By David M. Greenwald
Executive Editor
In his recent column, Tom Elias takes shots at Sacramento Democrats who have been attempting to alleviate the housing crisis through housing density laws like SB 9 and SB 10.
He noted, “The two earlier laws – which may face a referendum to cancel them in the 2024 election — have so far had little effect.”
He writes, “But it’s not happening on a large scale, very possibly because the state housing shortage estimates they were designed to mitigate probably are nowhere near accurate. The actual housing shortage appears to be far smaller than levels claimed by the state Department of Housing and Community Development (HCD).”
Elias takes advantage of the moving target as well, noting that in 2018 Governor Newsom campaigned hard for 3.5 million new units by 2025—noting “fewer than half a million have actually been built on his four-year watch.”
He continues, “Newsom now says just 1.8 million new units are needed, half what he claimed four years ago. And a springtime report from the non-partisan state auditor found HCD figures lack solid documentation, suggesting the real need may be far lower than even Newsom’s latest numbers, which he proffered without any documentation.”
Elias of course makes no allowance for what has taken place over the last four years or the fact that housing estimates were always just that—estimates, and that we are trying to hit a moving target during perhaps one of the most volatile times in our history.
Elias apparently did not read the reports out of the Terner Center at Berkeley that predicted that SB 9 would only have a modest impact—not because the demand was not there, but because of construction costs.
“Yet, the likelihood of creating new housing and homeownership opportunities as a result of SB 9 largely depends on local context,” the 2021 report out of Terner wrote. “While Senate Bill 9 does not apply to single-family parcels in historic districts, fire hazard zones, and rural areas, local market prices and development costs play a large role in determining where there is financial viability for the addition of new homes.”
This analysis on the impact of SB 9 “finds that SB 9’s primary impact will be to unlock incrementally more units on parcels that are already financially feasible under existing law, typically through the simple subdivision of an existing structure.”
However, in contrast to fears by many homeowners: “Relatively few new single-family parcels are expected to become financially feasible for added units as a direct consequence of this bill.”
Thus they conclude: “While this analysis does not attempt to measure the actual rate of uptake for adding new units to single-family parcels, it is reasonable to assume that SB 9 will modestly accelerate the addition of new units relative to the status quo by facilitating access to conventional mortgage products for multiple households able to purchase homes on newly subdivided single-family parcels.”
The study found that “the vast amount of single-family parcels across the state would not see any new development,” said David Garcia, policy director at the Terner Center, which supports the bill.
This analysis was a huge reason why I never bought into the idea that SB 9 would solve the housing problem and it is also why I always believed the alarm about the death of single-family neighborhoods was overstated from the start. I supported it because it makes sense to allow for more dense neighborhoods going forward.
Last week, we covered a new study from Berkeley which showed that, while housing advocates have embraced density as a means to alleviate housing demand, current zoning, the report shows, suggests that the region is not ready to go that direction. At this point, more than three-quarters of all land zoned for housing is zoned only for single-family housing.
One of the findings of the report is the correlation between higher levels of single-family zoning and higher levels of segregation in a municipality. In another study that Elias apparently either did not read or does not understand, one reason why SB 9 has not had much impact is that only five percent of the state’s parcels fall under SB 9.
“What we really need to be able to do is take two single-family home parcels and allow a two-story, 12-unit building on them,” said Stephen Menedian, one of the report’s authors told the Business Journal this week. “We’re not talking about towers.”
Instead, Elias takes aim at the current proposal, AB 2011, which purports to build Affordable Housing.
He quips, “This proposed law, titled the Affordable Housing and High Road Jobs Act of 2022, offers no explanation of what a High Road job might be, except that any building under its auspices would require that all labor be paid union wages — in short, the highest in the construction industry.
“No wonder several under-construction affordable housing projects are coming in right now at more than $1 million in building costs per unit.”
As the Vanguard has attempted to explain, the law has attempted to streamline the building of affordable housing and doing it with the support rather than the opposition of labor.
The cost of building one unit of affordable housing has little to do with the cost of labor, which generally avoids such agreements and everything to do with the high cost of construction, the supply chain problems, the land costs, and of course the restrictive zoning and potential road bumps in the planning process.
Elias concludes this piece: “The flaws in SB 9, SB 10 and other densifying measures that did pass were just as evident as those afflicting the newest proposal, yet they passed handily and Newsom signed them into law. So what’s to stop this one, too?”
The problem, of course, is Elias has no solution for housing problems other than to suggest that one might not exist.
