Although controversial renter protection measures overwhelmed the San Mateo City Council’s public consideration of recommendations made by its Housing Task Force earlier this month, the stakeholder group also released a report providing critical insight into the area’s red-hot housing market.
Key facts include that nearly half of the city’s housing stock is comprised of rentals, the vast majority of those currently residing in San Mateo cannot afford to buy a home today and prices have drastically increased as the city absorbs an influx of new jobs.
But the actual statistics and data compiled by the task force were primarily left undiscussed during two lengthy council meetings hosted earlier this month.
Ultimately, officials were unable to achieve consensus on whether to enact tenant protections such as rent control or relocation assistance ordinances after being met by hundreds of renters and landlords with opposing views.
Moving forward, the task force — comprised of Realtors, renter protection advocates, low-income housing nonprofit representatives, business officials and faith leaders — culminated with a report equipping the council with more information about the regional housing crisis and San Mateo-specific trends.
Home prices tip the rental market
With rents skyrocketing in response to the demand created by thousands of new jobs, the report notes only 13 percent of those currently living in San Mateo could afford to buy at today’s prices.
“The city of San Mateo, San Mateo County and the Bay Area as a whole are experiencing an affordable housing crisis. The demand for housing affordable to all but the wealthiest residents far exceeds the available supply,” according to the report.
Over the past four years, single family home prices have increased 72 percent in San Mateo to an average of $1.4 million and condominiums have increased about 86 percent with average prices up to $730,169, according to the report.
San Mateo County is only affordable to 27 percent of first-time homebuyers — making the local market less accessible than its neighboring Santa Clara and San Francisco counties, according to the report.
High purchase prices have arguably led to even further demand placed on the rental market. The task force reviewed data on “asked for” rents compiled by Zillow and Real Facts. The latter reviewed data from large complexes with 50 or more units, which account for about 42 percent of rentals in multi-family buildings, according to the report.
Average rents have increased 49 percent over the last four years with studios showing increasing demand as prices have jumped to $2,112, up 67 percent. A one-bedroom unit is up 51.9 percent to $2,633, a two-bedroom unit with a single bath is up nearly 49.8 percent to $2,949. A three-bedroom townhome is up nearly 49.7 percent to $3,499, according to the report. A look over the last eight years shows slower growth, with annual increases much higher between 2011 and 2015, according to the report.
Zillow data show slightly less drastic increases over the last four years, and accounts for smaller size multi-family buildings and single-family homes. Average asking prices for an apartment, regardless of size, in a building with five or more units has increased about 31.1 percent to $2,950. Rents for single-family homes or condominiums have jumped 52 percent to $3,495, according to the report.
Although these data reflect current asking prices, the report notes rental information from the U.S. Census Bureau shows slower growth over the last eight years with median rents up 23 percent between 2007 and 2014 — the report notes these slower increases reflect actual rents being paid by residents who’ve remained in place, rather than those seeking new housing.
Who can afford the expenses?
Based on federal data and information from the 2016 Silicon Valley Index, wages within the majority of career fields have not kept pace with housing costs and most cannot afford the county’s average monthly asked for rent of $2,786.
The majority of those who are considered low income, or earning less than $75,000 a year, are currently “rent burdened,” according to the report. Newcomers or those who need to relocate must make even higher wages to afford the asking rents within the county.
Assuming an “affordable rent” accounts for no more than 30 percent of one’s monthly salary, county residents must make more than $110,000 to not have their pocketbooks overly burdened by current asking prices. That means those in a variety of moderate-income jobs who make between $123,600 and $93,850 — such as computer or mathematical, architecture and engineering, business and financial operations, or life and physical sciences — who look for housing today might be contributing larger portions of their paychecks.
The gap between income and asking rents increases drastically for those low-income workers making below $93,850 a year; such as those in design or entertainment, construction, education, protection service and sales fields. It’s even steeper for very-low income earners who bring in less than $58,600 a year and work in areas such as social or community services, office or administrative support, transportation, health care support or farming, according to the report.
The lowest income earners in fields such as food preparation or services, personal care and building or grounds maintenance, typically make less than $35,000 annually and cannot afford the average asking rents as of January 2016, according to the report.
The housing stock at large
A large portion of the community is comprised of tenants with nearly 47 percent of the city’s housing units offered as rentals.
The city has a total of 17,877 rental units ranging from single-family homes to studio apartments. The majority, 75 percent, are located in multi-family buildings. The units are spread between 5,966 properties, which are owned by 5,204 landlords, according to the report.
Nearly 42 percent of the city’s housing units are in large multi-family properties with 50 or more units — of which there are at least 34 in San Mateo, according to the report.
About 87 percent San Mateo landlords own just one property. About 6 percent of the owners are listed as corporations. About 36 percent have a mailing address in San Mateo, while another 38 percent have a county mailing address, according to the report.
Evidence shows the rental housing market has become increasingly lucrative with nearly 40 percent of the city’s rental properties sold and purchased within the last five years, according to the report.
During the last two calendar years, 179 properties consisting of 930 units were sold. Of those, 470 units within 56 properties were purchased by corporations, according to the report.
Some have questioned whether speculators or outside investors looking to capitalize on the region’s profitable housing market are a threat to affordability, and the report notes this could lead to increasing rents.
“The current market conditions have created significant economic pressures for property owners and investors to increase rents,” according to the report. “While it is acknowledged that many property owners have not levied significant rent increases at their properties, it may be only a matter of time before rents are increased or properties are sold to new investors.”
Visit cityofsanmateo.org to review the Housing Task Force Summary Report.