Blogging Bayport Alameda

March 2, 2016

Short supply

Filed under: Alameda — Lauren Do @ 6:02 am

Even though some people believe that adding supply will never ease the demand for housing, particularly in hot markets like the Bay Area there are a few metro areas that seemingly have bucked that disbelief.

From Washington DC which had notoriously high rent the added supply has brought down rents into this metro area which was becoming increasingly unaffordable, from Greater Greater Washington:

In 2015, DC permitted more new housing units—4,956, to be exact—than in any year since the Census started keeping track in 1980. This pace of housing growth compares favorably to other cities, and there’s reason to believe it’s helping to slow rent increases.

In recent years, real estate analysts have noted that DC’s higher pace of building has led to rents that are slowing in growth, or even declining. This effect is especially seen at the higher end of the market, since most new construction is luxury.

Here’s Multifamily Executive covering a new Yardi Matrix report:

The cities that had the smallest rent gains in 2015 were Richmond, Va.; Washington, D.C.; and Baltimore. Echoing other reports, Yardi says Washington’s rent gains have been held back because of the large amount of new supply in its market, while Baltimore still lacks job growth. These cities can expect to see similar results in 2016, Yardi says.

And for an example a little close from home, Seattle has seen its share of high rents as well.  But it appears that the building glut as softened the spikes, from Puget Sound Business Journal:

There are 22,000 units projected to open this year and next. Combine that with the 7,400 units developers opened last year. – the highest level of production seen locally since 1991 – and it’s easy to see why landlords are concerned.

“It’s interesting right now because supply, I think, is definitely having more of an impact and a drag on the market right now more than anything else,” said Pettit during a Bisnow event.

While a lot of the units in DC and Seattle are of the luxury and higher market rate variety, according to the latest report from the Legislative Analysts Office because of the barrier to actually building subsidized affordable housing, at this point one reliable method to helping to soften the housing market pricing is by building market rate housing, from Streets Blog:

The report notes that it’s simply unrealistic to expect that current strategies to prevent displacement, like voucher and affordable housing production programs, will meet the growing need of rent-burdened low-income households by themselves.

“While affordable housing programs are vitally important to the households they assist, these programs help only a small fraction of the Californians that are struggling to cope with the state’s high housing costs. The majority of low-income households receive little or no assistance and spend more than half of their income on housing,” according to the report.

“Extending housing assistance to low-income Californians who currently do not receive it — either through subsidies for affordable units or housing vouchers — would require an annual funding commitment in the low tens of billions of dollars. This is roughly the magnitude of the state’s largest General Fund expenditure outside of education (Medi-Cal),” the report says.

Policies like rent control, while they may benefit some existing tenants, don’t actually do much to address the problems in the long term because price controls don’t add new housing.

More on that report in a different post.

 

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22 Comments »

  1. Well, that is a strategy: make Alameda less and less desirable to live, and rents will go down. Let’s start tearing down Victorians and replacing them with cinder block apartment buildings. It’s a strategy that worked for a while in the 1950-60s, why not try it again?

    Maybe we can find a loophole and start filling in the Bay again, adding cheap real estate. Litter, crime, tax breaks for letting your house and yard revert to a certain seediness…there are lots of effective and creative ways, besides building more units, to bring down demand and reduce rents.

    Unfortunately, as with the build build build impulse, they all seem to come down to the Vietnam strategy: “We had to destroy the village in order to save it.”

    Comment by Jack Mingo — March 2, 2016 @ 7:22 am

  2. 1. “there are lots of effective and creative ways, besides building more units, to bring down demand and reduce rents.” This is about supply, not demand. Price is where the two intersect.

    So what would you do?

    Comment by BC — March 2, 2016 @ 7:56 am

  3. At the risk of devolving into chicken/egg silliness, the recent situation has more to do with demand than supply. The supply hasn’t much changed the last few years, but demand has.

    Comment by dave — March 2, 2016 @ 8:15 am

  4. True! But demand is a little out of our control.

    Comment by BC — March 2, 2016 @ 8:17 am

  5. The constraint is not housing it’s infrastructure. The tube and bridges are almost impassible at commute time already, by adding more people it’ll be gridlock. At that point the attractiveness of living here (demand) will decline and prices will stabilize.

    Comment by Adrian Blakey — March 2, 2016 @ 8:21 am

  6. 5

    Bingo

    Comment by dave — March 2, 2016 @ 8:34 am

  7. some things are more mutable than others but there is no such thing as a “constant”. It’s perspective which changes the view, whether it is from across the estuary or from the space station.

    Comment by MI — March 2, 2016 @ 8:35 am

  8. #7 That’s deep.

    Comment by frank — March 2, 2016 @ 8:45 am

  9. you want deep? try this.

