Public Comment

Housing Those Who Don't Want to Be Here

Steven Finacom
Saturday May 09, 2015 - 10:55:00 AM

As luxury high-rise towers are proposed in Downtown Berkeley, it’s sensible to ask who will live there. Who are they being built to house?

The developer of 2211 Harold Way spoke to this question one of the first times he appeared at a Berkeley city meeting, around February of 2013. This was at the Design Review Committee.

A member of the Committee, a retired San Francisco planner, asked him who his market was? Who was he building these units to house? It wasn’t a confrontational question, just a genuinely curious one.

The developer replied, if I remember correctly, “People like you, and people who want to live in San Francisco but can't afford to."

This was a refreshing level of candor.

But let’s look at both those “markets”, whether they’re tenable, and what the impact would be on Berkeley if they are.

The “Empty Nester” Idea

By "people like you" the developer apparently meant prosperous empty nesters with houses in the Berkeley hills who might, as they age, want to sell a large home and move to a more manageable condo or apartment near BART.

For literally thirty years I’ve heard people predict this as a big coming housing market for Downtown Berkeley. In all that time, I have known or heard of only one person who actually did this—sold her house in the hills and moved to a downtown apartment.

She moved to “Library Gardens”. After some time she decided she didn’t like it. It was noisy, most of the other units were occupied by students who were too preoccupied and transient to be real neighbors, and the apartments weren’t as nice as she wanted. So she moved again, to flatlands El Cerrito.

Still, the empty nesters are at least a theoretical potential market. But there's another factor to consider here.  

The old paradigm used to be that a house in the Berkeley Hills was more valuable than a house in the Berkeley flatlands, and certainly more valuable than a flatlands condominium.  

So, the real estate calculus went, empty nesters could sell their hill house for, say, a million dollars, downsize to a $500,000 condo near Downtown, and live comfortably on the residual from their house sale. 

But it may not work that way any more. The condos intended for Downtown are likely to be more expensive than many single family homes in Berkeley, especially if they capture the high-rise views developers covet. It’s not unrealistic to imagine small condos being marketed for well over a million dollars, or even considerably more, in this market. 

So, goodbye to the nest egg from the house sale. How many people would sell an expensive house, and buy an even more expensive, but much smaller, condo, in the same town? Only those with considerable additional wealth to live on. And I’m not sure that has been happening or is likely to happen to a degree to merit large amounts of “empty nester” housing Downtown. 

But what if, instead of buying, those empty nesters decide to bank the money from the house sale and downsize by renting in Downtown near all that culture, shopping, restaurants, and transportation?  

That probably would prove to be financially unpalatable either for those interested in living only one or two to a unit.  

We know that the 2211 Harold Way developer forecasts rents of nearly $4,000 a month for an average sized unit. Similar new units will probably try for that sort of target as well.

This is a market for the rich, those who can afford upwards of $50,000 a year in rent.  

Or it’s a market for those willing to live three, four, or five to a unit, doubling or tripling up with each paying ten or fifteen thousand a year. And in downtown Berkeley there is a seemingly inexhaustible supply of people willing to do just that, because of the 36,000 students attending the UC campus next door.  

So the empty nesters will continue to face considerable competition from those willing to pay per bedroom, rather than per unit.  

Four students who can pay $1,000 or more each a month for a share in a two bedroom apartment means that very few apartments, luxury or otherwise, will be offered to empty nesters at $2,000 / month. 

So I’ll remain skeptical of the “empty nesters will flock to the new housing Downtown” argument for the time being. 

Housing Those Who Don’t Want to Be Here 

On the issue of "people who want to live in San Francisco but can't afford to", I’ll share this observation. 

Historically, ever since the ferry and streetcar system from the East Bay to San Francisco was developed in the late 19th century, there have been many people who have lived in Berkeley and worked in San Francisco. That's part of our history. We have been, at least in part, a “commuter town”, although much traffic has also flowed the other way and Berkeley also has a large homegrown jobs base. 

But from reading a lot of Berkeley history, I am relatively convinced that most of those commuters of the past chose to live in Berkeley. They weren’t forced to by economics. They wanted to be in an East Bay “suburb” with a milder climate, lower buildings, more green space. They wanted to raise their families here, and be part of the community life of this town. 

They could have lived in San Francisco where they worked. A hundred, or even fifty, years ago San Francisco wasn’t considerably more expensive than Berkeley as a place to live. So having a work commute to San Francisco as a trade off for a home in Berkeley was a cultural and personal choice, not an economic one. 

Today, for the first time, we are being told we should promote high rise housing development specifically for people who don’t really want to live in Berkeley but are willing to come here—as a second, or maybe third, choice—since it’s cheaper than living in San Francisco or Silicon Valley. 

This is a new paradigm for Berkeley, and it bears some scrutiny. 

If new housing is being specifically built to provide bedrooms for people who would rather be living elsewhere, what does that mean about our future demographics and community life? 

Will Berkeley end up with a substantial number of residents who didn’t necessarily want to come here in the first place and will leave as soon as there’s an affordable housing choice for them elsewhere? 

I actually encountered someone like this a few years ago. As the tech wave began, he arrived in Berkeley, a recent Ivy League graduate who had rented an apartment near south Telegraph Avenue, sight unseen. He said he had signed a lease in which he guaranteed to stay for three years, or pay the rent difference if he moved out.  

His main contact with the surrounding neighborhood, where I live, was through his vehicles. He was constantly searching for a place on the street to park a Maserati he’d purchased. Then an expensive motorcycle appeared. These appeared to be toys. All the while, he was commuting by BART to a tech job in San Francisco that paid him a five-figure salary a month. 

He didn’t dislike living in Berkeley, but it was simply a place he’d picked on line because he couldn’t find something he liked and could afford in San Francisco nearer his job.  

Then he did find something. I think his already considerable income rose, or he got lucky in the San Francisco housing market. So he moved, apparently paying the rent penalty for leaving his Berkeley apartment early.  

He never got to figure out Berkeley—other than where the less crowded streets were to store his car—because his mind was on working and living elsewhere. San Francisco was his real goal. 

Is that the new Berkeleyan of the future? Only here because there’s “cheap” housing, then gone as soon as another opportunity presents itself? 

If so, it has serious implications for our community life. If a big part of Berkeley becomes just a place to sleep, there’s no reason for those residents to really engage in local life. As long as there’s a BART station nearby, a grocery store, and good takeout, they don’t need to. They will work and live elsewhere, merely sleeping in Berkeley. 

This may become an especially acute attitude among those who live high in the sky, ten or fifteen floors above the rest of Berkeley. In that sort of environment you can both literally and figuratively live apart from the community—you don’t really need to worry about anything taking place down there. 

It’s the opposite of the conditions that prevailed for decades where people who happened to work out of town still wanted to be Berkeley residents, had front doors that opened to Berkeley streets rather than high-rise elevator lobbies and doormen, and were invested in the town in ways other than financial. 

Now I don’t want to sell the allure of Berkeley too short. It’s quite likely that some of the people who initially move here only because they “want to live in San Francisco but can't afford to”, will actually end up liking it here, and become active and long term residents. 

But promoting high-rise buildings specifically intended to be marketed to those who either won’t be able, or who wouldn’t initially want to, live here? That’s probably not a good, or sensible, choice for this community.