March 20, 2011

2010 Census Data Displays Diverse Diversity Diversions

Thanks to Burbed reader Real Estater for nominating this article by posting it in the comments on Friday.


Image from USA Today

East Bay tops among California’s most diverse places

By Eric Kurhi and Matt O’Brien, Contra Costa Times
Posted: 03/18/2011 03:20:18 PM PDT

HAYWARD — Close to the geographic center of a city known as the “Heart of the Bay,” Luciano Ruiz peered out the pickup window of a burger joint in what is, by one measure, the most racially diverse neighborhood in California.

“There’s been a mix of people here ever since I grew up,” said Ruiz, 18. “It’s always been mainly Latino down here in South Hayward, but now you see more African-Americans, a lot more Asians. I’ve seen a little increase in Middle Eastern people.”

The 2010 census shows a collection of census tracts in the Hayward flatlands as the most diverse in California and a microcosm of the state’s likely future. Latinos are the largest group, but share the space with many other people. Multicultural churches, mosques and businesses are in walking distance.

Thirty-five miles away, in the Walnut Creek retirement community of Rossmoor, a cluster of census tracts reflect an older, less integrated California. About 90 percent of residents are white and less than 1 percent are African-American in the Bay Area’s least-diverse neighborhood.

“It’s probably accurate,” said Rossmoor resident David Smith of the newly released statistics. “Our population is overwhelmingly white.”

imageSince this is from the Contra Costa Times, there’s little about neighborhoods in Santa Clara or San Mateo County, and which would be the most or least diverse. East Palo Alto was specifically called out as one of the 10 most diverse communities in California. The diversity index is the probability that two randomly picked people from the area would be of different race or ethnicity. Maybe you might have an idea which neighborhoods you’d nominate?

imageAnyway, I looked up the data, and East Palo Alto has a DI of 83.4 (the highest was 86.4 and Hayward was 85.1).  Oakland was 81.1. Not mentioned in the article are Sacramento, 79.6, South San Francisco, 79.0, San Jose, 77.1, San Bruno, 76.3, Santa Clara, Cholula Half Gallon - Click Image to Close71.8, and Sunnyvale, 70.7.  On the other end of the scale we find Belvedere, 16.4, Portola Valley, 22.3, Woodside, 25.2, and Boulder Creek at 26.  Don’t assume that a low DI means white-bread; the Central Valley’s Mendota is 96.6% Hispanic and has a DI of 26.0.

In case you’re wondering how some areas end up with lots of diversity, here’s the secret, according to the above article:

It didn’t happen overnight,” Bogue said. “Just like anywhere, somebody puts a house up for sale, somebody looks at it and somebody buys it.”

Yeah, that couldn’t happen in Atherton, where houses are bequeathed.  But while houses are occasionally listed for sale in homogenous census tracts, the diverse ones, such as Richmond, San Pablo, Pittsburg, Hayward, Vallejo, Oakland and San Leandro have another interesting thing in common.

imageLocal historian Frank Goulart said affordability has also long attracted a broad spectrum of people to parts of Hayward.

“If you want an honest answer, it’s the cheap housing,” Goulart said.

He said many of the homes in the city’s most diverse tracts “were built like shacks.”

There you go.  Diversity is code for crapboxes (like this one above, in Hayward, the City of Diversity).  But don’t worry about it.  The majority of California public school students are now Hispanic, so the Diversity Index must be heading down (see Mendota, above).  That means housing quality will go up, so the Real Bay Area will get bigger!

imageThere’s no danger of that in Silicon Valley, though.  Santa Clara County’s index is a kumbayah 74, almost as multicultural as Alameda County’s state-topping 78.  The least diverse Bay Area County?  Marin, at 45. The overall state index is 72.9, second only to Hawaii’s 81.1.

But what’s more important is housing!  And the county with the highest percentage of vacant housing units goes to Alpine, with a whopping 71% of its housing sitting empty.  For the Bay Area, the winner is Sonoma, with 9.2%, imagebut Santa Cruz’s 9.7% would have beaten it had any of the county physically come into contact with the Bay.  Meanwhile San Mateo and Santa Clara county are both in the 4’s, while San Francisco managed double: 8.3% of the housing units sitting empty.

There’s stats, stats, stats to play with, so have fun courtesy of USA Today.  Data is available by city as well, so go wild and wonder why the city (town?) of Almanor has 100% of their 75 housing units empty.

Photo above: foreclosed home in Hayward, showcasing diversity.

Comments (8) -- Posted by: madhaus @ 5:04 am

August 15, 2010

Should Government Encourage Homeownership?

I realize asking this question on a real estate blog is a bit like asking RBA parents whether it’s advisable to raise school taxes.  All I can say is Not my fault, USAToday brought it up.

Feds rethink policies that encourage home ownership

image By Paul Wiseman, USA TODAY

Just how much should Uncle Sam do to help Americans buy their own homes?

For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.

Now, policymakers are pausing to reconsider. In the next few months, they’ll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.

The rethink could mean a shake-up for a mortgage market addicted to government subsidies.

“This process of figuring out the government’s role is going to involve some hard choices,” says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us. “The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. … We took for granted that anyone could get a mortgage.”

