May 21, 2024 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

SM.a.r.t. Column: A Path Forward for Santa Monica: Part II

May 19, 2024

May 19, 2024

As referenced in Part I of this article, the state’s use of faulty statistics and forceful legislation has left a...

SM.a.r.t. Column: A Path Forward for Santa Monica: Part I

May 12, 2024

May 12, 2024

To quickly summarize, California grapples with an ongoing housing crisis spurred by state implementation of over 100 policies and mandates...

SM.a.r.t. Column: Where Will Our Huddled Masses Sleep? Navigating California’s Affordable Housing Mandates

May 5, 2024

May 5, 2024

Just as Lady Liberty beckons the “huddled masses” of immigrants to America, cities like Santa Monica have an ethical obligation...

SM.a.r.t Column: SMCLC SPEAKS

April 28, 2024

April 28, 2024

SMart (Santa Monica Architects for a Responsible Tomorrow) periodically invites guest columnists who have made a significant contribution to the...

SM.a.r.t Column: Building Modern Boxes Lacks Identity

April 21, 2024

April 21, 2024

In the relentless pursuit of modernity, cities worldwide have witnessed the rise of so-called architectural marvels in the form of...

SM.a.r.t. Column: Santa Monica Needs Responsible Urban and Architectural Design

April 14, 2024

April 14, 2024

[SMa.r.t. note: Eight years ago, our highly esteemed and recently-passed colleague Ron Goldman documented his thoughts on the need for...

SM.a.r.t. Column: BLINK NOW!

April 7, 2024

April 7, 2024

Nine years ago, I wrote a column for SMa.r.t. titled SANTA MONICA: BEACH TOWN OR ‘DINGBAT’ CITY? (https://smdp.com/2015/05/09/santa-monica-beach-town-dingbat-city/)Here is the...

SM.a.r.t Column: ARB Courage (Part 2 of 2)

March 31, 2024

March 31, 2024

Last week we discussed the numerous flaws of the Gelson’s project as a perfect example of what not to do...

ARB Courage (Part 1 of 2)

March 24, 2024

March 24, 2024

On March 4, 2024, your ARB (Architectural Review Board) ruled in favor of the 521-unit Gelson’s Project at Ocean Park...

SM.a.r.t Column: Can California ARBs Balance Affordable Housing with Community Character in the Face of New Housing Laws?

March 17, 2024

March 17, 2024

By suggestion, I attended the March 4th ARB (Architectural Review Board) meeting that addressed the Gelson Lincoln Boulevard Project.  After...

S.M.a.r.t Column: On the Need for Safety

March 10, 2024

March 10, 2024

Earlier this week, in the dark pre-dawn hours, a pair of thugs covered in masks and hoodies burst into the...

Film Review: The Oscar Landscape 2024

March 7, 2024

March 7, 2024

FILM REVIEWTHE OSCAR LANDSCAPE 2024A Look at the Choices – Academy Awards – March 10, 2024, at 5:00 p.m. on...

S.M.a.r.t Column: Five Saving Historic Santa Monica

March 3, 2024

March 3, 2024

Our beloved City is surrounded by many threats, from sea level rise to homelessness, to housing affordability, to cancerous overdevelopment,...

S.M.a.r.t Column: Gelson’s Looms Large

February 22, 2024

February 22, 2024

Our guest column this week is by SMCLC (the Santa Monica Coalition for a Livable City). SMCLC is a well-established...

S.M.a.r.t Column: Top Toady Town

February 18, 2024

February 18, 2024

Throughout history, from the ancient Romans and Assyrians to Russia’s ongoing invasion of Ukraine, siege warfare has served as an...