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Housing is up more than 240% since 1989 and up 56% since 2013. WILD, right?? Well, take those numbers with a grain of salt.
In certain areas, yes housing may appear unaffordable to some. But it’s actually not as bad as it looks. To put home prices into context, look at mortgage rates over time. Typical interest rates were greater than 10% in 1989. 10%!!! So while prices were far lower back then, the cost of borrowing was way higher. And after adjusting for inflation AND interest rates, monthly mortgage payments are now actually 30% lower than they were in 1989. Now ok fine, admittedly these statements don’t exactly apply to very high cost of living areas like New York City or Silicon Valley. But the point is, housing is not as expensive as it appears to be based solely on its sales price. You just have to look at the bigger picture to make a more realistic assessment. The pandemic has somehow pushed median Bay Area home prices over $900,000. You read that right—you need nearly a million dollars to purchase an average home here! *insert crying emoji*
As we’ve seen for the last year, high demand for single-family homes in suburban areas and tight inventory has driven home prices up tremendously in most Bay Area counties (with San Francisco home prices being the one exception at less than 1% growth). All-cash offers, waived inspections, and competitive bidding wars have become a mainstay in the real estate market these days. One agent in San Ramon mentioned seeing luxury homes sell for TWICE the county’s median home value in recent months. And buyers are even looking to snap up properties in outer-suburban cities like Gilroy, Manteca, and Morgan Hill. Looks like single-family neighborhoods are about to get a whole lot more crowded. Bay Area cities are starting to allow the construction of multi-family units like in-laws and fourplexes in residential areas.
Why? Because housing costs are out of control and single-family zoning (and its racist past) is to blame. It turns out that single-family zoning, which limits development to one home per lot, was actually created in 1916 (in Berkeley of all places!) to keep Black-owned dancehalls and Chinese laundromats out of certain neighborhoods. I guess people didn't like clean clothes or fun times back then? Fast forward a century and now it's just keeping out everyone who can't afford a single-family home. So it's time to break up the white picket fence monopoly and create more housing options for BIPOC. While it's certainly not the end-all-be-all solution to racism in real estate, it could be a baby step in the right direction. |
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