It definitely feels like the dog days of summer in the San Mateo County real estate market. The trend is continuing. Properties are not selling as fast, nor with as many offers, as has been the norm. This may be somewhat seasonal as many people turn their attention to vacations and travel over the summer, with real estate taking a back seat. It may be that the market heated up too fast earlier this year, at an unsustainable rate, so it’s self-correcting. It’s actually a good thing. The rate that prices were increasing by was clearly not sustainable over the long term. Interestingly, this trend is showing up mostly in single family home prices. Condos and townhome sales do not seem to be affected yet.
Two economic issues currently in the U.S. may impact the Bay Area housing market. The first is the mounting trade wars with China, Europe, Mexico and Canada. The second is rising interest rates (2 more are planned by the Federal Reserve Bank but with inflation rising there is talk of a third), tightening monetary policy and the converging yield curve, the latter of which has been a recession indicator in the past and is receiving a lot of press attention.
In Marin, at this point, housing sales are still strong but prices show some signs of weakening.
The number of new single family homes that came on the market in June was the lowest for that month in the past 10 years. And, with the number of sales not declining, inventory stayed at the very low level of just 1.4 months. Prices, however, have risen just 1% over the past year.
Likewise, very few new condo/ townhome listings came on the market in June – half as many as in the preceding two Junes. Again, like single family homes, inventory is incredibly low at 1.1 months. Sales prices have been strong – up 18% year-on-year.
Single Family Homes: The three-month rolling average median sales price of $ 1,515,000 is up 1% from last year.
Year-to-date, new listings are down 3.4% while sales are up 2.7%.
June’s inventory of 1.4 months is 4.8% higher than in 2017.
The median percent of list price received was 98% in June
Condo/Townhomes: The three-month rolling average median sales price of $777,333 is up 18% over last year’s.
Year-to-date, new listings are down 5.2% while sales are down 3.5%.
June’s inventory of 1.1 months is % lower than in 2017.
The median percent of list price received was 101% in June.
Two economic issues currently in the U.S. may impact the Napa housing market. The first is the mounting trade wars with China, Europe, Mexico and Canada. The second is rising interest rates (2 more are planned by the Federal Reserve Bank but with inflation rising there is talk of a third), tightening monetary policy and the converging yield curve, the latter of which has been a recession indicator in the past and is receiving a lot of press attention.
In Napa, at this point, housing sales are still strong in terms of price, but there have been fewer single family home sales than in the past four years. New listings are fewer than in any of the previous 10 years.
Single Family Homes: The three-month rolling average median sales price of $728,333 is up 6.1% over last year’s.
Year-to-date, new listings are down 3.4% while sales are down 6.5%.
June’s inventory of 2.2 months is 1.5% lower than in 2017.
The median percent of list price received was 99% in June.
Condominium/Townhomes: The three-month rolling average median sales price of $485,333 is down 1% over last year’s.
Year-to-date, new listings are down 17% while sales were down 11%.
June’s inventory of 1.6 months is double what it was in June, 2017.
The median percent of list price received was 99% in June.
May’s median sold price in Southern/Central Marin reached a new high – $1,625,000, although the three month rolling average showed no appreciation compared to the same time frame in 2017. The prior year’s appreciation was 14%, so this is a notable cooling of the price rises.
The number of new listings year-to-date is the lowest in three years while the number of sales is the highest in three years. So, to no one’s surprise, inventory is incredibly low, just 1.5 months.
Condo/townhome sold prices rose a healthy 19% in the past year but it’s a relatively low number of sales so that statistic could be a bit misleading.
Single Family Homes: The three-month rolling average median sales price of $ 1,524,333 is virtually unchanged from last year’s.
Year-to-date, new listings are down 2.4% while sales are up 1.7%.
May’s inventory of 1.6 months is 5.6% lower than in 2017.
The median percent of list price received was 100% in May
Condo/Loft/TIC’s: The three-month rolling average median sales price of $778,333 is up 19% over last year’s.
Year-to-date, new listings are down 1.0% while sales are down 6.5%.
May’s inventory of 1.3 months is 2.2% lower than in 2017.
The median percent of list price received was 99% in May
With the California November election about five months away, several tenant rights groups and apartment associations representing owners and landlords are gearing up for a big fight over the state’s Costa-Hawkins Rental Housing Act, which limits rent control.
On one side, tenant unions want to repeal the law. They are concerned with low- and middle-income earners, elderly and disabled tenants being forced out of their neighborhoods due to lack of housing supply, unaffordability and high rent.
Property owners on the other side are worried that repealing Costa-Hawkins could financially hurt a majority of apartment owners and drive them out of business.
“The fact that people are being forced out of their neighborhoods and into the street, we will continue to target corporate landlords from now until November,” Alliance of Californians for Community Empowerment Executive Director Christina Livingston said.
