Making the Housing Shortage Worse

May 10, 2018 By Charles Crumpley 1 Comment

Rent ControlWe have a severe housing shortage, and last week our mayor said that he’d help make matters worse.

If Eric Garcetti gets his way, rent control could be imposed on far more apartments in Los Angeles and throughout the state. That’d be great for the few folks lucky enough to get a rent-controlled unit. It’d be bad for everybody else.

That’s not a surprising statement. Studies have shown that. Let’s look at one of the latest.

A working paper published in January by the National Bureau of Economic Research examined the effect of a 1994 ballot initiative in San Francisco that slapped rent control on smaller buildings constructed before 1980. Three economists followed what happened to those buildings and compared their fate to similar buildings constructed after 1980.

So what happened? First, there was a reduction in the number of rent-controlled units as landlords decided to convert their buildings to condos or otherwise redevelop their properties. In fact, rent-controlled buildings were 10 percent more likely than the non-rent-controlled buildings to convert, “representing a substantial reduction in the supply of rental housing,” the report said.

Second, there was a 25 percent reduction in the number of renters living in rent-controlled units compared to 1994, largely because of “landlords demolishing their old housing and building new rental housing,” the study said. “New construction is exempt from rent control.”

So there was a drop in the number of rental units as well as a decrease in the number of tenants who enjoyed rent control. No surprise there.

In short, rent control makes matters worse, which pretty much every informed person knows with the apparent exception of Garcetti. What was a teeny bit more surprising was the working paper’s assertion that rent control increased gentrification as well as worsened income inequality in the city.

How so? One of the authors of the working paper, Rebecca Diamond, an assistant professor of economics at Stanford University, was quoted as saying that rent control “pushed landlords to supply owner-occupied housing and new housing – both of which are really the types of housing consumed by rich people,” she said.

“So we’re creating a policy that tells landlords, ‘It’s much more profitable to cater to high-income housing taste than low-income housing tastes.’”

In other words, rent control makes matters much worse.

What’s particularly alarming about last week’s news is that the current move to impose more rent control would make matters even worse than you might expect. That’s because the proposed statewide ballot initiative that would roll back the Costa-Hawkins Rental Control Act (the initiative which Garcetti last week called a news conference to endorse), would not only give cities the green light to allow rent control to be slapped on apartments built after 1978, but it would take the extra step of limiting the ability of landlords to raise rents after one tenant leaves. The way it works now is that when one tenant leaves a rent-controlled unit, the rent can immediately catch up to market rates for the incoming tenant. Rent increases are limited thereafter, until that tenant leaves.

That provision alone is a killer. It would mean landlords would be doomed to falling further and further behind market rates. That means more apartment buildings would not pencil out, and landlords would rush to empty out their buildings, scrape the ground and construct something new – something that’s not an apartment building. We’d see declines much greater than 25 percent in tenants enjoying rent control.

Look, the yearning to do something is understandable. After all, rents have popped up alarmingly and even folks with good incomes are being priced out of homes. But imposing more rent control would only choke supply and make matters much worse.

The real issue is supply. If we had more construction, the shortage would eventually disappear. But for that to happen, developers need to feel confident that they can build with the certainty that they can earn enough income to pay their mortgage and other bills and get a reasonable return. Right now, they can’t. And mayoral endorsements of rent control make matters worse.

 is editor and publisher of the San Fernando Valley Business Journal.

This article was originally published by Fox and Hounds Daily

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The state’s most controversial housing bill in years just died

April 18, 2018 By Matt Levin 1 Comment

Housing apartmentThe most controversial state housing bill in recent memory died with a pretty resounding thud.

Senate Bill 827, which would have forced cities to allow taller, denser development around public transit, got only four votes on the 13-member Senate Committee on Transportation and Housing. Both Democrat and Republican lawmakers voted against the bill.

Authored by state Sen. Scott Wiener, Democrat from San Francisco, the bill would have allowed developers to build five-story apartment buildings near major public transit stops, including neighborhoods previously zoned for single family homes. The bill received a ton of media attention, including a fairly flattering write-up on the front page of the New York Times.

Urbanist “Yes In My Backyard” (YIMBY) groups mourned the bill’s death as yet another roadblock to building the new housing the state so desperately needs. Cities and anti-gentrification groups cheered the demise of what they viewed as an unprecedented inroad on local control.

