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Bay Area renters, don’t look now, but more hikes might be on the horizon.

Year over year rents rose 3 percent in March in San Jose, 6 percent in Oakland and 1 percent in San Francisco, according to a survey by Apartment List released Monday. Nationally, rents rose about 2.3 percent during the last 12 months.

Real estate economists and professionals are expecting a continued run-up during this year’s peak summer moving season. “We’re just not doing anything to keep up with it on the supply side,”  said Chris Salviati, housing economist with Apartment List.

The rising prices come as the long-running shortage of housing supply in the Bay Area has forced renters into less expensive suburban apartments. But those suburban apartments are no longer thrifty choices.

The highest prices for two-bedroom rentals in the country were found in Bay Area suburbs: Danville apartments leased for $5,400 a month, Cupertino for $5,050, and Los Altos for $4,690. San Mateo checked in as a relative bargain at $4,270 per month. Apartment List draws its data from private listings and adjusts for an over-representation of luxury units

A survey by real estate website Zumper found similar hikes around the Bay Area. San Francisco remained the most expensive city in the country, ahead of New York and San Jose.

Zumper analyst Crystal Chen said rents for one-bedrooms in San Jose climbed nearly 10 percent in the last year in their survey. Only San Diego rose faster, she said.

Rick Smith, a Santa Clara real estate agent who advises clients on investment properties, said the stubborn market has been plagued by the low supply of apartments. Rent control in San Jose has given residents an incentive to stay in their homes, and further limits available units, he said.

He expects rents to continue to trend higher, especially around booming employment centers in Santa Clara County.  “There’s just not enough vacancies,” Smith said.

Bay Area rents continued to rise in March

The median monthly price for rentals in Bay Area cities in March, year over year:

CITY                                                       1 BR                      2 BR           Change

San Francisco                                       $2,420                   $3,040                     1.0%

San Jose                                               $2,030                   $2,550                     3.1%

Oakland                                                $1,800                   $2,260                     5.8%

San Mateo                                            $3,400                   $4,270                     2.2%

Walnut Creek                                        $2,440                   $3,060                     1.9%

Mountain View                                      $2,040                   $2,550                     4.3%

Source: Apartment List

Article source: https://www.mercurynews.com/2018/04/02/bay-area-rents-climb-ahead-of-apartment-hunting-season/

This six-story condo, which is expected to receive Silver Certification from Green Point Rated Certification, a Build It Green program, pairs state-of-the-art amenities with environmentally sustainable features. Its vintage-meets-modern design is in sync with its location—a prime spot where technology companies are innovating every day.

Along Rausch Street, the building features garden-stoop entrances, enhanced landscaping and trees. There’s a 5,600-square-foot retail base. Housing above the retail component incorporates large windows and brick material.

The corner of Folsom and Rausch is accentuated by a lighter structure with expansive windows to maximize views and provide connection to the outside. The complex also includes 74 parking spaces (15 ready for electrical vehicle installation) and 104 bike parking spaces.

Sales will start later this year.

Number of units: 112
Price range: Studios: $599,000 to $669,000; one bedrooms: $799,000 to $869,000; two bedrooms: $1.325 million to $1.624 million
Developer/architect: Belrich Partners Rausch LLC and Pillar Capital Consulting Group/BAR Architects
Apartment sizes: 403- to 419-square-foot studios, 603- to 656-square-foot one-bedrooms, 852- to 1,066-square-foot two-bedrooms
Amenities: Daily front desk attendant 7 a.m. to 9:30 p.m., resident lounge, conference room, gym, outdoor yoga platform, landscaped rear garden area, rooftop terrace, barbecue area with fire pit and outdoor media area.
Website: 99rausch-sf.com

Article source: https://www.mansionglobal.com/articles/92724-san-francisco-gets-new-crop-of-luxury-condos

SAN FRANCISCO — For commuters sitting in traffic on Highway 101, heading home to tiny apartments that eat up most of their paychecks, a new bright-green billboard offers yet another reason to pack up and leave the Bay Area.

“Own a home. Work in tech. Move to Pittsburgh,” the ad teases.

The billboard was erected last week by Pittsburgh, Pennsylvania-based startup Duolingo — the maker of a popular online language-learning platform and mobile app — to lure tech talent away from Silicon Valley and into the Steel City. It’s a unique campaign that capitalizes both on the Bay Area’s notorious housing shortage, and the ongoing exodus of local residents searching for cheaper homes and a better quality of life.

And it appears to be working.

