Written by Todd Andrew, Red Oak Real Estate Consultant
Representatives of Red Oak Realty were pleased to be able to attend a discussion panel, “Exploring Solutions to the Bay Area Housing Crisis,” at Yelp headquarters on New Montgomery Street in San Francisco on April 19th. Co-hosted by Yelp and the California Association of Realtors (CAR), and moderated by Steve White, President of CAR, the diverse panel included:
* Jeremy Stoppelman, CEO and Co-Founder of Yelp
* Scott Wiener (D-SF), California State Senator
* Miriam Zuk, Director of the Urban Displacement Project and the Center for Community Innovation, UC Berkeley
* Sonja Trauss, Founder of SF Bay Area Renter’s Federation, and Candidate for San Francisco Supervisor
California has fallen 3.4 million housing units short, or 50% of the total housing shortage in the United States, though it has just 15% of the nation’s population. In particular, according to the Silicon Valley Leadership Group’s data, the Bay Area saw a 29 percent increase in payroll jobs from 2010 to 2016 while housing stock increased by only 4 percent. Meanwhile, market statistics gathered from the Multiple Listing Service by Red Oak Realty show that the median price of a single family home in the East Bay from El Cerrito through Oakland has increased from approximately $500,000 in the first quarter of 2013, when market appreciation began to accelerate, to approximately $913,000 in the first quarter of 2018, an increase of about 83% over five years.
In addition to it’s negative impact on low- and moderate-income people of all backgrounds, Stoppelman said the resulting displacement affects even tech companies’ ability to attract and retain the best talent locally, and leads them to consider opening or expanding operations in other states. This is a worrisome trend for the Bay Area, where tech and innovation drive much of the economic growth and opportunity. To address the problem, among other things, Stoppelman intends to work with other tech leaders and CEOs to encourage local governments to approve new housing near their campuses.
Senator Wiener described his proposal to expand transit-oriented housing that was supported by many housing, real estate and business groups, including Stoppelman. After adding amendments to address the concern of detractors, Senator Wiener’s proposal, SB 827, stalled in committee on April 17th. Co-authored by Nancy Skinner (D-Berkeley), the bill would have created a statewide transit-rich housing bonus for new construction. Though it would have removed some local barriers to approval, which many see as crucial to addressing the housing shortage, it included tenant protections and would have maintained local control over design standards, affordable housing requirements and demolition controls. He intends to re-introduce a similar measure in the next legislative session.
Senator Wiener emphasized that he supports building subsidized, income-based affordable units. But he pointed out that almost all of us live in homes that were built as market-rate housing, and that the future needs of the middle-class will not be met without it. He maintains that if more market-rate housing had been built over the last decades, housing would be more affordable for everyone now. This concept of building market-rate housing to increase affordability was the underpinning of last year’s SB 35, which passed, as well as this year’s SB 827.
In short, the panelists agreed that increasing the supply of market-rate housing is not the only solution to the housing crisis in California and the Bay Area, but it’s a critical component of it, and will be key to keeping California competitive.