Dumbarton Rail Plan Takes Small Step Forward

For decades, there have been discussions among regional officials about reactivating the long defunct Dumbarton rail, which runs along the Dumbarton bridge connecting Menlo Park and Union City.  Such talks have never gained any legs, mostly due to an inability to source sufficient funding for the project.  However, last Tuesday San Mateo County Transit District officials approved a plan to make a number of short-term and long-term improvements along the Dumbarton transportation corridor, including a $1.27 billion overhaul of the 100+ year old rail bridge.  This plan is the culmination of a study into reviving the corridor led by SamTrans, who have owned the rail bridge since 1994.

The rail would require major improvements before it could become operational again, but if active, it would link Caltrain, BART, the Altamont Corridor Express, and Capitol Corridor.  Proponents of the project call it the "missing link" to a regional rail system that would carry passengers from as far as Sacramento and San Joaquin Valley to jobs in Silicon Valley. 

While it's encouraging to see San Mateo County Transit officials taking steps to push the project forward, cooperation would be needed from several other regional bodies before any improvements could be made, since the rail corridor spans multiple counties and transportation agencies. 

Funding is another major challenge, as currently no funds have been allocated towards any of the improvements specified in the plan.  Regional Measure 3, which could be on the ballot as early as next year, proposes a $3 toll increase on the region's 7 state-owned bridges.  If passed, $130 million of the toll increase's projected $4.5 billion in revenue would go towards Dumbarton Corridor improvements.  With that in mind, it's worth noting that funds which were set aside for the Dumbarton Corridor from the last bridge toll increase have since been reallocated.  

In reality, if we are ever going to see the Dumbarton Rail Corrdior project move forward, it is going to take significant contributions from the private sector, specifically Silicon Valley companies whose employees would be filling the train's seats every day.  Competition for government money is tight, and $1.24 billion is a funding gap far too large for a bridge toll increase to fill.  

Stay tuned to my blog for updates on this and other local news

A Look at Benjamin Moore's Top Paint Colors of 2018

Every year, Benjamin Moore releases a list of their top colors, showcasing what they have found to be their most popular paint colors around the world.  It's a great list to reference if you're doing any home renovation, or are just looking to freshen your home up a bit with a new look.  Their 2018 list was recently released, which includes their 2018 color of the year: Caliente.  The video below shows a little about how they chose Caliente as the color of the year, and highlights some of it's uses.

The RealSmart Fund (the investment arm of RealSmart Group) used several of Bejamin Moore's top colors of 2018 at our most recent flip in Redwood City.  Below is a slideshow with pictures of the home, where you can see these colors in action - if you like what you see, let us know!  We'll let you know which colors were used where, and we have samples of all of these colors at the office for you to try out for yourself!

Follow this link for the complete list of 2018's top paint colors

Redwood City Close to Adopting El Camino Corridor Plan

Last week, the Redwood City Planning Commission unanimously endorsed The El Camino Corrdior Plan, which aims to improve travel and business along the city's main thoroughfare. The plan was launched by City Council in January of 2016, and took form over 6 public meetings led by a 10-member citizens advisory panel. It prioritizes improving all forms of travel along El Camino- car, bike, public, and foot - without removing any existing car lanes, and calls for additional ground floor retail and affordable housing.

 The recommendations for improving transportation include: adding a bike lane separated by a barrier from vehicles (which would involve removing some street parking), making sidewalks continuous, and adding more trees and pedestrian lights along the street for better walkability.

While the plan doesn't currently call for any zoning amendments that would allow taller buildings, the El Camino corridor could be an ideal location for the higher density housing that many people feel Redwood City needs in order to adequately address demand for rental units. The ease of access to public transit along El Camino has the potential to mitigate some of the traffic concerns higher density housing can bring, especially after improvements are made to the corridor to facilitate smoother travel.

The Planning Commission's recent endorsement of the El Camino Corridor Plan is not an official approval. It will be brought to City Council on December 4th for official consideration and possible adoption.

Follow this link for more information and updates on the progress on the El Camino Corridor Plan.

Non-Profit Developer Planning 67 Affordable Units in RWC

67 affordable rental housing units for low income families and homeless/at-risk veterans are being planned at 2821 El Camino Real in unincorporated Redwood City, thanks to a $3.5 million dollar loan that just funded from HEART of San Mateo County to non-profit developer, Palo Alto Housing Corp (PAH).  The money was given on a one-year loan with a very low interest rate in order to facilitate PAH's purchase of the 0.59-acre site, which is currently home to an Enterprise Rent-a-Car.

Plans call for the construction of 67 studio and one bedroom apartments.  34 of those units will be made available to families making 30-60% of the area's median income which, according to the San Mateo County Department of Housing, is between $39,500 and $78,960 annually for a family of four.  27 units will be reserved for homeless or at-risk veterans, and the remaining 6 will be set aside for homeless or at-risk individuals with mental illness.  Support services for these tenants will be provided on-site as well.  The project is currently in the preliminary stages of the the application process as PAH waits for the property to be rezoned, which they hope will occur sometime in November.  If all goes as planned (which is rarely the case in development), construction will begin early 2019, and the property will be fully leased by late 2020.

The Housing Endowment and Regional Trust (HEART) of San Mateo County has been a crucial resource for getting affordable housing projects up and running, especially since the dissolution of California's 400 plus redevelopment agencies in 2012.  HEART is a public/private partnership formed by the county, cities, and labor, business, and education non-profits with the purpose of providing more affordable housing opportunities.  Since it's inception in 2003, the organization has received $14 million in funding gifts and pledges, enabling them to invest around $12.4 million into more than 950 affordable homes across the county.  That money goes towards land purchase, architectural drawings, environmental impact reports, and other costly obstacles that cash-strapped non-profit developers face before they can even break ground on a project. 