In the week since the billboard went up off 101, where the freeway cuts between San Francisco’s Mission and SOMA districts, one Duolingo recruiter reported receiving at least 50 phone calls from people who mentioned seeing the sign, the company said. Not all of those calls resulted in applications, but at least some disgruntled commuters likely are looking for a way out. 

“There’s just significantly less traffic here,” Duolingo CEO Luis von Ahn said. “Being able to buy a home and actually walk to work, which is unheard of in Silicon Valley, is actually pretty common here.”

Half of Duolingo’s 110 employees walk or bike to work, von Ahn said, and about the same number own a home.

The median home value in Pittsburgh is $132,400 — compared to $1.3 million in San Francisco, $1.1 million in San Jose and $755,600 in Oakland, according to Zillow.

Those out-of-sight prices, unaffordable even for many Bay Area workers with high-paying jobs, seem to be playing a role in encouraging residents to leave in numbers higher than the region has seen in 10 years. Last year, for the second year in a row, the droves of people leaving the valley nearly equaled those moving in — 44,102 people left between July 2015 and July 2017, and 44,732 moved in, according to the 2018 Silicon Valley Index report published by Joint Venture Silicon Valley.

That’s because no one can afford to live here anymore — not even Google employees or doctors at Stanford, said Joint Venture president and CEO Russell Hancock.

“It used to be the California dream,” he said, “and now it’s turning into this Silicon Valley nightmare.”

About 10 percent of Duolingo’s employees used to live in the Bay Area, according to the company. Von Ahn says when he asks Bay Area-based applicants why they want to relocate to Pittsburgh, they usually tell him it’s because they want to buy a house.

The Duolingo team decided to capitalize on that by ramping up its Bay Area recruiting effort. While Pittsburgh has a robust tech talent pipeline — it’s home to Carnegie Mellon University, and Uber, Google, Amazon, Apple and Intel have offices there — Duolingo can’t always find local employees to fill the roles it has open. There are plenty of back-end engineers in Pittsburgh, von Ahn said, but Duolingo needs more app developers.

Silicon Valley recruits are highly prized, he said.

“Many of them have worked for companies that we admire and look up to — companies with very popular apps, the Instagrams and Facebooks of the world,” von Ahn said. “So they have very good training from very well-run companies. They bring a little bit of that culture here, which I think is pretty useful for us.”

Kevin Wang moved to Pittsburgh from Berkeley for an engineering job at Duolingo six months ago and never looked back — except maybe to miss the East Bay’s gorgeous weather. Wang, 30, paid $1,100 to rent a room in a four-bedroom condo while attending grad school at UC Berkeley. When he graduated, he took a job at Uber and moved into his mother’s house in Walnut Creek, while sometime’s crashing at a friend’s house in Berkeley. His commute to Uber’s San Francisco office typically took 40 minutes on BART, and Wang said he’d never be able to buy a home there without his parents’ help.

So Wang, who had lived in the East Bay since middle school, decided to head to Pittsburgh. Shortly after he arrived, Wang and his wife bought a three-bedroom home for less than $600,000. Now he bikes the mile from his house to the Duolingo office.

“I like it,” Wang said of Pittsburgh. “I think it has everything I was experiencing in Berkeley. It has plenty of good restaurants, reasonably bike-able streets…It has good parks, and a decent music scene as well.”

Article source: https://www.mercurynews.com/2018/03/30/work-in-tech-want-to-own-a-home-move-to-pittsburgh-bay-area-billboard-says/

This six-story condo, which is expected to receive Silver Certification from Green Point Rated Certification, a Build It Green program, pairs state-of-the-art amenities with environmentally sustainable features. Its vintage-meets-modern design is in sync with its location—a prime spot where technology companies are innovating every day.

Along Rausch Street, the building features garden-stoop entrances, enhanced landscaping and trees. There’s a 5,600-square-foot retail base. Housing above the retail component incorporates large windows and brick material.

The corner of Folsom and Rausch is accentuated by a lighter structure with expansive windows to maximize views and provide connection to the outside. The complex also includes 74 parking spaces (15 ready for electrical vehicle installation) and 104 bike parking spaces.

Sales will start later this year.