The ACCE is a nonprofit community organization that advocates for policies that help low-income families.
“We are just beginning our campaign to get our stories out there,” Apartment Association of Greater Los Angeles Executive Director Dan Yukelson said. “While there are corporate landlords like Blackstone and Essex and others, more than 80% of our members are not Wall Street tycoons, these are mom-and-pop shop operators trying to make a living.”
The debate over the Costa-Hawkins Rental Housing Act comes at a time when a growing housing shortage on both ends of the spectrum continues to plague the state’s housing landscape.
A bipartisan bill enacted in 1995, the law limits local rent control ordinances, prohibits rent control on newly constructed apartments built after 1995 and single-family homes, condos and duplexes, and allows multifamily property owners to raise rent to market rate when a tenant moves out.
About two dozen cities across the state have some form of rent control ordinance, including Beverly Hills, Los Angeles, West Los Angeles, Santa Monica, San Francisco, Oakland and San Jose.
Tenant groups such as the Coalition of Affordable Housing cite Costa-Hawkins as one of the reasons tenants are being priced out of the housing market — especially in big metros such as Los Angeles, Orange County and San Francisco. Many want to expand rent control to developments built after 1995 and single-family homes.
Rent is up because apartment owners are trying to pay their own mortgages due to the rising cost of construction, maintenance, water, insurance and other utilities, Yukelson said.
Since the end of April, hundreds of tenants across the state have joined a groundswell of protests and rallies in major cities on a mission to curb what they say are out-of-control rental hikes and unaffordability.
Carrying signs that read “The Rent Is Too Damn High” and “Families Need Rent Control Now,” the rallies began on April 23, when the Coalition for Affordable Housing and other proponents of rent control filed more than 560,000 signatures in a petition to repeal the state’s Costa-Hawkins Rental Housing Act. The group only needed 365,880 signatures to qualify.
Just before Mother’s Day, the groups rallied again, this time in Santa Monica, in front of Blackstone Group’s office.
A week later, protestors showed up in Long Beach to protest an eviction attorney who spoke at a seminar against rent control at a trade show hosted by the Apartment Owners Association of California.
More rallies and protests are planned in the near future leading up to the November election, Livingston said.
Yukelson said his group has yet to put up a fight and is losing the public relations battle. That will change soon, he said, with a public campaign to keep Costa-Hawkins.
“Costa-Hawkins is our No. 1 protection,” Yukelson said. “Repealing this could bankrupt the industry. Some of our members are already selling off their property and fleeing the state.”
Coldwell Banker Broker Associate Jason Insalaco said people are frustrated with the rising cost of housing. Low vacancy is driving up rent and a shortage of new housing supply with less homeownership and stagnant wages “have created a perfect storm over the state of housing.”
“While recent data shows modest to stagnant rent growth this year, housing affordability has become the hottest political issue in 2018,” Insalaco said.
In the past five years, the average rent in San Francisco for one-, two- and three-bedroom units rose by 16% from $2,970 in 2014 to $3,453 in 2018, according to RentCafé using data from YardiMatrix. In Los Angeles, average rent increased by 28% from $1,827 in 2014 to $2,337 in 2018.
Insalaco said both sides agree there is not enough housing to meet increasing demand but repealing the law would harm future developments and new construction.
“Margins are already thin on most modest residential projects,” he said. “Present and future rent restrictions on new construction would make development financially untenable in most cases unless the government funds the entire development. More housing needs to be built, not less.”
Stephen Barton, who once served as director for the City of Berkeley Housing Department, disagrees that repealing Costa-Hawkins would lead to less construction. He said many major cities that have adopted a rent control ordinance, such as Santa Monica and Los Angeles, have had plenty of new construction to add to the housing inventory.
Barton said the current ordinance needs to be updated. He said the cost of housing has led to massive displacement of low-wage earners, workers and teachers in major cities.
“Look at what is happening now, a lot of businesses in the higher rent areas are having real troubles coming up with staff,” Barton said. “In a high-end rent city like San Francisco, it causes a lot of disruption in the economy.”
A fair solution that both sides can agree on, though, is harder to come by.
Yukelson is suggesting for Los Angeles and other cities to adopt a public-private partnership pilot program similar to what Denver enacted called LIVE Denver. The program stands for Lower Income Voucher Equity Program and allows a qualified renter based on income to pay a portion of the rent, with the city, nonprofit or other group making up the difference. The program also sets aside a small percentage into an escrow savings account that can later be used by the tenant as a down payment for a home or a new unit, Yukelson said.
“It’s a win for property owners and win for tenants,” he said. “It’s not a hand out but a hand up.”
ACCE’s Livingston said politicians and every major group involved in this issue need to come up with better solutions.
“We know that in the months between now and until November, more families will be displaced, so it’s no time for us to take our foot off the gas pedal,” she said. “This is a crisis and we are responding to the crisis.”
