McKae Properties Real Estate Market Commentary

 SFGate reports that San Francisco rents may have finally hit bottom.  The rental market may be reflecting the action in the recent Game Stop trading.  Never try to catch a falling knife in stock trading, which begs the question, what does one apply to property rentals?  Apartment List shows that rents fell just .4%, while Zumper is reporting prices actually rose .8%.  After monumental declines of 25% and 27%, depending on which service you wish to follow, even a minimal loss or gain is noteworthy. It questions the point of  who  will be the parties renting?  The techies have departed from the Bay Area to parts unknown, whether it be to Hawaii or parts east of the Bay Area or even out of state.  After the rise in unemployment benefits, checks from the US treasury, matched with renter relief from the State of California, the poor souls who lost their homes or apartments to soaring rents replaced by Techies coming to Facebook, Google, Yelp and the like, have the opportunity to come back

  In my last edition, Zillow estimated a 10% increase in home values for  2021.  These will come from inflation. Near the end of 2020, lumber prices increased due to the lack of production thanks to the Coronavirus.  Several large lumber mills in the U.S. came to a halt.  Home builders suffered the consequences.  Pressure treated wood prices increased 79%, dimensional lumber 73%, plywood 59%, decking 60%.  Along with these specific items all associated building products increased.  It was not usual for new home prices in the U.S. to increase $90,000 as a result of rising lumber costs.   The other issue for rising lumber prices was the tariffs with Canada.  Our domestic market cannot supply all our needs so our partner in Canada is relied upon to pick up the difference.   Next, we had wildfires on the west coast.  Our proud Redwoods stood the challenge, but the pines and other trees relied upon for construction became smoke and ash.   The small home builders and contractors have had a h

Prior to 2020 Bay Area exodus really did not prove to be a fact.  Some 3% of the population moved prior to 2020  While many talked the story about moving for various reasons.  The climate, job opportunities far outweighed the cost of living. (More to follow) March 2020 the Pandemic created many changes in housing.  The ability to work from home created an attitude of staying in the Bay Area.  The first attitude to be affected was the rental market.  Rents in San Francisco plummeted.  The move helped areas outside the Bay Area to see demand and increases in home prices.  Besides San Francisco San Jose dropped in rental prices as did other communities within the Peninsula.  The result was not in the lower income housing rental.  They remained the same as the ability to move severely restricted an exodus as the ability to find work anew made the lower income families to stay put. What has resulted was the decline in the luxury end of the market.  Laurence Du Sault in the January 15, 2021

 Bay area housing, the job market, and transportation could radically change in 2021.  Employers and white-collar workers have discovered the potential and savings from working remotely. Early in the pandemic, I wrote of my observations of the change in the work status that was affecting the rental market.  Google, Twitter and Facebook decided upon some form of mobile working.  What the pandemic has provided is new efficiencies. We all know about the corporations and the owner billionaires that have moved out of the State of California.  But, did you know that it has gone beyond technology?  Lawyers, accountants, and journalists and other professionals have discovered that working from home has rewards. The shift is already putting stress on the finances of State and Local Governments.  Builders and investors in residential and office construction have joined the shift.  Office vacancy rates are expanding in the Peninsula.  Commercial properties, like residential, are moving east of th

"Welcome to the Hotel California, you can check out any time you like; but you cannot leave."  Remember that famous melody from The Eagles? The California Assembly has put that into legislation. AB 2088 will create a "Wealth Tax" on residents and any person who stays in California longer than 60 days.  Then extends the tax for 10 years!   This is certainly an answer to why Ellison and Musk moved to Hawaii and Texas.  In addition to these well known residents David Blumberg and Keith Rabois have left The Hotel California too!  DropBox and Splunk are on their way out the door.  The list most likely will go on, but a "wealth tax"?   Of course, how else is California going to pay off their massive deficit and liabilities?   But a Wealth Tax?  The California Constitution can most likely cover that on State Residents, but going across state border to attach to the wealth of citizen of other states and countries is likely to run afoul of the U.S. Constitution for