Progressive Cities: Home of the Worst Housing Inequality

America’s most highly regulated housing markets are also reliably the most progressive in their political attitudes. Yet in terms of gaining an opportunity to own a house, the price impacts of the tough regulation mean profound inequality for the most disadvantaged large ethnicities, African-Americans and Hispanics.

Based on the housing affordability categories used in the Demographia International Housing Affordability Survey for 2016 (Table 1), housing inequality by ethnicity is the worst among the metropolitan areas rated “severely unaffordable.” In these 11 major metropolitan area markets, the most highly regulated, median multiples (median house price divided by median household income) exceed 5.0. For African-Americans, the median priced house is 10.2 times median incomes. This is 3.7 more years of additional income than the overall average in these severely unaffordable markets, where median house prices are 6.5 times median household incomes. It is only marginally better for Hispanics, with the median price house at 8.9 times median household incomes, 2.4 years more than the average in these markets (Figure 1).

The comparisons with the 13 affordable markets (median multiples of 3.0 and less) is even more stark. For African-American households things are much better than in the more progressive and most expensive metropolitan areas. The median house prices is equal to 4.6 years of median income, 5.5 years less than in the severely affordable markets. Moreover, for African-Americans, housing affordability is only marginally worse than the national average in the affordable market.

Things are even better for Hispanics, who would find the median house price 3.8 times median incomes, 5.1 years less than in the severely affordable markets. This is better than the national average housing affordability.

Among the four markets rated “seriously unaffordable,” (median multiple from 4.1 to 5.0) the inequality is slightly less, with African-Americans finding median house prices equal to 2.2 years of additional income compared to average. The disadvantage for Hispanics is 1.5 years.

In contrast, inequality is significantly reduced in the less costly “moderately unaffordable” markets (median multiple of 3.1 to 4.0) and the “affordable” markets (median multiple of 3.0 and less).

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The discussion below describes the 10 largest and smallest housing affordability gaps for African-American and Hispanic households relative to the average household, within the particular metropolitan markets. The gaps within ethnicities compared to the affordable markets would be even more. The four charts all have the same scale (a top housing affordability gap of 10 years) for easy comparison.

Largest Housing Affordability Gaps: African American

African-Americans have the largest housing affordability inequality gap. And these gaps are most evident in some of the nation’s most progressive cities. The largest gap is in San Francisco, where the median income African-American household faces median house prices that are 9.3 years of income more than the average. In nearby San Jose ranks the second worst, where the gap is 6.2 years. Overall, the San Francisco Bay Area suffers by far the area of least housing affordability for African-Americans compared to the average household.

Portland, long the darling of the international urban planning community, ranks third worst, where the median income African-American household to purchase the median priced house. Milwaukee and Minneapolis – St. Paul ranked fourth and fifth worst followed by Boston, Seattle, Los Angeles, Sacramento and Chicago (Figure 2).

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Largest Housing Affordability Gaps: Hispanics

Two of the three worst positions are occupied by the two metropolitan areas in the San Francisco Bay Area. The worst housing affordability gap for Hispanics is in San Jose, a more than one-quarter Hispanic metropolitan area where the median income Hispanic household would require 5.0 years of additional income to pay for the median priced house compared to the average. Boston ranks second worst at 3.9. San Francisco third worst at 3.3 years. Providence and New York rank fourth and fifth worst. The second five worst housing inequality for Hispanics is in San Diego, Hartford, Rochester, Philadelphia and Raleigh (Figure 3).

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The San Francisco Bay Area: “Inequality City”

Perhaps no part of the country is more renowned for its progressive politics and politicians than the San Francisco Bay Area. Yet, in housing equality, the Bay Area is anything but progressive. If the African-American and Hispanic housing inequality measures are averaged, disadvantaged minorities face house prices that average approximately 6.25 years more years of median income in San Francisco and 5.60 more years of median income in San Jose.

Moreover, no one should imagine that recent state law authorizing a $4 billion “affordable housing” bond election will have any significant impact. According to the Sacramento Bee, voter approval would lead to 70,000 new housing units annually, when the need for low and very low income households is 1.5 million. The bond issue would do virtually nothing for the many middle-income households who are struggling to pay the insanely high housing costs California’s regulatory nightmare has developed.

