 Well, good morning, good afternoon, or good evening, whenever you're listening. This is Davis Phil on KDRTLP, 95.7 FM in Davis, California. We live at KDRT.org online. I'm Bill Buchanan. I'm the host. Thank you for tuning in. Housing is an interesting story in Davis. It involves the committee, shapes the community really. It involves business, it involves money, it influences local politics, and it also reflects what we all want as individuals in terms of how we live, how we'd like to live, and how we experience the town. In May, two months after the COVID-19 pandemic started, we talked with Davis real estate expert Steve Boschkin on local housing and trends, and now that the summer of this strange year is over, we'll talk today about what's happened since spring in terms of prices, rental vacancies, and more, and maybe understand what's happening a little better. And I'm happy to say, too, that Steve is back with us today, also his wife, Kit Boschkin. Together, they have a variety of real estate properties and businesses and such in town. She's more expert on the rental side. Steve more on the sales side. Steve and Kit, thank you for coming on the show today. Thank you, Bill, for this conversation. Thank you. So we do know a few things that we didn't know in May. For example, the University of California, Davis, is estimating that 23 to 25 thousands of its students will be here in some form this fall, which is to say they're not living at home. They're going to be in Davis or maybe they're living in Dixon or Woodland or something like that, even though only a handful of classes will occur in person. So most of its students will be around here or nearby. Longer term, there are signs that the University of California anticipates teaching most of its classes remotely through June 2021. Of course, it's early, things can change, but that's sort of an early take on it. So what I'd like to ask really both of you, I'd like to mention a few categories and then ask you what the situation is in Davis this fall. And Steve, let's start with home sales and home prices. Okay, so right now there are 51 active homes, which is very, very low. We're probably easily 50% of what we would normally have this time of year for inventory, which is causing problems in and of itself because as you know, if you're going to sell a home because you're going to move into a new one, you don't want to pull the trigger to sell yours and end up homeless. So that's causing a lot of issues in the market, which is also driving prices up, the supply and demand of just lack of housing. People are putting multiple offers or sellers are getting multiple offers oftentimes in like a homeless price correctly. So right now there are also 53 homes pending, meaning they have an accepted offer. So you can see that we have as many pending as we have for sale. And year to date we have sold 316 homes. So we are very, very close to a one month supply total of homes available on the market. So why do you suppose people aren't selling? There's a variety of reasons. I think one of the biggest things is the lack of housing for them to go to. I think that that is a real concern to many buyers in the market. You would think that the student population since they weren't coming, we didn't see as many out of area buyers coming to purchase for their students. But we have seen quite a few of in Davis and Bay Area transplants coming to purchase homes. Well, if there is an inventory for them to buy again, they're not the ones that are trying to move up or down in Davis are not going to pull that trigger. The one glimmer of hope, so to speak, in the next year or two, is going to be when Bretton Woods comes online that should free up some inventory. But that isn't fully approved yet, I believe they're maybe did this week. But I think that's the development up in the northwest part of town up near the hospital. Yeah, just to the west of Sutter Davis, north of Covel. And it is primarily aimed at the age in place generation. There's 80% of it is supposed to be of age. I think it's 55 and older, but I don't know that there's formal limit on it. But the idea that Dave Termino came up with for that project is that many of the seniors that live in Davis live in very large homes that they raise their kids in. They've lived in those homes for 30 plus years, and they don't need a five bedroom, two story house anymore. They need a two bedroom, single story, age in place, nice home. And so this is going to free up quite a few resales. Kit, I'd like to get to Reynolds in just a minute, but one last question there. What you're describing about supply doesn't sound all that related to the pandemic. Is the pandemic affecting sales at all? I think where the pandemic is actually affecting sales had more to do with about the middle of March through the beginning of June, when people were so worried about touching any surface. And that just going out in public would give them C-19, and we didn't know what it is. We have a whole bunch of rules now that are in place when we show a property. And when we have other agents come into the home, we're still limited to how many people can go in at a time where by state law, we are not allowed to have open houses. There's a whole bunch of dynamics that we're there in place that we're being careful of, which, you know, it affects the market a bit. But I'm thinking the overall lack of housing availability right now is really what's driving, you know, the housing market right now. Okay. And again, I don't want to dwell too long on it, but just, I mean, it sounds like even if not for the pandemic, supply might still be limited at this point, and you'd still have similar conditions. That's unexpected. We were aiming for that going into the pandemic. This was going to happen whether or not the pandemic was here. Oh, sorry. The other component of this that has really driven things home is the interest