Since this project is on county lands, it doesn't fall under Redwood City jurisdiction and therefore will be voted on by county officials rather than the Redwood City Planning Commission.  Still, if approved, this would be the largest affordable housing development to be approved in the Redwood City area since the passing of the Downtown Precise Plan in 2011.  It will lose that spot however, if Sobrato is able to gain approval for their massive Broadway Plaza redevelopment, which includes a separate 120 unit affordable housing development.

Stay tuned!

To Stage or Not to Stage

You’re getting ready to sell your home and your Realtor recommends staging it prior to going on the market. You think to yourself: ‘Why waste the money? We’re in a seller’s market, and I have a beautiful home that should sell no problem, with or without staging.’ Well, you might be right, but the question isn’t whether staging will be the difference between your home selling or not. The question is whether staging will increase the likelihood of your home selling quickly and at the highest price the market will bear. In cases where the home isn’t a complete fixer, the answer to that question is usually yes.

First impressions mean a lot in real estate, even in a highly competitive market like the Bay Area. For a buyer to feel confident writing their highest and best offer for your property, you want them to feel at home as soon as they walk through the front door. Needless to say, it’s hard for most people to feel comfortable in a dark and empty house. If one of our clients has a vacant home, we almost always hire a professional stager to furnish it before going on the market.

If you currently live in the house you’re selling, “staging” becomes more a matter of rearranging furniture, decluttering and hiding/removing personal effects. As much as your home feels like home to you, it might not feel that way to the next family. Whether vacant or owner occupied, it’s important to present a neutral living space that appeals to the broadest demographic of buyers possible.

Foster City Must Upgrade Levee or Become Flood Zone

Flooding and flood insurance is the top of the news stories with the multiple hurricanes arriving on the Florida coastline. Here in California, we don’t think too much about hurricanes or flooding, but the latter may be more of a reality than we are aware of. We live in the Bay Area - aptly named as our cities surround approximately 1600 square miles of “bay” water - and while hurricanes don't pose much of a flood threat here, rising bay levels do. One bayside community is currently at the middle of a battle to protect their city from flood hazards, as well as the costly insurance premiums that come along with them.

Foster City officials are currently mulling over their options for updating the levee running between their city and the bayfront. The Federal Emergency Management Agency (FEMA) had previously certified the levee as providing the city with sufficient protection from flood risk, but a new study found that due to rising water levels roughly 85% of the levee no longer meets FEMA standards. As a result, most of the city could be designated as a flood zone unless appropriate updates are made to the levee.

A flood zone designation would have an immediate impact on Foster City’s real estate market. Any property purchased with federally backed loans would require a flood insurance policy, which can cost thousands annually, depending on the property. Homeowners would also have to disclose the flood insurance requirement when selling, which could adversely affect property values. Fortunately for homeowners, the city is taking steps to make sure this doesn’t happen.

We recently hosted Foster City Community Development Director, Curtis Banks, at one of RealSmart's weekly networking meetings. He explained to us that FEMA granted Foster City a "seclusion mapping" designation in 2015, which has allowed them to temporarily avoid the flood zone designation so long as they show they are taking steps to improve the levee. Since then, he says Foster City has held 37 public, regulatory and general project meetings to decide how much to invest in raising the levee - the higher they raise it, the longer they will be protected from rising sea levels. It’s worth noting that in 2010, Redwood City spent about $2.7 million adding 1-2 feet to about 8 miles of levee in the Redwood Shores community. At the time, the city predicted sea level rise would mandate another round of improvements in 20 years.

Continual levee improvements/maintenance are a burden that fall on many Bayside peninsula communities, not just Foster City. Whether or not these communities do enough to maintain their levees could be the difference of thousands of dollars every year to homeowners. Something to keep in mind if you own a home, or are looking to buy a home in places like Redwood Shores or Foster City, where FEMA accredited levees are the only thing standing between you and a costly flood insurance policy…….or the bay.

Stanford Purchases RWC Property for $39.5 Million

Stanford University has officially purchased the last piece of the 35-acre puzzle that will become "Stanford in Redwood City".   550 Broadway, a nearly 2.5-acre parcel last home to a data center and administrative office for Genentech, was purchased by Stanford in an off-market sale last month for $35.9 million, according to public record.  It joins 1228 Douglass Ave, and 405, 425, 475, 500-585 Broadway as addresses slated for redevelopment in Stanford's first major campus expansion.

It is unclear at the moment what Stanford's long term plans are for their most recently acquired piece of Redwood City real estate, but it does not look like it will factor into phase one of the Stanford in Redwood City project, which broke ground December of last year.  According to a report from the Silicon Valley Business Journal, the University is currently exploring leasing out the site's existing 68,000 square foot building on a short term basis.

Phase 1 of the Stanford in Redwood City project is projected to finish sometime in 2019.  Once completed, it will feature four office buildings, a town square and park (open to the public), outdoor dining areas and plazas, a child care center, a parking garage, a glass atrium fitness center, and its own sustainable central utility plant.  Some improvements to the surrounding roadways and intersections are included in phase 1 as well.  Pictured below is an overview of the phase 1 layout, with the recent acquisition at 550 Broadway highlighted in blue.

There is no set timeline beyond phase 1, but when it's all said and done Stanford's first major campus expansion will feature 13 buildings, totaling roughly 1.5 million square feet of office, medical clinics, and R&D space.  Further, as part of the University's development agreement with Redwood City, they have pledged $15.1 million in public benefits.  

The Redwood City campus will mirror the look and feel of the Palo Alto campus, and much of the ground will be open to the public.  The University's free shuttle service will be accessible to the public as well.

Stay tuned for updates.

Tesla Looking to Set Up Shop in Redwood City

An architect working on behalf of Tesla has filed an application with Redwood City to redevelop 515 Veterans into a sales office, warehouse, and service center/garage. The 23,000 square foot site, located at the corner of Whipple and Veterans, is currently home to Crunch fitness and Chef Peking, a Chinese restaurant.

