Amazon’s second headquarters could be curative or curse for winning city’s real-estate market

As the dozens of cities lustily bidding for Amazon’s second headquarters parade their smart citizens, housing capacity, transportation connections and tax breaks this week to lure Jeff Bezos’s empire, the sometimes painful housing-market lessons of Seattle — the e-commerce giant’s home base — has become a factor of its own in this race.

The housing market must be a major consideration as metro areas march forward in their pursuit and Amazon makes its pick, say real-estate experts, especially as it relates to Amazon’s

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impact on job creation and the local economy, its probable boost to demand for diverse housing types for young and experienced workers alike, and the tension between homeowners sitting on higher home values versus the buyers and renters pushed entirely out of the market.

There’s little doubt that securing the bid for the second Amazon complex, which the company pledges will bring a $5 billion investment and 50,000 jobs, would be a “major win” for the lucky city, said Lawrence Yun, chief economist with the National Association of Realtors. But there will be housing-sector winners and losers as a result, he said.

Proposals to Amazon are due Thursday, and the pomp coming with some of the highest-profile packages has included Manhattan’s alighting the Empire State Building in Amazon orange, and other aggressive tacks, including New Jersey’s reported pledge for a massive $7 billion in tax incentives to bring “HQ2” to Newark. Chicago Mayor Rahm Emanuel and Illinois Gov. Bruce Rauner, not always so chummy, huddled to form a no-fewer-than-600-person committee to support their bid, the Chicago Tribune reported.

Analysis: MarketWatch screens reveal cities that meet the stated criteria for Amazon’s second headquarters

Real-estate economists are crunching the good and bad (note: there’s more in the “good” column) that could come with scoring this high-profile expansion of an Amazon whose arguably creative destruction of retail continues to change the commercial and residential fabric of most of the cities doing the wooing.

Read: Amazon, Apple, Google and Facebook will all go away within 50 years, says author

The housing-market change in the Seattle area, which places six companies among the Fortune 500, including Microsoft

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in the suburbs, has been notable. In the seven years since Amazon concentrated its headquarters in that city’s South Union neighborhood, home prices in the city have surged by 83% and rents by 47%, according to online real-estate marketplace Zillow, also based in Seattle.

In general, tech-job-driven upward pressure on wages has yanked real-estate prices along the same path. Earlier this year, in one of Seattle’s hottest neighborhoods, homes went for a median price of more than $1 million. It was the first time on record that had happened in the city or its surrounding suburbs, according to the Seattle Times. Seattle’s median home price is $700,000, double Chicago’s median of $306,750, for instance.

Who will work at the new Amazon location, and where will they live?

Keep in mind that if the online retailing colossus brings 50,000 high-paying jobs to the winning city, it won’t necessarily generate 50,000 home sales or apartment leases right away, as some portion of the jobs presumably would go to people who are already in place.

But “homeowners [looking to cash in on an increase in demand] need to position themselves and their homes to take advantage, as there will be a boost in values,” said NAR’s Yun. “People who will feel left out will be those forced out by higher rents, and pushed out further into outer suburbs, the one negative side-effect of major high-paying jobs coming in.”

Real-estate experts often point to the long commutes faced by employees in Silicon Valley and in the San Francisco Bay Area more broadly. But Yun said the tech revolution for cities is largely a boon for real estate. He pointed to Portland, Ore., and its “high unemployment rate just 10 years ago, with an economy still very reliant on lumber,” contrasting that situation with the Portland that exists today: “Its economic diversification leaves it a vibrant city with vibrant restaurants and a lifestyle that’s a point of pride.“

If Amazon takes a similar approach to its Seattle pick, it may opt for an HQ2 location that gives its office and the home choices of its workers a decidedly urban or downtown-fringe feel, said Ralph McLaughlin, chief economist with real-estate site Trulia.

