October 1, 2023 Breaking News, Latest News, and Videos

Real Estate Prices Driving Moves From State

By Tom Elias

If you’re a millennial, now aged 18 to 35, there’s a good chance the only major city in California you’re very much interested in moving to is San Francisco. That’s because it’s largely walkable, with plenty of amenities like singles bars and gorgeous parks. And also a lot of high-paying, high-tech jobs if you qualify.

Millenials may be willing to double- and triple-up so they can live where they like despite high rents, but that same cost factor is driving an unprecedented share of them away from California, says a new study from the Apartment List website

When they get ready to buy, those same millennials are forced out of high-priced cities like San Francisco, Santa Barbara and the coastal parts of Los Angeles, adds the CoreLogic data analysis firm.

This scene is not unique to California’s higher-priced cities, but also occurs in New York, Chicago’s tonier areas, Boston and Washington, D.C. But it could lead to serious problems for California companies wanting to hire or retain the brightest members of the young-adult generation.

In San Francisco and Silicon Valley, where prices have skied in the last three years, 50 out of every 100 households that apply for new home mortgages are buying in nearby counties like Alameda and Contra Costa, where prices are significantly lower. Contra Costa’s median sales price over the last year, for example, was less than half San Francisco’s for comparable properties.

Now this problem is spreading to nearby Alameda County, home to cities like Oakland and Berkeley, where 34 percent of home loan applications are for areas even farther from the Bay Area’s urban core.

In Los Angeles, meanwhile, the millennial population decreased by 7.4 percent between 2005 and 2015, with many 18-to-35s decamping to places like Austin, Tex., Charlotte and Houston. The technology industry is strong in those places, but real estate prices and rents are half or less than for comparable properties in the most trendy parts of Los Angeles.

Overall, says CoreLogic, home prices were up 71 percent in California in that time, with the median statewide home price in mid-2016 reaching $428,000.

There is no backlash yet, mostly because of foreign buyers, who tend to be among their countries’ affluent, seeking a safe place to invest their riches. The leading buyers of this type have lately been mainland Chinese.

“This makes it harder for the average person to make a living (in California),” said Sam Khater, a CoreLogic economist. “That means less teachers, fire fighters, retail workers and more. It’s causing the entire state to be more expensive.”

Or, as a Silicon Valley executive complained earlier this year, “I pay some of my people with master’s degrees $70,000 and $80,000 a year and they still have no hope of buying a house anywhere near where they work.”

Some locales are trying to compensate for this by subsidizing teacher housing, from kindergarten to the college level. For sure, real estate prices are a recruiting barrier when companies and schools seek to hire top talent from places like Texas and Arizona, where median home prices are barely half California’s level.

Some places are trying to solve the problem with affordable housing, generally apartments or condominium units that builders are required to include in new developments along with market-rate housing. This kind of affordable property usually bears a resale price limit, with city and school employees often getting priority on the long waiting lists for them.

But those same new developments, when placed in already crowded urban areas, add to traffic volume which is not notably reduced even by new public transit that has opened in parts of Los Angeles and other areas.

It’s a real quandary for California: The state needs talented young workers to fuel its innovative industries, but even those who earn more than $200,000 yearly have difficulty qualifying for mortgages on homes selling for more than $1 million, increasingly common in this state.

But acting to artificially reduce real estate prices would impact the resources of millions of Californians who have lived here for a generation or two.

So far, there is no answer to this dilemma, which sees more and more companies forced to open satellite facilities in more affordable states.

elias

in Opinion
Related Posts

S.M.a.r.t Column: Civic Center Debate

September 24, 2023

September 24, 2023

Civic Center Debate Last year, the City declared the Civic Center Auditorium surplus property after a decade of neglect and...

SMa.r.t.Column: THE ONCE AND FUTURE SANTA MONICA CIVIC AUDITORIUM

September 18, 2023

September 18, 2023

This week SMa.r.t. is focusing on the historic Civic Center Auditorium and residents’ efforts to save it from a misdirected...

S.M.a.r.t Column: The Battle for the Planning Commission: A Circus of Political Maneuvers

September 10, 2023

September 10, 2023

Ah, the wonderful world of city politics! Ladies and gentlemen hold on to your hats as we delve into the...

S.M.a.r.t Column: The 30 MPH City Part 2

September 4, 2023

September 4, 2023

Last week’s article discussed why we need to continue our program to slow down our streets to save lives, given...

S.M.a.r.t Column: The 30 MPH City Part One

August 27, 2023

August 27, 2023

Some ideas sound extreme when first presented but acquire more credibility when you think about it, and particularly when conditions...

Open Letter On the California Voting Rights Case Against the City of Santa Monica

August 25, 2023

August 25, 2023

By Oscar de la Torre Like many Santa Monicans and Californians who care about fair elections, I watched the California...

S.M.a.r.t article: Save the Civic – Keep it Alive

August 6, 2023

August 6, 2023

Santa Monica Civic Auditorium: A Historic Gem That Shaped Our City’s Cultural Legacy. Save Santa Monica’s Heritage The Santa Monica...

SMa.r.t. Column: Counseling The City Council

July 28, 2023

July 28, 2023

This week, our SMa.r.t. column is authored by concerned resident Nikki Kolhoff. Nikki has been an active voice in the...

SMa.r.t. column: The Impact of Private Companies on Our City Streets: A Call for Safety

July 21, 2023

July 21, 2023

As someone who’s always out and about, whether walking, biking, or driving, this writer has noticed a worrying trend that...

A Seismic Duality

July 21, 2023

July 21, 2023

Last month the City issued a follow-up report on its success in complying with its Seismic Retrofit Program. This 2017...

SMa.r.t. Column: The Future Of Santa Monica Airport (SMO)

July 4, 2023

July 4, 2023

On January 1, 2029, the City Council will be given the legal right to vote on whether to maintain the...

A Comfortable City for All

June 23, 2023

June 23, 2023

Picture this: a concerned citizen takes to Facebook to ask about the mysteriously vanishing benches and chairs on the Promenade....

An Open Letter To Santa Monica

June 16, 2023

June 16, 2023

Declining Business Climate in Downtown Santa Monica By Jennifer Rush, Blue Plate Restaurant Group To all that do business, live,...

Thirsty Santa Monica: Running Dry

June 11, 2023

June 11, 2023

The thirst is real, and Santa Monica is feeling it. The problem? Santa Monica relies on the Metropolitan Water District...

Landmarks Commission Back From the Dead

June 2, 2023

June 2, 2023

For over three years, SMa.r.t. (Santa Monica Architects for a Responsible Tomorrow) has consistently warned that recently increased intense development...