Rough sketch of Tesla's proposed project

In order for the pioneering electric car manufacturer to use the land as desired, the site's zoning will have to be amended to add Vehicular Combination Zoning District to its existing Industrial Park zoning.  City staff are currently reviewing the environmental implications of such a zoning change at 515 Veterans, but as the company notes in their proposal:

"Servicing an electric automobile is different from servicing a gas-powered car. Tesla’s vehicles have no internal combustion engine. This vehicle is exclusively electric and is not hybrid. Accordingly, there is no exhaust system, no fuel tanks, no liquid fuel usage, no new or used motor oil, no noise from the vehicle, and no emissions like hydrocarbon and carbon monoxide that are emitted from an automobile powered by an internal combustion engine. Instead of an engine, an electric motor powers Tesla’s vehicles. Electric motors require little to no maintenance.”

With this in mind, it's probably safe to say that Tesla isn't terribly worried about how their electric car service station will stand up to environmental scrutiny.

I wouldn't expect the public review phase to be very rigorous either - this project wouldn't be displacing any housing opportunities (as the land is not zoned for residential), it isn't likely to introduce any more traffic to the area than the existing gym and restaurant, and the surrounding area is already home to several auto dealerships and service centers.  So unless Tesla backs out, my money says it's only a matter of time before Redwood City is welcoming one of Silicon Valley's most iconic and innovative companies to its workforce.

Why Redwood City?

Tesla's desire to open a shop in Redwood City is likely part of a larger effort to increase their sales capacity.  They just started delivering their most affordable car yet - the Tesla 3 - to customers in July, and demand for the car reportedly far exceeds the number of cars available.  On Monday, they announced they would be raising $1.5 billion through their first ever offering of "junk bonds" in order to get the cash necessary to ramp up production of the Tesla 3 sedan.   As production increases and Tesla becomes a more accessible and mainstream auto manufacturer, they will likely look to set up additional service and sales centers to accommodate demand.

Stay tuned to my blog for updates as this proposal progresses through city review.

Zoning Amendment Sought for Massive Inner Harbor Office Project

Last week, Redwood City officials voted 4-2 to explore amending the city's General Plan to allow for the construction of nearly 1.2 million square feet of office space along the Redwood Creek.  The amendment is being sought by developer Jay Paul Co, who hopes to build four 7-story office buildings on the 27-acre site, which is currently zoned for light industrial and port use only, with a maximum building height of 3 stories.  The office space would be designed with tech and R&D firms in mind.

In addition to the 4 office buildings, the proposal calls for surface parking at each building, two parking structures, and landscape improvements, including a new park with sports fields.  Most Redwood City residents will remember the site of this proposed project as the former home to Malibu Golf & Grand Prix, but this massive development would also span the land that Lyngso used to occupy, as well as a lumber supply company and gas station.

In a July 10th letter sent by Jay Paul to the city, the developer outlined over $40 million in community benefits, and $32 million towards measures that would mitigate the project's environmental impact. The project's benefits would include $10 million toward the Woodside/Highway 101 interchange improvement project; $10.1 million for the Blomquist Bridge and street extension project, plus a commitment to pay the full $24 million needed “while additional funding sources are identified;” $5 million for the development of an inner harbor public park with new sports and recreational facilities; $2.1 million for bicycle paths; and $2.25 million for a new free public shuttle. Mitigation measures include $15.8 million in housing fees, $5.5 million in sewer and water fees, and $2.5 million in traffic impact fees.

Despite the bounty of public benefits packaged with Jay Paul's proposal, numerous residents spoke out against the development at last week's meeting, mostly for it's lack of housing, and for tech and R&D firms being perceived as a poor fit in the Inner Harbor community.  Both Vice Mayor Ian Bain, and Councilwoman Janet Borgens voted against the proposal.

This vote was only to approve looking into the zoning amendment further, and does not itself authorize a zoning amendment.  City staff will prepare a draft environmental impact report, which will be reviewed at a future Planning Commission meeting, before being brought back to city council for review.

Stay tuned.

131 Townhouses Proposed Along RWC Waterfront

On Tuesday night Redwood City Council discussed a proposal to develop 131 three-story townhouses at 1548 Maple Street, a 7.9 acre stretch of land running along the city's waterfront.   The project would be adjacent to the Docktown Marina, which currently houses about 65 floating homes that the city is currently in the process of vacating/relocating.

The proposal also includes improvements to the section of the Bay Trail that run through the site.

Tuesday night's meeting featured the usual concerns that surround new residential development in Redwood City: affordable housing and traffic.  All 131 of the townhomes would be offered for sale at a market rate, so as it stands the project offers no consideration for affordable housing.  Commissioner Connie Guerrero asked that the developer come back with a proposal that included affordable housing, as well as an alternate proposal for a downsized project.

Another member of the Planning Commission, Shawn White, requested information on how school enrollment at Taft Elementary, and traffic along the 2.5 mile route to the school, would be affected by the development.  White suspected that since the project consists of single-family townhouses rather than apartments, it is more likely to attract young families with children.  Taft would be the elementary school that most families living at the complex would be assigned to.

The project's approval would also require the city to grant a zoning change from tidal plain to mixed-use.  The Planning Commission has already spent quite a bit of time studying zoning changes in that area during their drafting of the Inner Harbor Specific Plan, and while the IHSP was never completed, the hopes are that they can use those reports to guide them in studying a zoning change for this project.

Comments and concerns about the environmental impact of this project can be sent to lcostasanders@redwoodcity.org through Aug. 7, with future opportunities to weigh in once an environmental impact report is prepared and subsequent public hearings are held.