What to make of all the hubub? Some key takeaways:

Enemies, enemies, got a lot of enemies

It’s tough for anyone to take on cities and counties, who wield enormous power in Sacramento and to whom state legislators often give considerable deference. It’s tough for anyone to take on the construction trades’ union, a major source of campaign contributions for Democratic lawmakers. It’s tough for anyone to take on equity and social justice groups, who can bend the ear of progressive legislators.

It’s really tough to take on all three at the same time. That likely wasn’t Sen. Wiener’s strategy when he first introduced SB 827, but that’s ultimately what helped doom the bill. The support of realtors, developers, YIMBYs and a handful of affordable housing advocates couldn’t muster the votes he needed.

Supporters of the bill arguably made a misstep in not courting social justice groups early enough. A flurry of amendments to protect renters from being displaced and to force developers to include units reserved for lower-income tenants failed to calm their concerns.

Last year, Wiener was able to push through a bill that stripped local control over some housing developments by getting labor and affordability advocates on his side. That bill was also part of a larger package of housing legislation that had something for everyone, including a new revenue source. Gov. Jerry Brown was a driving force behind that package.

None of that that happened this time.

The bill did spark a statewide debate on whether to up density to help remedy our housing crisis

What Wiener was attempting was truly revolutionary. You can debate how dramatically the character of a city would change by building a five-story apartment building next to a single family home. But taking away the power of local governments to block those types of developments was a pretty radical step—a step that a growing number of Californians think is necessary to prevent cities from obstructing new housing.

The bill received a ton of media attention, both in California and nationally. It garnered support from prominent urban planners, environmentalists and civil rights advocates. It’s both cliche and premature to say it shifted the needle on the housing debate. But it certainly framed the conversation squarely around the state’s role in compelling cities to build.

Expect something like this to come back soon.  

Nearly every Democratic legislator who voted against SB 827 caveated their opposition by praising the bill’s vision and audacity. Sen. Jim Beall, Democrat from San Jose and chair of the housing committee, said at the hearing that while he couldn’t support the bill in its current form, he was eager to work on something like it in the months ahead.

Could SB 827 ever rise from the dead? Well for his part, Wiener has vowed to re-introduce something like it in the future. Combining his push for density around transit stations with a broader mix of tenant protections and new funding for affordable housing could make it more palatable to the interest groups Wiener needs to succeed.

This article was originally published by CalMatters.org

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Tech Oligarchs and the California Housing Crisis

April 15, 2018 By John Mirisch 6 Comments

Silicon ValleyLet them pay.

Silicon Valley tech oligarchs are concerned about housing in California.

Let them pay.

Housing prices in the areas of their shiny new tech campuses are skyrocketing to unaffordability for many of the longer term residents and are raising the price of housing for their employees.  As the pro-developer LA Times had to admit, “The housing crunch, particularly acute in Bay Area cities such as San Francisco and San Jose, is a problem that the tech industry helped create by attracting well-paid new workers who can outbid longtime residents.”

So let them pay.

The tech oligarchs are not interested in rent control or rent stabilization ordinances to protect the longtime residents.  They’re not funding efforts to repeal the Costa Hawkins and Ellis Acts, which restrict the ability of cities to rent-stabilize apartments.  They want the housing crisis to be solved by taking zoning control away from cities and by allowing developers to run riot without any municipal controls, under the misguided notion that by building enough luxury housing, affordability will “trickle-down” to the peons.

And so the tech oligarchs are funding “Yimby” (“Yes in my back yard”) pro-developer groups which support Sacramento-mandated levels of density, engineered to maximize profits, overriding the individually crafted General Plans of distinctive communities throughout the state.  Those who see through the true nature of these AstroTurf groups have perceptively tweaked “Yimby” to “Wimby” (“Wall St. in my back yard”).  Not surprisingly, these tech oligarchs and their Wimby/Yimby puppets are the loudest voices in support of Sen. Scott Wiener’s SB827, which would allow indiscriminate densification throughout the state, using “mass transit” as an alibi.  (“Mass transit” as defined by Wiener is a bus four times an hour during rush hour.)

One of the tech CEO’s who is a major donor to one of Yimby groups recently said, “Technology companies have such insane margins that they’re one of the few sectors that can continue to be viable in this environment.”

Of course, tech employees outbidding existing residents, who are priced out of the market, is a major cause of displacement.  Despite some cosmetic changes to the bill as an afterthought to blunt criticism, SB827 cannot avoid all the impacts of gentrification and displacement in its mission to address the needs and desires of the tech oligarchs.