It’s a joke that anyone believes there is no housing crisis. It’s only going to get worse with the economy pricing people out of home buying.
Please be clear… does “housing crisis” mean “home buying crisis”?
I see the two as different, but like a Venn diagram, somewhat related. There are overlaps, but not “same”…
I opine that folk NEED shelter/housing… that is paramount… pretty much a ‘right’…
I opine home ownership, is NOT paramount, nor “a right”… particularly if someone expects that whatever choices they make, it is “affordable” in their terms (given their choices).
Please be clear, as your post conflated “housing” with “ownership”… [and yes, I still abhor the word ‘conflated’… but am slowly understanding where it might be appropriate]
FYI – I just saw this article from the NYT – https://www.nytimes.com/2022/07/23/business/housing-market-crisis-supply.html?smid=nytcore-ios-share
Here’s one of the most cogent articles I’ve seen to date on the root causes of the housing crisis. (Sorry, David, but high labor costs is identified as a key problem.) The expense of affordable housing is highlighted as an impediment.
https://www.theatlantic.com/newsletters/archive/2022/07/building-house-expensive-market-inflation-nimby/670596/
I’ve had some email exchanges with Elias over this issue in the past. He (along with Joe Kotkin at New Geography) view single family homes on a large lot as sacrosanct. Elias’ pet solution is to convert multi-story commercial space to apartments. However that’s much easier speculated about than done:
https://www.nbcnews.com/business/real-estate/why-empty-offices-aren-t-being-turned-housing-despite-lengthy-n1274810
https://sfstandard.com/housing-development/turning-downtown-offices-into-housing-isnt-the-solution-you-think-it-is/
https://www.sfchronicle.com/business/article/S-F-has-nearly-16-million-square-feet-of-vacant-16051240.php
But not necessarily what Elias was talking about: “ The construction sector hasn’t hired enough people to keep up with housing demand in this century. Nearly one-third of construction laborers—and an even higher share of painters and paperhangers—are immigrants. But thanks to anti-immigration policies and the pandemic, annual immigration to the U.S. has fallen from about 1 million to 250,000 in the past five years. What’s more, the housing crash wiped out all sorts of specialists. Since 2006 in California, the number of tile installers, carpenters, and rebar workers has declined by 23 percent, 30 percent, and 52 percent, respectively.”
Interesting reading. A couple of takeaway quotes:
Kotkin is a pragmatist. As such, he’s sure to butt heads (and has) with urbanists. He definitely called one trend accurately over a decade ago: the increase in sales of single-family detached homes for multigenerational households:
1980: 12%
2008: 16%
2018: 19%
The vast majority of American home buyers prefer to live in detached, single-family homes. But they may be willing, or even prefer, to have grandma and their college kid live with them. Planning for that kind of density, as well as aging in place and for a sufficiency of rental housing, is going to be important.
First Kotkin hides behind his “pragmatism” to shield his reactionary stances and his denial of the reality of the climate change threat. (I’ve seen his stuff for years.) I always read any of his analyses understanding that his underlying perspective is there. I often agree with the problems that he’s identified, but his solutions are usually off base and appeal solely to the selfish of individuals as somehow being the correct path forward. Of course that selfishness is what has gotten us to the multiple crises that we currently face.
The reason why multi-generational households are increasing is not a preference–it’s a symptom of both the housing crisis and the growing wealth gap. Younger people can’t afford to buy a home buy themselves, and even renting near a job center is challenging. (Moving to a lower cost place without jobs will not solve the problem–businesses don’t follow population, it’s the other around.) The same is true for elders living with their children–the combination of longer lives, higher elder care costs and housing prices rising faster than median incomes forces families to live together. Property tax rules like Prop 13 also encourage elders to stay too long in houses that are too big which decreases the supply of family sized houses, reinforcing the supply shortage and higher prices. (A recent study found that the average stay in a purchased house in California has risen from 7 to 12 years due to the impact of Prop 13. In 2000 I calculated that Prop 13 had added a 15% premium to California house prices because owners had to be bought out of their property tax break–it’s probably larger now.)
There are many reasons given for adopting multi-generational housing. The fact that people are seeking, buying, and/or remodeling homes for this purpose in ever-increasing numbers indicates that it has benefits that make it desirable for many. It’s also worth pointing out that it’s always been much more common in cultures other than WASPs.
