Friday, September 19, 2008

The Path To Downturn San Jose

From Biz Journals:

On the portion of El Camino Real known as The Alameda, pedestrians can grab a piece of highly addictive cinnamon bread, a slice of New York-style pizza, coffee — either chain or local — or a fully loaded breakfast burrito. The district offers the best in Bollywood cinema, a nearly 100-year-old candy shop and an expansive space to spend an afternoon knitting your cares away.

Much of this stands in stark contrast to The Alameda of the recent past, business owners say, when prostitution activity was routine and, save for a few mom-and-pop businesses, empty or underutilized storefronts abounded.

Now, 17 years after the city of San Jose declared The Alameda a redevelopment district, restaurants, retail and housing have combined to make the once-blighted historic area a thriving place to live and play. Business owners say the area still faces some obstacles, but it has built momentum and has a promising future.

The Two Economies

From Forbes:

Flash back to a couple of weeks ago, when we were in California on vacation. At our hotel in Yosemite, it seemed like a meeting of the European Union: French, Italian, Spanish and British English filled the corridors. I asked a waitress and cashier how many Europeans were there and they both agreed it was two-thirds to three-quarters of the people they served.

So, where were all the Americans? Maybe they were staying in budget motels or camping out on the Valley floor. Maybe the Californians were too smart to travel to Yosemite in high season. Maybe others just didn't want to spend the airfare and $4 a gallon gas. Or maybe they were all shopping at Woodbury Common.

Whatever the reason, it sure looked as if California was in a recession.

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We really have two economies in the U.S. One is holding up pretty well; the other is overwhelmed by foreclosures, tighter credit and higher gasoline prices. In one economy, people are tightening their belts a little, but not too much. In the other, it feels like the worst economic slowdown since the 1980s, or even World War II.

The statistics don't capture the reality. Although jobless claims have risen and Friday's data may show an increase in the unemployment rate over July's reported 5.7%, neither figure has matched those of previous recessions--yet.

And shockingly for the doom-and-gloomers, revised gross domestic product numbers for the second quarter showed a pretty solid increase of 3.3%.

Though largely powered by exports, a real recessiondoes not typically produce that much economic growth.

The deeper you dig into the data, the more clear it is that the U.S. economy is sharply divided, and the fault line is usually where the housing bubble was the frothiest and the housing bust the most severe.

San Jose Home Values

Sue McCallister writes:

Once the long Labor Day weekend is over, Silicon Valley residents who want to buy homes will start hitting the open-house circuit in earnest, real estate agents say, eager to make purchases before the holiday season begins.
It's clear that with prices declining in many parts of Santa Clara County, sales generally accelerated this summer, especially among less expensive homes.
Interest in market
Many real estate agents also point to the relatively high number of "pending" sales in Santa Clara County as evidence of a market that's rebounding after a slow first half of the year. "Pending" means sellers and buyers have signed a purchase contract; there are different categories of "pending," based on how close the sale is to being complete. So far this year, June posted the year's best sales volume for single-family houses, with 966 changing hands in the county, according to multiple listing service data.
Short sales occur when homeowners sell their property for less than they owe their mortgage lenders; lenders must approve the transaction, and the process can take months.

More Research Needed


We have lived on the corner of Bachman and Massol for the past 37 years and have attended many town council meetings. Last night we attended the council meeting where the condo-conversion project at Bay Tree Apartments was debated. We listened in amazement that this large-scale project has gone so far without any specific town rules in place to guide the town staff, the town council, the developer and the residents.

There are many gray areas such as the treatment of renters, parking provisions and building code upgrading that has put everyone at a disadvantage, and there are no rules to guide them. We were also shocked to learn from Mr. Cole's statement that Lyon Development has had this project in the works here for three years.

Our question is simple. Why didn't the town start developing condo-conversion guidelines at the time the Bay Tree application was submitted? Rather than reinvent the wheel, why didn't the town research and cherry-pick best practices from other communities nearby with experience with condo-conversion guidelines (codes, ordinances or whatever they are properly called) from Palo Alto, Saratoga, Campbell and San Jose?

