In 2013, my mother received a notice to vacate her rental that she had lived in for close to 15 years. The owners had recently died and their children no longer wanted to be landlords; the children sold the tiny cottage in an awful condition in a prime location in Los Altos. The gentleman who purchased the property likely saw the opportunity to make something better out of what was a poor use of land between two parking lots. He likely saw that the community had a housing shortage and job growth showed no signs of stopping. He could make above market returns, not just on a home he could build, but mostly on the value of the Silicon Valley land upon which my mother’s decrepit cottage sat.
I don’t know the person who purchased the property, but I’ll give him the benefit of the doubt. He likely didn’t realize that evicting my mother would lead to 2+ years of severe psychosis and 3 hospitalizations. My mother’s schizophrenia was pretty well managed before this notice came, but having to deal with the uncertainty of where she was going live next, her life quickly unraveled.
With support from many family members, we soon found something economists would call “natural occurring affordable housing” — a run-down housing complex in Fair Oaks neighborhood of Sunnyvale. It was teeming with life, walking distance to a super market, and full of people who worked in the service industry supporting Silicon Valley’s booming economy. Despite my mother’s deteriorating health and unconventional tendencies, everyone there helped keep an eye out for her between family check-ins.
Less than one year after my mother moved, the apartment complex was purchased by a private equity/retirement fund joint venture. First, they painted the exterior. Next, the remodeled the lobby. After that, they rebranded the complex so no one could find the less-than-generous reviews about the current management. The final step, apparently, was to renovate the apartments one-by-one. Unsurprisingly, they started with my mother’s unit. This second notice to vacate came when my mother hadn’t fully recovered from her first eviction. She unraveled further. I was no longer focused on keeping her housed, but keeping her alive. She left her Sunnyvale home in the back of a police car and never came back.
Again, I’ll give the new property owners of the Sunnyvale apartment the benefit of the doubt. I doubt the school teachers and other public sector workers that benefited from the above market returns they would get from the CalPERS investment in this property, vis-a-vis kicking out existing tenants on affordable rents, knew about the vulnerability of my mother’s situation. They were looking to take advantage of “strong rent growth” and “the high cost of homeownership in the San Francisco area” and had retirement commitments to fund.
My mother grew up in Sunnyvale. Her father worked at NASA. She went to high school with Steve Jobs. She was born in the right place at the right time and saw incredible prosperity be created all around her. In that vein, she was fortunate to have access to the incredible amount of resources needed to keep her housed.
As her and her neighbors went through the process of being “pushed out” I saw how housing insecurity in the Bay Area really manifests itself. Housing insecurity is deteriorating health from the anxiety that you may need to move again because the town where you rent doesn’t have many tenant protection. Housing insecurity is not being able to keep your kids in the school that they’ve gone to for four years because you’ve gotten priced out of the area. Housing insecurity is your entire community and support structure being uprooted at any time because your landlord may need the cash from their skyrocketed property value
The housing insecure of the Bay Area are victims to the obscene above-market returns on real estate many of my friends and family have enjoyed. The land that my mom’s Los Altos cottage sat on has gone up $900K in value with zero land improvements in six years (in fact the lack of passive income from my mother’s rent should have devalued the property). If this money were invested in the S&P 500 over the same period of time it would have made $500K. As long as someone can make almost twice the return from investing in unimproved real estate over a bull stock market, you will have evictions, you will have children who cannot afford to live alongside their aging parents, you will have people shut out from economic opportunity that a booming industry provides, you will have the affordability crisis that we face today.
My mom’s story can happen to so many people out there, and this is why I care about housing. There’s not one player at fault (i.e. politicians, real estate developers, tech companies, homeowners, landlords, retirees, etc.). It’s all of us. We can:
As a homeowner, it’s not rational for me to hope that my home value goes down; however, if that is the only way out of this soul crushing housing crisis, I’ll take it.