Band of Brothers: New York & San Jose – United In Their Unaffordability
Legendary songwriter Burt Bacharach wrote the hit, “Do You Know The Way To San Jose” for Dionne Warwick in the 1960’s. Had he written the song today he may have changed the title to “Do You Know The Way To Buy A House In San Jose?” The Northern Californian city is the first US metropolis where the median price of a home is now over $1 million. People don’t buy starter homes in San Jose, they buy them once they’ve got started.
According to the National Association of Realtors, home prices rose 83% across the U.S. in the second quarter of 2016 making the median home in San Jose $1085,000—$199,400 higher than the average price in San Francisco, a city that is well known for high-priced homes.
Fueling San Jose’s price hike is nearby Silicon Valley, where average incomes, five years into a career, usually top $100,000 per annum and billionaire tech execs keep the real estate market inflated. It all makes for a tall order for a mid-career employee to buy a home.
“Most buyers get onto the property ladder by starting at the bottom, although some first time buyers with a lot of cash from Google, Apple, LinkedIn can start much higher,” says Skip Levy, a realtor with the Sereno Group who has been involved with San Jose real estate for thirty years. “We recently helped some 30-year-old buyers purchase a $2.1 mil, fixer upper home in Mountain View. They both work for Google and make good money. They also were able to sell stock for their down payment of $900,000.”
Comparatively, Manhattan’s median income is around $148,000 according to the Bureau of Labor Statistics. Like Silicon Valley, buying a home in New York is about a challenging as negotiating a rent reduction for penthouse with a river view. The median cost of a Manhattan apartment is $1.95 million according to real estate firm Douglas Elliman. This may be why most Manhattan workers do not live in the city, but commute from outlying areas where the cost of living is less. But, like mold in a Jersey Shore basement after Hurricane Sandy, soaring sales and rents on both coasts have crept into the suburbs too.
According a a recent NY Times article, activists across Silicon Valley and the San Francisco Bay Area are pushing for a slew of rent control proposals. In New York, amid sweeping gentrification, affordable housing has become an oxymoron. The idea is being pushed to have a percentage of large developments in East New York, Bushwick, Harlem be set aside for affordable housing. However, many activists see the correlation as a scam.
“I don’t fully understand or appreciate the focus on new construction,” said Inwood resident Jennifer Fox to Gothamist. “What I see as the threat in Inwood specifically is the market pressures…the systemic abuses that we see in frivolous abuses, in landlords who charge preferential rents, and then, whoopsy daisy, four years after you can’t challenge your rent, now you’re up to what they claim is legal rent. I am frustrated with the fact that all of these re-zoning proposals are only talking about the new construction and not talking about the preservation.”
In New York and San Jose, it seems a legacy of increasing rents may be the only thing being preserved.
AGORAFYAvocado toasts are the reason why millennials can’t afford a home, says one Australian real estate developer. #AvocadoToast #Millennials https://goo.gl/TBCPnv
AGORAFYFive years on since Superstorm Sandy, Queens’ coastal peninsula is in the midst of a development boom. #Development #Rockaways https://goo.gl/BRKRrD
AGORAFYIt turns out, renters can’t get enough of good ol’ no-doorman-no-frills apartments. Too bad developers aren’t building any. #Doorman #LuxuryRentals https://goo.gl/pdnbo6