This is not only a long piece for USAToday, it actually runs longer than most of my Sunday essays here on Burbed.  There’s a lot in this article, and most of you will probably TL;DR the thing.  So here are the major ideas.  (I realize that my trying to shorten a teal deer essay is going to be about as effective as asking Steven Slater to give a rousing pep talk about the joys of being a flight attendant.)

  • Previous policies led US to massively overinvest in housing
  • Treasury Secretary Geithner said reforms must make mortgage credit widely available, promote affordable housing for buyers and renters alike, protect consumers from predatory lending, promote financial stability.
  • Government sponsored enterprises such as Fannie and Freddie are providing funding for 90% of all mortgages now, unlike in 2005 where plenty of private lending.
  • Fannie and Freddie privatized profits and socialized losses to taxpayers.  Next incarnation won’t do so.
  • If they are taken away, there goes a homebuyers’ subsidy as mortgages will be more expensive.  Upper middle class homeowners vote.
  • 30 year fixed mortgages encouraged by Fannie and Freddie but bad bet for banks.  If rates are low they are poor return, if rates are high, borrowers refinance when rates go down again.  Contrast with the pre-WW2 model: 50% down, 5 year mortgage, balloon payment.
  • Government may switch to subsidizing apartments for renters instead of lower-rate mortgages
  • image Until now $230 billion spent on homeowner subsidies (including $80 billion mortgage interest deduction) versus $60 billion for renter programs.  Renters need the help more, 45% of them spend more than 30% of income on their rent, which is definition of affordable housing.  Furthermore 71% of bottom third income renters spend over half income on rent.
  • Richard Florida notes policies encouraging suburban homebuying no longer benefit economy as it did after WW2.  Money spent on furnishing a home no longer supports American industry as appliances, furniture mostly made elsewhere.
  • More homeowners mean fewer people moving where the jobs are.  Moving rate was 20% in 1985 but down to 11% in 2008.  Florida found high-homeownership cities lag in job creation.  (I hope this sounds familiar, as I’ve already written about his observations on this very topic.)
  • Florida thinks the Ideal homeownership rate to aim for should be 55%.  Current rate is 66.9%, projected to fall to 62% by 2012, a rate last seen in 1960.

I’m sure there’s more to say, so why don’t you say it in the comments.  Is it time for homeowners to pull their own weight and stop sucking the government teat?  Are Angry Renters angry for a damned good reason?  Are there just some people who shouldn’t be homeowners even if they can fog a mirror?

Comments (46) -- Posted by: madhaus @ 5:06 am

May 30, 2010

Backyard Cottages: Threat or Menace?

Here’s an article sent in by burbed reader nomadic, who writes, “The RBA needs backyard cottages too!  I bet Worried Mom would be happy to live in a cottage in her backyard while she rents out the main house to cover college tuition for her kids.”

This is another crazy idea from Seattle, which brought us too much coffee, Windows Vista, and not enough sunshine.  Why would we in the RBA (Real Bay Area) want to use them as a role model (we’re doing a great job this year on that last one)?

Seattle’s backyard cottages make a dent in housing need

John Stoeck sweeps the 437-square-foot cottage he's building behind
 his home in Seattle. The city changed zoning rules to allow cottages in
 single-family neighborhoods.

<< John Stoeck sweeps the 437-square-foot cottage he’s building behind his home in Seattle. The city changed zoning rules to allow cottages in single-family neighborhoods.  

Lynn Watkins, left, and her partner, Yolinda Ward, built a 
600-square-foot cottage behind their four-bedroom Craftsman-style house 
after deciding the "big house" was too big.

>> Lynn Watkins, left, and her partner, Yolinda Ward, built a 600-square-foot cottage behind their four-bedroom Craftsman-style house after deciding the "big house" was too big.

By Judy Keen, USA TODAY

SEATTLE — John Stoeck is building a one-bedroom, 437-square-foot cottage on the spot where his garage stood before a tree fell on it. Construction costs: about $50,000. When the cottage is finished this summer, he plans to rent it for at least $900 a month, which will make a nice dent in his mortgage payments.

His is just one of about 50 tiny cottages sprouting in backyards across the city as it tries to expand affordable housing options in established neighborhoods without resorting to high rises and apartment complexes. The city changed zoning rules to allow cottages in single-family neighborhoods citywide, rejected a proposed cap of 50 cottages a year and helped organize a design competition to spur creation of reasonably priced plans. The point is not just to allow the cottages, but to encourage them.

They may not making any more land, but would this work in the RBA?  Would rental cottages in the back yard make RBA homes more or less Special? A rental income stream is nice, but how does a tenant a few steps from your back door work for you when you want to slip out to soak au natural in your hot tub?  How can you water your own lawn when your cottage renter tore it out to put in a garden?  How can you enjoy being lord of your manor when you’ve downsized to a 600 sf Craftsman cottage, and you’re renting out The Big House to an Angry Renter?

Would this solution work for Worried Mom?  Could it work for you?  What would your city do if you put in a permit application for one of these beauties?  Renters, would you jump at the chance to live in a cottage in a SFH neighborhood instead of your current digs?

Then again, this is the RBA!  Maybe we can make it even more Special!  Instead of Backyard Cottages, we could have Backyard Garages, and incubate the next Web 3.0 startup! What’s even better than rental income? How about ground-floor equity?  After all, it’s your ground floor!

Comments (8) -- Posted by: madhaus @ 5:02 am