    I’m trying to take an historic perspective. We set the trend when the land was stolen from the Ohlone. The price of land, and housing with it, may go up and down in shorter term but over all it will only go up, even if we tear down all the Victorians. FACT: New housing may not bring down the rents but no new housing will make the rents increase faster.

    We are all on a collective ride on the great ship planet earth. Building more housing may not have an appreciable effect on climate change, or at least a direct effect in the short term, but the broad historical reality is that whining about our “quality of life” is sort of elitist bullshit. I know it is a little insane, but my first reaction is, if you don’t like it then move somewhere better like the ghetto in Capetown , or maybe just Chicago.

    “For the greater good, let’s wreck Alameda as fast as possible!” That is sarcasm but not what it might sound out of context. I’m not making fun of the pro-development people. I’m not embracing them either, just trying to keep PERSPECTIVE. Rhetorical speculation about bull dozing more Victorians ( which ain’t gonna happen) , as an argument against more new development, to me invokes an analogy made by David Suzuki about climate change and what to do about it. It goes like this: “It’s like being in a car speeding toward a brick wall at 100 MPH and arguing over who gets to sit in the front seat.”

    Alameda with it’s pristine Victorians ( and their expensive up keep) is the front seat. The Ohlone are the corpses in the trunk. If it is really important to have the front seat until we hit the brick wall because you believe we can’t avoid the impact, I can accept that.

    I know new housing will not bring back the Ohlone and so this whole comment can be dismissed as new age drivel or it’s equivalent, but sometimes it’s good to get a reality check. Now we can all get back to rational debate about how new housing effects markets..

    Comment by MI — March 2, 2016 @ 9:06 am

  10. The attractiveness of living here for many is the short commute to SF. I preferred Livermore but the extra commute time was the largest factor for moving to Alameda. 20 minutes to the SF by the ferry. That drives a lot of the demand in Alameda. Now the have a ferry to Oyster Point. I turned down a Job at Genentech because of the long commute prior to the ferry.

    What would be ideal is to have more companies (Jobs) in Alameda which people could just commute within the Island. Supply also makes a huge difference in my opinion.

    What is funny is Uber is moving to Oakland and all of a sudden there is a huge demand. There will only be 2,000 people working there and probably 75% will live somewhere else. A lot of it is perception, although many from SF are migrating East anyway. There are thousands of new housing units planned and is different stages of development in Oakland. The one which will impact traffic though the tunnels and onto the freeways is Brooklyn Basin project and the new housing in the Jack London Area. “Coliseum City” if it happens could impact 880 as well.

    Comment by joelsf — March 2, 2016 @ 9:30 am

  11. First of all, the Pope, Spain or Mexico stole it from the Ohlone (not sure which), then we stole it from Mexico, fair and square. I live right by a constant reminder of why equating “quality of life” with elitism should be exercised with some restraint (does that sound elitist?), even if here only to splash some water on opposing rhetoric. The particular reminder is that truck depot and concrete bunker butting up to the beach called the Post Office (and McDonalds – which I admittedly hit some weekends — and the concrete bunker courthouse). I don’t know how the Ohlone felt about that decision, or if they cared that much given the passage of history and its location on landfill, but it’s unlikely to have been to label any opposition as elitist quality of lifers. (I’ve always wondered about the Post Office’s placement as far from the highway in Alameda as you can get. Was it in anticipation of a second bay bridge coming through or just relatively cheap space?). Also, does anyone have an update on new housing that is coming to the Oakland side of the Estuary (West of 880)?

    Comment by MP — March 2, 2016 @ 10:05 am

  12. “The tube and bridges are almost impassible at commute time”

    At peak morning commute time, the average time through the tube in the off-island direction is 7 to 8 minutes.

    At non-commute time, the average time through the tube is 3 to 4 minutes.

    Does the term ‘almost impassible’ accurately reflect a 4 minute differential?

    What I’ve observed is that Alamedans will take the amount of time it takes to get through the tube when there is an ACCIDENT IN THE TUBE (which has nothing to do with development or more people living here), and attribute that delay to development and new residents. It’s human nature I guess, but wrong.

    Comment by brock — March 2, 2016 @ 10:22 am

  13. 12

    Small sample size but here goes:

    I bike to work so bridge & tunnel commute times don’t much affect me, buy I have driven someone to Fruitvale BART at 8AM-ish a few times lately. From my house in the Fernside to BART and back has taken 30 minutes or more.

    And people I know who do commute through the tube all tell me it’s gotten much worse.

    Just a tiny observation.

    Comment by dave — March 2, 2016 @ 11:03 am

  14. Maybe I’m in the minority, but getting someplace door-to-door in 15 minutes in an urban environment doesn’t seem unreasonable to me. Especially during peak commute hours.