Let them pay.

While one might expect Ayn Rand toting, latte quaffing tech masters-of-the-universe to thumb their noses at concepts like “Community” and “Livability,” especially if they stand in the way of their G-d given rights to profiteer, this position is not as easy to reconcile with the self-styled persona of Sen. Scott Wiener, representing some of the most liberal parts of San Francisco.  It’s downright odd that someone who by rights should be thumbing his nose at the 1% (or in this case, the 1% of the 1%) is freely regurgitating Reaganomic trickle-down talking points; but Wiener, whose largest donor base comes from developers and the real estate lobby, seems to be going the extra mile in making a fair bid to be known as Sacramento’s patron saint of crony capitalism.

Wiener and his cabal of self-styled progressives act as if the “law of supply and demand” is not a variable and disputable economic or sociological principle – or as if induced demand doesn’t exist in a flexible market – but is some kind of immutable natural law, which would put Newton and Kepler to shame.  To have those closer to Marx suddenly embracing Mundell and Laffer is the kind of cognitive dissonance which ordinarily causes heads to explode, and, quite frankly, I’m not sure that hasn’t been the case here.

And yet, considering the tech corporations’ “insane margins” and considering Sen. Wiener’s proven lack of squeamishness when it comes to taxing ordinary Californians (gas tax, anyone?), he should have no problem looking to corporations for major funding to solve the housing crisis which they, in no small part, helped to create.

But then again, the key phrase about Sen. Wiener’s lack of squeamishness when it comes to imposing taxes seems to be “ordinary Californians.”  He has demonstrated he doesn’t have a problem with that, but taxing the “insane margins” of the tech corporations is probably not regressive enough for him.  Ordinary Californians simply can’t spread money around Sacramento the way the oligarchs can.  So when Wiener says, “It’s about damn time that the tech sector started to engage in housing policy,” it sounds perforce like he’s looking towards future campaign donations rather than actual housing solutions.

It also looks like Wiener is less concerned with the implications of increasing income inequality, which plays a major role in the housing crisis.  Rather than try to deal with the problem of income inequality which the tech oligarchs are creating, Wiener and his Yimby cronies attempt to deal with a symptom of income inequality instead of its actual cause.  Let’s tackle housing, not the income inequality creating the housing crisis; and let’s put a target on single-family housing, which can generate untold profits if we upzone it, by labelling it as “racist.”

One would hope that Wiener, whatever wing of whatever party he belongs to, would be interested in dealing with the issue of income inequality, but this is the same guy who said: “I could care less how much money developers make.”  Of course not.  Should we really be surprised that the by-right upzoning of his bill represents one of the single largest wealth transfers from the public to the private sector in California history?  Should we be shocked that Wiener and his self-righteous cronies are doing nothing to address the growing income disparity of ordinary Californians with the tech oligarchs and their “insane margins”?  Is it really surprising that he won’t even begin to think about how all that money he is gifting to developers could be used to help build subsidized affordable housing, for example?

Let the developers pay, too.

One of the many built in fallacies and policy errors within SB827 is its attempt to use mass transit as an alibi to densify.  Public transportation should serve the needs of urban planning, not the other way around.  If Wiener wants to look for causes of the housing crisis to fix, then he should – as the LA Times did – draw the nexus between massive job creation and increased housing demands.  And policy should be determined accordingly.

Consequently, in addition to doing a better job taxing the “insane margins” of tech companies, no massive projects should be approved under CEQA until and unless a concurrent solution for the accompanying housing impacts are dealt with.  This would mean eliminating statements of “overriding considerations” which allow agencies to effectively not have to deal with housing impacts.  It would also mean that the tech corporations would be asked to step up and take responsibility for the problems they are creating, as they create them.

Let them pay.

If, as a result, tech companies threaten to move to Merced or Modesto or Fresno or Victorville – or out of state, for that matter – let them. Economic justice demands not caving to all the demands of the corporate oligarchs.  Economic development needs to be spread throughout the state and throughout the country and encouraging economic development in struggling areas is a good thing.  If the jobs magnet is creating the housing crisis, then part of the solution should lie in job creation in areas in which housing is abundant and affordable.  Instead of trying to cram everyone into a few megalopolises, while the tech oligarchs live in their dachas on massive landed estates, we should literally be working to spread the wealth and share in the “insane margins.”  As much as I love California, I’d also love to see new life breathed into Detroit and other rust belt cities, for example.

