Market activity was robust with many transactions throughout the year. I witnessed a general shift away from communal living to single-family homes, with outdoor space becoming an essential amenity as everyone sequestered at home.
Now the vaccine is being widely distributed, I see even more activity from buyers and sellers. There’s light at the end of the tunnel, and a renewed hope that people can get back to work, dine in restaurants, tour a museum, take in a movie, and hug our loved ones again.
I believe this trend will continue as we see more distribution and achieve herd immunity. The Bay Area is still a wonderful place to live.
Adam Gavzer, Compass,
415-505-0714, adam@gavzer.com.
A: The news and rollout of vaccinations have already been impacting our real estate market, as we seem to have had the busiest January in recent memory.
Many buyers who left the city for most of 2020 seem to be rolling back in, and as talk of returning to offices and enjoying the restaurants, shopping, and culture of city living is on the horizon, savvy buyers are hoping to find their new homes now for the years to come.
San Francisco still does not allow in-person open houses, though, so it is more important than ever to be working with an agent who is familiar with the sub-markets across the city, and can gather as much background information as possible prior to submitting an offer.
The city remains a great place to live. Once a majority of its residents are vaccinated, we welcome the renewed energy and real estate market.
Kevin Delmore,
Sotheby’s International Realty, 415-203-3357, kevin.delmore@sothebyshomes.com.
A: The arrival of the vaccine is extremely good news.
On the onset of the coronavirus pandemic and the shelter-in-place order, many people started moving in droves out of densely populated cities to suburban communities. They were seeking more spacious living spaces with home offices and outdoor areas.
When the COVID-19 vaccine becomes readily available to all groups we will see a gradual return to the cities. Rents have declined and this will contribute to the return.
The Bay Area real estate market has been very resilient despite the pandemic and all predictions for 2021 is that we will continue to experience a strong real estate market.
“Concord is effectively built out,” says Guy Bjerke, Concord’s director of community reuse planning. “We’re fooling around with some parcels downtown, and there is some ability to redevelop, but there isn’t a lot of green field development going on. This base provides the best opportunity [to hit major housing goals].”
It’s perhaps the only opportunity.
View of the giant cranes used for loading and unloading ships along the tidal area of the Concord Naval Weapons Station.
Kim Kulish/Corbis via Getty Images
The weapons station is a Superfund site, and efforts to clean up toxic leftovers from its decades of service as a munitions depot have lasted nearly 40 years. Even so, the city hopes to eventually create 13,000 new homes here (equivalent to 28% of the 46,500 homes Concord had in 2019), with a quarter of them priced as below-market-rate housing, plus 2,700 acres of parkland and 6 million square feet of commercial space.
That’s bigger than any other single Bay Area development — so big that its gravity would affect housing pressures across the entire region. And Concord needs those homes; the Association of Bay Area Governments estimates that in 2017 (still the latest year for which estimates are available) the city had met just 4% of its 2023 regional housing needs.
Omnipresent Miami-based developer Lennar, the same company overseeing San Francisco’s Treasure Island and Hunters Point redevelopments, was supposed to build phase one of the project, a 500-acre proposal for 4,400 homes.
It was a deal years in the making — and months in unmaking, as last-minute negotiations between the developer and labor unions scuttled the whole thing. In March of 2020, days before life as we know it in the Bay Area froze over, the Concord City Council effectively voted to kibosh the Lennar agreement. “It felt kind of like we were dating, and [going ahead] would have meant marriage, and the majority of the council felt like it wasn’t working out,” Concord’s Vice Mayor Dominic Aliano says.
The vote yielded outrage from housing hawks, but councilmembers felt the developer didn’t care enough. Bill Whitney, CEO of the Contra Costa Building and Construction Trades Council, the union league negotiating with Lennar at the time, dismisses the company as “a bunch of Miami suits.” A Lennar spokesperson declined to comment for this story.
View of “Blast Area” sign on an unused facility on the inland area of the Concord Naval Weapons Station.
Kim Kulish/Corbis via Getty Images
This would have been controversial at the best of times, but 2020 turned out to be hardly the best of times. Although this puts Concord in a singular position right now, the larger problems the city faces are not necessarily unique. Lots of Bay Area cities, San Francisco included, are balancing their housing goals on a handful of megadevelopments. Just in San Francisco, “major multi-phase projects” amount to more than 30,000 planned homes.
But megadevelopments are an exercise in competing priorities. “There is a real mismatch between what a local jurisdiction wants and what a developer wants,” says Debra Ballinger, director of the East Bay housing advocacy group Monument Impact.
Cities look at massive projects like piñatas full of affordable housing and amenities; developers, on the other hand, are in it for market-rate homes and commercial spaces that pad their profits. When these goals conflict, the strain can sink a development — and a city’s housing futures.
So if Concord in 2020 served as a regional example of how megadevelopment goes wrong, what can the city do in 2021 to right the ship again? In a November memo to the city, Bjerke noted that the financial risk is too great for the city to act as its own master developer. After consulting 15 different companies, Bjerke noted that many showed interest in the site and most “viewed the pandemic as having a temporary impact on the market,” but also that “access to the scale of capital required [...] is somewhat limited right now” and “uncertainties” can throw a scare into developer ambitions.
Housing advocates, still stung from last year’s breakdown, sound despondent about the future. “My husband and I joke that we won’t see anything in our lifetime,” says Ballinger.
“I don’t think they would have walked away” if they’d known the scale of the crisis brewing, says William Goodman, an organizer with the housing group Hope Solutions. “There were jobs, there was housing, there was a lot of land; we had a pot of gold.”
