Commentary: Pressure Is Only Going to Mount on the Davis Housing Market

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For much of the last two years, the Vanguard has been discussing the impact of the growth of UC Davis on the housing and rental market in the community.  The focus has been on the need for UC Davis to build more on-campus housing as a means to relieve pressure on the impacted 0.2 percent vacancy rate in the city of Davis.

But we haven’t paid nearly enough attention to the regional housing picture and the impact that it is likely to have on Davis and UC Davis students.

The Bee on Wednesday published a story entitled, “Rents are rising faster in Sacramento than any other part of California.”

The reality is that Davis lies physically in between the San Francisco/Silicon Valley housing market – which is the most expensive market in the state if not the nation, with monthly rents averaging nearly $3000 per month – and the cheap Central Valley market, where average rents are the cheapest at $985 per month.

However, “rents are rising faster in Sacramento and the Central Valley than any other part of the state.”

The report goes on to say: “Sacramento’s rental market had the biggest year-over-year increase compared to all other markets across the country, and throughout California.”

“The current economics of supply and demand in the Sacramento market favor property owners and not the renter,” said Doug Ressler, director of business intelligence for Yardi Matrix. “Limited supply and demand continue to increase rental rates.”

Sacramento saw a 9.9 percent increase in rent between June 2016 and 2017.  Compare that to Silicon Valley and San Francisco, which only had 1.6 and 0.9 percent increases respectively.

In fact, Sacramento had the fastest increase not only in the state, but the nation, just ahead of Seattle.

The implications for this are huge.

First, those who believe that students can simply rent housing in other communities and commute to UC Davis should now consider the likelihood that these students will be competing for housing regionally with people being displaced from Silicon Valley.

Second, the other areas where students traditionally rent and commute are now likely to be impacted as well.

That puts even more pressure on the Davis housing market and the UC Davis housing market.  The university factored in a 10 percent out-of-area figure when projecting housing needs.

As Assistant Vice Chancellor for Campus Planning and Community Resources Bob Segar explains, “The way we got that number (90 percent) — and I don’t know if it even matters — was historically, 90 percent of students have lived either on campus or in town. So when we said we’ll take 90 percent, the intention of that statement was we’ll take all the growth.”

But if the markets that students used to inhabit are becoming more impacted, that calculus figures to change.

The university thus far has not committed to exceeding either the 90 percent of new students figure or the 40 percent of overall students figure for on-campus housing.

Another problem we will soon face is that, right now, UC Davis’ plan calls for 2775 beds by 2020.  But UC Davis will have added about 3000 new students between 2015 and 2020.

Will the new housing come on line on time?  That seems questionable at best.  We believe that it is more realistic to project an opening of 2021 or even 2022.  What that means is that there will be 3000 additional students with no new university housing projected for four or five years.

In the best case scenario, both Sterling (which has been approved by council) and Lincoln40 (which still has to go through the entitlement process) will be on-line by September 2020, but that only amounts to about 1500 beds.

The fallback position of many in the community has been that students can simply commute.  But if the Sacramento housing market is impacted, that will have repercussions everywhere in the region.

Yesterday we had a discussion of homelessness in the community – and Robb Davis made the point that, in addition to the visible homeless, there is also the student population that ends up homeless.

As we pointed out early this month, student homelessness may not mean that students literally end up on the street – instead many will “couch surf” or live in their car.  Student homelessness is a big and growing issue for students in Davis.

Samantha Chiang, ASUCD Senate President Pro Tem, said at the Sterling meeting that many students are “forced to start their housing search in November of their first year, only to not find a house and be forced to couch surf in the following year.”

Georgia Savage warned that “from a student perspective, not passing this project is risking homelessness for students, which I would argue is a significantly more present issue.”

As another student put it: “I struggle from April to August to find a place to live in Davis and I had to prepare myself to be homeless if I could not find a place.”

Many dismissed these warnings, believing that areas like Woodland and Dixon and Sacramento can provide a relief valve from housing pressures of Davis, but the emerging reports out of the Sacramento market suggest even if those options were available to some students, that window may also be closing.

The Vanguard continues to support the city position asking for the university to commit to provide 100 percent of new students with housing on campus and increasing their overall on-campus housing provision to half the student population.

However, whether or not UC Davis ultimately sticks with 90/40 or goes to 100/50, the city is in need of more apartment and rental housing for students – we figure that gap is at least 4000 if the university sticks with the 40 percent on-campus housing plan.

—David M. Greenwald reporting



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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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30 thoughts on “Commentary: Pressure Is Only Going to Mount on the Davis Housing Market”

  1. Ron

    Overall, this article “confuses” rising regional rents, vs. availability.

    From article:  “However, whether or not UC Davis ultimately sticks with 90/40 or goes to 100/50, the city is in need of more apartment and rental housing for students –”

    The “city” is not in need of more apartment and rental housing.

