Planning for the Future, Bay Meadows Considered

Dear Planning Commission,

I am writing this afternoon out of concern that approving the construction of the Bay Meadows project as it is currently conceived will have a detrimental long-term impact on affordable housing in San Mateo. While well considered and beautiful in conception, the fact of the matter remains that adding nearly 500,000 sq. ft. of new development to this city, of which less than 15% is residential, will exacerbate the jobs/housing imbalance. 67 units is not enough compensation for the number of new jobs created.

A more balanced approach is being pursued at Concar Passage. In this development there are nearly 1000 units on offer, and only 40K sq. ft. of office and retail. If this ration was applied to the amount of commercial space Wilson Meany is proposing, it would mean adding over 10,000 new units of housing.

There is a development in Montreal called LaCité. It is a tall apartment building above retail and supermarket, all on top of a subway stop. The residential units spur sales at the shops and make the area more vital at all hours. No one living there needs a vehicle. Anyone who recalls the dismalness of downtown Redwood City after the close of business before efforts were made to revitalize the city center should understand why all commercial can ultimately fail to bring the best results. These are some of the multifaceted design ideas which are required to make San Mateo a dynamic, walkable city as opposed to a crawl of cars trying to get from one parking lot to another.

It is not only our responsibility to our city which requires we pause before building. The housing crisis in the Bay Area has been fueled by one city after another approving more office and retail than housing to support those industries. Without more affordable units locally we will continue to a have a situation where a friend’s nanny drives in from Gilroy, my son’s pediatrician’s receptionist commutes from Fairfax, and it is not rare to meet a waiter in for the night from Vallejo. These are the unsustainable consequences of perpetuating the housing/jobs imbalance, and should be addressed in conjunction with the present proposal.

Kind regards,

Kara Cox

A Comp Only an Investor Could Love

When Keynes spoke of ‘animal spirits’ he was referring to the irrational in humans: emotions, essentially.

Before the recent pandemic, investors, in competition with homeowners, were pushing sale prices higher given the outstanding rents which could be generated once they gained possession. One contractor I have worked with in the past had transitioned into a full-time gig converting single family homes into duplexes for one well-funded landlord. The math worked out fine because rents were so high.

The pandemic brought rent down, making this kind of investing less attractive. A flip in San Mateo which had redone the house (small 2/1) and turned the large garage into a stylish 1 bedroom went for 1.855 in January. Less than six months later, a gorgeous 2/1 around the corner sold for 2.365.

This is animal spirits at play, because two rentals for less than the price of one, even if one is nicer, makes more sense. However, one did not tug on the heartstrings of a homebuyer and the other did. In this case the difference amounted to 912 a sq. ft. for a cash flow from two units versus 1404 a sq. ft. for an adorable place to live, a premium of over 50%.

What I also find interesting if that as soon as the fancy 2/1 comp closed, an investor decided to test the market by trying to flip not a house, but a lot, essentially. After closing on the perfectly located dump in March for 1.325, the property is now back on the market with a list price of 1.498 and nary an improvement.

I have been waiting for a comp like this – one that really tests what the market is doing today. Up or down? This one is a beacon, for me, because it is unlikely to attract a lot of emotional buyers, both due to its shamelessly ugly condition and the fact that most of the people who might want the place already had the opportunity to bid earlier this year.

Clearly the last purchaser thinks it might move at list, netting a little under 200K (minus any fixed costs) for doing nothing. That is no jackpot, but it does remove the risks inherent in flipping, especially amongst rising construction costs. No cosmetic makeover will suffice for this home – it requires a complete renovation, putting one at the additional mercy of the city’s planners.

Will another buyer agree that the price of a lot and the shell of a house on the Peninsula is worth over 10% more a mere 3 months later?

We’ll know by July  1^st !

S*&T Happens

My grandparents moved to San Mateo from Detroit in the 1950s, seeking open space and opportunity. They purchased a classic rancher (3/2, approx. 1600 sf. Ft.) on a nearly double sized lot for around 35K. This was on par with the sale price of their house in Michigan.

At one point in the first few years of their relocation they considered moving back East. After flying into a snowstorm while undertaking a house scouting trip to Detroit, my grandfather found a phone and immediately called my grandmother back in California. Take the house off the market, he said, I can’t go back to snow. The property remained their home until my grandmother’s passing in 2018.

The trustee fixed it up a bit from its ancient glory and put it on the market for 1.95 at the end of August. Another house of comparable size listed for several 100K under. Though a smaller lot, the renovations were top of the line, and the property is more walkable to downtown.

On the day bids were due, the real estate agent representing the estate was frantic. They hadn’t gotten anything higher than 2 million. It was inconceivable!

Then, at the moment you thought the wave wouldn’t crest any more, it did. Once a bid for the other house was accepted, at well over ask, the losing bidders did an about take. After a little jockeying from two of the castoffs, the house sold for 2.1 in October.

At the time, my natural route through San Mateo still took me by the house. One day as a slowed for a touch of nostalgia, a resident caught me staring. I looked sheepishly at the friendly, breaded man who stood with his two young daughters, and explained myself.

He smiled warmly.

“We love it here.”

It was filled with a sincerity so compelling I was touched to the core. Visions of their family staying 60 years, filling it with several generations at a time for decades on end, danced in my head. This is not a family who would raze a beloved landmark of my childhood in order to erect a mini mansion.

The young family was comfortably settled in their brand-new dream home, happy as could be.

What could go wrong?

Less than two years and one pandemic later it hit the market for 2,288,000 in August of 2020.

Now as exuberant as the market may be around the Bay Area, it is also rarely completely stupid. Here were some people who had to sell. Job loss, divorce, flight to family, all of the above – who knows. Point is, this is a deal that gets circled by the vultures.

It sold at the end of September for 2.155, a mere 2.6% above the 2018 sticker price. Including moving costs, and closing costs, staging charges, realty fees, the lovely and very long fence erected in the front yard, and their losses soar into the low six figures.

Based on Realtor.com’s estimate, it is now valued about 2.215, or 5.5% above the sale price in 2018. They also contend that the value of said home went up 111% in the last 10 years. If this is the case, over 100% of that value came between 2011 and 2018. This does not bode well for today’s buyer.

If I recall, my grandparents spent about 35K on that house. Based on the sticker price, the asset’s return was 6000% over 60 years, which blows the national average out of the water. Good thing he went house hunting in the winter, because Detroit’s stats lack the same luster.