Smallest Housing Affordability Gaps: African-American

Tucson has the smallest housing affordability gap for African-Americans. In Tucson, the median income African-American household would pay approximately 0.4 years (four months) more in income for the median priced house than the average household. In San Antonio, Atlanta and Tampa – St. Petersburg, the housing affordability gaps are under 1.0. Houston, Riverside – San Bernardino, Virginia Beach – Norfolk, Memphis, Dallas – Fort Worth and Birmingham round out the second five. It may be surprising that eight of the metropolitan areas with the smallest housing affordability gaps for African-Americans are in the South and perhaps most surprisingly of all that one of the best, at number 10, is Birmingham. (Figure 4).

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Smallest Housing Affordability Gaps: Hispanic

Among Hispanic households, the smallest housing affordability gap is in Pittsburgh, where the median priced house would require less than 10 days more in median income for a Hispanic household compared the overall average. In Jacksonville the housing affordability gap for Hispanics would be less than two months. In Baltimore, Birmingham, St. Louis and Cincinnati, the median house price is the equivalent of less than six months of median income for an Hispanic household. Detroit, Memphis, Virginia Beach – Norfolk and Cleveland round out the ten smallest housing affordability gaps for Hispanics (Figure 5).

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Housing Affordability is the Best for Asians

Recent American Community Survey data indicated that Asians have median household incomes a quarter above those of White Non-– Hispanics. This advantage is also illustrated in the housing affordability data. Asians have better housing affordability than White Non-– Hispanics in 37 of the 53 major metropolitan areas (over 1 million population).

The Importance of Housing Opportunity

Housing opportunity is important. African-Americans and Hispanics already face challenges given their generally lower incomes. However, by no serious political philosophy, progressive or otherwise, should any ethnicity find themselves even further disadvantaged by political barriers, such as have been created by over-zealous land and housing regulators.

Cross-posted at New Geography.

isiting professor, Conservatoire National des Arts et Metiers, Paris

Jerry Brown signs new California affordable housing laws

As reported by the Sacramento Bee:

Gov. Jerry Brown on Friday signed a robust package of housing legislation aimed at addressing California’s unprecedented affordability crisis.

“These new laws will help cut red tape and encourage more affordable housing, including shelter for the growing number of homeless in California,” Brown said in a statement.

He signed the bills at the Hunter’s View public housing project in San Francisco’s Bayview-Hunters Point neighborhood, with the Bay Bridge as a backdrop.

“Today, you can be sure we got 15 good bills. Have they ended the need for further legislation? Unfortunately not,” Brown said. …

Click here to read the full story

Will Democratic legislation actually worsen the California housing crisis?

urban-housing-sprawl-366c0The first major votes on a raft of bills meant to address California’s housing crisis could come up for a vote Friday, with the Democrats who control the Legislature eager to demonstrate they know how much extreme housing costs are harming low- and middle-income families.

Gov. Jerry Brown has often been critical of plans to add new dollars to California’s traditional method of providing affordable housing – by building subsidized units that help a relatively small number of residents. He prefers to sharply streamline the housing approval process.

But after horse-trading this year with Democrats, Brown agreed to support two affordable housing initiatives, apparently in return for support for Senate Bill 35, a measure by state Sen. Scott Weiner, D-San Francisco. It would hasten approvals for new housing units in cities that aren’t creating the volume of units mandated under state law and make it significantly more difficult for local opponents to block construction.

Unlike Weiner’s measure, both the affordable housing initiatives require two-thirds support to win passage in the Legislature.

Real-estate fee struggles to win two-thirds support

One of the measures – SB3 by Sen. Jim Beall, D-San Jose – appears to have sufficient support. It would put $4 billion in general obligation bonds before state voters next year to fund construction of affordable rental units and to fund “smart growth” projects near transit centers and other housing projects. It would also provide $1 billion to the state’s veteran home loan program, which the San Francisco Chronicle reported would otherwise run out of money next summer.

