By: Jim Walberg, staff writer for The Bay Area Team @PacificUnion
Two-hour commutes to work! Bumper to bumper traffic on the 580 and 680! Does this ring true for you? Greg Gross, Metrostudy regional director for Northern California, said recent statement, “The story in the Bay Area housing markets will be affordability for the long term.”
The lack of housing affordability results in more than just Bay Area residents paying high percentages of their income on rents and mortgages. It causes families to be pushed out of job markets in order to find homes they actually can afford. We can all agree that moving 40 miles away from your job is not a sustainable solution for individuals and families. The Bay Area’s housing affordability crisis is so widely acknowledged that it sometimes can seem like the new normal.
When I moved to Danville, California more than 45 years ago there were 3,000 residents and four hitching posts in town. You could ride your horse downtown for groceries at Diablo Foods. Those days seem like a different century compared to how our population and housing has evolved in the East Bay for the last 45+ years.
Affordability will continue to get worse as long as the extreme inventory shortage of homes for purchase continues. The biggest issue will be in Bay Area communities where job growth is high and lack of homes to buy is low. This applies to almost all of the six regions of the Bay Area. Wherever there is a robust economy there will be an appreciating housing market causing affordability issues.
One measure we look at is what share of the housing market is at $500,000 or less. The two extremes are Santa Clara County which has a median sale price of $1,075,000, and Contra Costa County with a median price of $560.000. (This number is impacted by home prices in East and West Contra Costa. If you just looked at the corridor between Orinda and Danville, that number is significantly higher. The median home price in Orinda is $1,610,000. And, the median home price in Danville is $1,225,000.)
In the first nine months of 2017, the share of homes sold for $500,000 or less was only 9%. And, in all of Contra Costa County only 39% of the single-family homes sold for $500,000 or less. Only 25.5% of single family homes in the nine Bay Area counties sold for $500,000 or less. Lower priced affordable homes are vanishing in the Bay Area.
Well, the major Bay Area employers are paying close attention to this crisis of affordable housing. Here are some of the short-term ways they are addressing this issue.
- Offering “commuter benefits” to employees who are using van pools to get to work.
- Employer sponsored transportation – Genentech and Google buses picking up employees at car pool parking centers. They provide wifi, meals and beverages for the ride to the office. (Three-fourths of all commuting cars in the Bay Area have only one driver in them. We must figure out more effective ways to commute around the Bay Area.)
- Apple supports employees who bicycle, walk or run to work by providing lockers and showers. Apple maintains a web database of addresses and work schedules for those interested in ridesharing. They also connect to regional transit providers: Caltrain, ACE train and VTA light rail with 16 passenger shuttles from their campus, further extending the regions transit network.
The “wild card” aspect of the affordability issues may ultimately cause the Bay Area’s major employers to relocate a significant portion of the work forces to regional areas that have more affordable housing.
- Elon Musk building a 2 million square foot Tesla battery factory outside of Reno, Nevada.
- Cisco moving a large group of their engineers to Portland, Oregon.
- Chevron quietly relocating a significant number of their employees from their San Ramon, California headquarters to Houston, Texas.
- Google is also quietly looking at creating a second headquarters outside of California.
- Seattle is experiencing this with Amazon looking to find a new distribution center outside of the state of Washington. It will likely be Georgia.
And, I still love it here. In the midst of the traffic and the longer drives to get anywhere, there is no place I would rather be than the East Bay. The people, the quality of life, the weather, and the beauty cannot be beat. And, I know we pay a premium to live here.
So, what are your thoughts about the housing affordability issues? Are you relocating because of it? We are always standing by to help with any of your real estate needs.
Until next time… Jim Walberg.