Multiple generations living together in single-family housing is a trend with many positive attributes. It reduces poverty, provides continuity of child-care and elder-care, allows seniors to age in place, preserves family wealth, builds cohesive neighborhoods, and makes more efficient use of housing. This trend is likely to accelerate and should be factored into urban planning more effectively. To say that “it’s not a preference” is simply not evidence based.
https://www.pewresearch.org/social-trends/2022/03/24/financial-issues-top-the-list-of-reasons-u-s-adults-live-in-multigenerational-homes/
The Davis housing market is complex and unique to the region.
Over many years I did hundreds, probably thousands, of home visits for garden and landscape consulting. For a long time we didn’t charge for the service so I actually went to a lot of middle-income houses and yards, and even to mobile home parks and duplexes and quadplexes.
Examples:
Family that owned one of the Chinese restaurants in town. Mom bought two houses next to each other, tore out the fence, and made it into a big family compound. Kids ran back and forth between the two houses, and grandma took care of them while mom and dad ran the restaurant.
I saw multiple cases where Mom or Dad was living with a young family, often in a separate wing of the house, and especially in cases where the parents were new to this country.
Most perplexing to me: a couple that bought a house because their son was going to attend UCD. That’s not uncommon at all, but then
they moved here with him (dad worked from home, apparently). Fixed up the landscape, enjoyed the Davis community, then came in after four years to say goodbye since he was graduating and they were all moving back to So Cal. Together. I really wanted to take that young man aside and ask how he felt about all that.
I’ve occasionally encountered people who literally retired here. That is, they researched ‘great places to retire’ and decided to move here, usually because of the cultural opportunities provided by UCD, the proximity to the Bay Area and the mountains, etc. More commonly, though, older people that I met who moved here late in life did so to be closer to their families.
Don
Yes, it’s both reasons, although I think the current trend is driven more by the pressures that I’ve listed than the preferences (which are very laudable) that you’ve listed. Having a sufficient housing supply so we reduce the pressure could make the second one more desirable.
I don’t understand the reason that David continues to cite articles (such as the one he “built” an entire response around), without providing a link to them:
https://thecoastnews.com/elias-facts-dont-matter-to-californias-densifying-democrats/
At this point, I’m no longer consistently voting for Democrats. Though I’m also not voting for Republicans. Not that my single vote matters, anyway.
In any case, here’s an interesting tidbit, from the Elias article (regarding AB 2011):
If everyone thought that (and too many do) we would be in a deeper world of “hurt”, as it is an excuse for not voting… [and for many, using it as an excuse for whining about the outcomes… my ears “are closed” to those folk]
I say, yet again, if you are eligible to vote, but don’t, FU, if you whine about the outcomes…
I will seldom, if ever, suggest HOW someone votes… but, if eligible, and don’t, “don’t cry to me …”
If eligible, please register (if not already) and vote. Unlike some, I’ll accept the results of a vote, even if it prompts me to ‘gag’… [why I could never be the President, or ex-]
Your calculation is meaningless, especially since Proposition 19 now enables homeowners to transfer their low property taxes anywhere in California, now. (Certainly can screw-over their millennial kids, though – due to the other part of that proposition.) Overall, the result is a massive tax increase for the state. It was sponsored by the California Association of Realtors (CAR), in hopes that it would increase turnover (and their own profits). Partly from current homeowners taking advantage of the transfer, and partly from “forcing” sales for subsequent generations of family homes – due to the new restrictions regarding the ability to transfer property taxes to the children of homeowners. Essentially “pricing out” children of “family homes”, depending upon the circumstances.
Indeed – that’s how Asian families in particular have built wealth in places like San Francisco.
How would you “expect” him to feel about all that? (Seems like you have something in mind.)
And in regard to Proposition 19, it’s not just children (who might want to occupy a “family home”) who will be impacted. For example:
https://www.ocregister.com/2022/02/17/repeal-proposition-19s-death-tax/
There’s one of your reasons for “high housing costs”, going forward.
This proposition (which was approved in late 2020) is probably the least-understood (which was no “accident”), sneaky, and manipulative propositions to ever come down the pike. And don’t count on the corrupt legislature to fix it – though they (sort of) did regarding “family farms” – due to the influence of the farm bureau.
And it still doesn’t address the massive tax breaks enjoyed by most commercial property owners, due to Proposition 13. A similar measure barely failed on that same ballot, by approximately the same percentage that approved Proposition 19. (Something like 51 to 49 percent.) What do you suppose that Disneyland, for example, pays in property tax?