Redwood City Updates/Expands Neighborhood Associations Map

Redwood City recently announced an update to its neighborhood association map - expanding the number of neighborhoods from 11 to 17. This new map was designed to better align with the city's natural boundaries and neighborhood characteristics, as well as recognize and blend several pre-existing maps, including the General Plan Neighborhood Map, the previous Neighborhood Association Map, and the Nextdoor Neighborhood Map.

The new map include the addition of the Bair Island and Downtown neighborhoods, where the vast majority of new residential development has been concentrated over the past several years. Also, some of the larger neighborhoods have been broken up into smaller ones. For example, what was previously the High School Acres neighborhood is now recognized as a combination of Mt. Carmel, Eagle Hill, and Edgewood. Similarly, Central Park has been split into Woodside Plaza, and Palm. These new neighborhoods might actually be more familiar than the older ones colloquially, but they are just now being recognized by the city with their own designated neighborhood associations. 

Redwood City Residents: The city is currently in the process of appointing leaders to each association, and establishing regular meetings. They encourage all residents to take a look at the new map to determine which neighborhood association you belong to, as these associations are key in driving communication between city officials and the community. For information on how to register with your new neighborhood association, or how to get involved as a leader of your community, head to: http://www.redwoodcity.org/residents/neighborhoods/neighborhood-associations.

Over 55? Moving? Avoid Property Tax Increases With Props 60/90

When a home is sold in the state of California, the new home owner faces a reappraisal of the home's value and a corresponding adjustment to the home's base tax value.  Due to historically appreciating home values, this typically translates to an increase in the amount of property taxes paid by the new homeowner.  This can be problematic for older or retired people with decreasing or fixed incomes who sell their long time home looking to downsize.

For example, let's say a couple bought a house in Redwood City in 1992 for $250,000, with a 1.25% tax rate.  This would put their annual property taxes at $3,125.  The county assessor is allowed to raise your property's assessed value by 2% a year while you own it.  Assuming they did that every year all the way up until 2017, the property's assessed value would now be $410,151, bringing the annual property tax total up to $5,126.

Now the couple is retired, their kids have moved out, and they're hoping to downsize to liquidate some of the equity they've built up in their home.  So they sell their 3bed, 2 bath home for $1,528,600 (the average sales price in 2017 for a 3BD/2BA RWC home), and buy a 2 bed, 1 bath home down the street for $1,050,046 (the average sales price in 2017 for a 2BD/1BA RWC home).  They've done fantastic in terms of taking out equity from their previous home, but now they'll be paying property taxes based on the value of their new home.  At 1.25%, that puts their new annual property tax total at $13,125 - more 2.5 times greater than what they paid before!  Over the course of 10 years they'll be paying more than $130,000 just in property taxes.  This could be tough to swing with a fixed income, especially if you have pre-existing debts (i.e. loan for home renovation).

This is why California passed Prop 60, which allows homeowners over the age of 55 to sell their home and transfer its current assessed value to their new home - as long as the two homes are in the same county.  Prop 90 was later passed to allow inter-county transfers, but only at the discretion of each county.  Currently only 11 counties in California have an ordinance enabling the inter county transfer: Alameda, Orange, San Diego, Tuolumne, El Dorado, Riverside, San Mateo, Santa Clara, Ventura, Los Angeles, and San Bernardino.

Are you Eligible to Apply for the benefits of Prop 60/90?  If you meet the requirements below, then yes!

• You or your spouse must be at least 55 years of age when the original property was sold.
• The original property and new property must be within the same county.
  You can only use the transfer once in a lifetime.
• The new replacement property must be of equal or lessor value than the original property sold.
• The replacement property must be built or bought within 2 years of selling the original property.
• Your original property must be your primary residence and have been eligible for the homeowners' exemption or disabled veterans' exemption.
• Your replacement property must be your primary residence and must be eligible for the homeowners' exemption or disabled veterans' exemption.

One Time Use - You can only apply for the benefits of Props 60/90 once in a lifetime with one exception.  If the benefits have been used once based on age, they can be used again based on disability.

For more information, visit the California State Board of Equalizations

Fed Increase Interest Rates for the 3rd Time in 6 Months

The Federal Reserve raised their benchmark interest rate by a quarter point this morning, marking the 3rd rate increase since December of last year.  At the press conference announcing the increase, Fed Chair Janet Yellen said the rate hike "reflects the progress the economy has made and is expected to make toward maximum employment and price stability".

The Fed's decision to raise rates again signals a growing confidence in the American economy, which saw the unemployment rate hit a 16-year low in May.  The Fed's Board members predict there will be one more increase before the year's end.

What does this mean for real estate?  As it becomes more expensive for banks to borrow from the Fed, it typically becomes more expensive for consumers to borrow from the banks.  This is why people heavily monitor the Fed's interest rates to forecast where mortgage rates might be going.  That being said, average 30-year fixed mortgage rates have actually been on a slight downward trend over the past few months, despite two recent hikes in the Federal Reserve rate.

Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, speculates that interest rates abroad might be holding back our mortgage rates here.  While the Federal Reserve is showing confidence in the US economy by continuing to raise interest rates, central banks in other countries are still trying to stimulate their economies by keeping rates low.  This coupled with a strong foreign demand for safe assets (US real estate), is acting as somewhat of an anchor to US mortgage rates, according to the MBA.  Still, many economists, including Freddie Mac's Sean Becketti, expect that US mortgage rates will begin to gradually rise as the year progresses.

If you're thinking about buying and would like to explore financing options/current interest rates, I will gladly connect you with one of my trusted loan advisors.  Feel free to call any time: (650)222-2327, or email at camilo@realsmartgroup.com

Paint vs. Stain

When finishing wood upgrades in your home, you have two general style options: paint or stain. Whether you want to enhance the natural beauty of your new Redwood fence, or cover up the flaws of your old plywood cabinets, each style has its pros and cons, and can be used to accomplish distinct goals in your home renovation.

