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Housing affordability crisis drives Bay Area middle-class exodus

Mary Ann Azevedo

San Francisco Business Times

Seana O'Shaughnessy has lived in the Bay
Area for 19 years — nearly half her life. Yet in the next few months,
O'Shaughnessy, 41, and her husband will pack up and leave Redwood City
for Chico in time for her daughter to start kindergarten in the fall. It
breaks her heart, but O'Shaughnessy believes she has no choice.



"I love the Bay
Area. I love the community, culture, diversity, opportunities. I love
the access to the ocean, mountains and San Francisco. It is such an
amazing city," she said. "But it's gotten a little crazy right now. We
decided we didn't want to be slaves to our house and have nothing else."




Ironically,
O'Shaughnessy has had a ringside seat for the affordability struggles
that eventually priced her out of the Bay Area. She serves as the
executive director of Rebuilding Together Peninsula, a nonprofit focused
on building volunteer partnerships to rehabilitate homes and community
facilities for low-income families and individuals, and was honored by
the Housing Leadership Council of San Mateo for her efforts.


In Chico, O'Shaughnessy and her husband – who also works for a nonprofit – can much more comfortably afford a home.




"The homes are
probably 60 to 70 percent less expensive there," she said. "We have been
renting and looking at buying a home around the Peninsula, but with the
prices, we just couldn't justify it. Combined, we ought to be able to
afford a house based upon statistics – but statistics don't take into
account things like the cost of child care and student loans."




O'Shaughnessy and
her husband are examples of a growing population of people who can
simply no longer afford to live comfortably in the Bay Area.




"It's a crisis," she said.




No end in sight




Despite growing
alarm and a widening recognition that the region's mismatch between
supply and demand in housing is an increasingly severe problem, there
are few signs of change. The city of San Francisco is still producing
only 2,000 housing units per year — when it has needed more like 5,000
for the last 20 years and going forward.




Only 14 percent of
households in San Francisco can afford the median-priced home, which was
$999,250 in October, the lowest such percentage of any metropolitan
area in the country, according to a study by Trulia.


The median price of a
house in the nine-county Bay Area was $601,000. Areas such as Oakland —
where 40 percent of households can afford the median price — and San
Jose — where 34 percent of households can afford the median price — had
more affordable homes than San Francisco. But the mismatch in housing
and job production virtually ensures prices aren't going to move down.
The Bay Area generated 114,000 net new jobs last year — and only 8,000
units of housing. Meanwhile, there's still a backlash in some suburban
communities at policy initiatives designed to encourage or require them
to produce more housing.


Renting is no
cheaper, with median monthly rents for a one-bedroom apartment at $3,200
in San Francisco — higher than New York. Seven of the 10 U.S. cities
with the highest rents are in the Bay Area.




Employers worried




The region's housing
mismatch increasingly affects hiring and corporate location decisions.
In early 2014, Charles Schwab Corp. told employees in San Francisco that
it planned to move "a significant number of San Francisco-based jobs"
to other locations around the country over the next three to five years.
The move is expected to involve more than 1,000 of its Bay Area
workforce of 2,700.


Sarah Bulgatz,
director of public relations for Charles Schwab, in November 2014
confirmed that the company made the decision several years ago to focus
outside of San Francisco for future growth, due to factors "including
the high cost of living as well as the high cost of doing business."




While San Francisco remains the company's corporate headquarters, she said Phoenix is now its largest single employment base.




For Molly Dick,
founder of San Francisco-based Crossroads Relocation Services, it's a
familiar story. Dick specializes in helping companies move offices or
executives and she's seen her client base shrink. Fewer companies, she
said, are willing to invest in her services when many prospective
employees are scared off by housing costs and turning down jobs.




"They basically say
they can't afford to throw money at candidates who don't end up taking a
job," said Dick, relating the tale of recently assisting a client with
the recruitment of a CEO candidate from outside the area.

"They had two school-age children
and a budget of $1.5 million to $1.7 million and could put a significant
amount down," she said. "At the end of the weekend, they decided they
were not going to do it. While the city will always have appeal, there
are other factors involved and I'm definitely seeing a growing
disillusionment compared to decades past.




"With soaring real
estate prices and surging population growth, we are in a bubble. You're
seeing primarily overseas buyers and wealthy new tech workers," she
said. "So where does that leave the relocating executive and his family
who often can't sell their homes in a languishing market elsewhere? Most
of them don't know how they will afford the quality of life here."




Sean Randolph,
president and CEO of the Bay Area Council Economic Institute, said the
area's housing problem is "the accumulation of decades of
underbuilding."




"There's been a lack
of development of housing at all income levels," he said. "I came here
in the late 1990s and even then it was very clear that there had been a
failure to keep up with demand going back at least 10 years before
that."




Unfortunately, Randolph doesn't foresee a letup in the housing pressure anytime soon.




"There's been a lot
of resistance throughout the Bay Area of development of any kind, but we
have to get real about the implications of failing to put housing into
place," he said.