Spencer and Elli Anderson

Los Gatos

The Working Class In San Jose


"Working people in Silicon Valley are walking an economic tightrope, and any unexpected medical bill or even a car breakdown can push them over the edge," said Louise Auerhahn of Working Partnerships USA, a San Jose nonprofit backed by foundations, labor and faith-based activist groups.
Auerhahn is the principal author of "Life in the Valley Economy," a 128-report that likens Silicon Valley's economy to a barbell or an hourglass - great jobs at the top for software engineers and biotech scientists, and lots of low-paying jobs at the bottom for janitors and home health aides. This basic thesis drew support from business-affiliated public policy groups including Joint Venture Silicon Valley, whose reports spanning both corporate and governmental perspectives have painted the region's economy similarly in the past.
"The Bay Area Council has seen increasing evidence that an increasing wage disparity is putting the region at significant risk," Wunderman said in a telephone interview. For instance, he argued that the San Jose City Council should broaden its current living wage ordinance to cover contract workers at the city-controlled Mineta San Jose International Airport.
Other suggestions from the Working Partnerships report include partnerships between unions, business, community colleges and other local authorities to create job training programs to boost the skills of current or laid-off workers.

San Jose Planning Approval

Mary writes:

The San Jose Planning Commission gave its stamp of approval to a proposal for a condominium development at 746 The Alameda, which will be the first use of stackable parking in District 6.

The proposal to build eight condominiums above 2,800 square feet of commercial space on the corner of The Alameda and Bush Street was first submitted by developers more than a year and a half ago. Commissioners voted unanimously to rezone the 0.24-acre lot from light industrial to planned development.

The San Jose City Council will review the project on Sept. 9 at 7 p.m. The use of stackable parking will be only the second one in San Jose. The first is a project under construction at First and Julian streets that will have a mechanical lift system.

Condominium owners at 746 The Alameda will have two free-standing spaces and seven two-car mechanical lifts that can be raised or lowered into a ground well without requiring drivers to exit their cars to operate.

Affordable San Jose Housing


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Those looking for an affordable alternative will find at the newly renovated Holiday Inn San José. Its fully furnished guest rooms offer the solution for all housing needs, whether it is corporate relocation, or short-term and long-term housing. All rooms have workspaces and are beautifully appointed to embrace the Mediterranean feel. Warm wood furniture compliments the Granite Countertops and carpet, welcoming guests with a comfortable relaxing feeling.

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San Jose Condo High Rise

From Biz Journal:

San Jose's City Council on Tuesday unanimously approved a liquor license for high-rise housing complex The 88, allowing a Safeway supermarket to open on the bottom floor of the new luxury complex on San Fernando Street between Second and Third.

The permit was initially denied by the city's planning commission, which cited a high number of liquor licenses already in place downtown. The new license will let Safeway only sell liquor on a small portion of its sales floor.

The supermarket will be about 23,620 square feet and the sales floor about 18,213 square feet, according to city figures.

Home Values Plunge

Sue McCallister writes:

In a season of stunning financial news comes more drama from the local housing front: The median house price in Santa Clara County plunged 26 percent last month compared with a year earlier, the county's steepest decline on record.
Houses sold in August went for a median price of $592,750, down from a hefty $805,000 in August 2007.
The last time Santa Clara County houses sold for a median price less than $600,000 was in September 2004, when the figure was $595,000. The August 2007 median price reflects a period in which primarily expensive homes were selling, because low-money-down loans for first-time buyers were suddenly unavailable. That drove the median price up, even as home values in some parts of the valley were falling.
But by this summer, it was mostly lower-priced homes that were selling. In August 2007, just under 2 percent of sales were past foreclosures.
Last month, 330 condos and townhouses sold in the county, down 25.2 percent from August 2007.
In San Mateo County, the median house price in August was $672,500, down 23 percent from a year earlier. In Alameda County, the median price of single-family houses sold was $463,500, down 29.8 percent.
Contra Costa County's median price for houses fell a staggering 48.4 percent since August 2007, to $315,000. In that county, however, bargain hunters were busy: Sales of houses rose 70 percent from last year, from 788 in August 2007 to 1,339 houses sold last month.

Zoning Changes For San Carlos Project?

From the San Jose Mercury News:

The San Jose Planning Commission unanimously supported zoning changes needed to make way for a mixed-use project at the corner of Meridian Avenue and West San Carlos Street.

Commissioners voted Sept. 10 to recommend approval of the Prezoning/Rezoning for a Planned Development Zoning District for the site.

San Jose is planning to annex the county parcels by the end of the year.

The 50 people present at that meeting were told by Michael Van Every of Republic Urban that the project would consist of 173 condominiums, 24 townhomes and 15,000 square feet of space.

Eight people who live in the adjacent neighborhood or nearby spoke.

Speakers requested more community outreach in the permitting stage.