Commentary: Is There a Release Valve on Housing Pressures?

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In yesterday’s column we highlighted points made by Rich Rifkin on Measure R.  He made the point, “Every proposal that has gone to the voters under Measure J/R has lost. Several others were abandoned along the way as bills mounted.”

His view: “It’s time we stop this nonsense.  The process is too expensive in money and time.”

Mr. Rifkin brings up important points in his discussion of this issue.  While I am not there yet in terms of getting rid of Measure R, I do believe there is a danger if the housing market remains bottled up, and I’ll explain shortly.

Reading Bob Dunning’s most recent column, where he highlights the council raises against the backdrop of the housing market, it seems clear that the worm is starting to turn in town as the housing crisis continues.

Mr. Dunning notes, “No-growth policies have been a consistent winner for a long time because they tend to unite conservatives and liberals in a way no other issue can.

“Conservatives, who like to build gated communities to protect themselves from the unwashed masses, have formed alliances with liberals who have decided that developers are, by definition, evil,” Mr. Dunning writes.  “Throw in the false argument that our precious ag land is being eaten up by greedy developers, and you have a no-growth mentality that wins the day election after election after election.”

Mr. Dunning notes: “Pent-up demand for a spot in Davis has become so bad that even a slew of new homes in The Cannery has done nothing to cut into the escalating price of existing homes.”

Mr. Dunning believes it may be too late: “It’s the world we’ve created for ourselves and it’s much too late in the game to make our town truly affordable once again.”

The issue of Measure R and single-family homes are going to come, but they are not quite here yet.  The big issue this election cycle is going to be student housing.  I think the issue is
resolvable, but the stakes are actually quite high, as I’ll explain shortly.

We have repeatedly presented these numbers, but the current vacancy rate is somewhere between 0.3 and 0.4 percent.  That’s slightly better than previously, but in real terms is no real change.

What is changing is that there is a solution within our grasp here.  The university has committed to building 8500 beds on campus.  If the city can follow through and approve the housing for Lincoln40, Plaza 2555, and Nishi, there will be another 4000 or so beds on top of Sterling.  That gets us in the range of 13000 to 14000 new beds.

If we get there, I think we can get to the magic five percent vacancy rate and we can see a much healthier rental market.  The surplus on the market will help bring down rental costs.  And it may help free up single-family homes for families again.

But it is going to take a lot to get there.  The community is going to have to pass a Measure R vote for the first time ever.

I have reason to believe this can and perhaps will occur.  The first is, internally, the problems that beset the last Nishi project that lost narrowly have largely been addressed.  There is no Richards Boulevard access to drive traffic concerns.  There is now a good affordable housing plan that addresses those concerns.  And they have at least reduced air quality concerns by making it rental housing only.

Still, as we witnessed this week, air quality concerns are going to dominate the electorate.  And there are those who believe that all new student housing should be on campus, period.

The issue of affordability is likely to become much louder as projects come to the fore.  Certain student groups ended up not supporting Nishi in 2016 because of its lack of affordable housing.

Josh Dalavai told the Vanguard that the push is now shifting to not only include a demand for student housing, but to make sure that that housing is affordable.

“We’re trying to hit really hard on affordability now,” he said.  “Now more so than ever because it doesn’t do students much good if we just erect like ten West Villages and no one can actually afford to live there.”

He pointed out that anything market rate right now is going to be expensive.  He also recognizes that that price could come down as the supply increases and the vacancy rate improves.

Clearly, creating more affordable housing options for students is important.  But just as clear is the need to simply create more supply in order to allow market forces to drive down the costs.

Getting back to Measure R, I have continued to support Measure R for a few reasons.  But what is clear is that the measure has created a bottleneck in the normal flow of development in this community.  Ten years ago, when the voters voted down Measure X, that seemed quite reasonable.  The community had just gone through rapid expansion, Covell Village was too massive and there was poor planning for traffic effects.

We then went through a recession that really wiped out the housing market and demand for housing for a good half decade.  But somewhere around 2013 or 2014, the university resumed its growth trajectory, and the housing demand began to build.

At this point, with the vacancy rate, Measure R is acting as a lid of a pressure cooker, allowing the pressure to slowly but steadily build over time.

My question for the last six months to a year has been what does the release valve look like?  Is building student housing sufficient to relieve that pressure or will the pressure continue to build even after sufficient student housing is built?

One thing that is clear is that I see for the first time in a decade real discussion about the need for housing.  We have seen this week the first chirps questioning Measure R.  The students are organizing.  They have numbers – 23,000 or so live within the city limits of Davis.  How many would it take to come out and vote in order to impact the election outcomes?  And how many would it take to organize in 2020 to bring down Measure R?

