The Bay Area migration has turned the Central Valley into a suddenly hot housing market

The pandemic-driven desire for more living space, coupled with the freedoms afforded by corporate work-from-home rules, is luring thousands of Bay Area families over the Altamont Pass to planned communities where homes are often bigger, and 50% cheaper, than they are in Dublin or Fremont or San Leandro.

Nowhere is the trend more pronounced than River Islands, a 5,000-acre development on the San Joaquin River in Lathrop that includes 13 man-made lakes and miles of riverfront trails. Schools, ball fields, parks and fire stations make up a community that will eventually include 11,000 single-family homes and another 4,000 apartments and condos clustered around a new town center.

 The Bay Area migration has turned the Central Valley into a suddenly hot housing market

After selling 371 homes in 2019, River Islands saw a 57% increase in 2020, with 641 sales. And the number of buyers relocating from the Bay Area jumped from 55% to 76%. About 2,300 families have moved in so far and there are 1,500 kids — a number expected to eventually reach 9,000, according to the developer.

“Our builders have so much demand they have waiting lists,” said River Islands Development President Susan Dell’Osso. “They are basically doing custom builds for every home buyer.”

Data from the United States Postal Service backs up the claim that the out migration from the Bay Area to San Joaquin County is picking up. Between March and November of 2020, at least 6,320 households moved to ZIP codes in San Joaquin County from one of these Bay Area counties: Alameda, Contra Costa, San Mateo, Santa Clara, San Francisco and Marin. That’s a 22% percent increase over 2019.

 The Bay Area migration has turned the Central Valley into a suddenly hot housing market
Seven-year-old Ayden Banaag watches a video while sitting on the kitchen counter inside his family’s home at the planned community at River Islands in Lathrop, California Thursday, Mar. 4, 2021. The Banaag family recently moved from Hercules to Lathrop in February.Stephen Lam / The Chronicle

Sales are also exceeding expectations at Tracy Hills, a 5,000-home development west of Lathrop, according to John Stanek, a partner with Integral Communities, the master developer there. Tracy Hills sold 400 homes in 2020. The project opened in the late spring of 2019, so there is nothing to compare the sales to, but the pace easily exceeded expectations.

The out migration to the Central Valley is being driven by the Bay Area’s astronomical home prices and the fact that builders have failed to create enough housing to satisfy demand. Neighborhood opposition to development is widespread and Bay Area developers often spend years bogged down in lawsuits before winning approvals. Homes at River Island average about $225 a square foot, compared to $375 in Hercules, $506 in Livermore, $533 in San Leandro or $711 in Fremont.

While many of the new residents are currently able to work from home, the danger is that remote employment may not last and that the Central Valley influx will worsen the environmental issues the Bay Area has been grappling with for years — clogged freeways, marathon commutes and cars pumping even more carbon dioxide into the air, according to David Garcia, policy director for the Terner Center For Housing Innovation. A 2019 study by the Bay Area Economic Institute found 80,000 commuters drive between the northern end of San Joaquin County and the Bay Area, an average of 120 miles, 75% of them alone in a car.

“Traffic was very bad before COVID, and may be worse after COVID,” said Garcia, who was raised in Stockton and used to make the two-and-half-hour commute to Berkeley. “Having the Central Valley be the Bay Area’s affordable housing option is not an optimal outcome.”

 The Bay Area migration has turned the Central Valley into a suddenly hot housing market
Seven-year-old Ayden Banaag plays in the unfinished backyard surrounded by homes under construction at the planned community at River Islands in Lathrop, California Thursday, Mar. 4, 2021.Stephen Lam / The Chronicle

Virgra Banaag, who goes by the name Bing, said that she was not really in the market for a new home when she checked out River Island while visiting her sister nearby. Her family of four — her husband is an electrician and her kids are 7 and 13 — had been living in Hercules and had expected to stay there. When she toured an open house in River Islands, “the house called to me.” They decided to move.

“I had never even heard of River Islands before and now everybody wants to live here,” she said. “It’s the talk of my friends right now.”

Leslie and Chad Bourdon moved to River Islands with their two kids just a few months before the pandemic hit. They had previously lived for 13 years in San Francisco and four years in Marin. Chad Bourdon is a co-owner of 25 Lusk, the fine-dining establishment in downtown San Francisco.

Leslie Bourdon said they had been looking for a year for a house that had good schools and enough living space. Having grown up on Cape Cod in Massachusetts, she was drawn to the waterfront. The family put in a pool and have a private dock where they keep paddle boards and kayaks, and a pedal boat.

 The Bay Area migration has turned the Central Valley into a suddenly hot housing market

Chad Bourdon, director of operations and partner at San Francisco restaurant 25 Lusk, plays catch with son Marc, 5, and daughter Ava, 11, in the backyard of their home at the planned community at River Islands in Lathrop. The Bourdons moved from San Francisco to Lathrop in early 2020 just before the pandemic.

Stephen Lam / The Chronicle

She said her Bay Area friends were surprised by the move. “You say ‘Lathrop,’ and people say, ‘Where is that?’ You say ‘Central Valley’ and people from the Bay Area cringe, thinking ‘yikes.’ ”

Paul Jorge Dizon, a nurse who works at Kaiser Permanente, was paying $3,100 a month for his apartment in Hayward. He set out looking to buy something and quickly determined that on his budget, between $500,000 and $600,000, he could not afford anything in the Bay Area. In Tracy Hills he found a 2,500-square-foot house for $570,000. “You are away from the hustle and bustle of the Bay Area, but not too far,” he said.

Dean Wehrli, Northern California principal for John Burns Real Estate Consulting, said that River Islands is the best-selling planned community in the state. Wehrli said the influx has been driven by Silicon Valley workers who are more likely to be able to continue to work from home at least some of the time.

“In the back of their mind they are thinking that if they are called back into the office two or three days a week it’s a terrible but doable commute,” he said. “Whereas Fresno or Reno or Boise are not.”

Newark-based mover Jose Martinez said about 20% of his business is now Central Valley relocations, up from 10% a year ago. “Every time it’s always the same story,” he said. “Prices in the Bay Area are skyrocketing and people find it easier these days to live in a home with bigger dimensions.”

He is even considering making a move himself. “I definitely have my eye on Manteca.”

Chronicle staff writer Susie Neilson contributed to this report.

J.K. Dineen is a San Francisco Chronicle staff writer. Email: Twitter: @sfjkdineen

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