The other affordable housing initiative – SB2 by Sen. Toni Atkins, D-San Diego – appears to be in trouble. It would add fees of $75 on some real-estate transactions to provide ongoing permanent funding for affordable housing, estimated at $250 million a year. The Los Angeles Times reported that in a bid to boost support, Atkins had made changes this week to her bill to provide some of the funds it would generate to local governments. But it is unlikely to win any GOP votes in the Assembly, meaning all 54 Assembly Democrats would have to support it.

Many of the 54 have already voted this year to raise gasoline and diesel taxes and to approve a continuation of the state’s cap-and-trade emissions trading program, which also makes fuel more expensive. For those in swing districts, backing SB2 may seem risky.

“My concern is that it looks and smells like a tax,” Assemblyman Al Muratsuchi, D-Torrance, told the Times.

Prevailing wage mandate in Weiner bill questioned

Weiner’s proposal reflects the Republican view that regulatory relief is the only way to build enough housing to stabilize rents and home prices. With two-bedroom apartments renting for more than $2,000 a month in most big cities – and double that in parts of the Bay Area and Silicon Valley – there’s a growing fear among California business executives that housing costs will drive off talented workers and make it difficult to recruit new ones.

But in recent days, a new GOP talking point has emerged that takes dead aim at the idea that Weiner’s bill would accomplish much. It notes that by requiring projects that win quick approvals to use “prevailing wages” – union-level pay – those projects would be far costlier than those built with non-union crews.

Earlier this year – in a fight over another bill before the Legislature seeking to require “prevailing wages” on construction projects – the Building Industry Association estimated the mandate would add $90,000 to the cost of building a 2,000-square-foot home in California.

State housing officials say California has added about 800,000 housing units over the past decade – 1 million less than needed.

This article was originally published by CalWatchdog.com

Five issues to watch in the California Legislature’s final month

As reported by the Sacramento Bee:

State lawmakers return from summer break today to a once-in-a-lifetime solar eclipse and tens of thousands of people crowding into Capitol Mall for a free concert to urge passage of a trio of criminal justice bills.

Monday also marks the beginning of the end of session. Legislators have one month to get their bills to the governor’s desk before the Senate and Assembly call it quits for the year. It’ll be a busy time with plenty of action. Here’s our take on issues to watch as the session resumes:

▪ Housing: This tops the Legislature’s agenda this month, with Democrats hoping to reach a deal that includes long-term funding for affordable housing construction and regulatory changes to speed the development process. Democratic lawmakers say a housing package could be announced as soon as this week. At the core of the debate is financing: Can Democrats muster a two-thirds vote for a real estate fee and persuade Gov. Jerry Brown to sign off on a multibillion-dollar housing bond measure?

Click here to read the full article

Legislature Returns to Action in August: What to Watch For

CA-legislatureAugust is sure to be a busy month in Sacramento, as legislators fight to get their priorities passed before the legislative session ends on August 31.

While a large number of bills will be debated, there are four things to watch for:

Environment

With the political backing of new polling, Senate Bill 32 — which would extend and increase the state’s greenhouse gas emission reduction goals — is sure to reappear.

Not only is it a legacy project for the termed-out Sen. Fran Pavley, D-Agoura Hills — who authored the 2006 measure that this bill would extend — but it is backed by both Democratic leaders, Speaker Anthony Rendon and Senate President Pro Tempore Kevin de Leon.

“A clear majority of Californians strongly support our state’s climate policies and expect their elected leaders to build on our progress battling climate change and air pollution while making investments in clean energy across our state,” de Leon said in a statement on Wednesday. “This is why the Legislature should extend our climate targets in statute by passing Senate Bill 32.”

Republicans are opposed to the measure, which leaves the power to a handful of moderate, pro-business Democrats. The bill passed the Senate in 2015, but was defeated on the Assembly floor and then granted reconsideration.

An interesting data point: 15 Assembly members didn’t vote — which is a way of voting “no” without any accountability.

Transportation

The Legislature has been in a special session on transportation since last summer to come up with a funding plan to fix the state’s crumbling roads — but with little headway. Gov. Jerry Brown estimates there are almost $6 billion worth of unfunded repairs throughout the state each year.

