By David M. Greenwald
The big news statewide has been a migration of some out of the state. However, on a regional level, according to new data, the Sacramento region remains hot, fueled by people leaving the high cost of housing in the Bay Area.
While overall California’s population growth stalled for the first time in modern history, more people are moving to other states than moving to California and the birth rate has slowed—with older Baby Boomers passing away.
Still, the Sacramento region, led by El Dorado County, led the state in growth with Sacramento ranking 7th and Placer 11th.
Yolo County saw a more modest 8 percent increase in median housing prices, but that figure countywide of $460 thousand is considerably lower than what it would be in Davis. Sacramento saw a big growth in median housing prices, $420,000 compared to $360,00 a year before—nearly a 17 percent increase, the fastest growth since 2013.
The Bee notes that the prices in places like Sacramento, Yolo, El Dorado and Placer Counties remain far below median home prices in the Bay Area. Prices there remain absurdly high: San Mateo County was $1.42 million, San Francisco was $1.38 million, and Marin and Santa Clara were about $1.25 million.
Yolo County thus rates much more affordable than usual, while Sacramento is somewhat less affordable. Is that an artifact of COVID or part of a new potential trend? Students are staying away right now. Apartment vacancy is much higher than typical. We would expect that to change once students return to school, and a key question will be whether the housing crunch is over—or is this just a blip on the 
radar?
Even at $460 thousand like Yolo County, it takes about $95,000 a year to afford a house. In San Mateo County that figure jumps to nearly $300,000.
So what does the long-term picture look like in places like Davis? That appears to be in flux. For years, the city was struggling with low vacancy rates and the land-use battles were on creating enough capacity to accommodate current students and projected university growth.
Does that change now that COVID has hit? That’s a big question. Overall it does not seem that distance learning is popular. Students miss out on the college experience, prefer the classroom setting to the computer, and lose out of creating vital social and professional networks.
On the other hand, the cost of college and cost of housing had skyrocketed, especially in places like California.
There are some advantages to distance learning, but some decided disadvantages. We will have to see how that evolves.
That question will be critical for the future planning in the city of Davis. The council from 2016 until the past year approved a number of large student housing projects as a way to ease the housing crunch. In addition, the university agreed to add nearly 10,000 new beds over the course of its next LRDP (Long Range Development Plan).
If students are attending college in person far less in the future, obviously that will impact housing concerns. A lot of the new housing is more student-oriented, but the older housing could potentially be converted to other uses like workforce and family housing.
The bigger concern now, however, is the lack of housing in Davis for workforce and family. Even before COVID, we felt like the city and university had mostly planned enough housing to accommodate current needs and growth.
My bigger concern in the last few years has now shifted to family housing. We have seen the impact of a stalled housing market on the schools—enrollment in K-12 has been flat or declining in recent years, putting a strain on the district’s budget.
More important than that, however, is that the student enrollment can be viewed as the canary in the coal mine, illustrating the shrinking middle-age demographic, people who are 30 to 55. These are the people who are not only the ones with young children that fill our schools, but they are in the working demographic, the people who come for jobs, settle down, and raise families and produce the kind of vitality needed in a community.
If the core of Davis hollows, if people in that 30 to 55 age range decrease in population, increasingly we could see a dumbbell shaped curve with a large student age population 18 to 25 and a large senior population over 55, with a small population for the middle demographic.
What would that mean for the city? Declining enrollment. Decreasing schools and school budgets.
How do we change that? Some will argue that we shouldn’t. But to change that demographic shift, we will need housing that is affordable for families with children and jobs that can keep them in town.
That is going to be a primary focus in the coming years. How COVID changes that, or if it does, remains to be seen.
—David M. Greenwald reporting
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50% of undergraduates and 70% of grad students came back to town even when they basically couldn’t attend classes. I think enrollment and residency will return to near-normal very quickly. UCD will certainly be promoting that as their business model requires it, and they can certainly tout their safety record with COVID. I predict full apartment buildings again this fall.
That would be my guess as well.
“How do we change that? Some will argue that we shouldn’t. But to change that demographic shift, we will need housing that is affordable for families with children and jobs that can keep them in town.”
