A rental in Pacific Grove | Photo by Joe Livernois
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By Joe Livernois
I’m curious about a tiny home in the neighborhood, a one-bedroom, one-bath wooden structure built decades before Monterey started to get rigorous about zoning standards. It’s a basic cabin under an aging Australian wattle tree, built on a long-lost family’s property to accommodate a long-lost mother, and split off and sold soon after mom died.
The tenants there are about my age and have lived around the Central Coast for decades. They recently got the notification that strikes fear in renters’ hearts: a real estate appraiser would be dropping in soon to determine the value of the house. Expect a for-sale sign to pop up any day now.
It’s a unique property, to be sure. It’s tiny, on a minuscule piece of property, and it’s not a condo. But it’s bound to be appraised at a price that will drop jaws.
If it sells and if the monthly rent soars as a result, the tenants fear they will follow thousands of others forced out of the Central Coast because they simply can’t afford to live here anymore.
“We’ll try to hold on as long as we can, in this area,” said one of the tenants. “But frankly I’ve been checking out the housing situation in other areas, including outside of Monterey County and California.”
The pandemic may have wrecked small businesses and throttled careers, education and the job market for a year, but the real estate industry defied the logic of market forces, careening along as if there are no more bubbles to burst or markets to crash.
Some real estate analysts call it the “COVID Real Estate Surge.” But on the Central Coast, it feels more like a purge, as rising real estate costs continue to drive longtime Central Coast residents elsewhere.
CoreLogic, which promotes itself for using both science and analytics in providing analysis of the California housing market, reported that the median price of the 300 homes sold in Monterey County during the month of February 2021 increased by 16 percent compared to pre-pandemic times of February 2020. The price of the 209 homes sold in Santa Cruz County went up more than 21 percent during that same period.
Zillow, another national real estate analysis firm, reports that real estate prices jumped by at least 10 percent in most regions of the county during the past year. Soledad’s median price for a single-family dwelling jumped about $60,000 during that period, to $482,000. Santa Cruz homes climbed to almost $1.12 million, up $130,000 from this time last year.
Zillow’s figures show that single family homes in Salinas climbed only $37,000 during a 21-month period ending in February 2020. Since then housing prices have risen another $64,000. Across the United States, Zillow reported the “typical home value” increased more than 11 percent during the past year, to a high of $275,000.
The COVID housing surge is having its greatest impact in what is considered the luxury home market. Apparently the pandemic gave millionaires an opportunity to pause long enough to reevaluate their lot in life. “People are … fleeing urban density and pursuing space,” said Mark McLaughlin, of the luxury real estate company Compass California, in an interview with Forbes last year.
The impact reverberates in regions like the Monterey Peninsula. And the domino effect impacts surrounding cities. Marina saw median prices of homes increase 14 percent from one February to the next, according to CoreLogic. Seaside is up almost 22 percent, and average Salinas home prices soared to $612,000 in February, up 17 percent compared to February 2020.
Correspondingly, rents continued to rise — or at least stayed flat — in Central Coast cities during the pandemic. Average monthly rents in Salinas are now $1,800, about $300 less than Monterey rents, according to RENTCafe.com.
The flight of the big-city rich to resort communities is reflected in housing costs in all corners of California, according to the CoreLogic analysis. The sales prices of homes in Beverly Hills dropped 15 percent during the past year, while places like Hermosa Beach, 20 miles away from Beverly Hills, saw prices rise 50 percent.
The rental market has already chased away thousands of locals from Monterey Bay. Ray O’Halloran, a resident of Monterey County for more than four decades, now lives in Hanford. He considered Monterey County his home. “But I just couldn’t afford to live there anymore,” he said.
And those who stick around struggle to keep a roof over their heads. “I know of at least five people who are currently either couch surfing or moving because they’ve been evicted or displaced,” said M Sherman. Younger residents stick it out by sharing with others, sleeping in dining rooms and dens, they said.
Esther Malkin, an activist for renters on the Central Coast, said that Monterey County has “created a permanent renter class, as investors with no stake in our communities are already circling like the vultures they are.” She said developers and property management companies “are allowed to act as a cartel manipulating ‘market rates.’”
Malkin’s group is called Monterey County Renters United and she is currently a candidate for the state’s Democratic Renters Council.
Marc Del Piero, a bankruptcy trustee and former county supervisor, said that property owners who rented their single-family homes are now cashing out. “A lot of rental units are being bought by out-of-area buyers who intend to retire,” he said. “Every time this happens, existing rental stock diminishes permanently.”
Also, property owners who had been renting out their homes while waiting for the market to reach its upper limits are starting to cash out, leaving their tenants to fend for themselves. Which might be what is happening to that tiny cabin under the wattle tree in my neighborhood.
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