At some point we’re also going to have to consider the ultimate implications of the spirals of growth that Wiener and the oligarchs are assuming should be the natural state of things.  Now is as good a time as ever.  The notion of never-ending growth is the very definition of unsustainability.

My guess is that not bending over backwards to kiss the collective tochuses of the oligarchs would be bad for the collective treasuries of the reelection campaigns of a good number of Sacramento politicians, but standing up to the tech corporations and demanding a fair share of their “insane margins” is good policy which would actually make a difference in providing real solutions to our state’s housing crisis.  This is just another reason why we need to embrace the principles of subsidiarity and devolve power from the special interest puppets in Sacramento.

Additional measures to solve the housing crisis include:

  • Repealing the Costa-Hawkins and Ellis Acts, thereby untying cities’ hands and allowing them to implement more effective rent stabilization measures.
  • Bringing back redevelopment agencies, which Sacramento abolished in a massive money-grab, in order to focus on creating affordable housing.
  • Giving cities more leverage in negotiating with corporations for fair-share public benefits, including housing.
  • Empowering cities and local agencies through subsidies to create more subsidized affordable housing; solving the pension crisis (as well as wasteful Sacramento spending) and devoting the resources created in the process to housing.
  • Acknowledging that top-down, one-size-fits-all mandates are not suitable for a state as diverse and wide-ranging as California, instead encouraging regional cooperation and individualized solutions which respect the unique DNAs of California’s diverse communities.

The tech oligarchs’ dystopian vision has been brilliantly exposed by urban scholar Joel Kotkin, who has discussed the implications of densified urban living for workers and plebeians, who are regarded by the tech corporations and the politicians who serve them at best as modern-day serfs.  In attempting to deny the importance of quality-of-life issues (except for themselves) or any concept of living in a community with real community character (because they are believers in profit über alles), the oligarchs and their politicians are dehumanizing the very people they are supposed to serve and who have made them rich.  To them we are only widgets, stats or marks.

Let them pay.

Even if they’re not so good at logic or policy, Yimby groups seem to be talented at chanting.

So here’s a new one for them.  In the spirit of the classic scene in “The Bad News Bears in Breaking Training,” the Yimbys who are truly interested in real housing solutions might want to consider a new chant, directed at the developers, the tech corporations and their “insane margins”: “Let them pay!  Let them pay!  Let them pay!”

 is vice-mayor of Beverly Hills

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New Housing Bill Has People Freaking Out

March 25, 2018 By Matt Levin 16 Comments

Housing apartmentMemes of a mild-mannered California legislator photoshopped as a Star Trek villain. A San Francisco supervisor suggesting the city should sue the state, to “thunderous applause.” Wealthy Marin County homeowners and South Los Angeles tenants’ rights groups working as political bedfellows.

All inspired by a wonky state housing bill that has yet to receive a single vote — and faces tough odds of passing the Legislature.

Senate Bill 827, sponsored by state Sen. Scott Wiener, a Democrat from San Francisco, tries to force cities to build more dense housing around public transit hubs. The bill has received a remarkable level of media attention both within California and nationally, providing fodder for think pieces from Slate, Vox, The Boston Globe, Bloomberg and The New York Times — which called it a “bold, divisive plan to wean Californians from cars.”

That attention has only amplified a loud and acrimonious debate over how the bill would transform California cities. Proponents see the bill as a radical and necessary step for the state to solve its endemic housing shortage and meet its ambitious climate change goals. Opponents see it as a blunt overreach of state power that would destroy the character of local communities while displacing long-established residents so developers could build more luxury condo towers for rich people.

Here are four things you should know about California’s most controversial housing bill in decades:

1) This isn’t hype. If it becomes law, the bill could really revolutionize California cities.

As currently written, SB 827 would essentially exempt all new housing built within half a mile of a train stop or quarter mile of a frequent bus stop from most local zoning rules. So, if a city had zoned an area for single-family homes, developers could invoke the bill to build multifamily apartment buildings between four and eight stories high. It would also free those projects from parking requirements and other zoning rules frequently abused by cities to impede new development.

How much area in major California cities would fall under the bill? That’s what makes this so radical. Preliminary analysis by the San Francisco Planning Department shows that basically all — yes, all — of San Francisco and huge swaths of Los Angeles would lose their local zoning regulations. Ninety percent of San Francisco’s residential parcels would have a higher height limit for new development under the bill.

