REVIEW THE PREVIEW
I was tempted to offer my own real estate year in review, but having already done that for the world at large (see my cover story this issue), I decided instead to review the 2017 preview from the National Association of Realtors’ realtor.com.
(Full disclosure: I worked for a commercial affiliate of NAR back in the 1990s.) How did the the real estate experts do?
In November 2016, Realtor.com’s Cicely Wedgeworth presented five things that would drive property markets in 2017: millennials will look to the Midwest; price appreciation will slow down; fewer homes, fast-moving markets; and the West will lead the way.
As for millennials heading to the Real Estate Reporter’s home turf of the Midwest (including my birthplace of Madison, Wis., which ranked at the top of Wedgeworth’s field), I’m not sure how well that’s gone. The economy has finally picked up in the upper Midwest, but saying that recent college graduates will stay in awesome college towns like Madison is a bit like saying that Grateful Dead fans will get high at concerts — that’s just what they do. That doesn’t mean they’re flocking to other Midwestern cities.
However, price appreciation — in rentals and for-purchase housing — has slowed, certainly here in San Francisco. At various times this past year, there have been fewer homes on the local market, which of course has impacted speed of sales, but we have also seen positive benefits from the coming on-line of new condos (see previous sentence); and as far as “the West will lead the way,” your guess is as good as mine as to what that means.
My prediction for 2018? We’ll check this at the end of 2018, but I predict that the new year will see an acceleration of legislation and other enabling actions that will seek to sideline the NIMBYs and dramatically boost housing for the millions needing it in the Golden State. Otherwise, all of those millennials will head to Milwaukee.
HIGH RENT, HIGH CREDIT SCORES
A couple issues ago, we reported that Generation X was the generation that had the most trouble getting approved for residential leases, in many cases because their homes had been foreclosed on during the Great Recession and their credit scores were shot. Combine that with the tech industry’s notorious aversion to hiring people in their 50s, and you see why this isn’t a great city for Gen-X renters.
In fact, for any renters, an excellent credit score is a huge advantage in “exclusive and costly markets designed for elite renters,” according to a new report from Yardi’s Rentcafe. According to Rentcafe, rental applicants in 2017 in general needed a credit score of 650 to be accepted; the average score of rejected applicants was 538.
But in Boston, where the average rent is $3,232 and the five-year rent increase was 25.3 percent, the average successful credit score was 737; in San Francisco ($3,440 and 38 percent, respectively), it was 724. The city ranking last out of 50 in the Rentcafe report was Las Vegas, where a credit score of 590 got you an apartment. That’s a bit of solace after you lost your house at the craps tables.
THIS IS A MORAL CRISIS
Almost 20 percent of U.S. renters were unable to pay their rent in full within the past three months. That’s the disturbing finding from Apartment List’s Rentonomics. We have heard a lot about how the San Francisco area is booming; you can’t throw a stick without hitting someone with an idea for a stick-throwing app. But the U.S. economy overall has been doing quite well lately, with low unemployment and record stock market numbers, and still the statistics show a lot of people are in significant financial distress.
If there’s any good side to this, it’s this note from Apartment List: “We find that evictions are most common in metros hit hard by the foreclosure crisis and in those experiencing high rates of poverty. Perhaps counterintuitively, expensive coastal metros have comparatively low rates of eviction, in part because strong job markets with high median wages offset expensive rents in those areas.”
A CUT ABOVE
OK, so I kind of mocked the newly formed district that has dubbed itself The East Cut (Real Estate Reporter, July 2017). Now the district, which includes the Transbay, Rincon Hill, and Folsom Street neighborhoods, has launched an effort to assist area homeless individuals to get off the street and into jobs. Great news.
In a partnership with the nonprofit organization Downtown Streets Team, The East Cut Community Benefit District will hire five people who are homeless or at risk of becoming homeless to work on beautification projects, collaborate with local businesses, and be on-the-street public safety assistants.
“We believe that by giving people the resources they need to rebuild their lives, and the opportunity to reconnect with their communities, we are in the business of providing dignity,” said Angelique Villegas Diaz, project manager for Downtown Streets Team of San Francisco. She said this is “the exact type of community-based win-win that will allow our team members to take active ownership in their recovery by serving as part of a collaborative and professional team, while helping to improve the lives of others around them.”
HIGHLIGHTING HOUSING HEROES
Besides letting me do an alliterative subhead, San Francisco magazine has named two San Francisco-based state legislators among its “housing caucus”: Senator Scott Wiener and Assemblymember David Chiu.
SPEAKING OF WIENER
In response to a Facebook comment arguing that he should spend more time focusing on climate change and housing the poor, State Senator Scott Wiener wrote: “We can’t address climate change effectively without addressing land use patterns by concentrating more housing in urbanized areas and avoiding sprawl. If we continue to not build enough infill housing in urbanized areas, we’ll do what we’ve been doing for decades: push people out (not just the poor, but many middle class people) further and further, creating sprawl, lots more driving, and more carbon emissions. 40% of California’s carbon emissions come from transportation, and a lot of that is from long commutes. If we don’t address our housing situation, we’ll be spinning our wheels on climate.”