Its future workers, especially millennials, might desire ample inventory of condo developments and town houses, perhaps even over urban high-rises and over far-flung suburban options, when it comes to housing choices, he said. Other real-estate experts have said that an urban choice with suburban housing options will be optimal in terms of lessening housing stress on the area. For instance, Baltimore and Pittsburgh have suburbs that aren’t as developed as New York’s or Boston’s.

Housing-market price pressure for the Amazon winner will be impacted by how flexible zoning and planning policy is, so that construction, or even adaptive reuse, can keep up with new demand, real-estate experts said.

A large driver of surging housing prices in Seattle can be linked to its slow policy response. “The city is backed up on permits,” said Matt Goyer, a real-estate broker and founder of Urbnlivn, a Seattle real-estate blog. “Developers are eager to go but end up delayed for months because of delays in the city government.”

In all, researchers at Apartment List, which studied 15 metro areas contending for Amazon’s second headquarters, have predicted the Amazon effect alone will add an average of 2% to rental costs on top of any projected non-Amazon-related increase.

0f06e MW FW651 amazon 20171019153402 NS Amazons second headquarters could be curative or curse for winning citys real estate market

Commercial real estate will no doubt be impacted, as well. With total Amazon spending on real estate reaching nearly $4 billion, the company now occupies 8.1 million square feet of office space spread across 33 buildings in Seattle, according to Seattle Times research, the largest footprint by both raw area and percentage of any single company in any single city. In the last three years, Amazon had gone from occupying 9% of the city’s prime office space to 19%.

And therein lies another lesson: With industry concentration, such as that taking form in Seattle, comes risk. According to the most recent office-market snapshot from Green Street Advisors, a real-estate analytics firm, there’s longer-term risk in Seattle’s dependence on a handful of tech clients, although in the nearer term demand is forecast to remain robust, fueled by strong income growth and the desire for high-end office space, Curbed reported.

It’s also true that with Amazon will come presumed expansion of the service industries that support Amazon’s business. Chicago officials, for one, have said they believe that each dollar Amazon invests in construction and operations would generate an additional $2.72 for the area economy, based on an analysis by World Business Chicago, the city’s economic-development unit. Other cities have forecast similar multiplier effects.

Handicapping the contenders

Other big cities reportedly in the hunt include Atlanta, Philadelphia, Denver and Washington, while dozens more smaller metro areas want to be considered, too. Amazon, which bought Austin-based Whole Foods Market Inc. for over $13 billion this year before announcing its HQ expansion beyond Seattle, said in its release detailing the search criteria that it will only consider metro areas with a population of at least 1 million people and an international airport offering at least some nonstop flights to Seattle.

NAR’s Yun said he sees pretty good odds for North Carolina’s so-called Research Triangle, comprising Raleigh and surrounding university cities. He also thinks the excess building capacity of trendy Nashville, Tenn., positions it well, he said. Amazon may also opt for the D.C. suburbs of northern Virginia or the outer-ring suburbs of Boston to take advantage of university resources of the nearby cities while embracing the ability to stretch out and create a campus-style headquarters.

Anderson Economic Group, an East Lansing, Mich.–based consultancy that has worked with automobile manufacturers and companies in other industries, said that big, “old-meets-new economy” cities can’t be ruled out. In a recent report, it ranked the most likely candidates in this order: New York, Chicago, Los Angeles, Boston, Atlanta, Washington and Philadelphia, giving higher weighting to the depth of local labor pools, including in the secondary services industries that will support Amazon: legal, financial, engineering and advertising.

These cities could lose points on a cost-of-doing-business basis. However, a downtown Chicago address has proven attractive for recent moves by corporate giants such as Conagra

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 , ADM

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and Caterpillar

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 , that have or will soon abandon their longtime, small-town homes. McDonald’s

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is even quitting the Chicago suburbs for the city, as United Airlines had done previously. Chicago, additionally, prevailed over Dallas, Denver and others in the nationwide competition for Boeing’s headquarters when the aerospace behemoth opted to decamp from Seattle in 2001.