Think that is long shot?  Perhaps.  But keep building the housing market pressure and somewhere, somehow, that pressure is going to blow.

—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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49 thoughts on “Commentary: Is There a Release Valve on Housing Pressures?”

    1. Richard McCann

      No, the question is how long are they on the market. We bought our last year after looking at it the day it was posted on Redfin and making an offer just a couple days later. You also need to track the number of houses for sale over time. A snapshot tells you little about the market.

        1. Keith O

          I check Redfin, Zillow and other housing sites often.  You can check almost any time and you will find at least as many houses on the market in Davis that that snap shot I provided listed.

  1. Ron

    From article:  ” . . . it seems clear that the worm is starting to turn in town as the housing crisis continues.”

    Other than the impact of UCD’s unilateral choice to grow (primarily as a result of its pursuit of full-tuition, non-resident students), the “worm” is primarily the Vanguard, itself.

    In any case, watch for a downturn in the overall housing market, in coming years. The current trend will not continue indefinitely.

    1. Richard McCann

      Davis has faced mounting housing pressure for at least a decade. UCD growth is exacerbating it, but the market has been tight in Davis long before UCD’s growth plans.

      And regardless, Davis is the location of one of the most important educational institutations in the state (and agriculturally, globally). It’s our responsibility as a community to accommodate the educational processes of the state. We gain substantial benefits that other state taxpayers have and are delivering to us here. If you want to see what Davis would look like without UCD (and that is the only other option–not a static public university), just look to neighboring similarly sized communities nearby.

      1. Ron

        Richard:  It is not Davis’ responsibility to accommodate UCD’s efforts to pursue full-tuition, non-resident students.  It’s essentially functioning as a partially-privatized entity, but doesn’t pay any taxes.

        I can repost articles regarding state audits which are highly critical of UC’s enrollment practices, if needed.  Note that California student enrollments were actually dropping, at one point.

        I can also post an article regarding a state audit in which UC actually interfered with the audit process. 

        Unlike, for example, UC Santa Cruz, UCD makes no contribution to the city to offset its impacts.

        Regarding an overall “tight” market, current trends never continue indefinitely.

        But, on a broader level, some seem to advocate that towns such as Davis continue to respond to whatever the market demands. (There’s plenty of examples of the result of that type of decision, throughout the region and beyond.)

        1. David Greenwald

          “But, on a broader level, some seem to advocate that towns such as Davis continue to respond to whatever the market demands.”

          I don’t know that anyone has done that.  A key question is what the happy median is between pressure cooker ready to explode and accommodate all market demands.  Neither position seems tenable and I doubt anyone actually advocates either.  The question is how far in between the two you want to go.  I’d argue we haven’t gone far enough, you’d probably argue we’ve gone too far. So what’s your ideal?

        2. Mark West

          “It is not Davis’ responsibility to accommodate UCD’s efforts”

          Sure it is, that is one of the responsibilities that come with being a host city to a major University. If you don’t like being responsible, move somewhere that does not require that of you. Dixon would be a good option.

          Davis and the University grew in tandem throughout the vast majority of their shared history. It was only since the turn of the century that we have failed to fulfill our obligations to the rest of the statewide community due to our intransigence about new housing. The fact that others may share that intransigence is not material.

           

        3. Ron

          Mark:  If you’re trying to quote me, please don’t change my quote.  Here’s what I actually said:

          “It is not Davis’ responsibility to accommodate UCD’s efforts to pursue full-tuition, non-resident students.  It’s essentially functioning as a partially-privatized entity, but doesn’t pay any taxes.”

        4. Ron

          Actually, I see that David is the one who first misquoted me.

          Really, is the Vanguard getting this desperate?  Has it completely lost any remaining journalistic integrity?

          Sad, but maybe kind of amusing – if not taken seriously.

        5. David Greenwald

          “Actually, I see that David is the one who first misquoted me.

          Really, is the Vanguard getting this desperate? Has it completely lost any remaining journalistic integrity?

          Sad, but maybe kind of amusing – if not taken seriously.”

          “Yeah it was Mark who left out the most important part.”

          No apology offered. You just attacked my integrity, your backtracking is not sufficient

        6. Ron

          David – You are right.  My apologies to you, and (other) sentiments, regarding Mark’s post.  🙂

          Still, the desperation comment applies, regarding the Vanguard and your efforts, lately. It’s the same, repetitive one-sided arguments, day-after-day.

        7. Mark West

          Ron – I didn’t change the meaning of your quote by only selecting the first few words. You are right, though, I should have included a string of three periods (…) before the close-quote to indicate that you added some meaningless modifiers to your basic sentiment.  My apologies.