rates. I mean, right now we can get, you know, a 30-year fixed rate for two and a half percent. Well, and that's one of the strange things about housing is the price can go up, but the cost goes down or can go down if the loans are... Because housing prices rising with unemployment as high as they are also seems very strange. Right. But you're saying that's driven by supply. Kit, let's talk about rentals. I mean, that's been actually a pretty big story in this town. Students were wondering, you know, saw this on social media. They wanted to get out of leases because they thought if the classes are remote, they didn't want to necessarily be here. Didn't know if it was safe to be in a college town, I suppose. So what's the story with rents? What's the vacancy rate? Are rents up and down or...? That's an interesting question and how to go there. Rent-wise, when the pandemic hit, we were just starting our renewal process and our re-renting process. So a lot of the properties are regular rent that we got rented before the pandemic hit. At this point in time, yes, you're trying to find a rental. I just posted a rental that's a three-bedroom, two-bath available October 1st. I posted it on Tuesday, 2450, which is very reasonable for the city of Davis. I have yet to get one contact on it. So we're going to have to lower the rent. The other thing to piggyback on what Steve said, this is a single-family house. They bought it as an investment property just last year, I believe. And they're talking about putting it back on the market for sale. So those houses that didn't rent are also going to impact the sales market for people like this investor who said, I have no rent, I'm getting nothing coming in. I don't know if the university ever is going to be completely back in, especially not this academic year. So you might find more rental properties on the market because they're vacant. So that's going to impact the sales market and that's going to impact the sales market as well. I can imagine you folks have some interesting discussions from the rental and the sales side back and forth with your specialties. Do you have a feel for what the story is in apartments, in multiple units? I don't manage apartments. So that's, I'm not up to date on that. However, I met with somebody who they ended up buying their son a unit to live in. And they're trying to get out of their apartment complex lease. And according to that apartment complex, and I can't tell you how big it is. I just don't know how many units it has. But supposedly there's only three vacant units in the whole apartment complex. Now, my question to them is, does, does vacant mean nobody's living in it, but it's rented? Or what, what is their vacancy number? Because as I said, these guys rented an apartment. Are they considered vacant or they consider rented? Yeah, I agree with you on that question. And I think that goes to the heart of a question a lot of people have. I mean, it matters how many students are living in town on a variety of levels. Certainly for the economy, also in terms of, you know, if there is another surge in, in COVID. Right. Number of people here matters, you know. And what's your definition of vacancy? Like I said, this unit is rented or paying rent on this apartment because they don't want anything back for the credit. If you go to that apartment complex, are they going to say, yes, we're 90% full, but they only have 50% of people living there? So did the two of you, do you have a sense just from your experience in the market? You know, Davis is famous for 1% rental vacancy rates for apartments and such. And as you were talking about, the start of the cycle normally is what, February when people start to rent for the following year because you have to do that if you want to find a place. Correct. Obviously the pandemic disrupted all that. But, you know, I get a sense, I haven't seen any numbers, but I guess I'd love to know what you guys think about this. I get a sense, the vacancy rate in Davis, the real vacancy rate, not necessarily the, are they legally rented? Is there a check coming in? But people living in the kind of vacancy is much higher than usual. Well, Sterling next to the post office on 5th, that all came online. That's 600 beds, 600, 700 beds. That all came online this year. The university in West Village has other ones coming online as well. So I believe the vacancy rate, if this was a normal year, would have been higher just because we're having more properties come online. Yeah, and I would imagine next time that we come around in the cycle, people might not be as eager to sign these leases months ahead of when, you know, there's the school year would start. Right, we don't know what's going to happen to the 2021-22 school year. Yeah. So no, I don't think people are going to be signing leases in March like they have in the past because they don't know what's going to happen to the university announces what the next year is going to be. OK, and I would imagine at some point in there, there's going to be a real kind of reshaping of how people rent in town and when they rent and, you know. Right, and the other thing that's happened over the last couple of years is you're getting in a three bedroom unit, you're getting five people because they want to pay less rent so they're doubling up. Now with C-19, they're not going to want to double up. So you might get only three people in a three bedroom, which is what we had, you know, 10, 15 years ago. So that's going to impact the vacancy rate because now you're having more people wanting their own bedrooms. The one thing that I've heard about the vacancy rate in town was there was an item in the enterprise that talked about how the city, I guess, maybe it's the county, would try to rent some apartments for homeless folks, the idea of a place where they could live. And the enterprise article said that the vacancy rate was