Report identifies Sacramento area’s toughest neighborhoods for building

Some of the nicest neighborhoods in the Sacramento area are also the toughest ZIP codes for new construction, according to one firm’s study.

The ZIP codes encompassing much of Land Park, East Sacramento and the Pocket neighborhoods in Sacramento make the list. Others include unincorporated residential neighborhoods in Sacramento County in Arden-Arcade and around the Del Paso Country Club, as well as much of Citrus Heights.

Screen Shot 2017-08-07 at 5.52.55 PM
The McKinley Village project, 

Issi Romem, chief economist for San Francisco-based construction database website BuildZoom, said nationwide, such neighborhoods tend to have some features in common.

Most are what he called “inner suburban” areas, residential neighborhoods built decades ago with largely single-family housing.

In those neighborhoods, home prices appreciated faster than elsewhere over the period BuildZoom studied, from 2000 to 2015. And those neighborhoods are largely built out, so available vacant land is scarce.

“In downtown, you can tear down an old building or parking garage and build as high as you can go,” he said. “Here, no one will let you tear down and go higher adjacent to single-family homes.”

That’s generally been true for the neighborhoods in the Sacramento area identified in the report. Residents in East Sacramento pushed back against not only a senior housing project in recent years, but also the McKinley Village development of denser but detached housing under construction on the neighborhood’s northern edge.

BuildZoom’s report compared the number of homes built from 2000 to 2015 in the 50 largest U.S. metropolitan areas, broken down by ZIP code and using federal census data. Honolulu was also included. The study identified ZIP codes that saw fewer homes built in that time frame relative to a rise in home prices as tougher to build.

Locally, the greatest change was in 95817, which encompasses the North Oak Park and Elmhurst neighborhoods in Sacramento.

From 2000 to 2015, the neighborhood saw price appreciation of nearly 120 percent, but less than 1 percent new housing. A handful of housing projects, some of them dense, have emerged in that ZIP code more recently, such as Indie Capital’s Oak Park Creatives and Evergreen Co.’s mixed-use project at Stockton Boulevard and T Street.

Romem said identifying these ZIP codes is critical for cities. While cities typically grow outward, that’s becoming less desirable as workers want to be closer to jobs concentrated in urban areas, he said. And home prices have soared out of reach for many in those urban areas, especially coastal cities, he said.

“What this means is who in this country can afford to live where is a real issue,” he said.

To solve it, he said, there a couple of options. One, which politically has little chance of happening, would be to virtually ban single-family housing and encourage builders to go vertical, he said.

The other is to loosen up restrictions on second units in the tough-to-build ZIP codes, Romem said. That could mean either splitting a larger older house into two different living spaces, or building a smaller home on the same lot as an existing home.

“It’s not an easy thing to do politically, but it’s easier than some other options,” Romem said.

Article and image provided by: Sacramento Business Journal
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