The dispute is largely between Democrats who have proposed additional revenues (taxes) and Republicans who believe new taxes aren’t necessary as the money already exists but has been redirected to stop budget shortfalls in other areas.

Rumor has it that Democrats will propose what could be a massive package including new revenue, like a gas tax hike, sometime next month — although, since there’s a special session, it could be introduced after the regular session ends.

Republicans are unlikely to budge, but it may not matter what they want. Republicans are in danger of ceding a supermajority to the Democrats in November. If that happens, Democrats would be able to approve new revenues without Republican support.

Of course, the required two-thirds majority wouldn’t leave much room for defections from moderate Democrats.

Overtime for farmworkers

While farmworkers do get overtime, it has a much higher threshold than other professions. A revived bill would, over time, bring the threshold in line with other professions. You may remember that this bill was defeated in June, but it has been repackaged into another bill.

Proponents argue that farmworkers shouldn’t be exempt from the same overtime and break rules as everyone else. Opponents say farmers can’t afford it, and that an industry dependent on weather and external price setting can’t be regulated the same as other professions.

It’s unclear what would be different when the next vote comes that would make business-friendly Democrats, who sided with Republicans to defeat the measure, change their votes. Election year pressure may sway some vulnerable incumbents.

Of course, the measure was only three votes shy of passage, so proponents may target the seven Assembly members who simply didn’t vote, six of whom are Democrats.

Housing

It’s widely reported that the state faces an affordable housing crisis, particularly in urban centers.

Gov. Jerry Brown has been trying to increase affordable housing supply with a plan to reduce regulatory barriers for developers trying to build low-income housing. His ideas have not been embraced by the Legislature and he faces opposition largely fromunions and environmentalists.

Meanwhile, Sen. Jim Beall, D-San Jose, still has hopes of putting a $3 billion, low-income housing bond on the November ballot.

Local Voices Unwelcome As State Promotes Affordable Housing

affordable housingFrom 2011 through the first quarter of 2014, more building permits for single-family homes were issued in the city of Houston than in the entire state of California.

That might be one reason that in April, the median selling price of a single-family home in Houston was $217,000 while in California it was $509,100.

There is widespread agreement that housing affordability in California is a problem, but there’s less agreement on what to do about it. Still, we should be able to agree that whatever is done ought to be transparent, publicly debated by the elected officials who represent us.

But that’s not what’s happening. Instead, Gov. Jerry Brown and legislative leaders are working on a backroom deal to “streamline” the approval of residential housing projects by cutting local voices out of the process.

Under this deal, any “attached housing” development that meets local zoning requirements could be built without local review of the project’s impact on traffic, parking, local businesses, the environment or the neighborhood, as long as 20 percent of its units were designated as affordable housing.

For developments located within one-half mile of a “major transit stop,” even fewer affordable units would trigger the “streamlined” approval. Just 10 percent would be enough to get pre-clearance to build a project like the 3,990-unit “urban village” planned for the former Rocketdyne site in Canoga Park.

No local review would be allowed.

This enormous change of policy is about to be slipped through the legislative process with a trick that prevents committee hearings, debate, amendments, and public notice. It will be written on one of the “spot bills” that was passed earlier in the legislative session.

Spot bills are blank pieces of legislation. They are empty, blank, with nothing written on them except a bill number and the words, “A bill related to the budget.”

Later, when a backroom deal is made, staffers pull out one of the spot bills and write the new law on it. Then the “amended” bill is brought back to the floor of each house for an up-or-down vote.

No hearings, no debate, no amendments, no public notice.

These formerly blank spot bills are called “budget trailer bills,” because they’re passed after lawmakers vote on the budget.

Trailer bills have become such an established part of business as usual in Sacramento that “trailer bill language” is posted on the website of the California Department of Finance. The “Streamlined Affordable Housing Approvals” draft is proposed trailer bill 707, if you’d like to read it. Of course, it may be changed in private negotiations. We won’t actually know what’s in the law until it passes.

Why is this even legal?

Who knows, but if the “Streamlined Affordable Housing Approvals” law is passed, whatever is in our zoning codes is the last word on what can or cannot be built in our neighborhoods.