If you’re trying to brighten up an older home, but don’t want to spend the money to replace outdated cabinets, vanities, and bedroom doors - paint tends to be the way to go. It covers up imperfections in older wood, and gives you many more color options to match the rest of your home (convenient if you’re not doing a complete home remodel).

On the other hand, if you’ve just spent a bunch of money on brand new Cherry cabinets, or Redwood fencing, you’re not going to want to hide the gorgeous wood grain under a thick coating of paint. Instead, you’ll want to coat it with a stain that will penetrate deep into the wood’s pores, creating a richer wood grain appearance. Different stains will show more of the woods underlying features than others, depending on their opacity and pigmentation.

In some cases, paints and stains can complement each other quite nicely. Lighter paint tones used on trim or siding around darker stained doors and/or decking can yield some dramatic and beautiful results. Take for instance this San Carlos hills home pictured below, which masterfully pairs dark stained Brazilian Ipe decking with sleek white trim, posts and siding.

Dark stained Ipe Wood decking contrasting beautifully with the white painted wood accents.  

Paint can be more difficult and time consuming to apply than stains, as you typically want to prime a surface before painting, and give it a "finishing coat" of paint after the first coat. Also, since paint is so much thicker than most stains, more care must be taken to roll it out evenly, ensuring no droplets form and harden on the surface of the wood. Maintaining paint can be a bit more burdensome as well, as you will need to chip away any peeling layers before applying a new one. Stains don't normally chip or peel if applied properly.

With stains, surface preparation of the wood is minimal and primers are not always required. For exterior uses of stains (siding, decks, trim) a finishing coat is not normally required either. However, for some interior uses (floors, doors, butcher block countertops) you will want to apply a clear protective coating once the stain has dried.

History Shows: Stock Market Paces the Real Estate Market

Economists tend to disagree on whether there is a true causal relationship between the stock and real estate markets.  However, recent data shows that when the stock market goes up or down, home prices follow.  When tracking home prices in San Mateo County against the Dow Jones Industrial Average (DJI), between the dotcom crash of 2000-2002 all the way to today, you can see almost identical trend lines.  The above chart shows clearly that for nearly every peak and valley in the DJI there is a corresponding fluctuation in home prices.

As a Realtor who has represented numerous buyers throughout my career, I believe there is at least one obvious link between the stock market and real estate markets.  It is common for buyers to use stock investments to help fund down payments on home purchases.  This is especially true in regions like San Mateo County, where in the month of April a 20% down payment on the average home would have been roughly $375,000.  Since most people are not able to save this amount of money in a short period of time, stock based investments and company stocks are the typical source for the down payment.  For these people, a surge in stock value means a surge in purchasing power.  Therefore, it’s not all that surprising to see home prices ebbing and flowing right alongside the stock market.

While it’s not necessarily a proven science, the theory at the very least passes the eye test. If you’re looking for an indicator of where San Mateo County home prices could go next, keep an eye on the stock market.

The Bay Area's Most Central Transit Hub Set for a Major Facelift

The Millbrae Planning Commission was just given its first chance to formally review a massive mixed use development to be built adjacent to the city's Caltrain/BART staions.  The "Serra Station" proposal calls for the construction of 440 housing units, 290,000 S/F of office space, and 13,200 S/F of retail - contained in two 10-story buildings and one 9-story building.  This project is one of two major developments proposed in a 116 acre site surrounding the Millbrae Station, part of a city-led effort to build a vibrant economic hub around one of the peninsula's most central and connected transit centers.  The other project, "Gateway at Millbrae Station", is proposing the construction of over 300 rental housing units, 47,000 S/F of retail, and 160,000 S/F of office space.

In February of last year, city officials approved an update to the Millbrae Station Area Specific Plan, which preemptively completed much of the environmental work necessary for the development of the 116 acres site.  Plans were submitted for both projects shortly after the update was approved by city council, but they had to go through a lengthy public review process before being put in front of the Planning Commission.

Sound familiar?  Redwood City similarly completed environmental work for land downtown when they passed their 2011 Downtown Precise Plan.  This was done in an attempt to jump start developer interest in the city's downtown area - and it worked.... With fewer regulatory hoops to jump through for project approval, developers flocked to the city in droves.

Millbrae won't see development on the same scale that Redwood City did.  Their focus, at least for now, is on transit oriented development built around the Millbrae station.  Plus, the environmental work was only done for two projects (albeit two very large projects), as opposed to the dozens of residential and commercial projects that had the way cleared for them by RWC's Downtown Precise Plan.  Still, the Millbrae station certainly has the potential to become something special.  It is the largest intermodal terminal West of the Mississippi - connecting BART, Caltrain, SamTrans, and if all goes as planned, the California high speed rail.  It also happens to be the peninsula's most central public transit hub, offering easy access to the East Bay, SFO, the Oakland Airport, San Francisco, and San Jose.  With the area around it developed, this station could become a desirable place for people to to eat, shop, work, and live, rather than just a pitstop that travelers hurriedly pass through on the way to their final destination.

Check out this marketing video for the Gateway at Millbrae Station.  The project's developer, Republic Urban, put it together, and it offers a remarkably detailed representation of their vision for what the Millbrae station could become in several years time.

Redwood City Approves 350 Unit Apartment Complex Near Jefferson - El Camino Intersection

Redwood City's most prolific residential developer of late, Greystar Development, has been given the green light to move forward on another 350 unit apartment complex.  City council voted 4-2 last week to approve the 8-story project at 1409 El Camino, which will also include 6,000 S/F of ground floor retail, 440 parking spots, and 35 affordable units (10% of the total offering).  As a condition of the project's approval, Greystar will also be contributing $250,000 towards Habitat for Humanity's 20-unit affordable condo development at 612 Jefferson.