The changing face of retirement: Apartment living, active lifestyles, and rural homes
How a “silver tsunami” of aging boomers will reshape the senior housing market
Trend forecasters rightfully focus on the housing needs of millennials when predicting the future of the U.S. real estate market. But the rising senior population, sometimes referred to as a “silver tsunami,” suggests baby boomers shouldn’t be written out of the story just yet.
“Between 2010 and 2040, we predict the nation’s 65-plus population will grow by roughly 90 percent,” says Hamilton Lombard, a demographics researcher for the University of Virginia. “In some areas of the country, most of the population growth will come from retirees.”
This ballooning number of seniors will impact industries as diverse as health care, technology, and, especially, real estate, as changing expectations around retirement mean new challenges and opportunities for developers.
Here are some of the trends—many overlapping, some contradictory—shaping how this generation will spend its golden years, demonstrating that older Americans, like millennials, are far from homogenous.
Lifestyle living seen as big growth market It’s easy to chuckle at news that a Margaritaville retirement community is coming to Florida (what better age for Parrotheads to pursue their day-drinking dreams?). But the billion-dollar community offers more of what today’s and tomorrow’s seniors really want: active, engaging, and walkable neighborhoods.
In sharp contrast to yesterday’s siloed and isolated retirement homes, contemporary active senior living offers much more than golf. Many new developments boast clubhouses, fitness centers, lap pools, and walking trails. According to a recent senior housing marketing analysis by the commercial real estate firm CBRE, 40 percent of investors believe the independent living sector offers the greatest opportunity for investment.
Seniors simply don’t want to be placed on what one developer called “islands of old age.” Urbanized developments offer seniors health and social benefits, a greater sense of independence, and more of the intergenerational connectedness they crave.
In Orange County, California, developers designed the new $100 million-plus Rancho Mission Viejo project as an upscale mixed-generation development, with housing catering to older adults integrated into clusters of neighborhoods. Developments like New York’s new community center for the Morningside Retirement & Health Services (MRHS) showcase a renewed focus on active, communal space. A cohousing development for seniors on Oakland’s waterfront called Phoenix Commons has been compared to a “dorm for grownups.”
This lifestyle push also taps into the huge need for housing with better accessibility. According to a 2016 Harvard report on senior housing, only 1 percent of the country’s current housing stock includes features like zero-step home entrances, single-level floorplans, and wide hallways and doorways that are wheelchair accessible. With a greater number of seniors seeking to age in place, housing that follows universal design principles and allows for in-home health care is in high demand.
The rise of rural retirement One of the biggest shifts Lombard has seen in senior demographics is the Halfback phenomenon. The term “halfbacks” refers to retirees from the east moving “halfway back” from Florida to the Mid-Atlantic and Appalachia.
According to data Lombard provided to the Wall Street Journal, net migration to retirement-destination counties in Appalachian regions of Georgia, North Carolina, and Tennessee increased 169 percent between 2010 and 2017, a growth rate equivalent to traditional retirement destinations in Florida.
It’s the senior equivalent of Californians leaving the Golden State for cheaper cities nearby, says Lombard. Many of Florida’s traditional retirement communities have become increasingly expensive, and communities in western North Carolina, Virginia, and Appalachia offer a lower cost of living as well as tax breaks for seniors.
It’s part of a larger growth in rural retirement. Lombard says more retirees are finding that the countryside, with its excellent views, decent hospitals, and interstates, offers a more affordable, and convenient, place to settle and downsize.
Downsizing and going downtown Many older Americans want to be downtown as much as their children and grandchildren, leading them to downsize and focus increasingly on urban living.
The senior rental market is booming. Between 2009 and 2015, the number of renters over 55 increased by 28 percent, compared to a 3 percent increase in renters 34 years or younger, according to a 2017 analysis of U.S. Census Bureau data by RENTCafe. And the percentage of senior renters making $60,000 a year or more rose from 11 to 15 percent between 2006 and 2016, according to Harvard data.
This has created an opening for luxury urban living for seniors. A recent industry report by JLL, a global real estate firm, noted that more developers are focusing on urban infill projects to take advantage of this demand.
This is, of course, only a small slice of the senior market. There is also a sizable population struggling to pay rent: The U.S. serves only about a third of adults age 62 or older who qualify for housing and rental assistance. By 2035, there may be nearly 5 million eligible seniors who aren’t receiving aid, according to Jennifer Molinsky, a senior research assistant at the Harvard Joint Center for Housing Studies.
“They are the new homeless if we don’t start thinking about the building and expansion of affordable housing options in metro areas and in rural communities,” says Robyn Stone,senior vice president of research at LeadingAge Center for Applied Research, a national association of aging services and housing providers.
In many ways, the senior market is a microcosm of the housing market as a whole. While many developers rightly see potential in new high-end construction, there’s a huge demand for more affordable units that just isn’t being met yet.