That’s why it’s important to keep an eye on Mayor Eric Garcetti’s effort to update the zoning of every neighborhood in Los Angeles. We are in the midst of a “comprehensive revision” of the entire city’s zoning. The project is called “re:code LA.”

Haven’t heard of it?

Did you miss the “Listening Session: San Fernando Valley” meeting at the Van Nuys City Hall Council Chambers on July 9, 2013?

How about the “Regional Forum” at the Granada Hills Community Center on March 15, 2014? Surely you were at the “Public Forum: South Valley” at the Marvin Braude Constituent Service Center in Van Nuys on Saturday, April 2, from 9:00 a.m. to noon.

No?

The only way re:code LA could have a lower profile is if it was in the federal witness protection program.

But this “comprehensive revision” of L.A.’s zoning is the public’s last chance to have input on housing projects, because what the governor is writing on a piece of already-passed blank legislation will allow construction of huge residential developments, thickly clustered along a future transit corridor, without any local review at all. The projects need only be compliant with local zoning and include a bit of affordable housing.

It’s all too clever by half. The public deserves better than this.

olumnist for the Los Angeles Daily News and Southern California News Group

This piece was originally published by Fox and Hounds Daily

Local Voices Unwelcome as State Promotes Affordable Housing

http://www.dreamstime.com/-image14115451From 2011 through the first quarter of 2014, more building permits for single-family homes were issued in the city of Houston than in the entire state of California.

That might be one reason that in April, the median selling price of a single-family home in Houston was $217,000 while in California it was $509,100.

There is widespread agreement that housing affordability in California is a problem, but there’s less agreement on what to do about it. Still, we should be able to agree that whatever is done ought to be transparent, publicly debated by the elected officials who represent us.

But that’s not what’s happening. Instead, Gov. Jerry Brown and legislative leaders are working on a backroom deal to “streamline” the approval of residential housing projects by cutting local voices out of the process.

Under this deal, any “attached housing” development that meets local zoning requirements could be built without local review of the project’s impact on traffic, parking, local businesses, the environment or the neighborhood, as long as 20 percent of its units were designated as affordable housing.

For developments located within one-half mile of a “major transit stop,” even fewer affordable units would trigger the “streamlined” approval. Just 10 percent would be enough to get pre-clearance to build a project like the 3,990-unit “urban village” planned for the former Rocketdyne site in Canoga Park.

No local review would be allowed.

This enormous change of policy is about to be slipped through the legislative process with a trick that prevents committee hearings, debate, amendments, and public notice. It will be written on one of the “spot bills” that was passed earlier in the legislative session.

Spot bills are blank pieces of legislation. They are empty, blank, with nothing written on them except a bill number and the words, “A bill related to the budget.”

Later, when a backroom deal is made, staffers pull out one of the spot bills and write the new law on it. Then the “amended” bill is brought back to the floor of each house for an up-or-down vote.

No hearings, no debate, no amendments, no public notice. …

Click here to read the full article published by the Daily News

 

Palo Alto Demands $8 Million To Allow Business to CLOSE

Mobile home parkDid several business-hostile politicians leave Sacramento to take over over the city of Palo Alto? Seems that way to me. After all, who else would demand that a family pay $8 million to close its business over issues that the family had nothing to do with?

“No one should be forced to carry on a business that they want to close,” said Larry Salzman, an attorney with the Pacific Legal Foundation, which has filed a federal lawsuit against the city because of its demand on the owners of a mobilehome park.

“The city is treating the Jisser [family] as an ATM to solve a problem they didn’t cause — the lack of affordable housing in Palo Alto. That’s not just wrong, it’s unconstitutional,” said Salzman.

“The way to make housing affordable in Palo Alto is to build more housing,” Salzman noted. “The city has for decades refused to permit enough housing to be built to meet the skyrocketing demand, and it is now shamefully scapegoating the Jissers for its own failure.”

Palo Alto is ground-zero for California’s affordable housing crisis, where the median home price is a blistering $2.46 million dollars (compared to $448,000 statewide and $180,000 in the U.S.). A May 2015, report by California’s Legislative Analyst Office blames the state’s high housing costs on overly restrictive land use policies, particularly in coastal cities like Palo Alto.

