As I have laid out in my most recent series of articles on housing – I have increasingly lost faith in the ability of our state and local leaders to address the housing crisis.
There was a pretty good op-ed in the OC Register this week from Ricardo Flores, executive director of LISC San Diego and Konstantin Hatcher, senior director of community impact at California YIMBY.
The editorial writers are once again calling on lawmakers to remove “the chokehold of single-family zoning.”
They note that “The median price of a home in California is now nearly $1 million.”
They argue that “Much of this insane cost of housing is actually not the house itself, but the land beneath it.”
This is where it gets interesting to me.
“Land value is not inherent to a piece of dirt; it grows from all the valuable things that are happening around that land – in the case of cities like San Diego, Los Angeles, Long Beach, and others, that value is the sum total of good-paying jobs, great schools, cultural amenities, theater, arts, restaurants, beaches, mountains – all the things that people would pay good money to have in their community,” they continue.
There is an important point raised here – and that is land costs, which are driven by the combination of demand and scarcity – have greatly driven up the cost of housing. I think they downplay the cost of construction, which is also a big problem for producing affordable housing – both big “A” and little “a”.
“Strict zoning that prohibits the construction of more homes on existing parcels of land has forced more of our neighbors to leave,’ the op-ed continues.
Now they make the argument that, “the restrictions can launch a vicious cycle, as local governments lose out on the increased property tax revenues that would result from allowing more homes on large residential parcels.”
The editorial then argues these rules block the construction of entry-level homes that working families can afford and it also leads to “segregation and exclusion.”
While I think the op-ed raises a number of important points, it paints to simplistic a picture here.
There are people in our community who argue that we don’t need to add more “unaffordable” homes – which includes the median market rate homes that are pushing over $900,000 and towards $1 million in our community.
But the problem is how do we get there? We know that SB 9 and SB 10 have not really ignited the building of multifamily housing.
Part of the problem is that it is hard to build a market rate home that will sell in a place like Davis that someone will want to buy. Some of that is due to issues like land costs, costs of construction, and impact fees, but some of that is the fact that for what you can buy in Davis at a reasonable price, you can buy something larger and nicer in neighboring communities.
The authors of the piece are arguing that legislation like SB 1123, “will make this process faster and easier by legalizing and streamlining the process of building up to 10 homes on vacant lots in single-family zones near jobs, schools, transit, and other amenities.”
They add, “In other major US cities, homebuilders have already shifted their focus to smaller residential parcels to meet this pent-up demand for affordable starter homes, like bungalow courts or townhouses.”
While those are necessary, they may not be sufficient to drive a new more affordable market.
That’s one reason I was disappointed to see an affordable housing bond measure in the Bay Area get pulled off the ballot for November.
It is a huge setback.
As noted, “This setback follows four years of effort by housing advocates and local officials who had hoped to leverage high voter turnout during the presidential election.”
Given the high cost of building housing – especially affordable housing – we need a funding mechanism to help subsidize costs to make the housing more affordable. I don’t think can or will be solved simply by incentivizing more multifamily housing in the forms of duplexes, townhomes, and other starter homes.
I think we need to find a way to finance this house and make it more affordable to the average working family – and that is one area where we just have not made enough progress on yet.
“Part of the problem is that it is hard to build a market rate home that will sell in a place like Davis that someone will want to buy. Some of that is due to issues like land costs, costs of construction, and impact fees, but some of that is the fact that for what you can buy in Davis at a reasonable price, you can buy something larger and nicer in neighboring communities.”
David you have made similar statements in the past, and I still think this point misses the point.
1). There is zero vacancy in Davis. We have ZERO reason to believe that ANY unit of housing we produce wont be occupied.
If we keep in mind the fact that the size of our incoming commuting populace is on the order of 23,000 per day, we also have no reason to believe that our unmet housing need will be satiated anytime soon
2) The scenario you raise of somone choosing not to take the option of living in davis because they can afford somethg larger farther away assumes that everyone would make that choice, but it really isn’t true. If I were renting in woodland and had an opportunity to live closer to work and OWN a smaller condo here.. I would make that choice in a heartbeat.