Greystar Development has been the largest beneficiary of Redwood City's 2011 Downtown Precise Plan, which pre-emptively completed environmental work for the construction of 2,500 new residential units.  With the approval of their most recent 350 unit complex, Greystar has now accounted for just under 1,000 of the 2,500 new residential units allowed under the Precise Plan.  These units are spread across 4 separate developments - all within 3 blocks of each other.  See below for a map showing Greystar's development activity in downtown Redwood City.

Despite all of Greystar's development falling under the residential cap set by the Downtown Precise Plan, many residents feel the city has not adequately taken into account the environmental impact of green lighting so much development in such a short period of time.  The Precise Plan was initially supposed to guide development for a period of 15 - 20 years, but just 6 years since its passing the city has already almost hit the 2,500 unit cap (between was has been built or approved).  Further exacerbating resident concerns about traffic is the fact that all of Greystar's 1,000 units are clustered around a small 4 block area, adjacent to the already congested intersection at El Camino and Jefferson.   As such, an organization called Redwood City Residents for Responsible Development has filed an appeal against the approval of Greystar's newest project at 1409 El Camino.

Its possible that Greystar - in an attempt to avoid litigation - will compromise with residents by reducing the size of their project.  Otherwise it could be quite some time before any shovels hit ground at 1409 El Camino.

Redwood City Residents for Responsible Development have not yet indicated whether they will file an environmental lawsuit against Greystar's project should their appeal be denied.

Stay tuned!

Creativity and Cooperation: Financing Affordable Housing Sans State Redevelopment Funds

Since the dissolution of California's 400 plus Redevelopment Agencies (RDA's) in 2012, much of the burden of funding affordable housing has fallen back to the local level.  Previously, city governments and non-profit builders were able to tap into RDA's for the funds necessary to get affordable housing projects off the ground.  Now, these projects rely much more heavily on public/private partnerships for funding.  In the SF peninsula, where there has become such a dearth of affordable housing, we are starting to see these public/private partnerships take initiative.  Take for instance, Habitat for Humanity, who has partnered with Redwood City to fund the construction of 20 affordable condos at 612 Jefferson.  Or more recently in San Mateo, where the Housing Endowment and Regional Trust of San Mateo County (HEART), a public/private nonprofit, just announced it will be lending $500,000 towards predevelopment activities for a 68-unit affordable apartment complex at the new Bay Meadows mixed-use development.

The absence of RDA funding is also part of what motivated Redwood City Council to pass an amendment to their Downtown Precise Plan in 2016 requiring that 15% of new residential construction be reserved for affordable housing.  Without RDA funding, the city knew their ability to finance affordable projects on their own was limited.  This amendment served as a way for them to pass the financial burden on to the developers of new market rate housing.  Since its passing, at least two developers have responded to the city imposed affordable housing requirement in a promising manner.

First, Anton Development put forth a proposal for a 250 unit apartment complex on Brewster, including 20% (50) affordable units.  The project received unanimous approval from the city, and council members praised the developer for taking advantage of state and federal tax credits and exemptions to finance a greater number of affordable units than what was required.  Using these opportunities provided by state and federal governments to finance affordable housing could set a precedent for developers in the future.

Last month, the developer trying to push through a massive mixed-use complex at Broadway/Woodside in Redwood City, the Sobrato Organization, announced a partnership with MidPen housing (a non-profit developer) to construct 120 affordable units on two parcels of land already owned by Sobrato.  These 120 units would count towards the affordable requirement imposed by the city, and when taken into account with the 400 market rate units they hope to build, make up almost 25% of their total offering.

If these affordable housing projects had been built in to all new residential development from the inception of the Downtown Precise Plan back in 2011, they likely would have had a much more significant impact.  Now, building 120 affordable units into yet another huge market rate complex just feels like damage control, as the cost of living has already soared far out of reach for countless locals.  Still, 120 additional below market rate units means 120 low-income families get to stay in place.  Let's hope this trend of developers and public/private partnerships leading the charge to build affordable housing continues.

RWC: Broadway Plaza Proposal Amended to Add 120 Affordable Units

Earlier this week, Redwood City council voted 6-1 to approve a study that will look at how amending the General Plan to allow residential in one of the city's light industrial areas would impact nearby businesses and traffic.  This comes on the heels of the Sobrato Organization announcing a partnership with MidPen Housing to build 120 affordable housing units on two parcels of land currently owned by Sobrato, located in the southeast corner of Woodside and Bay Roads.

These 120 affordable units are part of an amendment made last month to Sobrato's massive Broadway Plaza redevelopment proposal, and would help fulfill that project's city-imposed affordable housing requirement.   Sobrato's "Broadway Plaza" proposal calls for the redevelopment of the aging shopping center located at Broadway and Woodisde Road, currently home to CVS, Big Lots & Foods Co.   It would replace the existing retail strip mall with 400 market rate residential units, 420,000 S/F of office space within three 5-story buildings, and about 19,000 S/F of retail space (which will include a new storefront for the existing CVS).

City Council was enthusiastic bout Sobrato's partnership with MidPen Housing, a non-profit affordable housing developer with a great local reputation.  Just a few weeks ago MidPen purchased a 55 unit apartment complex on Rolison in Redwood City for $17.1 million in order to maintain them at below market rate.

Still, even with the MidPen partnership, this project raises some concerns.  After you take into account the 120 affordable units, Sobrato's proposal would introduce 520 new residential units around the already highly congested Woodside Rd/Highway 101 junction - where there was no residential previously.  Add a busy 420,000 S/F office complex into the mix and you've got yourself a recipe for a permanent Woodside Road parking lot.