    I go through the tube during commute hours almost everyday (full disclosure – I’m on the bus) and haven’t noticed any difference in commute times since February-March 2015 when I was measuring the travel time.

    Comment by brock — March 2, 2016 @ 12:44 pm

  15. Brock is right. The tube commute doesn’t take that long; never has. Just feels bad when you are alone in a car. But the time I’ve spent in the tube has never been as bad as the time I’ve spent between 2 off-ramps on an SF or LA freeway at rush hour.

    MP = The Shoreline Post Office is located where we used to have a DMV.

    Comment by vigi — March 2, 2016 @ 2:59 pm

  16. 5. It’s not like when you get over a bridge or through the tube, you rush to your destination. I’ve sailed right over the Park St bridge in rush hour, only get stuck on 880 in San Leandro.

    I wonder how much any worsening of commute times is due to off-island factors and not to the capacity of bridges and tunnels. These are faced by people in Berkeley and Piedmont too, and relate to (a) being in what is probably another tech bubble and (b) decades of statewide underinvestment in infrastructure.

    Where we are different is that we don’t have BART. I think there’s a lot more that can be done to get people to BART on frequent, clean and efficient buses than is done now. Then the question can be, not how many cars we can get across bridges and through tunnels, but how many people. If we can get people to BART efficiently, then those who have to or want to drive will face congestion just as awful as everyone else in the East Bay but no worse.

    And Manhattan is pretty crowded at its entrances and exits. But that failed as a strategy for lowering rents there.

    Comment by BC — March 2, 2016 @ 5:35 pm

  17. I’ll take the front seat.

    Suzuki “…I’m not a climatologist. I wait for the climatologists to tell us what they’re thinking.”

    http://www.torontosun.com/2013/09/27/down-under-blunder-david-suzuki-unmasked-as-a-know-nothing-huckster-on-australian-tv

    Comment by jack — March 3, 2016 @ 9:00 am

  18. your front seat is guaranteed Jack, you dinosaur. You can pretend it’s 1950 and not wear a seat belt ‘
    cause it won’t make any difference. That hit piece on Suzuki is real entertaining. There is some woman who has a blog dedicated to outing him as a hypocrite. He has spoken out about over population but has five kids by different wives. BFD.

    Comment by MI — March 3, 2016 @ 11:07 am

  19. 11. That’s really a technicality. “we” refers to first Europeans to show up and start the genocide, not just Caucasian inhabitants of Alameda. Plenty of Modoc blood on the hands of people like Fremont who came after we ran Peraltas off their rancheria.

    And yes, rhetoric is rhetoric. On the one hand I apologize to Jack Mingo for losing my composure and being in his face with “elitist bullshit” accusation, but also won’t retract it. It just gets tedious to hear people invoke the same old hot button phrases like “bulldozed Victorians”, “mom and pop landlords”, “Emeryville”. I like a good metaphor as much as the next guy, but think the destruction of Vietnam hamlet is maybe hyperbolic. Napalm in Alameda? Just outgoing from the old NAS.

    I’m aware that housing costs are not directly linked to climate but density as a solution is linked to both climate and affordability.

    Comment by MI — March 3, 2016 @ 11:59 am

  20. #11 They are working on the Oak to 9th infrastructure currently and I believe the first building is going to start this year…I think the build out it is expected to last for 6 years.

    In my opinion, we should be building denser housing where jobs are. Who wants to spend hours commuting instead of with their family and friends? It is a quality of life thing for me as well as for the climate (environment). Urban sprawl is the most stupid and selfish thing one can do…take up the farm land, use more energy, so you can have your large yard with a white picket fence. I am not saying tear down the Victorian but tear down the 50-60 era buildings which don’t have any meaning and build 5 stories their. We have a lot of Old Apartment Buildings in Alameda which are 6 stories or more which are more than a box with a carport. My sister lived in one of those apartments in the early 80’s and it was a shithole on Sherman St. and it is still a shithole.

    When visiting her I would park on the street run to her place. The West End is so different now…but Webster St was scary back then if you came from a small town in the middle of ‘know where’ in Oregon. I have changed but so has Webster St. I would compare the way I felt then as the way I feel about walking down International Blvd in East Oakland today. That was just my perception…at the time, I am sure it wasn’t that bad. My dad worked for the forest service so we lived is small towns sometimes in the middle of no where…a few with only 300 people.

    Comment by joelsf — March 3, 2016 @ 6:44 pm

  21. Where exactly are buildings in Alameda that are “6 stories or more” ?

    Comment by A Neighbor — March 3, 2016 @ 7:05 pm

  22. Palomar is 8 stories. There are some on Lincoln, Park Regent are 5 stories and I looked online and most of the other old ones are either 4 or 5 stories built probably pre 1940’s…so I misspoke.

    Comment by joelsf — March 3, 2016 @ 8:03 pm


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