September 15, 2018

My House Got Stolen In The Housing Bubble

A report from the Bakersfield Californian. “Ten-and-a-half years ago, sorting through the day’s mail, I would often marvel at the number of let-me-sell-your-home postcards from real estate agents. We were surely half-millionaires on paper, I remember thinking, because our nothing-special suburban house had, apparently and quite suddenly, nearly doubled in value. I had known something wasn’t quite right, but the glitter of found money was dazzling — just not dazzling enough, fortunately, for me to suggest that we do something about it. And so we sat and watched.”

“Millions of other dazzled Americans took the leap, though. Then, 10 years ago this weekend, it all collapsed. Lehman Brothers filed for Chapter 11 protection, an event generally acknowledged as the start of the Great Recession. The abyss began swallowing homes — and lives.”

“Scott Shaw of Bakersfield saw much of it play out before him. The retired postal worker was selling real estate in the months leading up the bubble’s bursting, and he remembers how one seller in particular, in way too deep, didn’t fully grasp what has happening.”

“‘I went out to show a house that the owner had paid about $950,000 for, then used his equity to buy furniture, a swimming pool, more cars, et cetera,’ Shaw said. ‘Now he was trying to sell it for somewhere in the low $700,000s, and he asked me if he would have to pay the loans back. Wow! I had to catch myself from laughing. ‘Yeah, you’ve got to pay it back.’”

“The seller was a self-employed truck driver and his wife had a minimum wage job making sandwiches at a hospital. Their stated income had been enough for them to qualify for their loan.”

“Dawn Reichel puts it like this: ‘My house got stolen in the housing bubble.’ It wasn’t just any house. It was Reichel’s family home. The roof she’d grown up living under. Her parents had given it to her and her husband when they’d moved out. Now she was losing her inheritance. ”

“‘We got a ridiculously high appraisal, then refinanced,’ said Reichel, who lives in Bakersfield. ‘We did a bunch of home improvements. We used the money to rebuild the fence, fix the roof, repaint the house, upgrade our air-conditioning system. When we went to refi again at the end of the term, our house was worth $100,000 less than we owed.’”

“Their monthly house payment almost tripled from $890 to $2,400. They had to walk away. And when the house was auctioned off one Christmas Day it went for $58,000. ‘When you’re 50 years old and you’re watching everything go down the toilet, it’s not conducive to a happy marriage,’ she said.”

“Reichel still has not recovered financially. She has been a renter ever since the meltdown, though she says she is slowly but surely getting back on her feet. Reichel blames the American condition. ‘So much of it is our sense of entitlement,’ Reichel said. ‘We feel that we have to have everything, so we get everything and then we find out we don’t need everything. But we’re willing to take risks to find out.’”

“And so we did. Have we learned? Check back in 10 more years.”

Has The Hottest New Neighborhood Suddenly Gone Ice Cold?

A weekend topic starting with the Mountain View Voice in California. “Bay Area housing advocates were thrilled last year when Mountain View leaders pledged to go hard on residential growth, transforming the corporate office park of North Bayshore into a dense urban neighborhood with 9,850 homes. But despite that grand vision, almost nothing has changed for North Bayshore. After one year, not a single new apartment project has been pitched to the city for review, let alone constructed. In fact, city planners say at least one housing proposal already in the pipeline is now being pulled back by its applicants.”

“Why has the city’s hottest new neighborhood suddenly gone ice cold? City officials say the culprit is that housing is too expensive — even for developers to build. A line of developers at the Mountain View City Council meeting took aim at the city’s fees and requirements, which reportedly would add about $120,000 in costs per apartment unit. These costs were intended to help make North Bayshore into a vibrant neighborhood with parks, transportation and even a new school for residents.”

“But for the companies poised to build those homes, those costs are becoming a deal breaker, said Tim Steele, vice president with the Sobrato Organization. Steele explained that his company needed to amend the plan because the city’s park fees had dramatically increased, from $32,000 to $60,000 per apartment. Basically, the project no longer penciled out, he said. ‘Never in our mind did we anticipate the fees would double over that time,’ he said. ‘Even with the financial influence of offices, these projects can’t overcome this burden.’”

“The reasons for the sudden spike in development costs are complicated. On one hand, land values have nearly doubled since 2016, going from $5.2 million to $10 million an acre in 2018. The city’s ambitious and well-publicized housing plans were surely helping to drive these dramatic valuations. But as land values went through the roof, that also meant city fees for parks and schools were also rising to new heights.”

“Taken together, each apartment in North Bayshore would cost about $645,000 to build, according to city officials, a $120,000 increase from roughly one year earlier. Councilwoman Margaret Abe-Koga warned that the city was being pushed into a corner where they could end up subsidizing the developers’ costs. ‘We know what the school fees are based on what we’ve heard, but (the developers) just don’t want to pay it,’ Abe-Koga said. ‘Someone has to subsidize for this, and I don’t know if it should be us.’”

