The latest news and financial insights from your friends at 1st Nor Cal Credit Union.
1st Nor Cal Credit Union - Website
November 2019
Table of Contents
Visit Website
Locations & Hours
Loans & Rates
Online Banking
Mobile Banking
Member Discounts
Contact Us
Win $50!
There are two member numbers spelled out within the text of this eNewsletter. Find your number and give us a call at
(888) 387-8632 to claim $50!
Follow Us:
Return to All Articles
President's Corner
San Francisco Bay Area
The Golden State Warriors just moved to a beautiful $1.4 billion arena in San Francisco. The younger members of the team are having trouble finding affordable housing near their workplace. I can’t blame them. According to the San Francisco Chronicle, one player grew up in a three-bedroom, two-bathroom house in Louisiana costing $575 per month. A veteran player who had previously played in Minneapolis, Philadelphia, and Indianapolis, rented a mansion outside Detroit last year for $3,500 per month.

Sounds silly, doesn’t it? The NBA league minimum for a player with zero years of experience is just under $900,000. Assuming a 50% federal and state tax rate, their annual income decreases to $450,000. In order to secure a conventional mortgage loan, the player would be able to carry of total mortgage of “only” $1,125,000. That is serious sticker shock, even for an almost-millionaire with an average career of just 4.5 years. In addition, basketball players, as well as other professional athletes, have unique expenses such as agents’ fees and lease-breaking costs when the player is traded or released.

Why is the Bay Area so unaffordable? One of my colleagues who is the CEO of a local credit union refers to our “weather tax” as the reason for the high costs. We can probably all agree that there’s no place in the country (or the world?) with the great weather Californians enjoy. Thus, more people want to live in a mild climate with few natural problems, save for the occasional earthquake or wildfire.

The classic economic answer would be, “Look at the supply and demand curves.” Housing demand is higher because of the wealth of high-paying jobs primarily in the technology field, and supply is low because new housing cannot be built fast enough to keep up with the incoming residents. High demand plus low supply always equals higher prices, whether it’s housing, food, or basketball tickets.

A shortage of skilled construction jobs can also be blamed for higher housing costs. When the housing market crashed during the 2008 Great Recession, construction workers left the industry and never came back. Construction firms struggle to recruit younger workers and have to deal with environmentally-friendly and pricier building codes and design requirements.

Economist Elliot Eisenberg pointed out the recent Federal Reserve rate cut has the effect of shrinking home construction which lessens the supply of homes and hence keeps the high resale costs which dampens sales.

A final reason for higher housing costs is the geographical change of the state’s population. The non-urban population has decreased from 44% in 2007 to 23% in 2017. The urban parts of the Bay Area, Los Angeles, and San Diego have all seen a significant increase in people wanting to live and work there, which means increased competition for housing.

There are no easy answers to make housing more affordable. Adjusting tax policy, streamlining the permitting process, eliminating parking restrictions, encouraging transit-oriented developments, and changing zoning laws to allow for more high-density projects will help, but certain regions will probably always be higher cost than other areas. It will take cooperation of the federal, state, and local governments and homebuilders to make these changes. As for the young Warriors, there are some benefits to the higher housing costs. They’ll have the most incredible views in the world.

David M. Green

(925) 335-3802
1111 Pine St, Martinez
538 Center Ave, Martinez
4261 Century Blvd, Pittsburg
560 First St, Suite B-106, Benicia
2500 Nevin Ave, Richmond
Mon - Wed: 9:00am - 4:00pm
Thursday: 9:00am - 6:00pm
Friday: 9:00am - 5:00pm

(888) 387-8632
Federally insured by the NCUA
Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. National Credit Union Administrations, a U.S. Government Agency.
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
Recommended Five-Star Institution by Bauer Financial "Because peace of mind matters"
Recommended Five-Star Institution by Bauer Financial "Because peace of mind matters"
The information contained in this email (the “Content”) is provided for informational and educational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Content is not intended to be and does not constitute financial, investment, tax or accounting advice or a solicitation to buy or sell securities. The Content is necessarily general in nature and is not specific to you or anyone else. YOU SHOULD CONSULT YOUR OWN INVESTMENT, TAX OR ACCOUNTING ADVISORS BEFORE IMPLEMENTING ANY ADVICE INCLUDED IN THE CONTENT. By viewing or utilizing the Content, you agree that you will not hold Marquis, Inc., 1st Nor Cal Credit Union or their affiliates or agents responsible for loss or damages resulting from the Content.
Copyright © 2024 1st Nor Cal Credit Union. All Rights Reserved. This email was sent to you by 1st Nor Cal Credit Union located at 1111 Pine St, Martinez, CA 94553.
If you no longer wish to receive emails from us please go here.
Security Key: