Besides record low inventory levels and increasing lack of affordability for buyers? Turns out it's even more depressing than that.
Americans are finding themselves “increasingly locked into places that they wish to escape”. As residential mobility has gone down, "so have levels of happiness, fairness, and trust among Americans.” But how exactly could a decline in mobility lead to such bleak outcomes?
When people move less, it affects culture. Staying in one place leads to an increased aversion to risk, suspicion of outsiders, and cynicism. Another way to frame it is comparing two different types of society, one where people move a lot versus one where they don’t. A “mobile society” is often linked to optimism and tolerance while a “stable society” is linked to security and a strong sense of difference between groups of people. As America has shifted towards the latter, this could explain much of what has happened to America’s political system in recent decades.
We’ve become a less mobile society for many reasons—low income workers don’t have the financial freedom to move, many jobs require occupational licenses that are difficult to transfer across state lines, taxes and housing costs differ too greatly depending on geographical area, etc. While stability isn’t necessarily a bad thing, this could all lead to Americans growing up in a country where freedom of movement belongs only to the rich.
Potential solution? Taking steps that would allow more mobility like loosening zoning restrictions that leads to increased construction and neighborhood change in the places that people want to move to. Might be costly but definitely worth it.
If you've ever driven along the El Camino Real from San Francisco to San Jose, you’ve probably noticed the seemingly endless stretch of parking lots and strip malls that line the entire route. Well, get this—apparently there’s room for an estimated 250,000 new apartments along this road. Developers are trying to figure out how to make this happen as an attempt to alleviate the housing shortage.
Now let's be real, everyone loves a good strip mall. Where else can you do your grocery shopping, get a haircut, and pick up a burrito for lunch all in the same afternoon? So the goal here wouldn’t be to tear down every strip mall completely. Instead they suggest creating mixed-use buildings that would keep retail space on the ground level while adding apartments on top.
California reportedly needs to build millions of new housing units to meet current demand. Governor Newsom pledged to build 3.5 million homes by 2025, but so far only around 100,000 homes are being built each year. Strip mall development might be a solid solution.
In an effort to build a cleaner and healthier city, Oakland City Council just banned natural gas in all new buildings. Berkeley, San Jose, and San Francisco have also followed suit and said "We're not passing gas either!"
But seriously, eliminating natural gas use in buildings will lower the risk of fire after an earthquake (important when you live in earthquake territory!) and improve overall indoor air quality. Studies have shown that children are 42% MORE likely to have asthma in a home that uses natural gas while cooking. I know, right? Who knew??
AC Transit’s new rapid transit project named “Tempo” has officially started service! It takes riders from Oakland’s Uptown to the San Leandro BART station, driving through most of the 9.5-mile route in dedicated bus lanes for quick and easy transportation between locations.
Tempo will function more like a light rail line due to its frequent service and lack of car traffic, saving riders valuable time. Buses will arrive every 10 minutes between 6 a.m. and 7 p.m., and every 15 minutes from 7pm to midnight. Early morning service on the 24-hour line will run every 30 minutes on weekends, and hourly on weekdays.
To celebrate the start of the line and make up for construction delays, AC Transit won’t charge fares to ride the new buses until November 8th. So bring your mask and get those free joy rides in while you can!
BART has now approved a development project at the West Oakland Station that will include 762 housing units (!!!) with more than 30% of units being marked specifically for affordable housing. The development will also include more than 50,000 square feet of retail space and 300,000 square feet of office space, along with additional crosswalks and wide sidewalks for pedestrian access, perfect for getting those Fitbit steps in. The hope is that this project will be transformative for West Oakland, providing much needed housing that is more easily accessible to neighborhood amenities and resources.
The average U.S. home costs $240,000. But in San Francisco, a two-bedroom apartment costs around $750,000 to build. The costs of construction in SF are 13% higher than New York, 60% more expensive than Chicago, and 75% more than in Houston. But why is it SO expensive?
For starters, the price of land and labor in California is insanely higher than other states. In SF, a construction worker makes about $90 an hour. (Did you just audibly gasp because you had no idea this was a construction worker's average wage and consider maybe you too could work in construction someday? Because same).
But it’s not just that. There are so many costs that go into building affordable housing. Government fees, permits, hiring consulting companies.... So. Many. Things. It literally took the City Council 6 months just to agree on the financing paperwork alone. More attorneys are involved in projects than actual construction workers. And we wonder why it takes SO long to get any sort of traction on building affordable housing (or any housing at all) in the city. *Insert crying face emoji here.*
In non-Corona-related news (does that even exist anymore?), Kaiser cancelled their plans to build out a 1.6 million square foot tower due to delays and the ever-increasing costs of construction and project-related fees (not because of the pandemic, although the timing couldn't have been worse). This would've been Oakland's biggest commercial project, so this is a huge blow to the development of downtown.
In the midst of the biggest growing phases in downtown Oakland history, another tech giant is hopping on the bandwagon and making the move! Credit Karma opted to lease 5 floors with a rooftop deck at 1100 Broadway. Now with two offices, one in Oakland and one in SF, Credit Karma employees will be able to BART back and forth between two locations. New residential towers, offices, and hotels are also expected to pop up in the area within 6-12 months, proving that downtown Oakland's momentum is just getting started.
The Berkeley Way West building, that is. The tech giant has now taken over its first East Bay office in order to house two artificial intelligence companies it purchased last year, Semantic Machines and Bonsai. We've seen in the past how tech companies in Silicon Valley affected home prices all around the Bay, so TBD on how this will influence home values in the already coveted Berkeley area.
Ever since leading tech companies Amazon, Apple, Facebook and Google all landed on the West Siiiide (did you say that in your best Tupac voice?), affordable housing has been nearly impossible to find. Recently these companies vowed to find solutions to this issue in their local communities. But are their efforts enough? Some say nah.
Despite the billions of dollars they've pledged and initiatives they've started (Amazon literally opened a homeless shelter on their downtown campus), many folks feel that it might be too little too late. With homelessness rising and diversity dwindling in these communities, a lot of people believe that the money being thrown at the problem just isn't enough. Is there a better solution? That’s yet to be seen. But hey, this is a start.
All things real estate.