Trulia’s McLaughlin thinks transportation will be a huge determinant, he said, with strong transportation plus tax incentives an almost unbeatable duo. That bodes well for Chicago and the major East Coast cities, including the New York area, Boston and Washington.

Some observers give pretty good odds to Denver, believing its civic culture is a good complement to Seattle’s home base. But McLaughlin questioned its already surging cost of labor and its weakness as a transportation hub, especially as Amazon looks to expand its global markets. That bumps up in significance the offerings of Midwest or East Coast locales, where declining populations could actually be leveraged into an attractive package for Amazon: Housing costs are lower and politicians have an incentive to sweeten any deal with tax breaks for Amazon as they look to stem population outflow.

Amazon’s pitch and the local political pitch to taxpayers center on the fact that Amazon’s market share “could mean decades of guaranteed employment for an area,” said McLaughlin. That’s especially enticing for areas in the Northeast corridor or the Rust Belt that are losing population, he said.

How can Amazon help maintain a housing mix?

But some urban-policy and housing experts think tech giants can be more villain than savior, even for struggling communities.

Richard Florida, editor at large of the Atlantic’s CityLab, wrote in a commentary that the future of tech-driven housing diversity in U.S. cities rests in large part on a willingness of businesses to be good neighbors.

Tech outfits should invest alongside local governments and nonprofits to provide subsidized affordable housing for local residents, as well as workforce housing for their own service workers who otherwise endure long and arduous commutes, Florida said. And they might consider giving up the private shuttle services meant to ease the burden of those commutes and instead invest in better public transit for all.

As the five most highly valued companies in the world, Apple

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 , Google parent Alphabet

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 , Microsoft, Amazon and Facebook

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 , all based in the greater Bay Area or metropolitan Seattle, along with many of their peers, boast the resources and capabilities to help address America’s deepening urban divides and move toward inclusive prosperity, Florida wrote, adding that “it’s also in their interest to do so.”

Article source: http://www.marketwatch.com/story/amazons-second-headquarters-could-be-curative-or-curse-for-winning-citys-real-estate-market-2017-10-19

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CBRE Acquires Custom Spaces, the Bay Area’s Premier Boutique Real Estate Advisor to the Tech Sector

LOS ANGELES–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE: CBG) today announced the acquisition of the
business of Custom Spaces, a San Francisco-based, technology-focused
boutique real estate brokerage firm that advises leading technology
companies such as Airbnb, Cruise Automation, Medium, Gusto and Coinbase,
on occupancy strategies. The acquisition confirms CBRE as the leading
real estate advisor in the Bay Area for technology companies and
fortifies its Technology Practice globally.

Jenny Haeg, founder and CEO of Custom Spaces, will join CBRE as a Vice
Chairman within its Advisory Transaction Services business and will
have a leadership role with CBRE’s global Technology Practice. This
practice group consists of CBRE Advisory and Transaction Services
professionals who collaborate to meet the real estate requirements of
technology companies – from Fortune 100 multi-nationals to high-growth,
mid-cap companies, to emerging venture capital backed start-ups.

“We are delighted that Jenny and her team have joined CBRE,” said Joe
Wallace, Executive Managing Director, Bay Area, CBRE. “Tech companies
operate in an incredibly dynamic environment. There are very few real
estate advisors who, like Custom Spaces, both understand the unique
requirements of the tech sector and can implement related plans quickly
at scale. CBRE’s global service offering ensures that Custom Spaces and
their clients have access to best-in-class strategy, analytics and real
estate execution anywhere in the world.”

“Custom Spaces was founded to help technology companies scale and
achieve their real estate objectives in a way that is consistent with
their unique identity and culture. In speaking with CBRE leadership, it
quickly became apparent that they shared our mission of a service-based
firm that puts our clients’ needs first in a personalized way. Joining
forces with CBRE and leveraging their market-leading position globally
and broad-based service offering, will enable us to do this for more
clients, in more ways and in more markets. We are excited to continue
building the definitive real estate platform for technology companies
around the world,” said Ms. Haeg.

