Enough is enough: Tenants join landlord in Bay Area exodus
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SAN JOSE – Tony Hicks moved to San Jose in 1981, but he’s had enough.
Hicks told his 11 tenants he would soon place the three homes he owns on the market. He expected disappointment. Instead, most wanted to move with him to Colorado.
“It didn’t take them long,” Hicks said. “I was surprised.”
Rising prices, high taxes and his suspicion that the next big earthquake is just a few tremors away convinced the retired engineer to put his South San Jose properties up for sale.
The groundswell to leave Silicon Valley — the place of fortunes, world-changing tech and $2,500 a-month-garage apartments — has been building. For at least the last nine months, the San Francisco metro area has led the nation in the number of residents moving out, according to a survey by online brokerage Redfin.
San Jose real estate agent Sandy Jamison has seen many long-time residents and natives leave the state recently. The lack of available housing, leading to some of the priciest real estate in the country, is driving many from the region, she said.
Jamison has even drawn up a marketing flyer for the top five reasons people leave the Bay Area: high taxes, cost of living, quality of life from traffic to homelessness, politics and high housing prices. For many long-time residents, she said, “they feel like they don’t belong here any more.”
Hicks and his friends share the sentiment.
“I’ve been thinking about this for a long time,” said Dan Harvey, 60, a retiree in one of Hicks’ rentals who is concerned about the traffic he fights on his Harley Davidson and the high cost of living. “A fresh start.”
The landlord and tenants came together through Hick’s rental ads on Craigslist and in the newspaper over the last two decades. They grew close with common bonds of conservative politics, religious faith and motorcycles.
It’s an unlikely collection of 10 men and one woman — a retired engineer, a few military veterans, blue collar workers and others on fixed incomes. Few say they could afford to go it alone in the sky-high housing market in San Jose, where a typical two bedroom rents for about $2,500 a month, far more than what they pay Hicks.
Most of the men are divorced, widowed or never married, and many suffer from health ailments and a crankiness exacerbated by Bay Area traffic, crowding and the state’s liberal policies on crime and immigration.
Hicks, 58, was an engineer and marketing executive at IBM, Xerox and other companies before retiring in his early 40s to raise his daughter from his first marriage.
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He bought a few investment properties in South San Jose, and looked for long-term returns when he sold them. He kept rents low — between $500 to $1,200 a month for one bedroom — and never raised prices once a tenant signed a lease.
Many of his tenants have been with him for more than a decade.
“We became brothers,” said Mike Leyva. The 64-year-old Army veteran and retiree signed a lease in 2004 and never left.
In recent years, Hicks began to believe there was a better life outside the valley.
Vaulting real estate prices added incentive. He kept up on tax laws that could maximize the returns on his property. Selling his San Jose rental houses and buying new properties with the proceeds would allow him to defer taxes. “It’s a great financial move,” he said.
Hicks was also moved by discussions with his pastor and sermons at his church, the Vietnamese Living Word Community Church, about Biblical journeys. His spiritual beliefs guided him to his decision to move with his new wife, Fidessa, 31, and her 8-year-old daughter.
Cautiously, he broke the news to his friends.
“I was totally shocked,” Leyva said. “I thought he was joking me. I had a lot of questions about it.”
Levya spent two days researching the move and became convinced. He expects to slash his rent from $1,200 to about $800 a month, with more room in a newer home bought by Hicks. “I’m excited,” Leyva said. “It’s going to be a new journey in my life.”
Ed Blomgren, 70, pays $495 a month for one bedroom and a shared bathroom. The retired machinist, a Navy veteran, lives on a fixed income and couldn’t afford market-rate rent.
Blomgren grew up in Colorado, and he welcomes a chance to return to his home state, where he still has family. “At my age,” he said, “I think it might be a good thing.”
Hicks planned to stagger the sales of his properties over several months, to make the move easier. He went to Colorado Springs with his wife, Leyva and Harvey in December to scout properties.
He expects to get a lot more for his money. The median home value in Colorado Springs is $263,000, compared to $1 million for a single family home in San Jose, according to real estate website Zillow.
Hicks came to Jamison with a proposal: sell all three homes, so he could buy a half-dozen newer, bigger and cheaper homes in the smaller, mountain town, home to the U.S. Air Force Academy.
Within a day of listing his Raposa Court home, Hicks had two offers in hand above the $998,000 asking price.
After an open house, Hicks agreed to a $1.25 million cash offer. Another interested buyer agreed to purchase one of Hick’s rentals for $900,000, even though Hicks didn’t list it.
In the next two months, several tenant friends will fill up moving containers with their personal possessions and several motorcycles. Hicks expects at least six tenants and another Bay Area friend to eventually make the move. He will bring his family to Colorado this summer.
Hicks and his wife plan to buy or build a large home for about half the cost of what they sold their San Jose house. He expects to buy another six homes in good neighborhoods.
Silicon Valley will be in the rear view mirror, he said. “I even bought cemetery plots,” Hicks said. “But I’m selling them.”
Me, rich? Here’s what Palo Altans think about themselves
Local survey shows some surprising views residents of this Tony town have of themselves
Those of us who live outside of Palo Alto’s city limits see this peninsula burg as a bastion of the high-income, the smart-as-heck and the real-estate upper crust.
