“We’re seeing a run in real estate like I’ve never seen before and I’ve been in real estate since 1973,” Roy Kendall, a real estate agent, says.
The exodus from large cities has finally hit Tulare County. Buyers from areas like Los Angeles and the Bay Area are flooding the local market. Houses and apartments are flying off the shelf, raising housing values and rent prices in unprecedented numbers.
It’s a seller’s dream market that shows no sign of slowing. But others are more worried about the lasting effects of such a market, calling it the beginning of “gentrification” and the end of affordable housing in cities like Visalia.
Big City Exodus
The shift to a remote work environment has revealed the potential cause for the departure of big city residents. There’s just no longer a need to live and work in a city with high living expenses anymore.
“Why live in a really expensive city, when I can live virtually anywhere that’s a little less expensive?” posed Colleen Bliss, real estate agent for the Tri-valley area, located on the eastern side of the San Francisco Bay hills, and home to the cities of Pleasanton, Livermore, Dublin, San Ramon and Danville.
Bliss has been in real estate since 2014 and has been working with clients near the Bay Area, so she is very familiar with their motives.
“A lot of people in the tech industry are moving to surrounding cities in the Tri-valley area, because it’s more affordable,” she said.
Cheaper living has always been a driver for relocation. But what’s remarkable is the rate and scale of these relocations. Usually home sales peak around late March to late June, but according to Bliss the pace of sales has actually been accelerating through August and now into September.
“You got people literally lined up for a tour. Twenty-three offers on some homes,” Bliss revealed. “This is unprecedented.”
But the tri-valley is not alone in this phenomenon. After all, Tulare County has some of the most affordable living costs in the whole state. As a result, cities like Visalia seem to have become a natural target for relocation.
Visalia: Ripe for the Picking
“We’re one of the cheapest places around and close to the Bay,” Selina Robinson, local real estate agent, explained.
According to Robinson, Visalia is seeing very similar trends that Bliss is seeing in the Tri-valley area. She confirmed that the typical Visalia housing market season is accelerating and similarly extending well into September.
Robinson stated the buyers are coming from “all over the place” and even had one buyer from Guam. When asked if there was a particular buyer that she saw more often than others, she said that there has been a lot of move up market. In other words, these are not people buying for the first time.
One explanation for this could be that housing values have increased by 10-12%. Again, these are unprecedented numbers and may be creating a market that is out-pricing first time buyers.
That said, the influx of buyers has also created a severe drop in housing availability. A recent article from the Visalia Times Delta reported just under 600 homes listed countywide, compared to the average 5,000 baseline.
This is great news for anybody with skin in the game. Property owners are expected to profit big time. According to Kendall, the demand has increased so much homes are getting 10-20 offers above listing price. And values are increasing 1-2% every month.
“Real estate is gonna go up faster than gold, simply because real estate is better than gold. It’s an unbelievably strong seller’s market,” Kendall explained.
As Kendall mentioned, this increase in home values and lack of housing availability is great for anyone with assets. But it does not bode well for buyers and may create issues for tenants looking to purchase their first home. And the increase in housing values may have also seduced some landlords into selling their properties earlier than expected.
The Tenant’s Dilemma
“This is a process called gentrification,” explained April Teona Lancaster, a Visalia resident and business owner.
According to Lancaster, some landlords have seen the exploding housing market as an opportunity to make even more money.
She experienced this first hand back in March when her landlord decided to sell their home. Keep in mind the lockdowns were just going into effect and businesses were shutting down. So Lancaster was already nervous about her own business when she was suddenly hit with a 60-day eviction notice.
This was before the eviction moratorium so she was not protected by legislation currently protecting tenants impacted by the pandemic from eviction.
Facing homelessness, Lancaster did the only she could do and hit the housing market hard by making three full price offers on homes.
They were all sold to someone else.
Lancaster isn’t the only person who has experienced something like this. Another Visalia resident, who will be referred to as “the tenant” for court-related reasons, was evicted from her apartment when new ownership took over the complex.
When the tenant asked the landlord why they were getting evicted despite paying rent on time, the owner said they had the right, according to their contract.
Like Lancaster, this tenant also struggled to find a home. Many places would not approve her– something she found particularly frustrating because her credit was in good standing. And the apartments that did accept her were charging $1,200-$1,500 a month.
Shortly after evicting tenants, the landlord of her complex relisted the apartments at a higher price.
“For whatever reason, they’re trying to bring in a different demographic,” the tenant said.
Lancaster eventually found a new home. But their experiences illustrate concerning trends in the housing rental industry.
And, according to Lancaster, many of these situations can be prevented if people were more aware of the laws currently in place to protect tenants. Aside from the eviction moratorium, Lancaster became aware of the Tenant Protection Act of 2019 after her eviction. The Act protects tenants and assists them in relocating if necessary.
“It’s a critical moment for us and our residents,” Lancaster said. “Eighty-five percent of Visalia is renting. Those people don’t know they have these protections. They’re getting priced out of their rental unit and my heart bleeds for these people.”
Lancaster also believes rent control regulations, like the ones implemented in large cities that face gentrification, would help mitigate the loss of housing opportunities for Visalia residents. But she doesn’t believe city leadership would get behind that.
“It’s unrealistic to expect the current city council to spearhead any kind of rent control because it’s not gonna be popular.”
Is Home Ownership Becoming an American Pipe Dream?
“If you don’t own it today, you won’t own it tomorrow,” Kendall said when referring to what he projects will happen to the housing market in the near future.
According to Kendall, housing values will double within the next five years, making it even more difficult for first time buyers to achieve home ownership. And the outlook doesn’t look too good for tenants, either. Kendall stated that rents are “skyrocketing worse than housing prices”.
Statements supported by Tulare County statistics show rent increases of 9% between 2012 and 2017, while the median household income only increased by 2% in the same time period.
“We have a major housing crisis on top of the wildfires, the pandemic and the economy,” Kendall said.
It’s unknown if evacuees from the wildfires will contribute to the depleting stock of houses on the market. But real estate agents agree that record low interest rates definitely will.
Bliss stated this is the first time in recorded U.S. history that mortgage interest rates are below 3%. One would think this would be a boon for first time buyers, but as mentioned this tends to only increase the demand of housing and dramatically saturate the market with competition, leaving many Visalia residents high and dry.
Kendall believes if access to affordable housing continues to drop, what we’ll begin to see is homes become so scarce that the housing market will resemble Europe, where houses are not bought, but inherited.
“What we’re gonna see is the combining of families, multi-generational families living in the same household,” Kendall stated.
That means grown adults would live with their parents or even their grandparents because they can’t afford to survive on their own. It may sound far-fetched to some, but it’s already happening.
The tenant that shared her story earlier? She never found a place of her own:
“I had to build a shed on my dad’s property because I couldn’t find another place to live. It’s ridiculous because I’m almost 50 and my kids are in their 20’s. It’s been happening for a while, a lot of us now with our parents.”
This trend isn’t just isolated to Tulare County, either. A 2018 study from the Pew Research Center, revealed that a record 64 million Americans live in multigenerational homes. That’s 20% of American population.