And some are still angry. “It’s inconceivable to me that a group of five council people can kill a project of regional significance with one vote,” says an East Bay housing advocate who preferred to remain anonymous for fear of jeopardizing future work. (Granted in accordance with our ethics policy.) “Now we have a soft market, and who would trust the city after this?”
But the city and labor interests sound bullish, insisting that they can still deliver on the promise of 12,000-13,000 units, 25 percent affordable housing, and 100 percent union labor, even despite the downturn.
“This is a 30-plus year project; time is on our side,” says Whitney. What the economy is like right now matters relatively little for a decadeslong plan that assumed a recession would come along eventually, he argues. Even now he says he wouldn’t go back to the Lennar deal.
Concord Mayor Tim McGallian calls the recession a “stress test” for potential new developers, and says that anyone scared off “might not have been qualified to be master developer.”
He remains confident on the housing numbers but does hedge that not everything from past plans may appear again down the line. “We all went into this blind,” he says. “We asked for this huge laundry list of things, but nobody added column A to column B.”
The recession has eased some of the pressures of the housing crisis this year, but if economies bounce back that letup won’t last forever.
It seems we’ve come to the “you’re lying, no you’re lying” phase of the fleeing San Francisco narrative, which was inevitable. To this point we’ve been tracking it via anecdote, story after national media story based on interviews with people who’ve left, followed by pointed (and maybe a bit defensive) rebuttals from local media who have just as much access to people who aren’t leaving San Francisco as the national people do to people who are. When everyone retreats to their neutral corners we’re left with the sinking feeling that there’s hype, there are stories, and there’s not much actual data that might tell us what’s really going on.
So here’s some data, and I’m going to be straight with you: It doesn’t look good for the “no, you’re lying” crowd.
The Bay Area Council Economic Institute wanted some answers, so they did a study that tracked job growth in major and minor U.S. metropolitan areas between December 2019 and December 2020. During that time, white-collar job growth has migrated away from places like New York City (a loss of 7 percent), Los Angeles (6.2 percent) and San Francisco (not as bad at 2.6 percent) and toward the darlings of the “America’s Next Hot Spot!” set — Nashville, Boise and, of course, Austin, Texas. These are high-paying jobs and the study doesn’t consider population loss due to full-time remote work.
The numbers definitely show a shift in where people want to work, but still, 2.6 percent? That and a quote from Jack Dorsey will get you 30 seconds on CNN, but how big is that actual impact?
Do you want bigger numbers, then? OK, let’s talk about a different dream, because the Austin dream, the one that gets all the ink, is only one of the dreams. There are other dreamers.
They’re the urbanites who’ve had it with all cities, not just ours; they imagine taking their Zoom calls against a backdrop of towering redwoods and they seek the kind of serenity that can only come with the knowledge that they can leave their car unlocked at night and not assume that someone looking for change will rifle through it before morning. Everyone in all of the New York Times “great migration” stories is moving to Austin, but if you believe Redfin, they’re only a small part of the story — maybe the most insignificant part.
Redfin did its own study. It tracked real estate markets in rural U.S. areas for the first four weeks of January 2021. During that time, pending sales in these areas were up 43.5 percent from January 2020 — 43.5 percent! Median home values were up 16 percent. Homes were taking 29 percent fewer days to sell and overall inventory was down by almost half: 44.5 percent. I’m not sure how the math works on this, but it seems like if you have a 43.5 percent increase in sales and a 44.5 percent decrease in listings and you’ve been sitting there in your Upper Haight flat imagining your spacious life in Nevada City, you’d better get going before there’s nothing left to buy.
“It’s literally a sold-out market,” said broker Pete Belcastro of John L. Scott on a recent episode of the “Southern Oregon Real Estate Show” podcast, “and I don’t know if it’s going to change anytime soon.” Full disclosure: The Oregon part speaks to me because last summer, in our own effort to find occasional refuge from the madness of city living, my wife and I bought a home in an Oregon small town. Six months later, it’s looking like we were pretty lucky to do so.
On that same podcast, Belcastro noted that the majority of remaining for-sale inventory is priced at $500,000 or above — the top of the local market. It can’t be long before they start doing the math and figuring out who’s buying these homes. So far — anecdotally — it sure seems like a lot of people just moved here from California.
Hopefully we’ll be well-behaved. A recent realtor.com story told a cautionary tale of ex-pat New Yorkers moving to tiny Rockaway, N.J., and bringing with them all of their boorish city habits: loud parties, late nights, poor pet etiquette and, of course, plummeting real estate inventory and increased prices.
Last week I asked my new neighbor, a local Realtor, about demand in rural areas. Her eyes turned into saucers. “It’s crazy,” she said. “Especially homes on acreage.” I swear she had chills.
So far — anecdotally — nobody where we bought seems too concerned about Californians or that the influx of post-urban dwellers will change the nature of their hometown. I hope they’re right because this place is fantastic, and if you think I’m going to tell you where it is, you’re crazy.
Larry Rosen is a San Francisco-based writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner. The Market Musings real estate column appears every other week.
Developers seemed like they had a winning formula for breathing new life into the Bay Area’s ailing malls: Add housing and offices and turn conventional retail space into room for experiences. Then the pandemic changed the equation. Some mall owners are moving forward with ambitious renovations or reconstructions, while others have delayed or modified their plans while they try to get a handle on demand for housing, shopping and even office space.
