The return of new construction, both office and residential, also has figured in job growth that has hit around 500,000 since 2010. Residential construction was almost non-existent from 2010-2012, but since has expanded significantly as homebuilders strive to meet the pent-up demand. They are falling way short.
The job recovery and explosive growth has not been accompanied by significant new housing at all. In that same period of time, the Bay Area has added about 50,000 units. That doesn’t even keep pace with formation of new households.
As a result, both housing prices and rental rates have skyrocketed. Rentals are incredibly expensive in San Francisco and the shortage there has spilled demand over into Oakland where rents also have soared. A number of communities are considering rent control ordinances that seem well-intentioned, but further distort the market and result in minimal investment in new properties.
In real estate, the law of supply and demand applies.
So, it’s no surprise that outlying areas are aggressively marketing themselves to Bay Area residents. The communities over the Altamont Pass ranging from Patterson south on I-5 (an hour in non-commute traffic from Pleasanton) to relatively nearby Mountain House and Tracy (easy 30-minute drives without the commute traffic) out to Lathrop and Manteca (an easy hour). They banded together in a special real estate section in the East Bay Times two Sundays ago.
And last Friday’s edition brought an advertisement from a townhouse development in Davis (last I checked a map, Davis was about 15 miles from Sacramento). The ad touted 45-minute commute times to the North Bay (maybe) and the East Bay (really?).
Again, dream on marketers.
Interstate 80 is jammed with commuters from Solano County heading into the inner Bay Area already and ranks as one of the most jammed freeways on weekday mornings. Of course, I-580 from Tracy is worse. The 30-mile drive easily becomes an hour on weekday mornings and that is without an accident further slowing traffic.
