Renters pour out woes at housing event
Original post made
on Jun 23, 2014
In an event at the Adobe building Monday night, Mountain View residents spoke about their struggles to find housing and afford rising rents before an expert provided some perspective on the recurring housing shortage in the area.
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posted Monday, June 23, 2014, 10:24 AM
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Posted by Dylan Carlson
a resident of Whisman Station
on Jun 23, 2014 at 5:40 pm
Sorry in advance about the wall of text you're about to be pummeled with.
Everywhere in the discussion is "# of new homes per 1000 existing homes" but nowhere in the discussion is "amount of new commercial sq footage per 1M existing square footage." It's bizarre to have a conversation where there is no metric for perspective on commercial development.
Let's go back to the data we know: 5.5M sq ft of commercial coming on by 2017.
Now, Let's do some back of the envelope calcuations. (some fudgy, rounded numbers but are accurate enough)
In Mountain View ...
* Where the average sq footage of "homes" = 1600 sq ft
* Where existing residents = ~77,000 people
* Where the average # of occupants of a "household" = 2.3
* Where # of residences = ~33,500 (77,000 / 2.3)
* Where the average sq footage per worker = 170 sq ft.
* Where existing commercial real estate (office, industrial, warehouse, R&D) = ~20,000,000 sq ft
* Where existing workers = ~40,000
* Where % of workers also live in city = 27%
* Where vacancy rates are ~3% (at best) for anything
* Where median per capita household income = ~$90,000
* Where minimum rent for a new "household" apartment or house (2+2 unit) = ~$2,300 / mo
* Where median cost of a single-family family home (2+2 or slightly above) = ~$800,000
1. Housing would need to be ~$400,000 to be affordable for the median household.
($90,000 AGI, $20,000 down, 36% debt to income, 4% interest on 30-yr fixed).
2. IIRC the de facto standard rental formula is 3 times rent to qualify. A household at $90,000 can meet this, but there's a severe shortage of quality housing at the $2,300 price point.
(90,000 AGI / (2,300 / mo rent * 12 mos))
3. By 2018, this city will expand the daytime working population by around ~32,000 people to a total of 72,000.
(40,000 existing + (5,500,000 sq ft of space / 170 sq ft per worker))
4. By 2018, we will have ~39,000 additional cars on the road.
((70% solo car commuters of (27% MV residents of 40,000 existing workers)) + (32,000 new workers)) = 39,200 add'l cars
I could model out what prices will be like by 2018, without any policy intervention, but I think we all intuitively have some idea. Nightmare for most, gold rush for some.
1. Bryant's remark about the "1,100 units" in North Bayshore that wouldn't have "resolved the problems of the Bay Area" ... is at the very least kicking the can down the alley to the other cities. If you're not part of the solution -- Mountain View City Council I'm looking at you -- you're part of the problem.
2. The injection of large amounts of commercial space into the market has provably stabilized rates in a short period of time (less than a decade, despite massive growth). Look at the commercial rates over the past 10 years including new supply, the data is there. Yet the council and opponents of residential development seem to argue that residential prices and rental rates would not stabilize in a short period of time, and imply that people should look elsewhere. It's a vicious double standard. Companies get the supply to get the prices & space they need, but residents do not. All this will do is close off housing to the wealthiest people and foreign investors.
3. When a VC like Vinod Khosla (of Sun Microsystems, and "get off my beach" fame) is saying that the residential market in the Bay Area is screwed, you know there is something to this.
4. Question: What's your definition of "crisis"?
5. I have this fantasy scene in my mind: a conference room at a mountain resort ... cigar smoke, pinstripe suits, monocles ... the members of all the Bay Area city councils getting together ... wracked with deep concern and commitment on how to best serve all people, of all economic classes and their long term happiness and security. I said it was a fantasy...
6. I love the defense of Mountain View's current development bias by anonymous people. e.g. "Hmm" is both taking a stab at immigrants, and telling everyone what we "must get used to" but is too afraid to use his/her real name. Very telling.
This is my real name, these are my views, and they can be yours too (but not you anonymous cowards).