A more rigorous analysis of just how much developers would take advantage of the bill, and how it would apply to smaller California cities, has not yet been conducted. But the potential is huge.

For decades, urbanists across the state have have longed for the type of density SB 827 would bring. Despite major pushback from some quarters of his home city that San Francisco would become unrecognizable should the bill become law, Wiener has stressed that such density is good for cities like San Francisco, and the most effective way to combat the region’s astronomical housing prices.

2) Many environmentalists love this bill

Proponents of SB 827 say it has two primary goals: 1) to increase the supply of housing and thereby lower housing prices, and 2) to reduce greenhouse gas emissions that cause climate change.

Urban planning academics and climate change activists argue the state can only meet its climate change goals—a 40 percent reduction in greenhouse gas emissions from 1990 levels by the year 2030—if it succeeds in getting people out of their cars and onto public transportation closer to where they work. Alternative energy sources and cleaner-burning power plants can only go so far: The leading cause of emissions nationally is the tailpipe. Building tons of housing in major job centers close to good transit seems like a sensible and necessary solution, they argue.

But at least one prominent environmental group with a tradition of opposing new development has balked at the measure. Angering many climate change activists, California’s Sierra Club has argued the bill would only create more local hostility to future transportation projects and would displace low-income residents.

Anti-gentrification groups argue that communities whose residents have lower incomes are much more likely to ride a bus or take a subway to work than commuters who earn more money. If lower-income residents are exiled to the suburbs as a consequence of the bill, its success at cutting carbon emissions will be muted at best.

Anti-gentrification and tenants’ rights groups not so much

Advocates for lower-income renters and urban communities of color have greeted SB 827 with a mixture of skepticism and hostility. A group of prominent Los Angeles anti-gentrification and civil rights groups signed onto a letter opposing the bill last month on the grounds that it lacked sufficient protections for renters whose apartments could be demolished to make way for newer, bigger, market-rate projects. They also expressed the broader fear that “opening the floodgates” around transit corridors would mean rents around shiny new developments would rise out of reach of current residents.

Wiener has addressed some of those concerns by amending the bill to include fairly strict renter protections. Developers who wish to demolish a renter-occupied unit would have to pay for the moving and living expenses of tenants for more than three years, and renters would have the right to move back into the new development at their old rent.

But the changes have yet to attract broad support from major housing equity groups, who fear the larger gentrification pressures possibly unleashed from the bill. It also didn’t help that backers of SB 827 waited until after the bill’s announcement to try to court those groups’ endorsement.

The bill faces a very tough road in the Legislature — a road that goes through Marin County

Bills that override local zoning control are rarely popular in the California Legislature. Homeowners in many regions of the state are, by and large, not thrilled with the idea of new apartment complexes going up next door over their objections. Homeowners are also more likely to vote than renters—a fact state legislators are acutely aware of.

Cities and counties are stealth power players in Sacramento, and are also not fans of having their zoning power stripped away. Up and down the state, mayors, city council members and county supervisors have come out against the bill, including Los Angeles Mayor Eric Garcetti.

Last year, lawmakers passed a handful of laws that encroached on the traditional zoning power of cities. But that housing package took a herculean effort to enact after years of failure, and importantly included new funding sources for subsidized housing, as well as tenants’ protections that attracted support from a wide coalition of housing groups. And the zoning process changes brought by those laws pale in comparison to what SB 827 could do.

Nowhere has opposition to state interference in local planning decisions been as fierce as in Marin County, an affluent northern suburb in the Bay Area. If the bill is to receive a full vote of the Legislature, it will first have to clear a committee controlled by Sen. Mike McGuire, a Democrat who represents Marin. McGuire could prevent the bill from moving past his desk and receiving a vote.

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Who’s Really to Blame for Orange County’s Housing Affordability Crisis?

March 10, 2018 By Lucy Dunn 5 Comments

house-constructionThis past week, three separate media outlets sought my comment on Orange County’s housing affordability crisis and high-cost of living. The inquiries came on the heels of a host of news stories chronicling sky-high rents, the dismantling of homeless encampments in Anaheim, and the adequacy of wages paid by the county’s largest employers.

These were the questions news folks wanted answered: What is business doing to get more homes built? What is business doing to eliminate poverty? What is business doing to end homelessness?

Let’s get real.