high for Davis, didn't have a number. Of course, I was curious to know what it is, but. Well, I don't think you can get a number just yet. One, you wouldn't have the number anyway if we weren't in C-19. You still wouldn't have that number. You're still collecting that information because you do have leases that start maybe September 15th normally because the school doesn't start until September. So you in any given year, you wouldn't have had those numbers anyway. And like I said before, you now have to define what the vacancy rate is. Again, do you go back to an apartment complex that maybe has 90% of people or units physically having a lease on them, but they only have 40% of the people living there? Do you consider it vacant or not vacant if they're paying rent but not moved in? So we are talking with Steve and Kit Boschkin, who are local real estate experts and property managers and brokers and all sorts of things involving real estate. I'm Bill Buchanan and this is Davis Phil on KDRT. Steve, maybe this is a question back for you. I've heard, although for what you were saying, not many people are able to buy right now, but one of the waves that Davis has had over the year is sort of migrations from the Bay Area. People move here from the Bay Area. We're not far from the Bay and so on. Certainly, the big push to telecommuting, I would think, might amplify that trend. I'm wondering what you're seeing. And also, what I've heard, and this is just anecdotal, but I know people in town that I talk to. And they say that houses that have space for personal recreation pools. And so it seems to be going better because the idea is that people want to have space in their homes to swim or to have a gym or something like that. So I guess that's kind of a two-part question, is one, who's buying? Is it the Bay Area migration kind of coming at us again? And then is that true about sales? Are people looking for places to recreate? You know, it's interesting, I think you're accurate on we're seeing more people wanting pools than we've seen in the past. Typically, you get a buyer looking, either looking for specifically for a pool or they don't want to have anything to do with the pool because of the safety and maintenance issues of it. With C19, we're seeing more people want to have a garage in their gym, sorry, a gym in their garage, a potential for a pool or put a door, have one already in. And they're prepping right now for staying home with the anticipation that this isn't gonna end this year or maybe even next year, the stay at home part. So that is one thing that's interesting and the buyer's searches have changed a little bit. We still get the families, of course, that say, we don't want anything to do with the pool, we have toddlers at home or planning and starting a family, whatever, we just don't want to deal with the maintenance, whatever it is, there's still that group, more people are looking for houses with pools. To your question about the Bay Area influence, we are seeing an increase in the number of buyers moving this direction who in the past have telecommuted, sorry, have commuted and now they are telecommuting from home through Zoom or whatever. The change, though, that we're also seeing is that we're not getting as many Bay Area investors, we're getting some still, but the Bay Area oftentimes are the ones that come in and buy the multiple unit properties that duplexes, foreplexes on up. And right now, because of the mortgage markets, buying investment properties is very, very challenging to get financing for. So if you don't have all cash, and of course a lot of Bay Area people do have a lot of cash to bring in, but if you don't have all cash, you're probably not getting financing. And one of the interesting things I've sold quite a bit in the Bay Area this year, one of the interesting things I'm finding and it's looking like it's a trend down there, is that any kind of investment homes down there are plummeting in price. Between the rental limitations on raising rents and evicting tenants and all that kind of stuff to just not being able to get financing, the investor buyers down there are stuck. They don't have a way to purchase those properties. So if you've got a duplex or a triplex or foreplex in the Bay Area, and to some extent up here, if you wanna get financing, you're very limited on what your options are unless you have a lot of cash. We've got about, I don't know, seven and eight minutes left. A question for both of you. What other ways is the pandemic affecting? We've talked about rental, talked about supply, things like that. What haven't we talked about, maybe ways that the pandemic is affecting housing in town? Business in general has been down like in the downtown. So people's discretionary cash flow, that those that are affected directly by C19. I think that the other thing that we haven't discussed though that has had a fairly big impact over the last few weeks has been the fires and the level of smoke in the air quality numbers that people just weren't willing for the last two or three weeks to go out of their house. Well, I'd wondered about that. Climate change is anyone who knows this area knows we've had more severe smoky skies and fires in this area than we did before. Is that affecting whether people wanna move here? Yeah, well, I don't know about move here per se because it affects pretty much the entire West Coast. I suppose that there are some people that are leaving the West Coast. We did actually pick up a few renters that who unfortunately lost their houses in the fires. And it's a year to two, if they're going to rebuild it's a year to two before that's gonna be able to happen at pretty much a minimum. But I think most of the people that we're seeing just kind of hunkered down for the last three to four weeks which kind of tend to make showing a little slower but the housing sales still we're going. Okay. Also