The PLF is representing the Jisser family (Tim, Eva, and their son, Joe) in the lawsuit challenging Palo Alto’s unconstitutional demand that the Jissers pay millions for the right to close their business. The PLF announcement reveals more about the situation:

The Jissers immigrated to Silicon Valley in the 1970s. They made their living running a small grocery store and saved their money to buy the Buena Vista mobilehome park in Palo Alto in 1986. Since then, the Jisser family’s mobilehome park has provided some of the most affordable housing in Palo Alto for more than 30 years.

At age 71, Tim Jisser would like to retire, but the family has been mired in a highly publicized and often acrimonious dispute for years over their right to withdraw the property from the rental market and close their business. Earlier this year, the city gave the Jissers permission to close their business, but only on the condition that they first pay approximately $8 million to their tenants. The payments include rent subsidies for alternative housing for the tenants and the outright purchase of all of the Jissers’ tenants’ mobilehomes at prices reflecting the acute housing shortage in Palo Alto.

In effect, the Jissers are being forced to remain landlords – and to accept the permanent occupation of their land by their tenants – unless they provide their tenants with enough money to ameliorate the city’s notoriously high cost of housing. But it is the city itself that has created the housing shortage that makes it all but impossible for young families and people of modest means to live there.

Palo Alto is ground zero for California’s affordable housing crisis. It is the city that has refused to allow enough homes to be built to meet the skyrocketing demand during the last several decades, which has resulted in high prices.

Represented by PLF pro bono, the Jissers’ case charges that Palo Alto’s staggering financial demand is an unconstitutional condition on the Jissers’ property rights and a violation of the U.S. Constitution’s Takings clause. The Supreme Court has repeatedly said that individual property owners should not be forced to pay for public benefits that, in fairness, should be borne by the public as a whole.

Earlier, the Jissers had put together a relocation package for the low-income tenants that the city through early 2015 deemed adequate.

“It was really shocking—and frustrating, to say the least—that it would cost in the several millions of dollars to get out of the rental business,” the owner’s son, Joe Jisser, said.

More details about the case can be read here.

he Irvine-based Principal of Spectrum Location Solutions helps companies plan and select ideal sites for new facilities across the U.S. and internationally.

This piece was originally published by Fox and Hounds Daily

California: “Land of Opportunity” or “Land of Poverty”?

For decades, California’s housing costs have been racing ahead of incomes, as counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings. This has been documented by both Dartmouth economist William A Fischel and the state Legislative Analyst’s Office.

Middle income households have been forced to accept lower standards of living while less fortunate have been driven into poverty by the high cost of housing. Housing costs have risen in some markets compared to others that the federal government now publishes alternative poverty estimates (the Supplemental Poverty Measure), because the official poverty measure used for decades does not capture the resulting differentials. The latest figures, for 2013, show California’s housing cost adjusted poverty rate to be 23.4 percent, nearly half again as high as the national average of 15.9 percent.

Back in the years when the nation had a “California Dream,” it would have been inconceivable for things to have gotten so bad — particularly amidst what is widely hailed as a spectacular recovery. The 2013 data shows California to have the worst housing cost adjusted poverty rate among the 50 states and the District of Columbia. But it gets worse. California’s poverty rate is now more than 50 percent higher than Mississippi, which long has set the standard for extreme poverty in the United States (Figure 1).

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The size of the geographic samples used to estimate the housing adjusted poverty rates are not sufficient for the Supplemental Poverty Measure to produce local, county level or metropolitan area estimates. However, a new similar measure makes that possible.

The California Poverty Measure                           

The Public Policy Institute of California and the Stanford Center on Poverty and Inequality have collaborated to establish the “California Poverty Measure,” which is similar to the Supplemental Poverty Measure adjusted for housing costs.

The press release announcing release of the first edition (for 2011) said that: “California, often thought of as the land of plenty” in the words Center on Poverty and Inequality director Professor David Grusky, is “in fact the land of poverty.”