Do we face a growing housing affordability and cost-of-living crisis here in Orange County and throughout California? You bet. Hardworking residents are struggling to make ends meet, and housing costs stand at the center of their paycheck-to-paycheck existence. Orange County Business Council has been arguing this for years and objective data backs it up.

A recent USC Gasden Family Forecast shows the average rent for a two-bedroom apartment in Orange County at a whopping $1,813 a month. For the typical renter, that’s a number that swipes more than half of their monthly take-home pay.

But the problem isn’t a lack of quality jobs or even skimpy paychecks. The problem is a lot of workers in a strong economy chasing too few available homes or apartments. That drives up housing costs and takes more of their paycheck.

Indeed, OCBC’s own Housing Scorecard reports that Orange County needs 65,000 more homes today to meet the housing needs of the people who already live and work here. But get this: Orange County has added only one new home for every 5.26 residents since 2010. And it’s not just Orange County that’s falling down on the job. Anaheim reportedly approved only 8 percent of its low-income housing needs, for example.

The crisis statewide is even more pronounced. A recent report found that more than 500 counties and cities failed to meet their mandated housing goals. So it’s no wonder that California has a housing shortage exceeding 3.5 million homes. That’s what you get when your population has increased every year since 1950, but you’ve failed every year since 1989 to build enough homes to meet the need.

So who’s to blame?

Homebuilders — in an industry that has fueled California’s economy for more than half a century — are as eager as ever to build the American Dream in the Golden State. But here’s the problem: lawmakers, regulators, local governments and anti-development activists — who already own their own home — won’t let them.

Overly restrictive land-use regulations, abuses of California’s environmental laws, local ballot box initiatives that neuter good planning, and city councils that won’t say “yes” are fueling the bottleneck in new-home delivery. Sure, some recent, minor actions were taken by the state legislature to streamline approvals, but ultimately local political leadership controls land use and housing decisions.

The systemic flaws that eat away at the paychecks of Orange County residents and threaten California’s economic prosperity are not caused by business but by the folks you elect to serve you in public office. The role of business is to offer goods and services, and thus create jobs, not to act as a substitute for local government or its elected officials who benefit from the significant tax revenue generated by business.

So here are the questions that need to be asked: What are your elected leaders doing to see that a good supply of affordable housing is built? What are your elected leaders doing to assure the end of homelessness in your community? What are your elected leaders doing to help grow good middle class jobs?

If you don’t like the answers, vote them out.

 is president and CEO of the Orange County Business Council

Originally published in the Orange County Register.

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Without housing fix, Silicon Valley will falter

March 1, 2018 By Chris Reed 2 Comments

Silicon ValleyThree times in the past 18 months, prominent journalistic organizations have questioned whether Silicon Valley has peaked. Leading off the bad-mouthing was the hometown San Jose Mercury News, which reported in September 2016 that tech growth had slowed in the area compared with other regions and noted that Santa Clara County was down nearly 21,000 tech jobs from its 2000 peak.

That was followed by the London Guardian reporting in May 2017 that start-ups were increasingly likely to fail as the tech venture-capital model struggled, and by Bloomberg News reporting in September 2017 that the high cost of housing was leaving thousands of jobs unfilled.

This month, the Silicon Valley Competitiveness and Innovation Project, which is headed by the San Jose-based Silicon Valley Leadership Group, released a report on the region that was at least as bleak as the media accounts. It said Silicon Valley was still thriving and a global leader – but that it was unlikely to maintain its status as the U.S. pace-setter in creating tech jobs unless housing construction sharply increased, to end the upward spiral in rent and mortgage payments. A modest tract house can fetch more than $1 million in San Jose and triple that in wealthier suburbs. Rental costs, even in less affluent neighborhoods, are among the nation’s highest.

“The gap between job and housing growth is large and widening,” stated the report, which defined Silicon Valley as including the city-county of San Francisco, Santa Clara County and San Mateo County.

Many of the key findings were based on comparisons of where Silicon Valley stood in 2010 versus 2016. The study noted there was a 29 percent increase in payroll jobs during that span, but only a 4 percent increase in total housing units. As more people were forced to commute to Silicon Valley, the average commute lengthened by 18.9 percent over the six years.

“An average Silicon Valley commuter now spends 72 minutes commuting per day, round trip. This figure has grown marginally since last year and remains second only to the commute time of New York City workers, who spend 74 minutes commuting,” the report noted.