“We are excited to welcome Custom Spaces’ valued clients to CBRE. The
combination of our two firms creates a powerful and market-leading
platform to serve technology companies. We look forward to earning the
right to help these important clients grow by consistently delivering
exceptional outcomes – on every assignment,” said Jack Durburg, CEO,
Americas, CBRE.

“Custom Spaces has built a very capable team and great brand through a
tireless commitment to acting in the best interest of its clients and
cultivating strong relationships. Joining forces with CBRE will
undoubtedly bring access to cross-disciplinary expertise and horsepower
that will only further help Airbnb achieve our real estate goals and
objectives,” said Tido Pesenti, Director, Global Real Estate,
Procurement Travel, Airbnb.

Ms. Haeg founded Custom Spaces in 2011. In addition to the Bay Area, the
firm has developed real estate solutions for tech companies in markets
such as New York, Los Angeles, Tokyo and London.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and SP 500 company
headquartered in Los Angeles, is the world’s largest commercial real
estate services and investment firm (based on 2016 revenue). The company
has more than 75,000 employees (excluding affiliates), and serves real
estate investors and occupiers through approximately 450 offices
(excluding affiliates) worldwide. CBRE offers a broad range of
integrated services, including facilities, transaction and project
management; property management; investment management; appraisal and
valuation; property leasing; strategic consulting; property sales;
mortgage services and development services. Please visit our website at www.cbre.com.

Forward-Looking Statements

Certain of the statements in this release regarding the acquisition of
Custom Spaces that do not concern purely historical data are
forward-looking statements within the meaning of the “safe harbor”
provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements are made based on our management’s
expectations and beliefs concerning future events affecting us and are
subject to uncertainties and factors relating to our operations and
business environment, all of which are difficult to predict and many of
which are beyond our control. Accordingly, actual performance, results
and events may vary materially from those indicated in forward-looking
statements, and you should not rely on forward-looking statements as
predictions of future performance, results or events. Numerous factors
could cause actual future performance, results and events to differ
materially from those indicated in forward-looking statements,
including, but not limited to, our ability to successfully integrate
Custom Spaces’ brokerage professionals with our existing operations in
the U.S., as well as other risks and uncertainties discussed in our
filings with the U.S. Securities and Exchange Commission (SEC). Any
forward-looking statements speak only as of the date of this release. We
assume no obligation to update forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors
affecting forward-looking information, except to the extent required by
applicable securities laws. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional
updates with respect to those or other forward-looking statements. For
additional information concerning factors that may cause actual results
to differ from those anticipated in the forward-looking statements and
other risks and uncertainties to our business in general, please refer
to our SEC filings, including our Form 10-K for the fiscal year ended
December 31, 2016, and our Form 10-Q for the quarter ended June 30,
2017. Such filings are available publicly and may be obtained from our
website at www.cbre.com
or upon request from the CBRE Investor Relations Department at investorrelations@cbre.com.

Article source: http://www.businesswire.com/news/home/20171018006201/en/CBRE-Acquires-Custom-Spaces-Bay-Area%E2%80%99s-Premier

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Vallejo’s real estate market in middle of renaissance

http://www.sfgate.com/news/article/Vallejo-s-real-estate-market-in-middle-of-12285933.php


Published 5:15 pm, Tuesday, October 17, 2017

  • f71ab 920x920 Vallejos real estate market in middle of renaissance

Caption

Close


As real estate prices continue to rise in the Bay Area, Vallejo is now in the middle of a renaissance as home buyers flock to the waterfront city in Solano County.

Nearly a decade removed from municipal bankruptcy, Vallejo boasts a thriving housing market, tech-savvy infrastructure and an improving school system.

As the property values surge in Oakland and San Francisco, potential buyers have expanded their search area when shopping for a home. This proves to be a boon for Vallejo, which has seen a multi-year rally in its real estate market as their prices remain a fraction of those in the rest of the Bay Area.

