New trends have appeared in the San Francisco Bay Area. With rising employment across Silicon Valley and surrounds, demand for housing is strong and supply remains a concern. The business, government, and local developers are working hard to provide feasible solutions for the Bay Area. We sat down with one such developer, Danny Haber – the co-founder and CEO of oWOW. We quizzed him about the latest developments in the Bay Area and how his company is working to turn things around.
Question: For those who don’t know can you please give us an update of the latest market trends taking place in the Bay Area?
Answer: ‘Absolutely! As you and your readers are likely aware, the Bay Area has been characterized by a unique set of challenges, notably strong demand and minimal supply. The issue is further compounded by several other challenges such as rising rental prices and high real estate prices. What most people probably don’t know is why this situation currently exists. In the aftermath of the global financial crisis in 2008/2009, the Silicon Valley rebound was phenomenal. This was especially true in 2013, 2014, and 2015. Strong growth in the high-tech sector has facilitated robust demand in the housing market. Regulations and zoning requirements make it difficult for developers to set up multilevel apartment complexes in busy urban enclaves near transportation hubs, and commercial activity.
Entrenched systems such as Proposition 13 (a state law that strictly limits property tax increases every year) and lack of political will to expedite new home construction and development are but a few of the issues that we have to contend with. Now, there have been some changes between 2018 and 2019, notably falling prices in and around San Jose and San Francisco. This comes as quite a surprise. In November 2019, the number of new listings year-on-year declined. In fact, San Jose’s metro area was characterized by 22.2% fewer listings year-on-year. Notable in the real estate market is the San Francisco/Oakland/Hayward area which now has 17% fewer listings year-on-year. All of this tells us that big changes are afoot and developers need to focus on real-time market realities.’
Question: How does your company fit into the mix?
Answer: ‘oWOW is a small, dynamic, and vertically-integrated real estate development company. We like to think of ourselves as game changers in terms of how we approach the housing crisis in the Bay Area. We’ve identified many opportunities in the market, notably in communities where abandoned buildings, dilapidated buildings, or buildings that simply don’t live up to code exist. We get permission from the authorities to go in and renovate, remodel, and redesign these buildings to make them safe, affordable and enticing to tenants. We focus our energy on a niche section of the market – the middle-income earners. These are the forgotten folks in the greater Bay Area, and it’s surprising as they form the bulk of the economy. By coming in well below market price, we can confidently cater to this section of the market with luxurious apartments.
The techniques that we employ are different to the norm. We look at the living space in an apartment and say to ourselves how can we make this better for the tenants. When there is a one-bedroom, one-bathroom apartment, we get our design teams to come up with exciting solutions to make all of this work. We can transform single bedroom apartments into multi-bedroom apartments for our tenants. Thanks to these MacroUnits, we are able to fulfil expectations with high-class living at cut rate prices. There are several examples of our big projects on the market, including 960 Howard Street, 674 23rd Street, 316 12th Street, and 1919 Market Street. These are affordable spaces where people can live and work in these apartments as they see fit. The price point that we generate is super. Since entrepreneurs can start their businesses from home, this is a dynamic way to live, and the business aspect allows people to pay their rent. The mix of tenants is pretty remarkable, with business owners, educators, and employees of SMBs at all levels.’
Question: Why do you think prices are still so high in the Bay Area and how can developers like yourself change this?
Answer: ‘I think that it really boils down to a standard economic issue: supply and demand. There isn’t enough supply and there is way too much demand. Even though the trends indicate that prices are falling, they are still significantly higher than the national average. San Francisco’s Bay Area is a hot property market, and it has been for many years. Consider that the median listing price for a home in San Jose is $1.1 million, and in the San Francisco area the median price is $1,352,300. You would have to earn over $300,000 minimum to qualify for property ownership in these enclaves. Our big projects are certainly affordable, and we cater to that section of the market that isn’t necessarily a top gun at a Silicon Valley company.
We combine development, design, and construction so that we can get our modular units to market to power the housing revolution. You may have read about a 640 ft.² shack in San Francisco on the market for around $2 million. These are the types of things that we are certainly working to avoid. All of our work is starting to pay dividends, and thanks to the big investments by major tech companies like Apple, Google, Cisco, Microsoft, Facebook and the like, much more attention is being given to solving the housing crisis to make the Bay Area a more affordable place to live. It’s going to take time and lots of political will to get this done, but we are making progress on building a time.’
You can connect with Danny Haber through About.me, and Twitter