Here in “Northern” California, especially the “Bay Area” of San Francisco, job migration is following two trends: Jobs AND Affordability of Home Prices. My county, “Sonoma” is in the heart of the greatest wine region in the world. The counties of Sonoma, Napa and Mendocino produce outstanding wines rivaling old growth estates in Europe. They are all very desirable places to live but proximity to the Bay Area is key for many job seekers. The above map shows those counties where “migration” has picked up considerably.
San Francisco, though the highest priced real estate market, is drawing over 4041 from Santa Clara County which is the epicenter of Silicon Valley. SF is now headquarters to some of the most famous and successful “net” companies including Google and Sales Force. However the biggest winner of those seeking to work and live in their area is Alameda. This county is just over the Bay Bridge and is very affordable relative to the SF marketplace. Much is being written about the “gentrification” of San Francisco’s legendary inner city neighborhoods (Mission the biggie) but this is now happening in Oakland.
Gertrude Stein might have said of Oakland “there is no there there!” But whatever there is there it’s a heckuva lot cheaper than San Francisco! Plus the Bay Bridge is the artery which brings in all the east bay counties into San Francisco. In my County of Sonoma final touches on the “Smart Train” are wrapping up with service next year from San Rafael to Santa Rosa. Further expansion will be to Larkspur and then north eventually to Cloverdale. The Cloverdale depot has been there for 20 years and has been rebuilt once. However, the train service will give impetus for job seekers to make the migratory move to Sonoma County where affordability and jobs are plentiful but also allow those working in very expensive Marin County (median home price $1,150,000 vs. Sonoma County of $590,000)
When this happens we’ll have well paid home seekers displacing those who can’t afford the homes here. The higher wage owners will pay the price and in both the purchasing but also in the rental market. This will further displace workers now in our service sector. At the time of this writing 1 in 4 can purchase the median home price in Sonoma County. In San Francisco the number is more like 1 in 10. Affordability is tough throughout the bay area except for the more northern counties (Napa, Sonoma, and Solano) while those counties having a close proximity or like kind tech industry are very expensive. Couple this with an extremely tight inventory of homes throughout the bay area and you have a formulae for a housing crisis. What is keeping much of this manageable is the amount of “cash” buyers we have in the most expensive parts of the “City” and the Santa Clara Valley. But what’s also keeping us somewhat on track is the interest rates which are in the high 3% to low4% range. The “Trump” effect saw the 10 year treasurer shoot up and bring rates into the 4% range. If anything can put a damper on a real estate market it is increasing rates. Let’s hope the 10 year treasurer calms down.