I know people who work as university staff who commute from Yuba city. I have a family member who drover her daughter to davis from Rio linda so she could go to DHS, All of these people are migrating, some pretty extreme distances, because they cant afford to live here.
Some might accept that commute ( which hurts all of us of course with tailpipe emissions and traffic). And some might make the move.
Again with 23,000 such inbound commuters, and only ~2,500 housing units on the docket in our best measure J scenario… Again there is NO danger that the housing wont be filled.
The larger danger is that we build these projects as is: Too expensive for this commuting population, but attractive to sacramento workers who want to commute outbound. That doesn’t help anyone but the developers.
So my position is this, and its not the first time Ive said it: Lets build NOTHING but missing middle, denser forms of housing, and do that UNTIL we start to see some levels of vacancy in that housing supply segment. THEN we can start to consider other forms of housing based on market demand.
Lastly, I would state that we have no civic obligation to produce housing that is bad for our community. We have incredible demand for affordable types of multifamily housing, and multifamily housing is actually GOOD for our city financially, which single family is not ( see: the strong towns housing ponzi scheme)
We can get Capital A affordable along WITH little-a affordable. Look at the sterling apartments… Same can happen if those student apartments were family-oriented apartments, or condos, or a co-op. For now, that is all the funding mechanism we need right?
We need a better means of negotiating zoning/density with developers. The Measure J/R/D leaves with a “take or leave it” process rather than an iterative negotiated one. This is similar to how the single member district system has led us to the two-party system which has resulted in a highly partisan environment. Requiring black or white outcomes will lead to undesirable outcomes where we need gradations. Why would a developer agree to project concessions if they calculate that they won’t change the chance of approval?
David has been writing “housing crisis” articles for a lot of years. The number of those articles is almost too large to count. However, this article is different. Instead of throwing out slogans and/or hyperbole, this article actually gets to the nub of the problem … funding.
The article also provides some interesting numbers, with the editorial writers saying, “The median price of a home in California is now nearly $1 million” and the article noting that our Davis community has “median market rate homes that are pushing over $900,000 and towards $1 million in our community.” NOTE: Zillow reports that the “average home price today in Davis is $895,388. The median home price is almost surely lower than the average given the very high sales prices of the most expensive homes in Davis. What that means is that if both statements are correct median home prices in Davis are lower than median home prices Statewide.
However, neither “nearly $1 million” nor “pushing over $900,000 and towards $1 million” qualify as little-a affordable. That brings me to Tim Keller’s comment above. I believe he is spot on. Further, looking at Darryl Rutherford’s comment earlier this week, Tim Keller’s approach is actually a way forward economically as well. Darryl sad the following in his comment, “Our tax revenue challenges can clearly be linked to the lack of diversity in this town. The communities who continued to thrive during economic recessions are those who have a very diverse population of race, incomes and affordable homes to live in. If we continue to be such an economically homogenous community we’re going to continue to have these fiscal challenges. If we create a healthier economically diverse community we will see a healthier fiscal situation.
That brings us back to the point of the article … funding new housing. As long as we continue to follow the historical funding method of having the developers build 85 unaffordable houses (with median sales prices higher than the numbers in the article) in order to get 15 affordable houses we will continue to be a homogenous community with de facto discriminatory barriers to achieving a more healthy, resilient, equitable and sustainable community.
This is a societal proble, and we need societal solutions.
“as we continue to follow the historical funding method of having the developers build 85 unaffordable houses (with median sales prices higher than the numbers in the article) in order to get 15 affordable houses we will continue to be a homogenous community with de facto discriminatory barriers to achieving a more healthy, resilient, equitable and sustainable community.”
That sounds good…
Problem 1: How do you get to a new funding method?
Problem 1a: One of the reasons we got where we were is we stopped building sufficient new housing which helped drive up the cost of the median home to the point of unaffordability.
The point of my article is to understand that the market forces need help if we are to build housing that is more affordable.