SPUR Executive
Director Gabriel Metcalf, and a longtime commentator on housing said
that San Francisco residents' resistance to homebuilding is at odds with
the city's professed progressivism.




"It does not make
sense that you can think of yourself as progressive, but still think
it's OK to not allow people to come here, which is the real-world impact
of our longtime emphasis on protecting the physical character of the
city from change," Metcalf said. "Ultimately, when supply is constrained
and demand increases, people with more money win. Many of the people
that made this city colorful and interesting are leaving or have already
left."




Overall, there is
growing concern that the city of San Francisco – and the Bay Area as a
whole – is turning into a region of elites, one being hollowed of its
middle-class and middle-aged residents, particularly those with
families.




Metcalf last year
authored a widely read blog post on the exodus from San Francisco in
particular. "My friends keep moving to Oakland," it began.




Hard sell to execs to relocate




Betty Granoff,
president of San Francisco-based Relocation Breakthroughs, works with
individuals who have been asked to relocate or are considering a new job
in the Bay Area.




"Usually what
happens when someone contacts me is that their maximum rent is almost
always way low compared to where they want to live," she said. "They are
shocked. Most of the time, those who still can end up changing their
minds."




Those who don't end up having to compromise – a lot.




"I've been doing
this since 1996 and this is the craziest I've seen things," she said.
"Even with the first dot-com boom in the late 1990s, demand was just as
high but rents weren't."


And while San Francisco remains one
of the nation's most powerful magnets for millennials with high-salaried
jobs, those lower down the income scale feel pushed away.




Recent UC Berkeley
graduate Kaitlyn Quackenbush is a Bay Area native who says she may leave
soon. After spending nine months searching for an apartment she could
afford, the 23-year-old ended up disappointed and resentful.




"There's a cultural
shift and cost shift going on and San Francisco just doesn't feel like a
city I want to be in anymore," she said. "It feels a little bit like a
gated community where the middle class and working class are
disappearing."

 

Now that’s entertainment!

$779K helps lay foundation for 189-acre ‘family play’ zone

Great Wolf Resort isn’t a done deal.

But that isn’t stopping the city from taking the next step that would not only serve the 500-room resort with an 85,000-square-foot indoor water park but would lay the ground work for a massive 189-acre family entertainment zone also known by the shorthand of FEZ.

The City Council Tuesday is being asked to spend $779,157 from remaining redevelopment agency funds to retain the services of NV5 Inc. The engineering firm will design construction documents for major utility relocation work and expansion plus the extension of Daniels Street to McKinley Avenue.
Development of the FEZ will be accomplished via a public-private partnership. A private sector development group will construct the buildings, sports fields interior roads and “local” wet and dry utilities. The city will relocate and extend major utility lines such as water, sewer, and storm drains. the city also will extend McKinley Avenue.

McWhinney Development — the firm that would build the resort — is currently negotiating with Manteca as environmental studies are being completed for the resort and the rest of the FEZ.
If the Great Wolf Resort is built, it will be the biggest single investment at one time in a private sector project in the history of Manteca coming in at $150 million. Great Wolf would also become the largest private sector employer if and when they open their doors. It would take roughly two years to build and would provide 570 jobs of which 414 would be full-time. The projected annual payroll is $9.4 million.

McWhinney is basing negotiations on a 290,000-square-foot hotel with 500 rooms – with a possible future expansion of 200 rooms – along with an 85,000-square-foot indoor water park and a 20,000-square-foot conference center. A possible expansion would add 79,000 square feet to the water park and double the size of the conference center.

The resort would sit on 30 acres immediately west of Costco fronting the 120 Bypass. It would also include a conference center and community exhibition facilities plus a large public parking lot.
Two additional baseball fields would be added to the west of the Big League Dreams complex. The sports complex would also have a western entrance.

A large manmade lake would go to the west of BLD and north of the Great Wolf site. It would be surrounded by passive and active recreation facilities plus supporting commercial uses. A loop road would circle the lake and connect in three locations with Daniels Street as well as a future extension of Wawona Street that will go along the northern boundary of the BLD complex.

Nine playing fields designed for soccer including three international fields will be created. That is in addition to a playfield designed for soccer with spectator seating.

An indoor sports structure is envisioned along with outdoor speed sports plus areas for various other recreational endeavors.

Ultimately a new visitors center could be build on McKinley Avenue near its future connection with Daniels Street.

Since the FEZ will border the wastewater treatment plant facilities, a major landscape buffer is included.
At the same time two other projects are moving forward that complement the FEZ but are not a part of it. That includes work on creating an interchange on McKinley Avenue at the 120 Bypass and punching Milo Candini Drive through to West Yosemite Avenue.

The council meets at 7 p.m. at the Civic Center, 1001 W. Center St.

By Dennis Wyatt Executive Editor
dwyatt@mantecabulletin.com  
209-249-3519