. Four years ago it was a community of foreclosures, dead lawns, and single-family rentals – now it’s building hundreds of new homes, and adding schools and parks.

Such is the story of the past decade – bust, boom, bust, and now rebirth. The Bay Area has suffered through these cycles, but with less affect than the communities in the Central Valley. The growth of industries in Silicon Valley, the usual transient migrations in and out of San Francisco, and the slow growth attitude of most Bay Area cities actually contributed to reducing these impacts of the last five years. Yes, there were foreclosures and a total shut done of the homebuilding industry, but values held better than most other regions (New York and Washington D.C. excepted).

But values for new and old homes have now gone through the proverbial roof.

Case in point:

We owned a home in San Francisco for more than ten years. It was a delightful 900 square foot cottage on the city’s southwest side. Built in 1926, it had wonderful floors, lath and plaster, solid foundation, just great for a first home. And it was unlike most of the homes in San Francisco, it was on a detached lot. We paid about $80,000 in 1979 – by national standards three times the price in Chicago or Iowa. After all it’s California. Ten years later we sold it for four times the price. I chanced googling the house a few months back – it was on the market for $1,050,000. True, and to make it even more hysterical, nothing had changed in the house, the kitchen was exactly the same as when we sold it in 1990. And so was the small single bathroom, the small bedrooms (2), the one car garage, and the one extra room I added in the basement. It had not even been painted. That’s how bad things have now gotten in San Francisco. A thousand units are built each year (hopefully), when 5,000 are needed. The housing stock is aging with little to no replacement and at the insane price for a 900 sf house, no one will buy, tear down, and replace.

So the pressure on the existing housing stock continues to build and prices rise beyond reason. Now Bay Area rents have gotten to a point where the monthly would allow you to buy a new home – in Mountain House. I have seen this movie before and it did not end well.

Stay tuned . . . . . . . . . .

Noodling About

Nood-ling (nōōd’lĭng) n. 1. Fishing for catfish using only bare hands, practiced primarily by crazy people who cannot afford proper fishing gear. 2. The intentional annoyance by bloggers who are skeptical of the news as it’s reported, as in “Noodling bureaucrats is more fun than fishing bare hand for catfish and a lot more surprising.”

The Shrinking Home Syndrome
The fact that new home sizes are shrinking is all over the news (at least for the few new homes that are sold). There seems to be an attempt to rationalize the decisions by the marketplace to demand “smaller” homes. I beg to differ. I think it’s a result of commodity prices increasing the dollars per square foot price of the home. The increase in steel costs, copper costs, shipping costs, etc. all drive up the construction price. The marketplace determines the price range of new homes– the size of the home is a direct result. I don’t believe the market wants a smaller home; the market wants a home they can afford. There is a difference.

The Home Buyer Wants a Green Home
The first amenity in any new home is “Price,” all the other buyer’s needs fall well behind this paramount demand. It has been my experience that the new home buyer will not pay more for a “green home;” they expect these amenities, such as solar, double/triple pane glass, and toxic free furnishings, as standard. They won’t pay the extra $30,000 for solar electricity, if the house (all other things being equal) across the street is $30,000 less without it, they won’t pay thousands more for wool carpeting over synthetic, they won’t pay for sustainable bamboo over traditional oak flooring. They expect these amenities to be in the home. It’s my take that it is more the builders not wanting to be left out of the garish marketing push to label everything they do as “green,” than the “buyer’s” need, (and don’t forget the requirements by cities to also feel good about these “sustainable improvements” by requiring these expensive extras in approved projects).

Neanderthal Art
My Neanderthal urban artistic thinking hopes that San Francisco will come to its senses and throw out the proposed design for the new signature sculpture for the Transbay Transit Center (see video) . It’s my fear that it may be confused for a debris dump and may accidentally be hauled away as landfill for a tech building in Mission Bay (see below). Without a doubt, it is one of the dumbest sculpture ideas ever perpetrated on the citizenry of a city in the whole history of art (hyperbole intented). It’s so out of context with the design it’s tragic. And while I’m at it, why does San Francisco feel it’s necessary to validate such drivel? San Francisco has some wonderful and less than wonderful art on its streets, some kitschy, some serious, and some just stupid. Why add this to the mix?

Transbay Transit Center Sculpture

Sculpture Around San Francisco


California Redevelopment
Again California’s local governments have come out brighter than the mothership. Jerry Brown has demanded that the 425 Redevelopment agencies be shut down, their income returned to better things, like the state. I’ve gone into the good and bad of the agencies in past blogs; sure there are some that stepped over the line, but there are many that have saved the urban hearts of communities and ignited growth and better times. The issues of state spending and balanced budgets are not going to be solved by literally stealing from Peter to pay Paul (that’s not a Peter, Paul and Mary analogy – it’s much bigger than that). State government has grown so large with so many overlapping agencies and requirements that it was a forgone conclusion years ago that this would happen. How many environmental agencies deal with approvals, how many prison boards and commissions, how many state agencies deal with welfare and healthcare. We can rationalize all we want, but at least there is local control over these redevelopment agencies that responds to the immediate needs and desires of the area (see Transbay Terminal above for a good example).