Region’s population fell despite economic boom

Silicon Valley saw another negative landmark in 2016. Despite a booming economy, the report cited U.S. Census Bureau population estimates showing the region had a slight decline in population.

The downbeat report came as no surprise to one former Silicon Valley resident: Santa Cruz attorney Kate Downing, who resigned from the Palo Alto Planning and Transportation Commission and moved from the city in 2016 because her family could no longer handle Palo Alto’s housing costs. She told the San Francisco Chronicle, “We’re just not building enough housing. More correctly, cities are not permitting developers to build enough housing. … I think more affordable housing would have kept us in Silicon Valley.”

Lawmakers from the region have had some success in trying to make it easier to build homes in California. State Sen. Scott Weiner, D-San Francisco, was the lead author of a bill enacted in 2017 that limits cities with bad records on new housing from preventing new projects that meet basic zoning rules.

This year, Weiner and co-authors Senator Nancy Skinner, D-Berkeley, and Assemblyman Phil Ting, D-San Francisco, have introduced Senate Bill 827. With exceptions, it would make it far easier to build small apartment-condo buildings up to 85 feet in height within a half-mile of a transit center.

This article was originally published by CalWatchdog.com

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Housing bill with $230 million cost estimated to save renters only $20 per month

February 21, 2018 By Chris Reed 2 Comments

Housing apartmentState Sen. Steve Glazer, D-Orinda, and 16 co-sponsors have introduced legislation that sounds like a bold move to address the high cost of housing. Glazer’s Senate Bill 1182 would double the state tax credit for renters. But that turns out to only mean a maximum annual savings of $240.

The last time the rental tax credit was increased, in 1979, it set the credit at $10 per month for an individual filer and $20 a month for joint filers, with eligibility capped by total income. Senate Bill 1182 would increase the cap to $20 per month for individuals and $40 per month for joint filers. To be eligible, individuals have to have gross incomes of $40,078 or less and joint filers have to have incomes of $80,156 or less.

One-bedroom apartments routinely go for $1,700 or more per month in most metropolitan areas and the average home sale is above $500,000 in most of Southern California and over $1 million in the Bay Area. Glazer’s credit would mean that joint filers paying the average rent go from spending $20,160 in a year to spending $19,920 – a 1.2 percent savings. Individual filers paying the average rent would drop from $20,280 a year to $20,160 – a 0.6 percent savings. The percentage savings on a typical mortgage would be much lower.

In his news release announcing the legislation, Glazer noted attempts by the Legislature on many fronts to make it easier to build more housing, starting with streamlining regulations and giving qualified projects guaranteed approvals. He said these efforts could take years before they began helping Californians.

“None of those measures directed relief to the monthly budgets of struggling renters,” Glazer said. “The renter’s tax credit does.”

Three Republicans among co-sponsors

The news release listed these lawmakers, including three Republicans, as co-authors: Sens. Jim Beall, D-San Jose; Steve Bradford, D-Gardena: Bill Dodd, D-Napa; Cathleen Galgiani, D-Stockton; Jerry Hill, D-San Mateo; Ben Hueso, D-San Diego; Connie Leyva, D-Chino; Josh Newman, D-Fullerton; Janet Nguyen, R-Fountain Valley; Richard Pan, D-Sacramento; Anthony Portantino, D-Glendale; Richard Roth, D-Riverside; Nancy Skinner, D-Berkeley; Bob Wieckowski, D-Fremont; Scott Wilk, R-Santa Clarita; and Assemblyman Tom Lackey, R-Palmdale.

Glazer’s office said the higher renters’ tax credit would cost the state $230 million in annual revenue.

There are other restrictions on eligibility for the renters’ tax credit besides income caps, the Franchise Tax Board’s website notes. They include:

– Tax filers need to have paid rent for at least six months for shelter that served as their principal residence.

– The rented property was not on a parcel exempt from state property tax.

– The property was not shared for more than six months with a parent or a guardian or any individual who could claim the tax filer as a dependent.

– The tax filer was not a minor living with a legal guardian, parent or foster parent.

Glazer, 60, a former political and development consultant and aide to Gov. Jerry Brown, won a May 2015 special election to fill the final 19 months of Mark DeSaulnier’s state Senate seat after DeSaulnier was elected to Congress in 2014. He won a full four-year term in 2016.

