Hard-hit Vallejo, Calif. property market now on an upswing
• Buyers offering to pay more than asking price
• Demand exceeding supply
• Buyers priced out in San Francisco turn elsewhere
VALLEJO, California — The housing market in this city with a large Filipino American community is on the upswing, a sharp contrast to the market’s slide in 2008.
There are more buyers than available homes. Demand exceeds supply. So prices are increasing – considerably. Prices are currently 28 percent higher than this time last year. But buyers are still willing to buy.
Rod Nubla, a Filipino-American realtor, explains: “Buyers are offering to pay more than the asking price, and that drives prices up. If a house goes on the market on a Friday, there are eighteen offers by Monday.”
This is a complete turn-around for the Vallejo housing market, which went into decline three times in succession: when the Naval Shipyard closed in 1996; when the recession hit; and when the City declared bankruptcy in 2008.
The bankruptcy led to a brief upswing in the housing market, because it caused house prices to plummet, and the new very low prices attracted people to move to Vallejo from San Francisco, Oakland and Berkeley.
But the market soon went back into decline -– until late 2012, when demand and prices began their continuing increase.
Nubla explains the reasons for the new increase in demand: “One factor is that ‘wealthy millennials’ are driving up prices in San Francisco and other nearby communities, and this is forcing other people to look further afield for more affordable homes.”
He added, “There are also people who grew up in Vallejo, or have other connections here, and so want to settle here.”
An additional very important factor is the new low lending rates, which are benefiting the housing market just as much in Vallejo as in other cities.
Nubla gives the reasons for the decrease in available homes in Vallejo (which also pushes up the demand): “A lot of homes were foreclosed in recent years, and people bought them all up at discount prices, creating a scarcity. Investors have been buying up homes, leaving fewer available for individuals who want homes to live in. Right now there are 107 homes for sale in Vallejo. That is not many considering the size of the population (120,000). That scarcity is pushing up prices.”
Vallejo’s well-known problems with crime and school performance are apparently not deterring homebuyers.
Nubla says that “buyers realize that high crime is in certain pockets of the city, and they steer away from those areas, choosing the neighborhoods with better reputations.”
There is a particular downside to the price-increases and home scarcity for people who are economically less advantaged. Filipino-American Vallejo City Council Member Jess Malgapo, sees one of the results of this situation from another angle.
Malgapo, who is on the City’s Housing Committee, reports that their 2,600 “housing vouchers” for subsidized rental properties (formerly known as ‘Section 8’) are “maxed-out…we have a waiting list in the thousands.”
How do Filipino-Americans fit into the picture? Nubla says that some Fil-Ams have had an especially hard time with foreclosures in recent years. “Filipinos tend to be investors, and some have bought multiple homes as investments. When the recession hit, each had to foreclose several homes.”
But the current upswing in Vallejo’s housing market should impact Filipino-Americans in the same way that it does all citizens, whether buying or selling.