“There are substantial savings across the bridge,” said Linda Daraskavich, president of the Solano Association of Realtors and a broker for Coldwell Banker. “What you’re seeing here is consistent with other parts of the Bay Area, where you have multiple offers and homes selling for over the asking price.”

Location remains the most important factor in real estate, and Vallejo’s proximity to Oakland and San Francisco accounts for part of its appeal. However, new housing developments and the city’s new high-speed broadband network aims to make the city both a destination for buyers and a hub for the tech community.

“Fiber communications are critical to public services and commerce in the 21st century,” Vallejo Mayor Bob Sampayan said. “With downtown and Mare Island right on the waterfront and affordable commercial real estate, we are perfectly situated in the San Francisco Bay Area to become a destination for the new economy.”

The gigabit fiber is a public-private partnership that leases city-owned fiber to Inyo Networks, Inc. The network firm markets and provides retail services to a variety of agencies, including government, medical and educational institutions.

Vallejo has ranked No. 1 for nine consecutive months this year in Realtor.com’s “hotness” index. Realtor.com’s hotness index measures where houses sell the fastest and what markets have the most views on the website. Vallejo has sat toward the top of the list every month this year and outpaces other major players like San Jose-Sunnyvale-Santa Clara and San Francisco-Oakland-Hayward.

The median price of a single-family home in Solano County is $378,000, roughly half of the Bay Area’s median price, and the city boasts a stock of classical homes and recent construction. Victorians, bungalows, and tract houses are peppered throughout the city, while newer construction by Lennar, Shea and KB Homes feature Mediterranean and contemporary designs.

Famed architect Julia Morgan even built in Vallejo. In 2015, one of her designs hit the market and listed for less than a million dollars. The brown-shingle five-bedroom would command a price north of $4 million had it existed in San Francisco, listing agent Jason Born said.

Typically, a house spends one month on the market in Vallejo before selling. That’s slightly less time than the surging markets of San Francisco and San Jose.

Schools will always be a concern for families looking to buy a home, and Vallejo’s educational opportunities are on the upswing.

The city now features a mixture of private, public and charter schools. For the third straight year, U.S. News and World Report named Mare Island Technology Academy “One of America’s Best High Schools.” The publication’s award is based on academic achievement, graduation rate and percentage of students going to college.

Other coveted schools include Annie Pennycook Elementary, St. Patrick-St. Vincent High School and Vallejo Charter School.

Realtor Valerie Bechelli and her team recently sold 3024 Overlook Drive in Vallejo’s Hiddenbrooke Golf Course Community. The four-bedroom, three-bathroom sits on a quarter of an acre 10 minutes from the Vallejo Ferry. Built in 2002, the home offers hillside views, new windows, a modern kitchen with stainless steel appliances and hardwood flooring throughout.

The Hiddenbrooke Golf Course, designed by Arnold Palmer, winds behind the home that features gabled rooftops and a turret near the front door.

While the community is an enclave with one access road, residents of the Hiddenbrooke community represent a microcosm of Vallejo itself, Bechelli said. Young professionals, tech workers and retirees all call the community home.

“The demographics are kind of across the board,” she said. “We’ve had several people move from San Francisco to this area.”

Any time a city transforms in such a dramatic way there are concerns about lost identity. Vallejo celebrates its diversity and offers plenty of room for growth, so citizens aren’t in immediate risk of being forced out by rising home prices, said Joanna Altman, assistant to the city manager.

With so many local affordable housing options available, Vallejo is not seeing the type of exodus that comparable Bay Area cities are experiencing, she said.

“Bay Area wide housing and rent prices are on the rise, but Vallejo remains the affordable option,” she said. “Choose Vallejo.”

Article source: http://www.sfgate.com/news/article/Vallejo-s-real-estate-market-in-middle-of-12285933.php

Posted in SF Bay Area News | Tagged | Leave a comment

Vallejo’s real estate market in middle of renaissance

http://www.sfgate.com/news/article/Vallejo-s-real-estate-market-in-middle-of-12285933.php


Published 5:15 pm, Tuesday, October 17, 2017

  • f71ab 920x920 Vallejos real estate market in middle of renaissance

Caption

Close


As real estate prices continue to rise in the Bay Area, Vallejo is now in the middle of a renaissance as home buyers flock to the waterfront city in Solano County.

