CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, JULY 24, 2020, OR THEREAFTER
BY THOMAS D. ELIAS
“EVIDENCE MOUNTING OF MARKET SOLUTION TO HOUSING”
FOR RELEASE: FRIDAY, JULY 24, 2020, OR THEREAFTER
BY THOMAS D. ELIAS
“EVIDENCE MOUNTING OF MARKET SOLUTION TO HOUSING”
New evidence arrives almost every day backing the concept
of a market-based solution to California’s housing shortage, one that does not
have to involve politicians at all.
Of course, that offends politicos like San Francisco’s
Democratic state Sen. Scott Wiener, who persists in the notion that
high-density, high-rise apartments and condominiums are the answer.
In a sense, he’s right. For the market-based solution
that’s fast taking shape does involve high rises and high density – just not in
new buildings. Rather, housing will almost certainly occupy space now leased by
insurance companies, law firms, venture capitalists, bank headquarters – almost
every kind of white collar business.
Lease holders who once clamored for more space in office
towers rising above areas like Century City in Los Angeles, downtown San Diego
and San Francisco’s financial district are now looking for ways to escape the commitments
they still have. “For lease” signs proliferate in urban areas.
Some tenants refuse to pay rent, having sent their work
forces home to work safely and virtually at the start of the coronavirus
pandemic. They’re not being evicted yet, because of state emergency rules
allowing tenants huge leeway on delaying payments during the health crisis. But
if they don’t either pay up when the rent delays expire or work out deferred
payment deals with their landlords, they will pretty soon find themselves
ousted.
They will leave gigantic amounts of current office space
empty. It’s not that white collar businesses won’t need office space; merely
that they will need much less. Companies like Facebook and Twitter have told
their workers to keep operating from home as long as they like. Others are
asking workers to come in one or two days per week.
As California reopened haltingly after the initial crisis
phase of the pandemic, when unusual caution was taken to prevent hospital
overloads that could have cost many lives, it became clear vast numbers of
workers will opt to stay home most of the time.
In many cases, that’s not mere preference, but necessity.
State guidelines for reopening public schools, for example, create a need for
continued virtual commuting. By staggering start and stop times, reducing class
sizes and using a mix of in-person and online instruction, the schools are
telling millions of working parents they’ll have to flex their work hours.
Some like it that way. This reality is visible in recent home
pricing figures from San Francisco and some of its suburbs. Demand for housing
is up in Marin, Napa, Santa Cruz and Monterey counties, but down in San Francisco
itself. One result is that a house which sold for $1.89 million 15 months ago
in the city’s Sunset District is now listed on the Zillow real estate site at $1.78
million – down $101,000.
At the same time, realtors in suburban counties are seeing steady
demand. They report many would-be buyers are the same people who long worked in
office towers, but lately operate from home. As their bosses tell them they can
keep doing this, some are seeking more spacious quarters and a less urban
environment.
In short, many want the very urban sprawl that’s anathema
to Wiener, who has sponsored bill after bill aimed at bringing density to the same
areas so attractive right now to folks leaving dense neighborhoods.
The same thing is happening in the Los Angeles and San
Diego areas, where prices in outlying areas are rising, while real estate near
the urban cores remains stable.
The next phase figures to see entire floors of high-rise
buildings go vacant, and then remain empty for significant periods. Once building
owners realize that new lessees won’t be forthcoming in droves, they’ll opt for
other ways to monetize their buildings: converting much of the empty floor
space to condos and apartments.
These will likely come in all sizes and price levels, from
large ocean-and mountain-view units to small apartments on the lower floors.
Some buildings will have mixed use, with stores on the ground floor and other
levels shared by offices and dwelling units. Zoning changes are inevitable.
That’s how market forces will solve the housing shortage,
creating vast numbers of units within the next five years, many of them very affordable.
-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It" is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net
Absolutely spot on. Please join us at livableca.org. :)
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