San Mateo City Council Fails to Pass Tenant Protections

At a public meeting on Monday night, San Mateo City Council met to decide on whether or not to pass temporary tenant protection measures, but the contentious meeting was adjourned without a single vote being cast.  This was the second of two meetings that were held to address a report provided by the city's housing task force, which highlighted a 40% increase in rent over 4 years, and a huge imbalance in jobs to available housing.

After failing to reach an agreement on a 90 day just cause eviction and rent control ordinance last week, the Council was again incapable of coming to a meeting of the minds about a proposed relocation assistance program this week.  The relocation assistance program would have required landlords to pay tenants six months worth of the area’s median rent for a similar size unit if they evicted tenants without just cause or give steep rent increases of 10 percent or more.  This temporary measure was supposed to protect tenants from landlords preemptively raising rents while the city, tried to come up with a more long term solution.

Frustrated with the city's inaction, tenant groups opted not to attend the latest meeting.  Reyna Gonzales, a representative from Faith in Action - a group that has been lobbying for tenant protections - issued the following statement regarding tenant absence:

“Over the past 18 months, we have been to more than a dozen city meetings, have participated in the city’s task force, have shared painful, personal stories, and have watched hundreds of families and seniors in our community be displaced while the council deliberated what action to take. We are tired of witnessing how the voices of special interests seem to continually outweigh the voices of residents. We are choosing not to attend tonight’s meeting because it is clear that the council will not take action to address this crisis in a meaningful way”

Those in opposition to tenant protection measures however (mostly landlords), were heavily represented at the meeting.

For now, both parties seem to be resigned to let the issue of tenant protection/rent control be decided by the voters on the November ballot.

Source: San Mateo Daily Journal

Redwood City to Discuss 15% Affordable Housing Requirement

At Redwood City's April 11th City Council meeting, they will be holding a study session to mull over the possibility of amending the Precise plan to reserve 15% of all new housing development for affordable units.   There are 2,500 housing units left to be constructed under the Downtown Precise Plan.  If a 15% affordable housing amendment were to be passed, that would mean at least 375 of those would be below market rate.

In addition to this proposed amendment, the council is expected to choose a developer to build a 100% below-market-rate housing complex on city owned land at 707 & 777 Bradford Street.  The city will be handing over the land (which is worth an estimated 8 million dollars) to the chosen developer at no cost.

No vote will be cast at the meeting regarding the amendment, but a vote will be cast to choose between the 5 development proposals that were submitted for the Bradford Street affordable housing project, which will include anywhere between 56-137 units for low to very low income families.

City Council has turned their attention towards affordable housing in recent months.  Back in October, they passed a $20 per square foot fee on all new office and residential developments, and a $5 per square foot fee on retail and housing.  The estimated $5 million in annual revenue these fees will generate will go towards affordable housing.

The City also donated $1.5 million to Habitat for Humanity for the construction of 20 affordable units on Jefferson Avenue, which we discussed in a previous blog post.

Mid-Peninsula Real Estate Market Not Red Hot in Quarter 1

Persistently low inventory kept home prices high through the first quarter of 2016, though growth has cooled off considerably.  The average sales price of a home on the mid-Peninsula - which I define as San Mateo, Foster City, Belmont, San Carlos, Redwood City, and Menlo Park - grew just 2.9% from Quarter 1 of 2015 ($1,586,414) through Q1 of 2016 ($1,632,449).  By comparison, over that same stretch of time from 2014-15, average sales price grew 16.6% - from $1,359,787 to $1,586,414.   

Though it may still be too early in the year to tell, this may be an indicator that the market is finally starting to push back against what many had deemed to be unsustainable price growth.  For over a year now, there has been talk among real estate professionals and economists that some degree of pullback was inevitable in the Bay Area real estate market, as price growth simply could not continue to outpace income growth to the extent that it has.  At some point, either demand would diminish, which would ultimately slow prices down, or incomes would have to see a huge boost.  The former presents the more likely scenario, and it seems that is what is beginning to happen.

For much of 2015, demand was so high that sellers were often fielding multiple offers before they even hosted an open house.  Transactions were frequently done in cash, and closing times were historically short.  In the early part of 2016, the real estate market is starting to look a bit different.  The right homes in the right neighborhoods are still selling quickly at prices that continue to impress, but homes with a few quirks/flaws are starting to sit on the market a bit longer.  Listings across the mid-peninsula in Q1 of 2016 stayed on the market for an average of just over 19 days - still a healthy number, but up from 16 days the same time last year.  In certain cities, the disparity between those numbers is much more dramatic.  Like in Redwood City, where the average DOM grew 100% - from 14 days in Q1 of '15 to 28 days in Q1  of'16. 

Much of this can be attributed to the demand for higher end real estate becoming far less reliable.  The decrease in demand is allowing buyers at the higher price points to be more selective, and contingent offers are becoming more common.  In Redwood City, Q1 sales of $1.6 million and above sat on the market for an average of 31 days, as opposed to 21 days for sales in the range of $1-1.6 million.  By contrast, the average DOM for sales in both of those price ranges in Q1 of 2015 was just 12 days - so it is evident that the decrease in demand has taken a heavier toll on higher end real estate.

Despite the slight slowdown in the first part of 2016, I am still dismissive of the idea that there may be an impending market crash, or even a significant pullback.  Prices may not be growing at the breakneck pace they were just a year ago, but the Bay Area's healthy economy and rapid job growth should continue to fuel strong demand for mid-priced real estate, even if the high end comes back down to earth a bit.  

As a seller, the best move you can make to prepare for the possibility of a longer transaction, is to enlist the help of a real estate agent who is adept at identifying characteristics of a property that could adversely effect desirability/sales price, and who can advise you on simple/cost efficient ways of improving on these features - something the RealSmart Team specializes in.  

Mid-Peninsula Market Statistics: Quarter 1 - 2016