Nearly a decade removed from municipal bankruptcy, Vallejo boasts a thriving housing market, tech-savvy infrastructure and an improving school system.

As the property values surge in Oakland and San Francisco, potential buyers have expanded their search area when shopping for a home. This proves to be a boon for Vallejo, which has seen a multi-year rally in its real estate market as their prices remain a fraction of those in the rest of the Bay Area.

“There are substantial savings across the bridge,” said Linda Daraskavich, president of the Solano Association of Realtors and a broker for Coldwell Banker. “What you’re seeing here is consistent with other parts of the Bay Area, where you have multiple offers and homes selling for over the asking price.”

Location remains the most important factor in real estate, and Vallejo’s proximity to Oakland and San Francisco accounts for part of its appeal. However, new housing developments and the city’s new high-speed broadband network aims to make the city both a destination for buyers and a hub for the tech community.

“Fiber communications are critical to public services and commerce in the 21st century,” Vallejo Mayor Bob Sampayan said. “With downtown and Mare Island right on the waterfront and affordable commercial real estate, we are perfectly situated in the San Francisco Bay Area to become a destination for the new economy.”

The gigabit fiber is a public-private partnership that leases city-owned fiber to Inyo Networks, Inc. The network firm markets and provides retail services to a variety of agencies, including government, medical and educational institutions.

Vallejo has ranked No. 1 for nine consecutive months this year in Realtor.com’s “hotness” index. Realtor.com’s hotness index measures where houses sell the fastest and what markets have the most views on the website. Vallejo has sat toward the top of the list every month this year and outpaces other major players like San Jose-Sunnyvale-Santa Clara and San Francisco-Oakland-Hayward.

The median price of a single-family home in Solano County is $378,000, roughly half of the Bay Area’s median price, and the city boasts a stock of classical homes and recent construction. Victorians, bungalows, and tract houses are peppered throughout the city, while newer construction by Lennar, Shea and KB Homes feature Mediterranean and contemporary designs.

Famed architect Julia Morgan even built in Vallejo. In 2015, one of her designs hit the market and listed for less than a million dollars. The brown-shingle five-bedroom would command a price north of $4 million had it existed in San Francisco, listing agent Jason Born said.

Typically, a house spends one month on the market in Vallejo before selling. That’s slightly less time than the surging markets of San Francisco and San Jose.

Schools will always be a concern for families looking to buy a home, and Vallejo’s educational opportunities are on the upswing.

The city now features a mixture of private, public and charter schools. For the third straight year, U.S. News and World Report named Mare Island Technology Academy “One of America’s Best High Schools.” The publication’s award is based on academic achievement, graduation rate and percentage of students going to college.

Other coveted schools include Annie Pennycook Elementary, St. Patrick-St. Vincent High School and Vallejo Charter School.

Realtor Valerie Bechelli and her team recently sold 3024 Overlook Drive in Vallejo’s Hiddenbrooke Golf Course Community. The four-bedroom, three-bathroom sits on a quarter of an acre 10 minutes from the Vallejo Ferry. Built in 2002, the home offers hillside views, new windows, a modern kitchen with stainless steel appliances and hardwood flooring throughout.

The Hiddenbrooke Golf Course, designed by Arnold Palmer, winds behind the home that features gabled rooftops and a turret near the front door.

While the community is an enclave with one access road, residents of the Hiddenbrooke community represent a microcosm of Vallejo itself, Bechelli said. Young professionals, tech workers and retirees all call the community home.

“The demographics are kind of across the board,” she said. “We’ve had several people move from San Francisco to this area.”

Any time a city transforms in such a dramatic way there are concerns about lost identity. Vallejo celebrates its diversity and offers plenty of room for growth, so citizens aren’t in immediate risk of being forced out by rising home prices, said Joanna Altman, assistant to the city manager.