The latest California Poverty Measure estimate, for 2012, shows a statewide poverty rate of 21.8 percent, somewhat below the Supplemental Poverty Measure and well above the Official Poverty Measure that does not adjust for housing costs (16.5 percent).

The California Poverty Measure also provides data for most of California’s 58 counties, with some smaller counties combined due to statistical limitations. This makes it possible to estimate the California Poverty Measure for metropolitan areas, using American Community Survey data.

Metropolitan Area Estimates

By far the worst metropolitan area poverty rate was in Los Angeles, at 25.3 percent. The Los Angeles County poverty rate was the highest in the state at 26.1 percent, well above that of Orange County (22.4 percent), which constitutes the balance of the Los Angeles metropolitan area. However, the Orange County rate was higher than that of any other metropolitan area or region in the state (Figure 2). San Diego’s poverty rate was 21.7 percent. Perhaps surprisingly, Riverside-San Bernardcox2ino (the Inland Empire), which is generally perceived to have greater poverty, but with lower housing costs, had a rate of 20.9 percent. The two counties, Riverside and San Bernardino had lower poverty rates than all Southern California counties except for Ventura (Oxnard) and Imperial.

 

The San Francisco metropolitan area had a poverty rate of 19.4 percent, more than one-fifth below that of Los Angeles. San Jose has a somewhat lower poverty rated 18.3 percent (Note 1). The metropolitan areas making constituting the exurbs of the San Francisco Bay Area had a poverty rate of 18.7 percent. This includes Santa Cruz, Santa Rosa, Stockton and Vallejo. Sacramento had the lowest poverty rate of any major metropolitan area, at 18.2 percent.

The San Joaquin Valley, stretching from Bakersfield through Fresno to Modesto (Stockton is excluded because it is now a San Francisco Bay Area exurb) had a poverty rate of 21.3 percent, slightly below the state wide average of 21.8 percent. The balance of the state, not included in the metropolitan areas and regions described above had a poverty rate of 21.2 percent.

County Poverty Rates

As was noted above, Los Angeles County had the highest 2012 poverty rate in the state (Note 2), according to the California Poverty Measure (26.1 percent). Tulare County, in the San Joaquin Valley had the second-highest rate at 25.2 percent. Somewhat surprisingly, San Francisco County with its reputation for high income had the third worst poverty rate in the state at 23.4 percent. This is driven, at least in part, by San Francisco’s extraordinarily high median house price to household income ratio (median multiple). In this grisly statistic, it trails only Hong Kong, Vancouver and Sydney in the latest Demographia International Housing Affordability Survey. Wealthy Santa Barbara County has the fourth worst poverty rate in the state, at 23.8 percent. The fifth highest poverty rate is in Stanislaus County, in the San Joaquin Valley (county seat Modesto), which is already receiving housing refugees from the San Francisco Bay Area, unable to pay the high prices (Figure 3).

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The two lowest poverty rates were in suburban Sacramento counties (Note 2). Placer County’s rate was 13.2 percent and El Dorado County’s rate was 13.3 percent. Another surprise is Imperial County, which borders Mexico and has generally lower income. Nonetheless, Imperial County has the third lowest poverty rate at 13.4 percent. Shasta County (county seat Redding), located at the north end of the Sacramento Valley is ranked fourth at 14.8 percent. Two counties are tied for the fifth lowest poverty rate (16.0 percent), Marin County in suburban San Francisco and Napa County, in the exurban San Francisco Bay Area (Figure 4).

Weak Labor Market and Notoriously Expensive Housing

The original Stanford Center on Poverty and Inequality press release cited California’s dismal poverty rate as resulting from “a weak labor market and California’s notoriously expensive housing.” These are problems that can be moderated starting at the top, with the Governor and legislature. The notoriously expensive housing could be addressed by loosening regulations that allow more supply to be built at lower cost. True, the new supply would not be built in Santa Monica or Palo Alto. But additional, lower cost housing on the periphery, whether in Riverside County, the High Desert exurbs of Los Angeles and San Bernardino Counties, the San Francisco Bay Area exurbs or the San Joaquin Valley could begin to remedy tcox4he situation.

The improvement in housing affordability could help to strengthen the weak job market, by attracting both new business investment and households moving from other states.