Davis voted away its ability to easily address this for the next ten years. You voted it away. Don’t expect anything to change the trajectory of that trend for a decade or more.
And, Ron G, I pretty much agree… JeRkeD is a major impediment… yet, I can see the “I’ve got mine, to the hell with the rest… ” position. Am ‘seeing’ it, but I strongly reject that mind-set… but, I understand that mind set… “there, but for the grace of morals, go I”
[Or, let’s build a moat, pull up the draw-bridge, and keep the riff-raff out… another ‘philosophy’ I reject…]
Or, a WALL…
Or restrictive covenants.
… or voter-approved exclusion of families with children and buyers without existing or prior Davis connections.
So since I love to pick on Davis.
How much does it cost in the city of Davis to build a low income house say in the $700,000 bracket just for bonds and permits, special district fees and other fees for the city, county and of course who can forget the state.
You answered your own question… ~ $700,000…
It costs Mucho. Don’t forget the additional costs of being carbon neutral imposed by people who live in housing that is not carbon neutral.
OK… if fees and taxes were reduced to $0.00… would that change prices? Most of the real estate changing hands today had those as ‘sunk costs’… and taxes were mitigated by tax deductions… it’s the market…
And Ron G makes a good point… initial costs are driven by codes/regulations, as part of the ‘market’…
Anyway, over the next decade a lot of single family housing will be built in the area. However, most of it won’t be build in Davis. Instead it will be built all around Davis in the nearby communities of Woodland, Dixon, Vacaville, West Sac, Winters and Sacramento City and County. Davis will remain an anomaly with an aging population of landed nimby’s in a sea of college students and apartment dwellers.
Yes, we are aging… good thing… alternative is not something I’d choose… something about ‘putting one foot past another’
Landed, yes…
NIMBY, no (except I do not want another dwelling unit in my literal ‘backyard’!). But, figuratively, we have ‘affordable’ for sale or rentals within 1/8 mile… am good with that… processed pretty much all of them…
I would love to agree with you Ron but sadly the only thing I see is building fees to build a house anywhere in this region is going to be exponentially higher just so the cities and counties can continue on with kingdom building.
I haven’t heard anything about cities and counties laying off people due to an expected drop in revenue from businesses have you?
Yes…
You bias is showing… or was it a ‘slip’?
Yes Chris, the state and cities have been subsidizing existing home owners prop 13 property tax bases by both nickel and dining new construction and raising state income taxes for over 40 years.
The chickens are finally coming home to roost with the Red State tax bill Paul Ryan got through before retiring to the services rendered pastures of the K St. feeding trough while he waits his chance to run for President. When the Red States killed the SALT deduction and started poaching California and New York billionaires and corporations they likely destroyed the patch California had used to paper over the impact of Prop 13 since 1978.
Excuse me Ron I’m a little bit slow is this the salt tax that you’re referring to
https://www.cnbc.com/2020/11/18/thisthe-irs-is-blessing-workaround-that-allows-business-owners-to-deduct-state-and-local-taxes.html?&qsearchterm=10000%20cap%20on%20salt
Chris… the ‘work-around’ only works if you are a corporation/business entity… not an individual… the article you cited makes that quite clear… SALT was designed to punish ‘blue states’… since it went into effect, we effectively pay more in Fed income taxes… the President did not veto it, as near as we can tell, he only pays $250/year in Fed income taxes… that might well bite him in the (t)rump, once he’s left (assuming he does) office… or, he or Pence could pardon him for that… if Al Capone had only been elected president, he’d never have gone to prison…
California hasn’t yet implemented such a workaround. Even so for an employee in California who owns a home with a high tax base I didn’t read anything that would offer relief from the cap on SALT deductions.
Chris… if fees exceed reasonable, actual costs of services, they are not FEES, they are TAXES… I’ll leave your last phrase alone… you probably wouldn’t recognize “kingdom building” if it bit you in the (t)rump… putin that aside… if “fees” exceed actual costs, they can be legally challenged as “taxes”… in Davis, there is a ‘Construction Tax’… not a fee, but a tax… has been so for ~ 50 years… compared to land cost, actual construction costs, it is not completely de minimus, but if it is amortized over the usual length of owning a house, it is pretty much de minimus…
Sales prices, yes. Rental prices have plummeted!
