March 10, 2014
By Sam Tepperman-Gelfant
Can you guess which two Bay Area cities made it into the top ten on a national list of the “Top 20 Zip Codes for Flipping Homes to Hipsters” put together by a real estate website specializing in foreclosed homes? I bet you can’t. Despite the fluffy headline, there is some substance to the analysis. The list considered factors such as above-average transit ridership, a high percentage of residents between 25 and 34, and whether average rents were higher than average mortgage payments.
Did you say San Francisco and Oakland? If so, you got one right. Oakland came in seventh, with real estate speculators nearly doubling their “investment” when they flipped homes in East Oakland last year. I recently reflected on the devastating impacts of such profiteering in Oakland, and this list provides further evidence of the trend.
But the other Bay Area city on the list caught me off guard: Concord, in tenth place. Having worked in Concord for the past six years, I never would have guessed that speculators had already set their sights on that community. But of the 20 zip codes that made the national list, one in Concord had the second highest number of homes flipped in 2013. Gentrification is upon them.
Looking at the data, Concord fits the profile. The largest city in Contra Costa County, Concord’s population is more than 30 percent Latino (7 percent higher than the regional average) and had a median income $10,000 lower than the county overall. 20 percent of its residents are between 25 and 34, and 17 percent walk or take transit to work. While home prices are high, they haven’t (yet) rocketed into the stratosphere as they have in San Francisco and much of the inner East Bay.
Concord’s appearance on this list reinforces why Public Advocates and our partners in the Community Coalition for a Sustainable Concord have been advocating for affordable housing and healthy communities in that city for so many years. With demographic changes afoot and massive new development coming to the shuttered Concord Naval Weapons Station, now is the time to build-in equity policies to ensure that the city remains a diverse community of working families for generations to come.
This list also carries a broader lesson for affordable housing advocates and planners everywhere: attempting to time the market is a dangerous game.
This lesson is important because when urban planners talk about regional development and housing, they often draw distinctions between “hot” housing markets (like San Francisco and Walnut Creek) and “weak” housing markets (like Concord and Richmond). The theory goes that government zoning, land use policies, and incentives need to be used to “heat up” cooler markets and spur new housing development. Once markets are hot enough, they will be able to support community benefits through mechanisms like impact fees or inclusionary housing requirements.
While there’s no denying that development is more active in some places than in others, attempting to finesse public policies to change the market temperature is risky . As the presence of so many “weak” housing markets on the target list for house flippers shows, the private real estate market is always looking ahead to the next hot market. And it’s nimble enough to move in and capture huge profits from communities before government agencies even recognize that the heat has been turned on.
Community benefits like affordable housing, tenant protections, workforce development programs, and local business cultivation must be built into government policies no matter what the temperature of the market is. This is especially true now, as public funding sources for affordable housing and other community programs are drying up. If investment is to benefit communities rather than displacing them, the public’s elected governments need to insist that the private market does its fair share to meet community needs rather than just syphoning off profits.