From KQED News. “Reid Williamson is an urban planning nerd. He lives in Oakland and was recently on a trip to Los Angeles. ‘We were driving from the Getty in northern Los Angeles all the way down to Manhattan Beach, and that’s really just one city,’ Reid says. Whereas up here, many people drive through multiple cities just to get to work each day. And those cities aren’t always working together.”

“‘So Cupertino adds jobs at Apple, and Cupertino says, ‘We’ll pass on housing, it’s not our thing.’ And then the next town over says, ‘That’s not our thing either.’ And all of a sudden you’re all the way in Tracy,’ he says. He asked Bay Curious: ‘If the Bay Area united to become one city, would that solve some of our problems?’”

“Downtown Redwood City has a lot to offer its residents. To Maureen Sedonaen, CEO at Habitat for Humanity Greater San Francisco, it was an ideal place for a new affordable housing project. In 2014, Sedonaen proposed a nine-story building with 46 units. But to win approval from the city, Habitat’s proposal was cut by more than half — down to 20 units.”

“Then a neighbor, with a history of obstructing development projects, halted the project for more than a year. He cited an environmental concern, saying the building would increase traffic. More than three years later, the lot Sedonaen hopes to build on still sits empty with a price tag that keeps on growing.”

From Fox 2 KTVU. “After at least three years in the making, the modern, luxury Baxter on Broadway apartments and town homes are finally for rent in Oakland. And the prices are staggering. A 400-square foot studio is going for about $3,000 a month. A one-bedroom with about 570 square feet is $3,500 a month. And a three-bedroom town home with slightly more than 2,700 square feet is going for $8,000 a month – or $96,000 a year in rent.”

“Legacy Property regional manager Jonathan Figone told KTVU that he believes the rental rates are in line with the rest of the Bay Area. The property is located at 4901 Broadway, at the intersection of the affluent Temescal and Rockridge neighborhoods. ‘We’re just being competitive,’ he said. As of Friday, he said he’s leased ‘just a few apartments. We opened our doors a few weeks ago.’”

“Earlier this week at the Oak Knoll Naval groundbreaking for another mixed-use project where 918 town homes will also be offered at market rate, Oakland Mayor Libby Schaaf said: ‘Housing at any price point helps relieve the supply and demand pressures and helps provide new places for new Oakland-ers to move into.’”

“It’s well known that Bay Area rental prices are sky high. Looking at other similar apartments nearby, seemingly comparable two-bedroom apartments at Jack London Square, 777 Broadway and on Jefferson Street are renting for $3,500 a month. As of this month, Rent Cafe, listed the average rent for a one-bedroom San Francisco apartment at about $3,500 a month, and a studio at about $2,500 a month.”

“The new Baxter on Broadway two-bedrooms, which boast 1,000 square feet, however, are renting for about $5,000 a month.”

“Figone pointed out that the Baxter on Broadway apartments are brand new. The 130 units feature a rooftop with a club room and barbecue pit, a bocce ball court, vegetable garden, dog run, pet grooming area and electric vehicle charging stations. The five-story building is near two BART stations, a Safeway grocery store and plenty of restaurants, book stores and coffee shops. It also sits kitty corner to a now-stalled retail project, where a vacant lot still sits awaiting development.”

“‘They all have stainless steel appliances,’ he said, ‘and beautiful flooring.’”

“Baxter on Broadway is one of several new apartment buildings coming online in Oakland. City housing records showed there were 6,982 housing units under construction in Oakland.”

From CBS Sacramento. “A major construction project in Roseville will bring approximately 20,000 new residents. Renee Bennett asked us: ‘What are they building on Fiddyment between Baseline and Pleasant Grove in Roseville?’”

“We took the question to the City of Roseville and found out that construction is part of the Sierra Vista Specific Plan. At that particular intersection, a retail center called Baseline Marketplace is being built. North of that will be residential housing. The Sierra Vista Specific Plan was approved 8 years ago using land annexed from unincorporated Placer County to the City of Roseville.”

“The plan includes: 8,679 single and multi-family homes. 259 acres of commercial space. 106 acres of parks. 304 acres of open space. 56 acres for schools. 40 acres of urban reserve. Once completed, an expected 2,045 people will live in the new neighborhoods.”

From The Inquistr. “Demi Lovato has officially listed her Hollywood Hills home for sale, but hasn’t sold the mansion just yet. However, it seems that she is so anxious to unload the property, where she suffered a scary overdose, that she’s willing to drop the price. Now that Demi is out of the hospital and looking for a fresh start when it comes to her recovery, the singer is said to want to sell her Hollywood Hills home as soon as possible.”

“‘She’s rather eager to sell and there might be a little wiggle room in the price,’ a source told the outlet.”

“Lovato reportedly paid a little over $8 million for the mansion, which boasts four bedrooms and six bathrooms, when she bought it back in 2016. She’s now asking nearly $9.5 million for the home, and would make almost $1.2 million in profit if the mansion sells for the asking price.”