Number of units: 112
Price range: Studios: $599,000 to $669,000; one bedrooms: $799,000 to $869,000; two bedrooms: $1.325 million to $1.624 million
Developer/architect: Belrich Partners Rausch LLC and Pillar Capital Consulting Group/BAR Architects
Apartment sizes: 403- to 419-square-foot studios, 603- to 656-square-foot one-bedrooms, 852- to 1,066-square-foot two-bedrooms
Amenities: Daily front desk attendant 7 a.m. to 9:30 p.m., resident lounge, conference room, gym, outdoor yoga platform, landscaped rear garden area, rooftop terrace, barbecue area with fire pit and outdoor media area.
Website: 99rausch-sf.com

Article source: https://www.mansionglobal.com/articles/92724-san-francisco-gets-new-crop-of-luxury-condos

Summary: There is an exception to a previous post, which explained that a stock market crash would have only minor economic effects on America. Just as an oil crash hurts oil producing regions (e.g., Texas), a stock market crash hurts areas that produce stock certificates. Printing this “paper” is the most profitable part of the San Francisco Bay economy, putting it in the cross-hairs for the inevitable crash. We do not know when it will arrive, just that it will. (This is a slightly revised post from 2015.)

Sector crashes often harshly affect industries and regions even when the national impact is minor or even beneficial. An oil bust hurts not just oil exploration and production companies, but also regions focused on that industry (e.g., Texas) – while helping everybody else. Similarly a stock market crash will hurt companies that trade stocks (brokerage firms) and those that print stock certificates (e.g., Tesla Motors) – and areas that manufacture stock certificates. Most especially the San Francisco Bay Area.

Silicon Valley and the entire Bay area form a 21st century version of a gold rush. Money floods in and fortunes are made — but instead of exporting pretty rocks it exports papers promising future riches. This should be obvious by now. I walk through the details in these posts…

• The advertising glut dooms the social media industry.
• The key things to know about the great American bubble machine.

These industries will not disappear, any more than finance did after the 1970s crashes, or the oil industry did after the 1980s bust. But the people in these industries and the areas in which they cluster will suffer from the fall to Earth (except those people at the top, and those who got in early).

What will happen after the crash?

The venture capital industry will evaporate, except for its long-experienced super-competent core. The bursting bubble will thin the herds of biotechs, social media companies, and other bubble industries. Bankruptcies for the unprofitable while the survivors reorganize to produce cash flow and profits instead of glitzy investor presentations and clickbait headlines. That means layoffs, and wage freezes for the rest – which slowly ratchet prices and wages back towards the national averages.

The crash will force evolution of the cultures at some corporations. The New York Time’s exposé about Amazon reveals how the management squeezes its white collar workers (it doesn’t mention the sweatshop working conditions in its warehouses). Only its insanely hot stock price makes that possible, as workers toil for the chance to profit from investors’ greed – more so than their wages.

When a regional economy breaks, its real estate prices usually crash soon afterwards. San Francisco has been one of two great beneficiaries of the debt supercycle since 1982. The result of its field of dreams burning will not be pretty. For its history see this March 2018 report by Paragon Real Estate Group (click to enlarge graph). Imagine the effect when the prices revert, something unimaginable to many in the region.

A real estate crash in a hot property market begins a second wave of economic decline for the affected region. People with no-recourse mortgages walk away from their loans (“jingle mail” for the banks) and seek new opportunities elsewhere. Prices will drop far. Not down to the levels of Buffalo or Iowa City, but to those of a premium urban center. San Francisco will be much like Oz, the Emerald City, after its people take off their green glasses.

Conclusion

Crashes are part of the business cycle, not the apocalypse. Boom-bust cycles are an inherent aspect of free market systems. They occurred in 19th century Britain, with its gold-based currency and no fractional reserve banking.

Sometimes government policy restrains the formation and development of bubbles. Sometimes – like now – it magnifies them.

The important policy action after the crash is helping affected people (minimizing the pain), not making the downturn worse (e.g., the Fed should stop raising interest rates). For long-term benefit we need to better manage these cycles. Investors being less gullible is a good first step. Only fools allow insiders to blow two bubbles in 20 years.

(5) For More Information

Other recent reports about Bay Area real estate by Paragon.

• Bay Area Real Estate Markets Survey, February 2018.
• Long-Term Trends in San Francisco Real Estate, March 2018.
• See all their market reports.

Please like us on Facebook, follow us on Twitter, and post your comments — because we value your participation. Updates to this post appear in the comments. See all posts about bubbles, especially these…

• The new tech bubble takes us to a new world. A mad world.
• How we’ve become accustomed to bubbles bursting the economy, instead of fighting them.
• We see a stock market bubble but prefer to close our eyes.
• Playing The Bubble Game: Investing In The 21st Century — at Seeking Alpha.

(6) Great books about bubbles

Extraordinary Popular Delusions and The Madness of Crowds by Charles Mackay (1842).

Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger and? Robert Z. Aliber.

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Article source: https://fabiusmaximus.com/2018/03/30/the-coming-stock-market-real-estate-crash/