    Seems like students are still not planning to confront UCD, regarding their plans.  (And, are instead expecting the city to react.)  Wonder how long that strategy will work.

    1. David Greenwald Post author

      “The “city” is not in need of more apartment and rental housing.”

      I think that’s stated as a fact when it is really a matter of opinion.

      “Seems like students are still not planning to confront UCD, regarding their plans.”

      The ones I have talked to are working behind the scenes and waiting to see what happens with the new chancellor coming on board next month. They also were not convinced that it would be a fruitful exercise. It’s a bit like squeezing a balloon.

      1. Richard McCann

        David, the saying goes “you’re entitled to your own opinion, but not your own facts.” Ron is wrong on the facts, as you have documented repeatedly here. There is a greater need for rental housing than just what can be met by UCD going to a 100/50% commitment. And Ron is ignoring the fact that UCD also is bringing in more staff who will not be living on campus. And that ignores the other job growth that is likely to occur in the city.

    2. Rebecca Young

      The “city” is not in need of more apartment and rental housing.

      Really?? If the city is not in need of more rental housing, where do you propose that the people who can’t afford a $500,000 house live? Or is the goal of the city to oust anyone who works in our community and isn’t wealthy?

      When you debate rental/apartment housing in Davis, please keep in mind that this isn’t just where the students live. Everyone lives there.  Its long term Davis residents, young families, and anyone who wants to live here and can’t afford or isn’t lucky enough to buy a house.

      Of course I wish that UCD would build more housing and I voice that to the University every opportunity that I can. However, it isn’t UCD’s responsibility to build housing for its employees.

      I greatly appreciate this article and that it considers the regional perspective. I would like to remind the readers that this issue is not student specific. It applies to anyone who works here.

  2. Richard McCann

    “The fallback position of many in the community has been that students can simply commute.” 

    Where is Davis’ commitment to the environment? We would be responsible for the increased GHG emissions (and increased fatalities from increased driving) if that’s our solution. Let’s face up to the real choices we face, not fantasies.

      1. Richard McCann

        We have complete control over how we address our housing crisis, because the limits are entirely self imposed. There aren’t steep hills or shorelines that physically limit where we go, and there aren’t large publicly owned tracts that prevent expansion. (Both of which are issues in the Bay Area and Los Angeles.) We keep acting as though holding our breath will make other act in our own special interests.

  3. Richard McCann

    Long article in the NY Times on California’s housing crisis here: https://www.nytimes.com/2017/07/17/us/california-housing-crisis.html

  4. Todd Edelman

     
    We need a formal supercounty entity with real power over transport and development that’s based on the existing semi-organic structure known as the Northern California Megaregion. I realize that there’s already some state-level structures that in theory deal with regional issues, and assume that SACOG and MTC and/or ABAG meet regularly, that there are regional entities such as the CCJPA and that the unfortunately too Neo-Liberal SPUR and TransForm – the latter one of my more favorite orgs – have a considerable and/or continual focus on the region.

    But my experience living in advanced cities and regions in Europe tells me that we need something much better. An entity that not only creates consistent payment, tariff and applicable user agreements/conditions of travel so that a smartcard that gets a 15 year-old on a HSR feeder bus in Santa Cruz is also useful accessing a snow-enabled electric bicycle to take them to the ski lift in Tahoe, and when ABC off-shore account multi-national tech company in Sunnyvale decides to add 5,000 jobs it guarantees that the citizens of Cloverdale or Elk Grove or Fresno can have a say about it, or help vote it down.

    I’m happy to help start a non-profit organization that will make this happen and remain its friendly adversary, counterpoint and supporter. Who wants to join me?

    1. Keith O

      when ABC off-shore account multi-national tech company in Sunnyvale decides to add 5,000 jobs it guarantees that the citizens of Cloverdale or Elk Grove or Fresno can have a say about it, or help vote it down.

      Yeah, what could go wrong there?

      1. Todd Edelman

        The main point is that housing these people has to be just as important as creating jobs for them. Some of the companies in the Peninsula are moving this way, but only years after their regionally-unvetted decisions have helped create a housing crisis.

  5. Ron

    Rebecca:  Really?? If the city is not in need of more rental housing, where do you propose that the people who can’t afford a $500,000 house live? Or is the goal of the city to oust anyone who works in our community and isn’t wealthy?

    When you debate rental/apartment housing in Davis, please keep in mind that this isn’t just where the students live. Everyone lives there.  Its long term Davis residents, young families, and anyone who wants to live here and can’t afford or isn’t lucky enough to buy a house.”

    Much like the article, you’re combining two separate concepts:  1)  Affordability, and 2) Availability.  Personally, I don’t think it’s a good idea to try to “build our way” to affordability.

