Danny Haber of oWOW Explains How Housing Market Pressures Lead to Innovative Solutions

by Darwin on November 10, 2019

Rent Cafe statistics have confirmed that of the 40 largest cities in the Bay Area, Alameda is the only one where rents have decreased marginally since January 2019, to $2513 (down $85). Further analysis indicates that San Francisco apartment rentals are overwhelmingly priced over $2000 (94% of listings), with 52% of San Francisco housing units being renter-occupied households, and 47% being owner-occupied households. Trends further indicate a steady increase in the average rent price between July 2016 ($3,485) and September 2019 ($3,703) in San Francisco. 

Nationally, rental prices have increased slowly, from $1,342 in July 2016 to $1,466 in September 2019. In San Francisco, the average one-bedroom apartment rents for $3,720, while two-bedroom apartments rent for $4,800. San Jose is close in tow with one-bedroom apartments renting for $2500, and two-bedroom apartments renting for $3,000. Given these astronomical costs, an average household income would have to be $100,000 + to meet the 33% of gross income rule for housing.

33% Rule is Unrealistic for Bay Area 

Most every real estate developer and resident of California agrees that the one third rule is not viable in the Bay Area. The rental market is such that many landlords are reluctant to rent to tenants who are rent burdened, without requiring a cosigner on the lease. If you are working for Silicon Valley companies like Apple Inc, Facebook Inc, or Google, you likely won’t have a problem qualifying for a $3,500 a month rental, but everyone else is staring down a barrel. 

School teachers, police officers, government workers, retail employees, and hospitality workers typically face insurmountable challenges when trying to rent apartments, townhomes, or freestanding properties in the Bay Area. While salaries are certainly higher in California, expenses often outstrip increases in hourly wages and salaries, with high taxes being levied on individuals in every direction.

When so much money is being spent on rent, precious little is available for savings. This presents many challenges to Bay Area residents who are effectively house poor. Given the exigencies of life challenges, it is foolhardy to pour hard earned money into rentals with no plan in place for savings, student loan repayments, retirement planning, or a rainy-day fund. The burden can be so excessive in the San Francisco Bay Area that 33% is unrealistic.

Most singles, couples, or families are spending substantially more than 33% of their gross income on housing, given prices in the property market. While housing costs increase as income increases, the rate of change is much slower. People on low incomes typically spend more per dollar income earned (as a ratio) than higher income earners. The National Low Income Housing Coalitionfound that 41% of San Franciscans spend anywhere from 30% – 50% of their gross income on housing costs. A large minority spends more than that on housing costs.

Meeting the Housing Crisis Head-On: Danny Haber of oWOW 

Many property developers tend to focus their efforts on the high-end of the spectrum. New apartment complexes are being developed, expressly for the higher echelons of the greater Bay Area. However, the housing crisis is a low-to-middle income problem and that’s precisely where Danny Haber is focusing his attention. Described by those who know him as a man of character and integrity, Haber and his vertically-integrated company delivers cost-effective solutions for luxury-style living. Thanks to adaptable units known as MacroUnits, apartments use a flexible wall system (Magic Walls) to transform single-bedroom units into multi-bedroom units. All the construction is built offsite and fully customized to spec, for delivery below market price.

oWOW is overhauling the Bay Area property market, one building at a time. Since homes are offered below market price, they are affordable to the middle-income earners. Several major projects have already been developed and brought to market, notably 960 Howard Street, 316 12 Street, 674 23rd Street, and 1919 Market Street. These repeatable designs can be customized according to individual preferences, and the overall process allows for rapid home construction with beautiful end products at lower construction costs. These savings are passed on to consumers in the form of lower rentals. More importantly, the reduced rentals allow for increased saving, and a bigger budget for retirement planning and debt repayment.

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