By the Numbers

Last week’s blog post (Behind the Scenes) sparked an interesting debate in the comments over whether or not Redwood City’s new housing developments are a good or a bad thing. Regardless of how people come down on the issue, I’m glad to see that people are interested enough to engage in a public debate; my hope with Walking Redwood City is that I can provide basic information that will enable my readers to form opinions based on actual facts, rather than gut feelings. So much of what I hear and read these days seems to be based on personal opinions that have no factual basis, and that just makes no sense to me. We can certainly disagree on the best way to deal with any particular issue—that’s the American way, after all—but we should all be working from the same set of facts.

That the discussion that arose revolved around housing, and how best to create housing that is affordable to those who need it, strikes me as timely, given that for about two weeks now I’ve been putting together a post on what housing actually costs in Redwood City. Regular readers of my blog know that I’ve been interested in housing costs for years now, but two weeks ago I received an email from a local realtor that really got me going. What struck me in particular was this line:

Our bay area Real Estate market continues to set new highs, with the average price in San Mateo County now over $2 Million!

That unbelievable figure clicked with something else I had recently heard, which is that one of our Planning Commission members, Connie Guerrero, recently resigned her seat after relocating from Redwood City to our next-door neighbor, San Carlos. Here is some of what she had to say when she spoke to the Planning Commission and the public about her resignation:

Over the past two years I’ve been searching for an apartment that was appropriate for me, my family, and was within my budget. My search led me to an apartment in San Carlos where my housing budget could go farther. It is ironic that as a Commissioner I was reviewing housing projects that would bring much-needed housing to Redwood City but there was nothing that would fit my budget. San Carlos had some units that were more affordable and larger.

It certainly does seem ironic, especially when one considers that Redwood City has always seemed a bit more affordable when compared with San Carlos. Almost thirty years ago, when my wife and I were looking to purchase a house in the area, there was no question: the homes in San Carlos were just a bit too expensive for us. Homes in Redwood City, however, were notably more affordable. While we still had to stretch in order to afford one, we were able to buy a small single-family home in a nice Redwood City neighborhood to house our growing family. Ever since then I’ve been keeping a casual eye on home sales, and the homes in San Carlos have always seemed to command a price premium over those in Redwood City. Thus, I was surprised to learn that this might no longer be the case. That spurred me to start doing some research, and when the realtor’s email came I knew I had the makings of a blog post.

The email came from Chet Lane, a realtor with Berkshire Hathaway Home Services who specializes in Redwood City’s Mount Carmel and Emerald Hills areas. Chet used to be a neighbor of ours, and based on his communications over the years I’ve learned to trust his opinions regarding our local real estate market. In his emails he helpfully provides links that allow me to pull up summary data not only for Redwood City home sales, but for sales in San Carlos as well. Although that data only relates to home sales, I quickly realized that raw data for rentals can be obtained from Zillow. A little spreadsheet work, and voila! I had snapshot comparisons of apartment rentals between Redwood City and San Carlos that supplement the home sales figures from Chet’s email.

Starting with home sales, allow me to further quote Chet:

San Mateo County homes average sale price was $2,049,600 last month, an increase of over $200,000 from mid-April of 2017. (+10.9%) Sales were about the same number, 333 total vs. 331 last year, but the inventory of homes for sale decreased again, from 440 last April to only 400 this year. Countywide, buyers averaged paying 12.0% more than the asking price, or $220,000 more per offer.

And

In Redwood City, the April average sale price was $1,907,840, an increase of 3.3% from 2017, or over $60,000 more than last year. Sales were up 15.4% from 39 to 45 this April, but the pending sales were down about the same percentage, so sales next month will likely be less than May of last year. The R.C. homes for sale also keeps falling, 19.5% less, or 33 currently vs. 41 last year. That caused overbidding for the available homes, and the average purchase price averaged $235,000 more than asking price. (+14.1%) WOW!

(The “WOW!” is Chet’s, but I certainly agree with the sentiment. It sure seems to be a seller’s market.)

Because he tends to focus on Redwood City, Chet doesn’t provide similar prose for San Carlos. However, as I said earlier, I was able to pull up some comparable numbers for that city as well. For single family homes, looking only at the month of May so far, the averages (that is, the arithmetic mean values) are:

  • Redwood City: $1.91 million
  • San Carlos: $2.18 million

And for condominiums, the averages are:

  • Redwood City: $1.14 million
  • San Carlos: $1.58 million

Note that these numbers are averages for all sales, not just for sales in the new buildings being constructed in both Redwood City and San Carlos. There are many variables, such as home size, the condition of the home, and the neighborhood in which a given home is located, which may account for some of the difference. And since we aren’t talking about a huge number of homes currently on the market, I’m probably on somewhat shaky ground statistically speaking. But the fact that these numbers seem to be in line with what has historically been true tends to give some validity to the presupposition that in general, homes in Redwood City cost a bit less than those in San Carlos.

