Comstock's magazine 0119 - January 2019 - Page 47

construction. “The stuff under construction died as buyers just walked away,” says Tanner. “In Elk Grove, where I live, there were houses that ended up being foreclosed.” When he saw these foreclosures, he knew things would get ugly. And they did. Home prices plunged from $370,000 in 2006 to $166,000 in 2011, and the number of new units dropped from 11,000 in 2006 to a historic low of 1,041 in 2011. of income,” he says, until the prices get so high that they’re out of reach for most of the population. This occurs over and over again.” To his point, from 2008 to 2017, the median home price in Sacramento County has jumped 59 percent. Median income? Just 11 percent ($57,000 to $63,000). 2008 FED SLASHES RATE TO HISTORIC LOW On Dec. 8, the Federal Reserve pegs the interest rate at 0.25 per- cent, the lowest in history, and they would get even lower in 2012. This decade of low rates has consequences. Lundquist says that consumers have gotten used to these historically low rates, and now, in 2019, as they begin to inch up, it can feel like sticker shock. “Lack of new construction is the biggest issue of the housing shortage, but with such low rates, this creates a situation where there’s less incentive to move on from their present home.” 2008-10 LABOR FLEES “Before we had the downturn in 2006, we were moving forward with a lot of construction,” Tanner says. “And when the construc- tion stopped, a lot of the labor left the market — particularly to Texas and Arizona.” The shortage is being felt across the board — in 2016, the North State BIA launched a concentrated initiative to train up 5,000 workers in five years. 2014 MORE MIGRATION FROM THE BAY AREA Think Sacramento housing prices are high? Look at San Francisco. The median Sacramento price jumped from the low of $180,000 in 2009 to $370,000 in 2018 — more than double — yet San Francisco soared from $392,000 in 2009 to $970,000 in 2018. This impacts prices here at home. “I can’t tell you how many people I’ve worked with in the past year that sold their cracker box for $1.5 million, and bought five times the house for half the money,” says Gobbi. Real-estate website Redfin report- ed that in October through December 2017, there were 15,000 users of their site (home searchers) living in San Francisco who wanted to leave, and their top destination was Sacramento. 2016 HISTORIC LOWS FOR NEW HOUSING From 2011 to 2016, each year averaged only 1,400 new housing units — by far the lowest stretch in the last 50 years, and possi- bly ever though definitely since 1965 — based on data from the Sacramento Area Council of Governments and the 1981 Busi- ness Services Bureau. “This shortfall has been accumulating for about 10 years now,” says Tanner. “Valuation is driven by supply and demand. And California doesn’t have the supply.” 2017 PRICES LEAPFROG INCOMES Tanner likes to keep in mind the big picture. “What routinely happens in the real estate industry is that the price of houses accelerates at a rate significantly greater than the acceleration Sacramento, CA 2018 PROP. 10 REJECTED In the November midterm election, voters reject the initiative that would have repealed Costa Hawkins, adding to the frustra- tion of renters. The average rent for a one-bedroom apartment in Sacramento is now $1,360, over double what it was in 2011 ($668), according to the rental website Rentjungle.com. Tanner sees reason for optimism: “It’s encouraging to see more new construction starting up,” says Tanner, who sees growth in Elk Grove and Folsom. “I think the Sacramento housing market looks good for the the next several years. It will likely flat- ten out for a while with higher interest rates, but will then move up as incomes catch up.” For perspective, we can again turn to the Business Services Bureau, which observed that “the increasing demand for rental units from the growing population, the increasing unaffordability of homeownership, and the low incidence of new rental complex construction will strain the existing rental housing stock and lead to record low vacancy rates unless these problems are alleviated.” Very true. Yet these words were written not this month, or this year, or this decade, but in 1981. The housing challenge is real and it’s complicated, but it’s also part of a grand history of ups and downs and booms and busts. Just ask the squatters. n Jeff Wilser is the author of six books, including “Alexander Hamilton’s Guide to Life.” Twitter at @jeffwilser. January 2019 | comstocksmag.com 47