With so many local affordable housing options available, Vallejo is not seeing the type of exodus that comparable Bay Area cities are experiencing, she said.

“Bay Area wide housing and rent prices are on the rise, but Vallejo remains the affordable option,” she said. “Choose Vallejo.”

Article source: http://www.sfgate.com/news/article/Vallejo-s-real-estate-market-in-middle-of-12285933.php

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Infernos could worsen Bay Area’s already brutal housing market

The deadly wildfires that roared through Sonoma and Napa counties this week, destroying thousands of homes, might also scorch the Bay Area’s already brutal housing market for months or years to come, experts warned Friday.

An estimated 2,800 homes have been destroyed in the wind-whipped infernos in Santa Rosa alone, and a total of about 5,700 homes have been lost in Northern California — a catastrophe that potentially leaves several thousand people to determine whether to eventually resume living on their devastated properties or to move elsewhere.

As a result, an already strained housing market — whose grim signature is skyrocketing home prices — could soon become even tighter as displaced residents begin scouting for places to live until their homes can be rebuilt, or they decide to relocate.

“It’s already a tight housing market, one where home prices have risen a lot over the last few years,” said Frank Nothaft, chief economist with CoreLogic, which tracks the residential market. “And apartments are tough. Rents are up. Prices are up. Rental vacancies are well below the national rates.”

This adds up to a challenging hunt for a place to live, even temporarily, for those forced from their homes.

“We are losing about 4 percent to 5 percent of the housing stock in the (Santa Rosa) area,” said Oscar Wei, a senior economist with the California Association of Realtors. “This will cut into the supply, short term.”

Compared to the entire Bay Area, Santa Rosa’s roughly 2,800 lost homes is a small portion — 0.1 percent — of the housing in the entire nine-county region. According to the U.S. Census Bureau’s American FactFinder, the Bay Area had 2.8 million residential units in 2015, the most recent year available.

But it’s much more of an impact in Santa Rosa. The destruction of the roughly 2,800 homes represents 4 percent of the Sonoma County city’s 67,000 residential units.

“If you destroy 2,000, 3,000 homes, that just constrains the market even further,” Nothaft said. “Housing is already scarce.”

The combined loss for those residential structures is likely to be staggering. Realty experts say the median price of homes in Santa Rosa during August was $585,500. That could mean the combined value of the destroyed residences is roughly $1.63 billion.

Finding a place to live will be just one of the challenges for displaced homeowners, especially if they decide to return to their original residences.

“It could be six to 12 months, or even longer, to rebuild the house, depending how the insurance claims go,” Nothaft said. “Then, after that, they have to find the contractors and the construction workers. There’s a shortage of skilled construction labor right now.”

Experts say there’s no definitive answer as to whether home prices will fall, rise, or neither.

“Pricing can go down, possibly, because the area is burned out and not an attractive place to live, but what can push prices up is people are displaced and they need somewhere to live, so the demand goes up,” said Randall Bell, director of Landmark Research, which tracks economics issues.

In a foreshadowing of the fires’ vast impact, State Farm officials said that, as of Friday afternoon, they have received more than 2,100 homeowners insurance claims and more than 800 auto insurance claims related to the North Bay firestorms.

“It’s a mix, a wide range now,” said Chris Pilci, a State Farm spokesman. “It could be somebody who had damage from being on the fringes of the fire, or it could be a total loss. We anticipate the claim volume will continue to rise.”

Insurance agents have fanned out into the devastated region.

“The first few days, communication was very difficult in that area,” said Sevag Sarkissian, a State Farm spokesman. “It’s all hands on deck.”

The impact of the displaced residents could also ripple beyond the market for buying and selling houses.

“Apartment rents are definitely headed higher,” Nothaft said.

 

 

Article source: http://www.mercurynews.com/2017/10/13/infernos-could-worsen-bay-areas-already-brutal-housing-market/

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