So, for home sales anyway, it appears that Redwood City is still slightly more affordable. But Commissioner Guerrero was talking about renting an apartment, so let’s take a look at those. On the day that I checked, Zillow had 17 apartment listings in San Carlos and 121 in Redwood City. Because I had to look at each listing individually, rather than lazily relying on the automatically generated reports from the link supplied by Chet, I took the apartment size (in terms of the number of bedrooms) into account. Here are the average costs per month in each:

               Redwood City   San Carlos
Studio            $2230         $1898
One Bedroom       $3081         $2358
Two Bedrooms      $3860         $3178
Three Bedrooms    $5380          n/a

Before I state the obvious, I should point out that I only found one studio apartment for rent that day in San Carlos, so that $1898 figure may not be reflective of the market for studio apartments in that city. As well, I didn’t find any listings for three-bedroom apartments in San Carlos, so again I can’t draw any real conclusions there. But overall, I was surprised to learn that, based strictly on an arithmetic mean of current apartment prices, in general apartments in Redwood City do indeed cost more than those in San Carlos.

I know that there is more to the picture, however, so I dug a bit deeper, looking at the minimum and maximum monthly rents for each category as well as the median (which is obtained by putting all of the prices in order and taking the one in the middle):

                     Redwood City                 San Carlos
               Minimum  Maximum  Median    Minimum  Maximum  Median
Studio          $1600    $3421    $1800     $1898    $1898    $1898
One Bedroom     $1795    $4235    $3103     $1925    $3500    $2200
Two Bedrooms    $2500    $5995    $3804     $2600    $3500    $3100
Three Bedrooms  $4700    $6059    $4700      n/a      n/a      n/a

Here you can see that the cheapest apartments can still be found in Redwood City—as can the most expensive. And the median agrees with the average: right now, in general, it costs more to rent an apartment in Redwood City than in San Carlos.

I must point out that Redwood City has many new “luxury” apartment buildings that are likely bringing up the averages there. San Carlos has a number of luxury buildings currently under construction, but most of those are not yet leasing and thus they aren’t affecting overall apartment prices as yet. I really should do this analysis again after the large apartment buildings along El Camino Real on either side of Holly Street in San Carlos are completed and leasing, and after the apartments in the Wheeler Plaza development are available. These two developments alone are going to add something on the order of 310 luxury apartments to San Carlos’ rental pool, and will likely shift the balance. (Redwood City also has a number of luxury apartments currently under construction, but given the large size of Redwood City’s rental pool, and the fact that the pool already includes a large number of recently constructed luxury apartments, I don’t think that the new ones will affect Redwood City’s average nearly as much.)

Of course, which city has the cheapest rents overlooks the real issue: just look at those numbers! Even in “bargain priced” San Carlos, the average one-bedroom apartment goes for $2358—and I think we can all agree that that number is just laughable. No wonder people are complaining about not being able to find a place to live: someone working for 40 hours per week at a rate of $15 per hour—which is more than the current minimum wage, I should note—earns $2600 per month. If they were living in that average apartment, they would only have $242 per month left over for food, utilities, gasoline, etc.—which is simply not doable. You are supposed to spend no more than 30% of your income on housing; by my calculations, in order to afford that average one bedroom apartment in San Carlos a single person would need to earn $45.35 per hour. Even if two people shared it, they’d need to earn about $23 per hour each, which of course is far more than most people earn working at your typical fast-food joint, ice cream parlor, or supermarket.

All of this sets the stage for a discussion around affordable housing, an issue that our City Council took steps to address this week. In my next post I’ll talk about that, and how the various housing projects currently in the works in both Redwood City and San Carlos are or are not helping those people who can’t afford today’s prices.

3 thoughts on “By the Numbers

  1. Pingback: Even More Numbers | Walking Redwood City

  2. Greg,

    On the topic of affordable housing in San Mateo County, you might also look into the new state regulations on additional dwelling units. It should now be much easier to add a mother-in-law unit on one’s property. Our county has put together a great calculator resource for the economics of such conversions – http://secondunitcentersmc.org/calculator/. A valuable resource for county residents.

    – Paul

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s