This articles was originally published by CalWatchdog.com

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Using ‘tiny homes’ to address housing crisis

February 4, 2018 By Chris Reed 6 Comments

Tiny-Home-Under-Construction-640x360Sacramento has become the latest city to consider responding to California’s acute housing crisis with “tiny homes” – small, prefabricated studio homes with bathrooms and built-in hook-ups for electricity and water.

In an era in which $2,000 apartment rentals, $600,000 homes and $300,000-plus “affordable” public housing units are normal in the Golden State, the appeal of housing that can cost as little as $40,000 per unit is obvious to government leaders dealing with growing homelessness and increased fears that expensive housing will make it difficult to attract needed workers or drive them away.

Sacramento Mayor Darrell Steinberg last month proposed spending $21 million to help pay for the addition of up to 1,000 such homes – from prefab 300-square-foot modular homes to container units that could be set up inside warehouses. Steinberg offered the proposal as the centerpiece of his agenda to respond to his city’s homelessness problem and suggested that public housing vouchers could be used for construction costs.

“It’s all in our grasp,” the mayor said in his annual State of the Downtown address. “Public funding, private funding, tangible goals, public accountability and a community commitment to whatever it takes to make this homeless problem better in Sacramento.”

Sacramento only added 235 housing units in its central city in 2017, according to the Sacramento Bee. The newspaper also recently reported that in one eight-day stretch in January, nearly 35,000 residents got on the waiting list for public housing vouchers, formerly known as Section 8 vouchers.

San Jose, Fresno, Clovis see potential in housing alternative

Some other local governments in California pursuing “tiny homes”:

San Jose – In December, the City Council voted 9-2 for a $2.3 million “tiny home” pilot program in which 40 homes would be built in one location. If the project works out, officials hope to add “tiny home” villages in each of the 10 City Council districts, the San Jose Mercury-News reported.

The cost of the first 40 homes is $73,125 each – a pittance in the metro area which in 2016 became the first in the nation to have homes cost an average of more than $1 million, according to the National Association of Realtors.

Fresno – In 2016, it became one of the first cities in the nation to formally encourage “tiny homes” when a law took effect. “The pint-sized houses on wheels – complete with kitchen, living room and loft – are now considered backyard cottages thanks to changes in the city’s zoning and development code,” the Fresno Bee reported. “That means tiny homes can be used as independent living quarters on the same lot as a single-family house granted it meets some requirements. Previously, the mobile units could only serve as temporary lodging.”

The 270-square-foot model pre-approved by the city is built by a Fresno firm. Prices start at $45,000.

Clovis – In June, in interviews with the Fresno Bee, city officials touted a long-term development plan for the city’s Old Town that sees “tiny homes” of no more than 400 square feet build in residential alleys as the key to its revitalization.

City officials are working with a local builder to develop three models with designs that are pre-approved by the city and are available for free to the public. The city believes the “tiny houses” would cost about $50,000 on average, according to areport from Fresno County’s ABC 30 News.

Perhaps the American city farthest down the road in embracing the small housing approach is Boston. In 2014, Boston Mayor Martin J. Walsh launched a Housing Innovation Laboratory. City officials have developed a prototype called an Urban Housing Unit, or Uhu,  a 385-square-foot modular apartment. The prototype, which may cost as little as $40,000 to manufacture, is pictured above.

This article was originally published by CalWatchdog.com

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California had 77 of the country’s 100 most expensive ZIP Codes for home sales last year

January 17, 2018 By Jack Flemming 1 Comment

A year-end report from real estate database PropertyShark has confirmed what every Angeleno already knows: California is a really expensive place to live.

The analysis, which surveyed the priciest ZIP Codes in the country based on median home sales prices, found that California holds 77 of the 100 most expensive spots, including five in the top 10.

New York came in with the second most ZIP Codes at 19. No other state had more than two.

Topping the list of most expensive ZIP Codes was 94027 in Atherton, Calif., a Silicon Valley city full of tech executives, which had a median sale price of $4.95 million, according to the data.

The 10013 ZIP Code of New York, home to the high-priced luxury condos of Tribeca in Manhattan, saw a median price of $4.1 million. In Miami Beach area, the 33109 ZIP Code the median was $4.052 million. …

Click here to read the full story from the L.A. Times

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Progressive Cities: Home of the Worst Housing Inequality

October 18, 2017 By Wendell Cox Leave a Comment

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.

 a is visiting professor, Conservatoire National des Arts et Metiers, Paris

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