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Posted by Dylan Carlson
a resident of Whisman Station
on Jun 24, 2014 at 10:35 pm
For what it's worth, my experience: I've spent a fair amount of time in places like Hong Kong, Mumbai, etc. I lived in NYC for a number of years. Had a house in the countryside of New England. I have /some/ perspective on what it's like to live in different ways.
Mountain View will probably never be anything like Hong Kong ... but I've heard people point at Hong Kong as an undesirable outcome. Or that high density living is somehow automatically bad. I doubt those people have spent any significant time in Hong Kong to have such an opinion. In my experience, quality of life in HK is surprisingly good, and I've been all over the islands and mainland territory. It's a neat mix of old and new. Real estate in HK is very expensive despite its vertical nature. Like MV, it is a land-constrained place. It's challenging keeping up with the residential demand. But there is supply, and unlike MV they are actively working on bringing more residential supply on, and on infrastructure. It evolves. I think there's a lot of positives to learn from when looking into city-states like HK and Singapore.
When's the last time we did any infrastructure in MV worth talking about? I can't think of anything beyond extending Stevens Creek trail.
High density residential coupled with good infrastructure can be done, but with this city council it's evidently not happening. It seems like they're all for building hives of workers, but not interested in giving any of them a place to live. The city is treated like a revenue project first, instead of a urban planning project. What did we do with that revenue besides over compensate city employees? Please enlighten me.
Why a glut of offices instead of a balanced plan? Which path is more better depends on what timeline you look at. In the next 10-15 years, what they're doing makes financial sense. If you are looking at long-term sustainability, it doesn't make sense.
Mountain View was incorporated as an agricultural area, which then became a place where the employees of a handful of aerospace (etc) companies would raise their families, before the internet gold rush came along. The question is, do we want a boomtown, and the eventual demise of that (like a Flint, MI) or a diversified place to call home in the long term?
I lived in Folsom before Intel set up. Folsom was good for Intel and vice versa, and it never became a hub of a bunch of other companies, so it never became a problem, and presented a development opportunity for surrounding areas in Granite Bay, El Dorado Hills. Probably like Mountain View was in the 1950s. But it was and probably still is a good place to put down roots, despite the layoffs Intel has done in the last 7-8 years. Folsom isn't going to die if Intel leaves town, but if Google leaves Mountain View, that would be a disaster for us.
Perhaps most on the MV administration and tech workers (I'm a tech worker) feel like the market will have a solution for everything, because they are mostly Millennials who expect to settle somewhere else eventually. Most of the 20-somethings I know just don't think about it at all. I don't blame them, I probably wouldn't be bothered with it either if I was 20-something. But I'm in my 40s, I've been around the block and I see this going a bad way.
Because times do change. Auto industries (e.g. Flint, Michigan) give us some precedent. I was born in Michigan, and much of my family worked in the auto industry. Flint was the birthplace of GM, now it's a ghost town of abandoned houses, crime, and scrappers tearing the old factories down for the metals. Was a good place once. I have a feeling Silicon Valley will have its turn if it doesn't have some vision of sustainable growth which includes intervention on housing.
Mumbai, as another example: I have spent collectively a couple of years in this city in actual time over many trips. Had an apartment there. It's a city that has had little planning, is in the top 5 most densely populated cities in the world. Somehow life goes on anyway. You would expect traffic to be much worse than it is with so much greater density. (Note, it's still awful, just not apocalyptic as 12 million people commuting might conjure in your imagination.) Mumbai's real estate is almost as expensive as it is here, crappy apartments are expensive, and it's difficult to get to break-even on any nice retail space in Mumbai just to make the rent.
My experiences there tell me that things will sort itself out here one way or another. Jobs will anchor people even if they're miserable. For a while. But the lack of any sensible foresight or policy creates some big tradeoffs. If we're making things harder for retailers, workers, and possible future residents to create more office space -- just because that's where *today's* demand is coming from -- there is a big opportunity cost to that.
Unfortunately it's hard to unwind dumb planning decisions after it's all been built. I hope this city council stops taking easy money and makes some better decisions for the long term.