Regrettably, Sacramento does not seem to be paying attention. Liberalizing land use regulations is not only absent from the public agenda, but restrictions are being strengthened (especially under the requirements of Senate Bill 375). In this environment, metropolitan areas like Los Angeles, San Francisco, San Jose and San Diego could become even more grotesquely unaffordable, and the already high price to income ratios in the Inland Empire and San Joaquin Valley could worsen. All of this could lead to slower economic growth and to even greater poverty, as more lower-middle-income households fall into poverty.

Note 1: San Benito County is excluded from the San Jose metropolitan area data. The California Poverty Measure does not report a separate poverty rate for San Benito County.

Note 2: Among the counties for which specific poverty rates are provided.

isiting professor, Conservatoire National des Arts et Metiers, Paris

Cross-posted at New Geography.

CA Supreme Court Forces Affordable Housing on Developers

affordable housingMany Golden State developers must now include so-called affordable housing units in their sales plans. The California Supreme Court sided against the builders, who brought a contentious, high-profile suit against municipal policymakers.

“At issue was a 2010 San Jose law that requires some new residential developments to set aside 15 percent of their units for sale at below-market rates,” noted the San Jose Mercury News. “The California Building Industry Association said the city failed to justify the 15 percent requirement and should base any such quota on an assessment of possible negative effects of the market-rate housing.”

But the impact of the ruling went far beyond San Jose city limits. “The League of California Cities and California State Association of Counties estimate more than 170 municipalities have some kind of ordinance on the books,” according to KQED. Officials in Sacramento have also brought attention to the diminishing quantity of less costly urban housing. As the Los Angeles Times observed, the state’s Legislative Analyst reported months ago that California’s housing is among the nation’s most expensive.

Given the court’s protection of the laws, their continued expansion became all but certain in liberal-leaning urban areas. “The decision clears the way for Los Angeles and other cities to require developers to sell a percentage of the units they build at below-market rates as a condition of a building permit. Developers also could be given the option of paying into a fund for low-cost housing,” the Times reported.

In a statement, the Times added, L.A. mayor Eric Garcetti applauded the ruling. “This gives Los Angeles and other local governments another possible tool to use as we tackle our affordable housing crisis,” he said.

A hands-off approach

Describing California’s paucity of cheap housing as a crisis of “epic proportions,” Chief Justice Tani Cantil-Sakauye went well beyond the bounds of San Jose’s set-asides to endorse broad municipal regulatory powers. Cities, she wrote, should “regulate the use of real property to serve the legitimate interests of the general public and the community at large.”

Rather than seeing itself as indulging in judicial activism, however, the court embraced city attorneys’ contentions that its powers simply didn’t extend to pricing rules. “There is no basis for the courts to second-guess the City Council’s considered judgment in adopting an inclusionary housing ordinance as a means to comply with its affordable housing aims,” they argued, according to the Associated Press.

Judicial gymnastics

Behind the hands-off approach, however, the court followed a complex line of legal interpretation. Plaintiffs claimed that San Jose’s “inclusive housing ordinance,” or IHO, amounted to an unconstitutional “taking” of property. Previously, the U.S. Supreme Court had ruled that the possibility of such a taking triggered heightened judicial scrutiny, a stricter standard of interpretation than the city’s attorneys wanted the California Supreme Court to use.

Under heightened scrutiny, a so-called “exaction” imposed by an IHO can only pass constitutional muster if regulators “can establish a reasonable relationship between the amount of a city’s need for affordable housing and the portion of that need attributable to a particular development project,” as the National Law Review noted.

The city admitted that it broke new ground in the aggressiveness of its housing regulations. As KQED noted, “the city side-stepped the usual study showing a relationship between the development of for-sale housing and the city’s need for affordable housing.”

But the court, the Review continued, ruled the set-aside in San Jose’s IHO was not an exaction at all, “because it did not constitute the payment of a monetary fee but rather simply placed a limit on the way a developer may use its property.” Rather than requiring developers to pay money or turn over its property to the public, the IHO placed “a restriction on the property by limiting the price for which the developer may offer certain units for sale.”

Originally published on CalWatchdog.com