Thursday, February 18, 2016

More evidence Californians are overpaying for housing - Part III

Just how unaffordable is rent in SoCal? Both San Antonio and Philadelphia prove once again that Californians are paying too much.

Rental Chaos: Marketplace portals clearly show that Orange County residents are overpaying to live by substantial margins.
Source: Realtor.com

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director
riversidetransit@gmail.com


Earlier in my multi-part blog series covering unaffordable rents in Southern California, I mentioned that Portland too had some issues but nowhere near to the tune of what the Golden State has. The Portland Press Herald recently ran a special report on housing affordability and the region's situation appears to be worse than what I initially thought. Even though the current rentals have generally not yet reached critical mass, the current rate of increases in relation to household incomes is serious.

The headline is "Welcome to Portland: No Vacancy". The deck reads "Rents are up. Incomes are down. A combination of social trends has overwhelmed Portland's apartment market, pushing some residents out of their homes and changing the city." As I mentioned, that trend is disturbing. Some unjustifiable factor has to be driving this pattern that Southern California has been seeing for the last few decades: marketplace rentals and housing prices rising faster than working salaries by substantial margins.

I'm sure this has also affected the neighboring cities and towns that support the Rose City. Officials need to ensure that developers are free to compete by expanding infrastructure to meet market demands and that speculation or any other forms of corruption for the sole purpose of eating up supply, pricing out residents, and hiking up rates and profit margins is strictly regulated. According to the property and rental portal site Realtor.com, the median rental there is almost $1,600 per month with the median home price at $429,900. I'll keep a watch on this one.

San Antonio Housing


On to the southwestern corner of the Lone Star State's urban region known as the Texas Triangle: San Antonio.

If one's looking for a new and luxurious place to call home, count on the prices to creep into the high territory. In fact, that's generally the case for most of Texas' urban cores. Rates are on a steady rise with the growing economies and job markets. But there is development taking place and if the head of the household is making about $50,000 per year and is the sole source of income, San Antonio does offer a variety of marketplace options. Median rent according to Realtor.com is $1,200 with purchases at $225,000.

Like north Chicago, the market offered several older and smaller 3 bedroom units and homes with asking rents starting under $1,000 per month. Most were about 800-1,000 square feet with a single bathroom. Such homes within a very short bus ride or bicycle distance from downtown were also selling for under $100,000.

Heading into the supporting suburban regions--still within about 10 miles of downtown--several of the apartment complexes offered better living space, commons and community swimming pools without the expensive price tag. Competition is still robust and selective. The 3 bedroom units in these communities were renting for about $1,100-$1,300 monthly.

Studios and single bedrooms all over town started around $450-550 per month for the entry level workforce with some complexes offering pools.

Overall, San Antonio's market looks great. Continued market competition between developers to address growth should keep the rental price fluctuations in line with working salaries and workers ensured of their place they can call home.

Philadelphia Housing

Source: Zillow
From the Lone Star State, we head back east. This time, we check out a vibrant city rich in U.S. history: Philadelphia.

When I did my initial research, I found an October article published in BizPhilly headlining that "Philadelphia Has 7th Most Overvalued Housing Market in the Country."  The article's deck read "Even scarier: It’s got the fastest home appreciation of any city in the top 10"

With that said, I was thinking Southern California might just beat Philly in terms of affordability. Afterall, further up north, New York City's housing market and rentals are out of control. So, I expected a household making $50k a year would not be able to live anywhere near downtown Philadelphia. Nope.

First, remember those older smaller 3 bedroom, single bath units that I've talked about for north Chicago and San Antonio? They're are also are abundant in and around downtown Philly. Several units are going for under $1,000 per month. That's per housing unit, not per room. Some of these homes are right in the heart of the downtown core. There's no question workers making similar salaries can be the sole provider of their household. But as I've said, the living space is small. On the bright side, the affordable workforce units are there and not subsidized by the government. Looking at the interior shots of many listings, the updated cabinets, new flooring and appliances will make these older units attractive for many.

The outer suburbs are faring well too. Just west of downtown for example, the Drexelbrook apartment complex offers stunning masonry architecture with robust public transit options. Single bedrooms there start at $825; 3 bedroom units start at $1,280. Other studios and single bedrooms around downtown are going for about $600-$700. The median rent in the city is $1,500 per month with purchases at $149,250.

So Philly's not in bad shape but just like San Antonio, officials need to keep a close watch to ensure price hikes are in line with economic and salary growth, not well above. If BizPhilly's article turns out to be true without spin, this city should be a developer's paradise and efficient policies should allow for improved market competition and infill development to keep prices in check.

Next in this series, we'll head over to the Big Apple which is New York City. Unlike Philadelphia, the housing market there is chaotic. Reports claim that the New Yorkers are facing some of the most burdensome market rental rates around even in the troubled gang neighborhoods. Applications and wait lists for government-assisted rentals are through the roof and sometimes even that is not enough. What's stopping the developers from competing, improving selection and lowering rental and unit prices? Yes, land and property values are justifiably high in New York, but what's stopping the market expanding supply and affordability of the high-rise apartment and condo units?

Then later, we'll head back into California to compare what was found and show you how our metropolitan areas can offer affordable workforce housing without government subsidies. Stabilizing the housing market will be a prime solution of reducing traffic congestion from our clogged freeways.

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