Ron O
Your analysis of Props 13 and 19 are incorrect (especially since I’ve had to dive into this for my own family situation). Prop 19 just scrambled around the tax burden chairs–the net effect will be minimal. While it may have increased likelihood of home sales upon death it doesn’t preclude children continuing to live in those homes. The previous loophole was being exploited significantly by the wealthy (see the stories on the Bridges family). However, the compromises in Prop 19 just shifted who gets the wealth transfers now. The overall tax collection will remain about the same.
The OC Register is a conservative newspaper that supports continued wealth transfers to the wealthy (since you’ve opened up the discussion about who the messenger is.) Those properties held by small landlords most likely have not been owned long enough to accrue a large property tax deficit. The reassessment is likely to be minimal. The Brinley property downtown was the exception, not the rule. (Commercial properties, which includes rentals, are transacted much more often than residential ones.)
That all said, the problem with Prop 13 is that it impacts not only the elderly but other home owners who stay in their homes longer than they would if they didn’t have to buy out someone else’s property tax break. Prop 19 does almost nothing for that. Estate sales and passing of family ownership are a tiny minority of real estate transactions.
So again, Richard: your claim (as follows) regarding this is factually incorrect in light of Proposition 19:
Proposition 19 totally negates this. And yet, you (now) claim to “dived into” this.
Again, if you actually “dived into this”, you wouldn’t be making this claim. At least, not with a straight face.
This is factually incorrect. Even the ballot statement itself noted this. It is not my “opinion”.
https://ballotpedia.org/California_Proposition_19,_Property_Tax_Transfers,_Exemptions,_and_Revenue_for_Wildfire_Agencies_and_Counties_Amendment_(2020)
But going back to your original claim – Proposition 19 enables homeowners to transfer their (low) property tax to another property. As such, your initial claim no longer applies (assuming it ever did in the first place). Again, fact – not opinion.
Facts… not opinion…
Leslie Graves – SourceWatch [biased opinion?]
Proposition 19 [Ballot] (ca.gov)
Your “source” [biased opinion?] raises questions… the law is the law…
Any one is welcome to “drill down”…
I believe that Richard is far more “on the mark” than you, Ron O…
Again, Richard claimed the following:
Given that Proposition 19 has completely negated this – due to the ability to “transfer” your current property tax, what part are you “agreeing” with him on?
What do you expect me to “search for” in your links, which would dispute this fact?
Again, Proposition 19 totally eliminated the “break” that homeowners receive by staying not moving. They are now free to move, and bring their low property tax with them – anywhere in California.
Again, just to be clear – are you disputing this basic fact?
The “premium” that Richard describes above (which is totally unsupported in the first place) no longer applies (assuming it ever did). For that matter, I can make up numbers and percentages, as well.
As far as the net increase in taxes (which isn’t even related to Richard’s initial claim), do you also “disagree” with the following?
https://www.hjta.org/news-events/taxing-times-online-fall-2020/politicians-seek-a-billion-dollar-tax-increase-with-proposition-19/
I already posted the actual ballot reference, as well.
You can see for yourself how this works on the Board of Equalization website. Again, this measure allows current homeowners to transfer their low property tax anywhere in California.
There is no property tax incentive to “remain in place”, anymore. As such, Richard’s “calculations” are irrelevant. And since he claimed to have looked into this for undisclosed personal/family reasons, it’s difficult to believe that he doesn’t already know this.
https://www.boe.ca.gov/prop19/#FAQs
Again, this proposition was heavily-promoted by the California Association of Realtors. They hope to benefit from two different situations:
1) Current homeowners who are no longer “penalized” for moving.
2) Those who inherit property from their parents, but are forced to sell due to an enormous increase in property taxes – starting on the day that their parents die. (With exceptions as noted on the BOE website.)
Overall, the restriction of generational property tax transfers (for children) is expected to “outweigh” the benefit that current homeowners (e.g., parents) will receive as a result of this measure. That’s why it’s expected to generate significant net revenues for the state, over time. In effect, this proposition greatly reduced the “value” of Proposition 13, and will ensure that more property (housing) is subject to more tax, over time.
Since the tax is attached to housing, this makes housing itself more expensive. There will be a net increase in total taxes extracted from housing, over time.
Here’s an article which describes the involvement of the California Association of Realtors, in pushing for this measure. Again, the reason for their interest is because they believe it will increase both types of “turnover” (real estate transactions) described above.
https://www.dailynews.com/2020/10/31/misleading-campaign-efforts-to-get-californians-to-back-tax-increases/