Janet Borgens, the one Redwood City council member who voted against the study, expressed concerns that going forward with Sobrato's proposal would set a precedent for "spot-zoning", which over time could replace our industrial spaces with residential.  The southeast corridor of Bay Road, where Sobrato hopes to build the affordable housing, is a light industrial area, but it has also become something of a startup incubator.  Borgens worries that introducing residential along that stretch of Bay could threaten the incubator environment, which brings something unique and difficult to replace to our economy.

Do you have concerns about this project?  If so, you'll have plenty of opportunities to voice them.  City staff confirmed that between the citizen committee, Planning Commission and City Council meetings required for a general plan amendment, there would be seven to eight more public hearings where community feedback could be considered.

Stay tuned!

Robot Delivery Pilot Program Underway in Redwood City

In December of last year, London based Starship Technologies rolled out a 9-month pilot program of their robotic delivery service in Redwood City. Masterminded by Ahti Heinla, co-founder and former Chief Technical Architect of Skype, Starship Technologies hopes to provide autono-mous food and grocery delivery that can be implemented by existing third-party delivery services like Door Dash and Postmates (both of which became the Starship’s first official US partners this year).

At this point, Starship reports their robots have reached 90% automation, only needing remote assistance while crossing streets.  However, if you happen to run into one in the streets of Redwood City, it will likely have a human “handler” in tow. This is in part to ensure safety while the robots are still mapping out the city, but also to help with community engagement.

We recently caught up with Starship’s Head of Operations in California, Justin Hoffman, who filled us in on his company’s mission and future in Redwood City.   He informed us that while the robots currently only operate within about a 2-mile radius of their office at 234 Marshall, they hope to expand their service area by setting up additional charging hubs at various points throughout the city.   As of right now, Redwood City residents cannot specifically request robotic delivery, but Hoffman did say there’s a possibility Doordash will offer that feature by the end of the 9-month pilot.  For now, keep an eye out for these robots as you pass through Redwood City!

Read below for a complete transcript of our brief interview with Justin Hoffman:

How far do the robots deliver from your office on Marshall?

--2 mile radius is what we are initially beginning with

Are there plans to open additional charging hubs to allow a greater service area?

 --In the mid-to-long term we aim to have automated charging/delivery dispatch hubs in a given city to broaden service areas and enable greater efficiency amongst the network of robots

Which elements of the delivery process have not become fully autonomous?  When do your handlers have to step in to help?

--When a robot reaches a crosswalk, for example, the robot will ping a robot "operator" (a remote operator who sees through the robot's cameras to guide it in difficult situations) to assist it when crossing the road. Handlers currently help us engaging with the community, assisting with mapping, and managing day-to-day operations


Are Redwood City residents within your service area currently able to request robotic delivery?  If not, will they be able to at any point during the 9-month pilot?

--We currently operate through partners such as Doordash (and very soon Postmates), and at some toward the end of the pilot, you may be able to request a robot specifically for your order.

Will Starship’s delivery service ultimately be integrated into existing third-party delivery services like Door Dash?

--We actually are currently integrated already with third-party commercial partners such as Doordash. As we build more partnerships, we will be available for a variety of types of deliveries, including groceries and (e-commerce) packages as well.

Do you have plans to expand into other Bay Area cities any time soon?

--Yes, we are currently in talks with a variety of other cities in the Bay Area. We shall announce names over the coming weeks/months.

Rent Control Update: Burlingame, San Mateo, Mountain View

At the time the last RealSmart Newsletter was released, residents of San Mateo, Burlingame, and Mountain View were about to cast their vote on rent control measures. Let’s take a look at how each of those measures fared:

BURLINGAME - MEASURE R: DID NOT PASS
67.44% of Burlingame voters said no to rent control in the November election. Measure R would have tied annual rent increases to the consumer price index, but no more than 4% and no less than 1%. The rent control restrictions would apply to only multi-family homes built before Feb. 1, 1995. Also included in the measure was a just cause eviction provision which would have applied to all rentals other than owner occupied duplexes.

SAN MATEO - MEASURE Q: DID NOT PASS
60.44% of San Mateo voters rejected Measure Q, which which would have applied the same restrictions on rent increases as Burlingame’s Measure R, and a similar just cause eviction provision. No new construction, single-family homes or owner-occupied duplexes would have been subjected to either rent control or just-cause eviction.

MOUNTAIN VIEW - MEASURE V: PASS
Mountain View’s rent control measure passed with 53.6% of the vote. HOWEVER, city council has since put a temporary hold on the measure after the California Apartment Association challenged its constitutionality. The CAA subsequently filed a preliminary injunction against the measure, which will be heard by a judge March 19th. If the injunction is approved, the measure will not be enforced. If it is not approved, Measure V will take effect, tying annual rent increases to the Consumer Price Index (between 2-5%), and rolling current rents back to what they were October 19, 2015.

Rent control may have failed by a fairly large margin in both Burlingame and San Mateo, but it succeeded in gaining significant grass roots momentum. Should housing issues persist, I would expect the movement to return in force by the next election. For the sake of full disclosure, we were contributors to the $1 million+ that was spent collectively by SAMCAR and the CAA opposing Measures Q & R leading up to the election.

If you follow our newsletter, you’re probably familiar with our stance against rent control by now. But it bears repeating that while we are sensitive to the social issues driving the argument for rent control, we strongly believe it only serves to exacerbate the underlying causes of the housing crisis. For an elaboration on our argument against rent control, read our previous newsletter at: www.realsmartgroup.com/fall-2016

RWC Approves 250 Unit Apartment Complex, Including 50 Affordable

The Redwood City Planning Commission unanimously approved a proposal to construct 250 apartment units at 801 Brewster, just a few blocks from the heart of Downtown.  The project was granted an exemption from current building height restrictions in order to account for 50 affordable on-site units.  The Developer, Anton Development, found that if they increased building heights to 4 and 6 stories instead of the 3 and 5 currently allowed, they would be able to take advantage of state and federal tax credits and tax-exemptions to offer 20% (50 total units) of the total project at below market rent.  In all, the project calls for the construction of a 379,502 square foot, 4-6 story building, offering a mix of studio, 1 bedroom, & 2 bedroom apartments. The architectural design will incorporate Craftsman elements common among buildings in the neighboring Mezesville Historic District.