          You are simply wrong, it is the City’s responsibility to grow in concert with the University, regardless of why or how the University chooses to grow.

        8. Ron

          Mark:  It totally changed the meaning.

          This started out by Richard stating (as he has in the past) that as city that is adjacent to a UC, Davis has a responsibility to accommodate the “educational processes of the state”.

          In recent years, UC has targeted non-resident students, due to the $42,000 in yearly tuition that they pay.  These are not California’s residents.  In fact, UC has prioritized non-resident student enrollments, over California residents.  (I can repost articles which show this, as needed.)  There is nothing in the city’s charter, or UC’s charter, which states that adjacent cities must automatically accommodate this type of growth plan.  (In fact, UCD is not even in the city.)

          Other cities (such as Santa Cruz) have pursued binding agreements with their UC’s regarding issues such as enrollment limitations, as well as motor vehicle traffic limitations (and financial contributions to help offset such impacts).

          If there is no formal agreement between Davis and UCD, look for this problem to continue into the future (as it has, in the past). Those problems include displacement of non-student renters, conversions of commercial sites, overly-large infill development proposals, and pressure to build on farmland outside of the city (and beyond).

      1. Ron

        It means that the Vanguard itself is stirring up the “crisis”, and refuses to accept that Davis is a slow-growth town.  Essentially, doing developers’ bidding, day-after-day.  With the same points, over-and-over. Probably also trying to stir up student activists.

        I guess if you repeat something long enough, people start thinking it’s true.

        At some point, towns such as Davis have a choice to make. You either continue responding to market demands, or you don’t. (Or, something in-between, which probably has no point of agreement, and satisfies no one.)

        Most cities in the region just continue responding to market demand.

        1. David Greenwald

          “It means that the Vanguard itself is stirring up the “crisis”, and refuses to accept that Davis is a slow-growth town.  ”

          I find that laughable, but ok, at least you’ve explained what you meant.

  2. Tia Will

    A few thoughts:

    “It’s the world we’ve created for ourselves and it’s much too late in the game to make our town truly affordable once again.”

    I am wondering when this mythical time when our town was “truly affordable” is. It was not affordable to me, even without student debt and even on a doctor’s salary 30 + years ago. I am wondering what year Mr. Dunning is referencing. I worked elsewhere, bought a relatively inexpensive starter home, and leveraged that to be able to buy in Davis 26 years ago.

    But just as clear is the need to simply create more supply in order to allow market forces to drive down the costs.” 

    If the Cannery did not accomplish this, what short of changing our laws to ensure that no one from outside of Davis can purchase here makes anyone believe this is going to work now ?

    As Richard points out: The time on market is critical to understanding both market availability, and also how effective “increasing supply” will be in allowing local employees and returning students and students who want to make Davis their home to be successful. When many people from the Bay area are seeking less expensive housing here, and have the cash in hand to purchase, we can expect homes to sell within days, sometimes as the result of a bidding war as recently happened when I purchased in Sacramento. This process does nothing to improve little “a” affordable housing.

        1. Ken A

          I’m wondering what Zillow or Redfin thinks the home Howard sold in 2016 is worth today (I was just taking to a couple who were telling me Davis homes are going up in value faster than they can save).

        2. Howard P

          Apples and oranges… new owners have made major improvements… making the house their own.  But doesn’t matter, as it is their home, not their investment… we got to know them pretty well…

          But getting to what your main point appears to be the $/SF value has definitely increased… at what rate, I know not…. the $/SF is probably the best index… aggregated… not for a specific property…

          Not disputing, but clarifying…

  3. Tia Will

    Ken

    Most (but not all) people that own property in town are hoping to stop all development”
    I would love to see any documentation you have to support this assertion. In my view, as a long term homeowner, there are at least three major groups of homeowners. 1. Those who hold the property as a major monetary investment either for themselves or their children. 2. Those who hold the property because they have lived their lives there, want to continue to live in and enjoy what they have earned over their lifetime. 3. Those who would move if they could, but cannot find a suitable place to which to downsize. Money is not the only “value” for many.

    1. Howard P

      1.  Money is important

      2.  Money is not important… maybe… they may well be thinking of it as a potential legacy for heirs, financial or otherwise. That’s about money.

      3.  Maybe… they might be able to downsize, but at a financial loss.

      No clue what the %-ages are, so won’t hazard a guess…

      1. Howard P

        Also, you do not differentiate between homeowners (as in owner-occupied), and those who live in Davis who own SF properties as rentals… we used to fit that… no longer… we seldom increased rents.   Think you said previously that you owned a house where your child lives… with other rooms rented out.

