Hunting for Housing

Hunting for Housing


Dear Readers,

This issue confronts housing hardships. We think city councils are wandering in the wilderness searching for elusive housing policies. Harder political decisions await Peninsula councils challenged by housing economics.

We offer our perspective. First, housing costs are a nationwide issue. Second, oversimplification and misuse of what affordability means are not helpful. In fact, they muddle development of sound housing policies. Third, state politics are well underway to shift housing policy away from local city councils. This shift is likely to result in long-term infrastructure imbalance beyond the grasp of state and local government.

So what does this mean now? It means that for the next few years our economy (boom or bust) will be wedded to housing policy. Each city will become a micro-experiment in politics and housing economics.

We want to focus on just two variables facing each city council. Where are the sites for new housing? What are the market prices as new housing projects are completed? This will be an interesting dance for housing developers who are speculating on land, labor and construction material costs.

Higher and Higher

San Jose’s home prices led the nation in price growth for the year ending in April.

Annual 26% appreciation is the highest it’s been since the 2008 bursting of the housing bubble.  Did someone mention “bubble?”
SV Business Journal

Ed. Comments: We are waiting for economists’ forecasts of home prices when tens of thousands of tech workers flock to new office buildings in downtown San Jose. We remember one expert’s advice saying that 3-5 other jobs are created for each new tech job. Will the number of housing units actually be greater than all new jobs?


Roundin’ Em Up? Movin’ Em Out?
San Mateo County realtors live and die by housing supply. One expert feels, “As long as all these communities are not building enough units to accommodate demand, we will have this imbalance of supply.” Another said,” …Despite the recent influx of building in Redwood City and surrounding cities, more work that needs to be done for the market to take notice.”
San Mateo Daily Journal
Ed. Comment: We look across the Bay Area landscape and see four responses to the deteriorating job to housing ratios (J2H!).
We understand why realtors lean toward Plan A….or B.
Plan A: Create new housing units at the same rate as job creation.
Plan B: Raise worker compensation to accommodate cost of living.
Plan C: Continue open-ended debate and displace thousands of citizens lacking income to cope with higher housing costs.
Plan D: Diversify job opportunities elsewhere. What if six tech titans and two business associations rethink Plan A, B and C?

The next four articles are our Peninsula Housing Reality Show.

Invisible Hands of Adam Smith

It’s complicated. A year ago a San Jose mayor set a goal for 25,000 new homes within 5 years. City leaders are admitting they may not be on track. As rents flatten and costs to develop new units skyrocket, developers now seem to be retrenching. This article describes housing economies and suggests there is only a 3% profit margin in San Jose’s upcoming housing market.
SV Business Journal

Ed. Comment: This is not a full story of how investors speculate in housing markets. Will San Jose City Council be pressured to rethink development fees and offer more exceptions?

We understand ROI tug-of-war among city government, developers and larger employers. Sense of urgency deals are made in public and behind curtains. This is normal political process, willfully blind to infrastructure costs of accelerated housing and job growth. Isn’t this an unnecessarily vicious circle for a smart, modern city on the rise?

We can only say, “Misery loves company.” Almost all other City Councils are sailing in the same boat bouncing on rough seas.


Twilight Zone Housing Markets

Foster City pursues 70 townhomes in addition to a 22-unit residential building. Intent is housing for first responders and other city employees. One fact-checking citizen said, “There’s no way the 22 units could be filled by first responders, there’s not enough of them in terms of interest or willingness to do it and they make too much money to qualify for affordable housing.”
San Mateo Daily Journal


Ed. Comment: Our housing markets are big, confusing and ugly. Newspaper articles, especially those driven by developers and employer associations, are pushing waves of incomplete news.

Who is monitoring city policies for balanced growth? It is simple. Almost 150 Peninsula councilpersons can stop, look and listen. Undaunted we remind our readers that the job/housing imbalance is not the only issue. The salient issue is voter reaction to funding new infrastructure costs to support new jobs and housing.


Fight or Flight?

A major state agency has about 800 employees at its San Francisco headquarters and 500+ elsewhere is California.  A spokesperson explained, “We are working on decentralizing…..”  Another explanation is it can’t find new employees who can afford to live in the Bay Area.
SV Business Journal

Ed. Comment: Welcome to the Plan D reality show. We understand why an agency such as the Public Utilities Commission (PUC) elects to move ’em out.

Point of a Spear

A few small companies try to slay housing costs and they are not waiting for politicians. Solutions range from $30k interest free loans to $500 or $1000/mo stipends to live close to work. Options also include taking employees home and sleeping under the desk at work. And backyard trailers!
SV Business Journal

Ed. Comment: Desperate times for desperate people! These small employers get the point. Everything is on the table. Piecemeal employer-driven solutions are creative but seldom reported. Short-term reactions are dandy but are not long-term job satisfaction to thousands of employees “left behind.”

We observe economic gods floundering as cost of living hovers above wages for many employees.  Who are those employees and what is their tolerance for pain?


Aging Gracefully at 80

Finally… upbeat news! Belmont Hardware, oldest retailer in Belmont, will be featured on ‘Brother vs. Brother’ home improvement reality show.
San Mateo Daily Journal

Ed. Comment: Owners and inventory may change but good service and products endure. Our Peninsula has many retail “treasures” and we wish all of them long life.
Let’s shop wisely. Steadfast and street smart!


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Editors, Neilson Buchanan and John Guislin, are unpaid, private citizens on the SF Peninsula and have no ties to developers or government organizations.

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