In this current housing crisis, any city approval of more residential units is a good thing — except when there’s no one to build them.
That’s what’s happening at Petaluma’s Riverfront development, a sobering reminder that we can’t simply plan our way out of the housing crisis, we are also at the mercy of market forces.
Riverfront, at the southern end of Petaluma bounded by Highway 101 and the Petaluma River, is the largest development underway in the city. At full build out, it will include 273 new housing units, commercial space and a new hotel.
The Petaluma Planning Commission last week approved the construction of 43 of the two-story homes designated for the development. The only problem is no one wants to build them.
Developer Basin Street Properties has spent years planning this project and obtaining the necessary approvals from the city with the intent of selling it to a home builder to construct the houses. Southern California builder Comstock Homes broke ground on the project and has since developed the streets and utilities on the property, but so far, more than a year later, no home construction has started.
Comstock even briefly opened a sales office in downtown Petaluma to show potential home buyers what their future dream house could look like, but the office has since closed. Comstock doesn’t think the development would be profitable enough, and the company has been looking to sell to another builder. So far, there have been no takers.
The portends a larger problem. There is clearly a demand for housing in Petaluma. The regional housing crisis, caused in part by a lack of inventory, has caused rents and home prices to soar, so much that many have left the area for more affordable places to live.
During the 12-month period ending July 1, 2018, Sonoma County lost 2,207 people to other areas, an exodus that was larger than any other county in the state. The 2017 wildfires that burned 5,300 homes exacerbated the crisis, driving housing prices even higher and causing people to leave.
Local governments that have been in recent times reluctant to approve growth have begun to loosen restrictions on development in order to combat the housing crisis. Sonoma County and Santa Rosa have taken steps to encourage residential building, and even Petaluma is beginning to do its part.
The 43 homes that the planning commission approved was the third phase of homes in the Riverfront development. Certainly there would be a market for those homes, if a developer would just step in and build them. It’s frustrating for many potential home buyers that the market conditions are such that developers don’t think this development can pencil out.