        Rent changes in the last 5 years?  Do the rents include paying off a mortgage, taxes, maintenance? Or are they set higher?  But, of course, it is not about $$$… you’re too noble to go there…

        1. Ken A

          Howard needs to remember that less development and a strong rental market gives ALL homeowners the “option” to make a lot of money renting out rooms of they ever need extra cash even if they are not currently in the rental business.  Most students would rather rent a room in an apartment with other students than in a home with an older lady (and her cats) but the current lack of apartments allows a lot of retired widows to make extra (often tax free) money every month to supplement their social security by renting rooms here in town.

          P.S. It finally clicked but I think most people first think “San Francisco” when they see “SF” not “single family”…

        2. Howard P

          Agree, to an extent… my grandparents had room&board students in the 40’s, early 50’s… incidentally, about /3 were from India/Pakistan… that’s how my Dad learned about cricket…

          Today, most seniors would not rent out rooms, due to personal safety concerns…

          But you are correct, that should be in the toolbox, but how many folk would be open to it, is unclear… I/we would, if not for the fact we are semi-empty-nesters… kids come home from time to time, and not ready to assign them to the couches, when they visit…

    2. Ken A

      Almost all the people in Tia’s #2 are ‘also” in her #1 with the exception of the small number of people who have donated their Davis home to a charity (with a life estate) and their estate and heirs will get nothing from the home when they die and the even smaller number of people in Tia’s #3 who are dying to move out of their $1mm 3,000sf Davis home but just “cannot find a suitable place to which to downsize”

      1. David Greenwald

        I don’t find this very productive either focusing on specific examples or from a public policy standpoint.  Public policy question: how do we address our housing needs within the current environment, period.  That’s it.

        1. Ken A

          Public policy tends to be what the voters want.  The schools know this and have had good luck passing parcel taxes by giving something for almost everyone.  1. Parents with kids get more money for the schools, 2. Homeowners without kids get better schools and higher property values and 3. Old people get to feel good helping the kids but don’t have to pay the tax.

          With the measure J/R votes 1. Parents with kids get more kids in town and bigger class sizes, 2. All homeowners will see a slight drop in demand for their homes and home values, 3. People renting rooms, homes and apartments will see a drop in rents and 4. Old people that may be selling soon to move in with kids or a rest home will worry about a short term change in values.

          The people that want new housing are mostly younger lower income renters (and historically the group with the lowest voter turnout are younger lower income renters)…

        2. Mark West

          “The people that want new housing are mostly younger lower income renters (and historically the group with the lowest voter turnout are younger lower income renters)”

          For the life of me, I cannot understand how anyone who rents their home and has a basic understanding of economics, can continue to support Measure R. You might as well open your wallet and start handing out cash to all the property owners in town because that is the impact of the ordinance on your life. Measure R is welfare for the wealthy landowners, paid for by all the renters who have been fooled by the rhetoric of ‘saving farmland and preventing sprawl.’

          The truth, though, is that Measure J/R has not saved even one square foot of farmland, it just changed the location of the land used for sprawl development. When we chose not to build in Davis, we forced the leapfrog development on to the farmland on the southern periphery of Woodland and the research lands on campus. Those homes in North-North Davis are filled with families whose children attend Davis schools, yet don’t pay the school parcel taxes that support those schools. Renters in Davis are simply subsidizing homeowners, here in Davis, in Woodland, and in other neighboring cities, thanks to Measure R.

          I think the students understand this and are beginning to understand that with the majority of the City’s residents being renters, they have an opportunity to join with those renters and change the story. The property owners in Davis have depended on the historically low turnout of students voters to protect the control of City politics, but I expect that the agitation we are seeing of late is going to expand and we will soon see the impact in our elections. It only takes a net change of a couple thousand votes to determine the outcome of a City Council election, especially with the number of candidates this time around.

        3. Ron

          Strange, how I had the exact same views when I was a renter.  I guess I’ve seen enough “change” to know that it’s often not a good thing.

          It’s unfortunate that other communities are not fully following Davis’ lead.  However, things are slowly changing across the region (and beyond), regarding agricultural mitigation efforts and prevention of sprawl, in general. Hopefully, this trend will continue (and strengthen), before the entire region looks like the Natomas/Sacramento/Elk Grove areas. (Might even include Roseville, in that bunch.)

          This is an issue that extends beyond the region, as well. It does not take long for things to start looking like Los Angeles.

  4. Howard P

    Getting to the main point of the topic, and the Dunning piece…

    The only true relief valve I can think of, is making Davis a less desirable place to live.

    Others might be tiny residences, less amenities, on much smaller footprints…

    Add sugar to a good bottle of wine, cork it, add some yeast… you get champagne, which “pops” with pressure…

    We may well have reached the point of no return…

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