When developer Ginger Hitzke first proposed an affordable housing complex on a parking lot in Solana Beach, she envisioned building 18 new homes for low-income families and adults at a cost of $414,000 per apartment.
More than a decade later, her project has shrunk in size by nearly half and become more than twice as expensive.
At $1.1 million per apartment, the Pearl is the priciest affordable housing project in the state and, likely, the country. It also serves as an alarming example of how political, economic and bureaucratic forces have converged to drive up the cost of such housing at a time when growing numbers of Californians need it.
“I have sticker shock,” Hitzke said. “It’s insane.”
Miguel Zamora’s saga, which is also the Pearl’s, began 30 years ago in a rundown, 1920s motel in Solana Beach, where he lived with his wife and four children. Hot water came and went, the roof leaked and toilets overflowed. Cockroaches, fleas and rats infested the rooms.
“It was all dirt. It wasn’t even paved. And it was quite ugly,” said Zamora, who worked in construction and as a dishwasher and gardener. “When it rained, it was really very cold. Everything would get damp.”
In 1992, the city of Solana Beach filed a criminal complaint against the motel’s Beverly Hills-based owner. As part of the settlement, the city demolished the motel, but agreed to provide Zamora’s family and more than half a dozen other residents new affordable housing by 1999.
Zamora and the others also received federal housing assistance vouchers, which helped him find an apartment five miles away from the old motel. His family has been living there for the last two decades, but the apartment they never received still weighs on his mind.
Should the Pearl or other low-income housing ever get built in the city, Zamora has the right to move in first. He longs to bring his family together in a place that feels more like home.
“I’d like to enjoy my grandchildren,” said Zamora, 67. “Because being apart is hard.”
Even though the deadline to provide the affordable housing was 1999, it took almost another 10 years for Solana Beach’s leaders to take the first step of asking developers to pitch projects.
Buyer interest declined by 90%? I think they meant that 90% of buyers don’t want to risk their life to see a home in person – they are still interested in the market as seen from the couch.
NAR’s latest Economic Pulse Flash Survey – conducted April 5-6, 2020 – asked members questions about how the coronavirus outbreak has impacted the residential and commercial real estate markets. Several highlights of the member survey include:
Due to the outbreak, 90% of members said buyer interest declined and 80% of members cited a decline in the number of homes on the market.
Home prices look to hold steady after rising robustly before the pandemic. Almost three in four members – 72% – said sellers have not reduced prices to attract buyers. Conversely, more than six in 10 members – 63% – said buyers are expecting a decline in home prices as buyers sense less competition in the current environment.
Technology plays a vital role as the real estate industry adapts to the new reality of managing deals virtually with social distancing directives in place. Members said the most common technology tools used to interact with clients are e-signatures, social media, messaging apps and virtual tours.
Residential tenants are facing rent payment issues, but many delayed payment requests are being accommodated. Nearly half of property managers – 46% – reported being able to accommodate tenants who cannot pay rent and more than a quarter of individual landlords – 27% – said the same. The recently enacted Coronavirus Aid, Relief, and Economic Security Act includes provisions on eviction prevention and small business loans and grants that are critical to keeping the rental market steady.
View NAR’s Economic Pulse Flash Survey full report here:
The closed sales in March held up ok, in spite of the covid-19.
It was announced on March 11th that Tom Hanks and Rudy Gobart tested positive, and the night that the NBA suspended the season. It was then that the coronavirus escalated to another level of concern, and any buyer who was already in escrow might have cancelled.
But the Dow had been dropping since middle of February, yet there were 77 of the 203 closings that went pending after February 20th (red line).
The first three years below had one extra business day:
NSDCC February Sales & Pricing
# of Sales
Buyers will be willing to endure if they find the right house, at the right price – and feel like they were treated with respect along the way. So far there have been 22 new pendings since April 1st.
Hat tip to Hank for sending in this research – they have California peaking next week:
The Institute for Health Metrics and Evaluation (IHME) is an independent population health research center at UW Medicine, part of the University of Washington, that provides rigorous and comparable measurement of the world’s most important health problems and evaluates the strategies used to address them. IHME makes this information freely available so that policymakers have the evidence they need to make informed decisions about how to allocate resources to best improve population health.
The announcement of the 10-year, $279-million investment in IHME by the Bill & Melinda Gates Foundation this year provides a moment in time to reflect and to look ahead. The Institute has grown from a core of three initial members in 2007 to a staff of more than 300; developed a powerful and constantly innovating research infrastructure; built a global network exceeding 2,000 collaborators; and perhaps most importantly, strengthened the field of health metrics science.
Throughout it all, IHME’s overarching objective, our true north, has been to create the most complete and up-to-date roadmap to help policymakers and donors determine how best to help people live longer, healthier lives.
Most states and the federal government are using their data for planning purposes:
We noted last week how the jumbo mortgage market is back-pedaling in two ways. Banks stopped funding jumbo loans with 10% down payments, and the program that qualified the self-employed borrowers by using their last 24 monthly bank statements was also terminated.
The actual impact is hard to gauge, but we can say the buyer pool is quite a bit smaller today than it was a month ago….and those loan programs won’t be coming back anytime soon.
For the remaining buyers left in the hunt, won’t they have their way when negotiating. How many other buyers are competing to buy that house? Any?
Doesn’t that mean the sellers have to come down off their price? Shouldn’t there be a correction?
The reason that sellers hold out for their price is because they have other options. They have plenty of equity so they can get additional financing if they need money, instead of moving. They can also rent their house for a ridiculous amount if they don’t need to tap their home’s equity. The majority of sellers need to leave town to make the move worth it, so there is a natural reluctance to give up the familiar – unless they get their price.
Today we hear agents say they don’t know when the market will come back.
Let’s identify which market. They don’t know when the sellers’ market will come back.
It’s going to be a buyer’s market for the next 2-4 months, and the vast majority of agents have never seen a buyers’ market, let alone know how to navigate it. Over the last ten years, listing agents have gotten away with doing little or nothing to accommodate the buyers – their mantra has been, “hey, if you don’t like it, then cancel and we’ll get someone else”. But will there be any other buyers today? If so, at what price?
Buyers might get talked into escrow at a price close enough to list to make the sellers happy, but getting them to the finish line will be a major challenge today.
Here are my tips for sellers in a buyers’ market:
Get a pre-listing inspection, and fix as many issues as possible before going on the market.
Have specific quotes available for other issues that aren’t fixed yet.
In spite of furnishing this data to the buyers, expect that they will want to re-negotiate.
Build a defense in advance.
You may still need to do a little something for them to get the deal done, but at least being prepared will keep it to a minimum.
Any worry about a real estate collapse has to take into account whether the individual home sellers are willing to dump on price to make a sale. The first sign of such would be a scramble to the exits.
How does today’s NSDCC inventory of houses for sale compare to recent years?
Here are the counts for the first week of April:
Whoa – and we thought inventory used to be tight! It was 698 three weeks ago.
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