Alan, I do agree that rental prices are definitely going down and it’s because of a rent moratorium landlords are becoming financially strapped they’re having one hell of a time just trying to maintain property expenses debt obligations and when this is over with you think those renters are going to pay those slumlords rent?
I have been in the construction racket for well over 30 years and this it’s not a good I think we are in a bubble.
Chris, unlike other bubbles, if we actually are in a bubble now I believe it is a very narrowly defined bubble (a bubble of distinctly limited scope).
When you look at the disproportionate impact patterns of the impact of COVID, the “professional class” … those with white collar jobs … have seen their financial well being much less affected than the people with blue collar jobs. As a result, paying the monthly mortgage payments for the people who own their home are not an across-the-board problem the way paying the monthly rent has been for a significant portion of the working class.
The migration of job locations from offices to rooms in residences devoted to work-from-home isn’t going to contribute to a bubble in either the owner-occupied housing market or the workforce renter-occupied housing market.
The market niche that is likely to experience some level of bubble (of currently unknown size or duration) is the student-occupied rental market. Don Shor’s argument in his 8:01am comment appears to be that that specific niche is going to recover to past levels of housing demand very quickly.
I would totally agree with you the city of Davis is totally driven by the University of California but outside of that fish bowl in the rest of California where the little people live it’s completely different story.
Just my humble humble opinion
Chris, whether the locale is Davis or elsewhere, the likelihood of a housing bubble in particular segments of the housing market is similar. The difference in Davis is that we have an additional market segment that most other markets don’t have … University of California students.
Matt, are small business owners white or blue collar?
Good question Ron. In my opinion it is a mix. Owners of small construction companies = blue collar Owners of HVAC companies = blue collar Owners of plumbing companies = blue collar Owners of restaurants = opaque blue collar Owners of accounting firms = white collar Owners of law firms = white collar
I’m guessing, “yes” (or possibly “no”, if the small business is a legal, or engineering practice, etc.)…
I don’t own a white, collared shirt… I’m partial to blue, and even my ‘dress shirts’ have collars…
But you bring up a good point, as to the ‘white/blue’ collar “distinctions”… for example, there are many maintenance/construction folk who have ‘orange’ collars… maybe we can work, as a society, to being “collar-blind”… [sometimes, ‘guys just want to have puns!’ (some girls, too… it’s fun)… might just write a song…]
Ron G…
Matt W has even a better response than mine…
Generally speaking, working with your hands = blue collar jobs.
The exceptions are using a pencil or typing on a keyboard. I think the exception to that are retail cashiers.
I’m green collar.
Matt,
I must disagree with you I know a lot of very rich turd herders world they are definitely white collar workers just have one come out and give you a quote on a new water heater for your house.
Truly, ‘bizarre’ post… whatever…
Well, as long as Measure J (or “letting the inmates run the asylum”) is in effect; there’s not much that’s can be done about housing affordability for families.
To even stabilize housing prices; new homes would have to be built on a scale larger than Wooland. Remember homebuilders don’t build new homes with the goal to decrease the local home prices. They want a premium for their new homes which generally raises local home prices. So building a little infill here and there isn’t going to help the problem.
Significant expansion requires infrastructure. Infrastructure requires funds from taxes and financied from bonds. Current residents generally vote against new taxes that would expand and improve infrastructure. So votes on annexing property into the city for development are hampered by their impact on city infrastructure (like traffic).
The Measure H/G parcel tax only adds to home owner costs. I personally have no problem with it as I’m generally in favor of funding the schools….but I can understand how it could be just another cummulative expense that becomes prohibitive for a family looking to move to Davis.
[edited]
Great avatar!
“Wooland?”
Are there a lot of “rich turd herders” there?
The inmates just got their contract to run the asylum renewed for another decade.
Wooland is clearly a typo of Woodland. No asylum connotation there … unless you want to commit SIRI to an asylum.
I will agree that turd herders as a meme for plumbers did give me pause, but I considered the content of Chris’ past comments and wasn’t that surprised … and moved on. Alan Miller has come up with some rather intriguing memes in the past, as have you if my memory serves me correctly. It is all part of the landscape.
With the Dems in total control you can expect them to reinstate the Salt tax deduction.