Turns out many residents of the town see themselves otherwise. The Palo Alto Weekly recently asked residents to do a little introspection. The results, and especially the comments people submitted, were surprising. Most Palo Altans see themselves as — hold on to your hat– members of the middle class or even lower class.
As the Weekly points out, Palo Alto’s median household income is $137,043, which is more than twice as much as the U.S. at large, but still not remotely enough to buy a new house there. Median home sale prices reached an all-time high at $2.67 million in 2017.
“But this vision of a foie-gras-nibbling, tree-lined paradise doesn’t necessarily match the reality of those living here who are just trying to make ends meet in one of the most expensive communities in the nation,” says the Weekly’s report.
Yes, rents have skyrocketed in recent years, along with housing prices. And, yes, the picturesque town is crawling with high-tech luminaries like Mark Zuckerberg and billionaires like Steve Jobs’ widow, Laurene Powell Jobs. Still, they mostly don’t consider themselves up there above the rest of us.
For 2016, the national middle class encompassed those earning between $38,411 and $115,224 annually, said the report. In Palo Alto, the range was between $91,362 and $274,086 for 2016, with an average household size of 2.4 people. (The U.S. Census Bureau considers local median income and costs to derive middle class figures by city.)
“Income alone does not determine who is in the middle,” the Weekly points out. “Palo Alto residents say educational attainment, culture and spending choices, for example, also factor into the self-identification. One respondent with a household income between $250,000 and $300,000 for a family of four wrote that his family is upper-middle class because they don’t spend more than $500 in a single purchase — except for four weeks of travel each year, housing, their children’s activities and $1,700 each month on farmers market food.”
The Weekly received 250 anonymous responses to its survey. When asked “How do you define your social class?” here are some of the answers people gave:
Upper middle class
Seventy-five identified themselves as “upper middle class.” Their self-reported incomes ranged from $50,000 to $400,000 or more (with one retiree reporting $35,000-$49,999).
Seventy-five identified themselves as “upper middle class.” Their self-reported incomes ranged from $50,000 to $400,000 or more (with one retiree reporting $35,000-$49,999).
● “We do not have to worry about staying afloat financially, so we can put our money toward health, education, and comfort.”
● “Upper middle class. Former professor, advanced degrees.”
● “The income is actually pretty high, but it is a single income with two kids. A huge bulk of it is spent on things like college or the mortgage, so there’s less disposable income for luxuries and buying food and buying clothes. My peers do that a lot more, and even some with lower incomes.”
● “Upper middle class – we are probably “rich” by some people’s definition but definitely don’t have a fancy lifestyle (one house, basic cars, no fancy vacations or extravagant purchases).”
● “Upper middle class. Former professor, advanced degrees.”
● “The income is actually pretty high, but it is a single income with two kids. A huge bulk of it is spent on things like college or the mortgage, so there’s less disposable income for luxuries and buying food and buying clothes. My peers do that a lot more, and even some with lower incomes.”
● “Upper middle class – we are probably “rich” by some people’s definition but definitely don’t have a fancy lifestyle (one house, basic cars, no fancy vacations or extravagant purchases).”
Middle class
Eighty-one people considered themselves “middle class.” Their self-reported incomes ranged from $10,000 to $399,999.
Eighty-one people considered themselves “middle class.” Their self-reported incomes ranged from $10,000 to $399,999.
● “We’re comfortable and never want for healthy food or clean clothing. It can be difficult to afford necessities like child care.”
● “Probably middle class, but not anywhere close to being able to afford a house.”
● “In this area, it feels like middle-of-the-road middle class, but where I’m from, I’d own a house and be in the upper middle class.”
● “Here in Palo Alto, I feel a bit below the norm, but still middle class. I have two degrees from Stanford, but neighbors on either side of me have PhDs. Hence the slight feeling of inferiority.”
● “Probably middle class, but not anywhere close to being able to afford a house.”
● “In this area, it feels like middle-of-the-road middle class, but where I’m from, I’d own a house and be in the upper middle class.”
● “Here in Palo Alto, I feel a bit below the norm, but still middle class. I have two degrees from Stanford, but neighbors on either side of me have PhDs. Hence the slight feeling of inferiority.”
Lower middle class
Seventeen considered themselves “lower middle class” or “working class.” Their self-reported income ranged from $35,000 to $349,999.
Seventeen considered themselves “lower middle class” or “working class.” Their self-reported income ranged from $35,000 to $349,999.
● “I’ve lived in Palo Alto my whole life. Only get to stay here because the house is paid off.”
● “We are not homeless or go hungry at night, but we sometimes do live paycheck to paycheck and have to budget if we make unexpected purchases.”
● “If asked I would probably say I’m poor. I can’t afford the things that others around me take for granted. I have to be very careful with my money.”
● “We are not homeless or go hungry at night, but we sometimes do live paycheck to paycheck and have to budget if we make unexpected purchases.”
● “If asked I would probably say I’m poor. I can’t afford the things that others around me take for granted. I have to be very careful with my money.”
Upper class
Four reported being in the “upper class,” three of whom reported earning $400,000 a year or more (the fourth is retired).
No answer: Eighty-nine people declined to answer the question or wrote their own answers, including that they were “disenfranchised,” “former middle class” and “survivors in an unjust capitalist society.”
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