The proposal was met with enthusiasm from the Planning Commission for the creative approach that Anton Development took to increase the project's total offering of affordable units. The hope is that their use of opportunities provided by state and federal government to incentivize below market rate housing could lay the groundwork for future developers to do the same.  These tax credits and exemptions are in place so that developers can offer a greater public benefit without taking a significant hit to their bottom line.  If this proves to be a lucrative project for Anton Development, even with 20% affordable units, perhaps other developers will follow suit.

Redwood City has authorized the construction of a considerable amount of housing since passing the Downtown Precise Plan in 2011, but the vast majority has been market rate housing - a mark that has grown out of reach for many longtime residents.  As a consequence, City Council has been facing increasing pressure to pause development and retool the Downtown Precise Plan to address the need for affordable housing.  With this in mind, developers looking to invest in Redwood City might find it worthwhile to use these state and federal tax breaks to finance a greater portion of affordable housing.  It could save them time and effort in the approval process - as evidenced by the quick and unanimous approval of 801 Brewster.

Major Tenant Secured for RWC Powerhouse Gym Development

On April 19th of 2016, the Redwood City Planning Commission approved a proposal to demolish an existing building at 2075 Broadway (Powerhouse Gym), and redevelop it into a 93,515 S/F mixed use building, with roughly 65,000 S/F designated for office space, and the rest for ground floor retail.  The developer, Lane Partners, had been trying to get the project pushed through for quite some time, having their initial proposal of 1750,000 S/F of office space rejected back in April 2015 due to a lack of parking.  Now, with a downsized project and planning commission approval, Lane Partners plans to break ground on the project this June, with an estimated construction duration of 20 months.

With project completion still over two years out, Lane Partners have reportedly already secured a major tenant for the development.  According to Redwood City mayor, John Seybert, the development will be an expansion site for the Chan Zuckerberg Initiative, a company formed by Facebook founder, Mark Zuckerberg, and his wife Priscilla Chan.  Per the company website, their objective is to "advance human potential and promote equality in areas such as health, education, scientific research and energy".  The couple introduced the company in December of 2015 with a pledge to contribute 99% of their shared stock in Facebook (over the course of their lifetimes), which at the time totaled roughly $45 billion.  The Initiative just recently announced the hiring of David Plouffe, campaign manager for Barack Obama's successful 2008 presidential bid, and current VP of Policy & Strategy at Uber.  Plouffe will be leading the company's policy and advocacy efforts.

The Chan Zuckerberg Initiative will be another major name added to downtown Redwood City's employer roster, which is currently headlined by Box Inc, who moved their headquarters to the new Crossing/900 development in Nov '15.  While the Chan Zuckerberg Initiative may not be huge in terms of number of people they employ, it is huge in terms of the weight carried by its name.  Having the Chan & Zuckerberg names on a brand new building just one block from the Courthouse Square is bound to have some influence on how Redwood City is perceived by businesses considering relocation in the future.

Stay tuned to my blog for updates on this project, as well as other major development in the mid-peninsula.

2016 Mid-Peninsula Real Estate Market in Review

The mid-peninsula real estate market told a much different story in 2016 than it did in 2014 and 2015.  While home prices continued to grow, it was at a far slower rate than the two years prior.  The average sale price for homes in the mid-peninsula grew 17.14% from 2013-2014, and 15.14% from 2014-2015. By contrast, the average sales price in 2016 saw only a 2.74% increase from 2015.  The most obvious explanation for this slow down is that inventory was significantly higher during the busiest months of 2016 than it had been in either 2014 or 2015.  In fact, in some cities inventory was nearly double its 2015 levels through much of the summer and fall months.  With more on the market, buyers became more selective, and the bidding wars that were all too common in '14 and '15, became much less prevalent in 2016.  While I'm sure most homeowners would love to see home values continue to soar indefinitely, the slowdown we saw last year was a welcome sight for buyers who felt the market had been running away from them in recent years.

* For the purposes of this update, the mid-peninsula refers to San Mateo, Foster City, Belmont, San Carlos, Redwood City & Menlo Park.

See blow for a snapshot summary of the 2016 mid-peninsula real estate market.  All percentages reflect the change from 2015 values.

2017 Real Estate Market: A Look Ahead

With Donald J. Trump sworn in as our 45th President on the steps of the Capitol Building this morning, now seems as good a time as any to ruminate on the future (of the real estate market).  Two indicators to closely monitor this year will be the stock market and interest rates.  After taking a quick dive immediately after Trump's victory was announced in early November, the stock market surged to finish off the year.  If this trend continues, it will boost the buying power of some home buyer hopefuls, especially here in the Silicon Valley where it seems everyone over the age of 30 has a stock portfolio.  Still, despite recent stock market performance, a new president and new economic policy bring with them a degree of uncertainty.  For now, expectations of decreased regulation and taxes have investors feeling optimistic about the Trump presidency.  

Rising interest rates could be the real story of the 2017 real estate market.  The Fed finally raised rates in December for just the second time in the past decade.  And just yesterday, Fed Chair Janet Yellen said she expects a few more rate hikes throughout the year.   With this being said, the Fed will only continue to raise rates if they are confident in our economy, which to a certain degree will hinge upon policy pushed through in the early goings of the Trump Presidency.  If rates do in fact continue to rise,  the increased cost to borrow could have a stabilizing effect on home prices in 2017.  

For better or worse, 2017 is sure to be a year full of surprises!  Stay tuned to my monthly newsletter for updates on the mid-peninsula real estate market as the Trump presidency progresses.