talking about the fires in the rental market I showed a number, it was three rented to one of them from Travis Air Force Base because the fires happened and a lot of those people rented they wanna stay close to where they were before. So they rented a lot of the homes that were available in the Fairfield, Falejo area and those incoming Travis people don't have a place to live. And so they're moving out this way normally you don't get Travis unless they're a doctor possibly this far out. Just a little farther than you wanna drive most of the time. Right, so I chose three different groups, a house that were all from Travis. Okay. The interesting thing about Travis is it used to be that unless you were an officer you were not allowed to live outside of the basically back in the Fairfield area. Those that are officers, the pilots, the doctors, the lawyers, whatever that work on Travis they were free to go further. But, and Davis is their go to place. What Kitt is alluding to is basically that now Travis has said, and we can't find you housing anywhere near base you're free to go to Davis now. And so we're seeing a lot more of the Travis employees coming here to live even though it's more expensive. A couple of questions towards the end here. Do you expect lasting changes in rentals or housing from the pandemic? And all the things related to that the telecommuting and reimagining the idea of working from home things like that. I absolutely do like I said before the last couple of years you were getting five people living in a three bedroom you were getting people sharing bedrooms. I think the pandemic is going to put that on hold for a little while. They're not going to want to share rooms anymore. So that will impact rental markets. Also the prices, if we're not gonna get five people in a room and they can't split it up rent wise that way I think rents are gonna go lower a little bit. Okay. And we can accommodate that adjustment. I think on the sales side, the interest rates I think are gonna be the determining factor. I don't see interest rates climbing in the next year or so. I think we've got a long way to go. And this is the keeping interest rates low is the fed's way of keeping the economy going right now while we have so much uncertainty. But at some point we're going to start to see inflation and as inflation rises their mechanism to lower the keeping inflation in check is to raise interest rates. And that will have a cooling effect eventually on the housing market. But I'm not seeing in the near term future that happening. And I don't think it's gonna be next year either. Once we finally get a vaccine that people can trust it's still gonna take six to nine months or more to roll out and get enough people vaccinated to make it work. And of course you have the psychology of it perhaps it's hard to predict too. I mean, I've wished I could go back and talk to people who survived the flu pandemic a century ago and ask them what was it like 10, 15, 20 years later things like that. A tough year for predictions but what do you think over the next year for Davis housing? Any thoughts, rents, sales? I think it depends what the university does. It really does. Right now they have not said they're not coming back for classes in January. That has not been announced. Cal State has announced it, UCs haven't. That's gonna be a huge impact. Us as rental people are still holding on that a little bit of hope that we just survive for October, November, December and they're all gonna be back in January. If they're not, we're gonna have to play that game when that comes. And Steve it sounds like the supply is more the question on that end. Yeah, I think we're gonna see a similar real estate sales next year. It could go up a little bit the numbers because I think in Davis and specifically if Bretton Woods can get online and those people start to make the move that are going to make the move into Bretton Wood and they start to be able to buy. They're gonna put their houses on the market. We're gonna have more inventory. And of course then you have your normal influx in and out of Davis anyway. So we could see actually more sales. I don't know that we're gonna see prices soften a whole lot. There's just not, as long as interest rates stay low and the inventory stays fairly tight it's gonna be another year. So rents were down, sounds like somewhat over the year but what percentage are we up for you in terms of pricing? I believe this year we're up between four and 5% from last year at the same time. That's really a hard number to pinpoint right now because we had two and a half months where almost nothing was selling because nobody would go out of their house. And so then things have kind of roared back. It's still limited on getting people in but looking forward for the next year I'm seeing that we're gonna be having probably a very similar gain again in values. We're assuming that interest rates aren't gonna be going anywhere. And we're assuming that some other pandemic doesn't join us and the interesting thing is construction costs continue to go up faster than almost any other sector in the retail world. And unfortunately, that's going to drive prices up as well. Roofing alone went up 5% last month, year over year. So the cost of supplies and lake well. Right, I mean, we can't get a lot of supplies we were getting out of China, we can't get those right now and there's all kinds of embargoes and tariffs that are being put on that have really driven the cost through the roof. Okay, well, we've been talking today with Steve and Kit Boschkin of Boschkin Properties among a variety of things, talking about housing in Davis as summer 2020 ends and fall 2020 begins. Kit and Steve, thank you very much for appearing on Davisville today. Thank you very much. You know, great talk to you again. Hi, I'm Bill Buchanan. This is Davisville on KDRT LP 95.7 FM. Thank you for listening.