    At some point, cities either continue to grow indefinitely at a relatively fast pace (as most have, so far), or they don’t (much like cities in the Bay Area, which have largely run out of room to do so).  No doubt, some would advocate that Davis annex and allow development to continue to devour adjacent farmland.  (I am not one of those folks.) There are also practical limits regarding the amount of density that Davis can reasonably accommodate.

    Rebecca:  “Of course I wish that UCD would build more housing and I voice that to the University every opportunity that I can. However, it isn’t UCD’s responsibility to build housing for its employees.”

    I understand that West Village will have a significant amount of housing intended for employees.  Not sure why they’re doing so, if it isn’t “their responsibility” to address the impacts that they’re creating.  (Of course, at some point, UCD is essentially forced to do this, in order to compete for employees.  Perhaps the same will ultimately be true, for students.)

    P.S. – Some of us are doing more than “wishing” that UCD would build more housing.  (Probably more than many of the students who have a direct interest in it.)

    1. Rebecca Young

      I am no expert on housing or economics, but my basic economics education says that affordability and availability are never independent.

      Ron, I would like to ask you, what is your solution to this problem? It sounds like your solution is that Davis should just ignore the increase in population from UCD and deny those people housing altogether.

      1. Ron

        Rebecca:

        David is somewhat correct regarding his statement above, in that UCD should assume the responsibility for most of the new needs that it is creating.  (Actually, I think that David agrees with this.) The increased need is largely the result of their pursuit of International students, who pay more than $40,000 per year in tuition.  Some are involved in some pretty extraordinary efforts to ensure adequate on-campus housing.  (I’m only marginally involved.)

        On the other hand, I’ve been somewhat disappointed in the efforts of students, so far.  (At least, from what I’ve observed.) After all, students are the “customers” of a UCD education.  Some seem to have plenty of time and energy to engage in protests regarding other issues – some of which have nothing to do with UC or UCD.
         

         

  6. Ron

    David:  “Adding 6000 jobs (over 20 to 50 years) and $5 million in annual revenue is bad because it will increase the cost of housing.”

    Once again, I call b.s.  How many “innovation centers” are needed (and supported by “market demand”), in addition to the one planned for Woodland (a straight/easy, 5-6 miles from UCD, up Highway 113)?

    Even in Woodland, the developers are apparently unwilling to build it without a very significant amount of housing, including low-density housing.

    1. David Greenwald

      We don’t have any innovation centers in Davis, so the answer to the question of how many is one.

      In terms of the second question, what do you think the relevance of the housing is to innovation center?  After all, Woodland has no such housing restrictions and we’ve already determined that the ideal set up is housing and jobs mix.

      1. Ron

        David:  I’m pretty sure that you understood that the planned “innovation center” in Woodland (which will be located 5-6 miles from campus, via a relatively traffic-free freeway) will have an impact on “market demand” for a “second” innovation center, in Davis.

        In fact, the “innovation center” planned for Woodland might be easier to access from UCD, compared to the MRIC site.

        So again, I point out that there may not be sufficient “market demand” to support an unlimited number of “innovation centers” in the area.

        Regarding the “relevance” of including housing at an “innovation center”, I’m also pretty sure that you understand that housing appears to be the primary motivation for developers in Davis (as well as Woodland). (I think we all understand that some developers are salivating at the idea of building more residences on prime farmland, outside of Davis’ borders.) Of course, they’ll call it an “innovation center” – regardless of the demand for “innovation space”.

        Seems almost like you’re “playing games”, regarding your comments.

  7. Ron

    By the way, I am starting to see (and hear of) signs that we’re nearing the “peak” of housing/rental prices that the area can support.

    The Bay Area (referenced in the article) normally “lead the way” regarding such trends.  The Sacramento region lags behind the Bay Area, but “swings” in a more extreme manner.

      1. Ron

        David: You’re stating that a one-bedroom apartment in Davis now rents for an average of $3,000 a month?

        If so, I call b.s., again.

        Regardless – are you advocating that Davis “builds its way to affordability”?  (If that were even possible?)

        Davis has Affordable housing programs, some with relatively generous upper income limits.

  8. Todd Edelman

    As global warming, VMT, Equity and so on share such an important place in the charter and founding documents of the Northern California Supercounty (NOCASUCO) it is clear it would be able to prevent unsuitable low density, via the carrot and the stick incentivize innovation centers into… centers…. laugh uproariously about surrealistically-entitled, regionally-inappropriate and academonic phrasings such as “quick drive from campus”, when that campus is bike-centered and largely un-automobilized. Its freeze on anything but marginal increased admissions – e.g. from persons in countries of concern or as necessary to keep a dept. functioning – for UC Davis for individual five-year maximum periods could only be over-turned by a 2/3 vote in the legislature.

     

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