Friday, March 30, 2018

California’s housing crisis and the density delusion

California’s housing crisis and the density delusion

Joel Kotkin and Wendell Cox
PUBLISHED: March 10, 2018 at 8:30 pm | UPDATED: March 11, 2018 at 11:46 am

Construction workers make their way across a scaffold, facing the Los Angeles City Hall, left, during a hard-hat tour of a half-completed museum, "The Broad" in Los Angeles on Tuesday, Sept. 17, 2013.

Once seen as a human-scale alternative to the crowded cities of the past, California’s cities are targeted by policy makers and planners dreaming of bringing back the “good old days,” circa 1900, when most people in the largest cities lived in small, cramped apartments. This move is being fronted by well-funded YIMBYs (“yes in my backyard”), who claim ever greater densification will help relieve the state’s severe housing crisis.

The goal, as stated by one YIMBY journalist, is startling in its retroactive boldness. “Getting people out of their cars in favor of walking, cycling or riding mass transit.” notes Liam Dillion, “will require the development of new, closely packed housing near jobs and commercial centers at a rate not seen in the United States since at least before World War II.”

Besides being ahistorical — this kind of housing was restricted to the urban cores a few of the largest metropolitan areas — many residents of these districts, including in California, gleefully abandoned this lifestyle for a more private, lower-density and family friendly lifestyle as soon as it became practicable. In fact, millions of people moved here from crowded cities, small towns, rural areas and other countries to enjoy this lifestyle.

The density delusion

The density-seeking measures such as state Sen. Scott Wiener’s highly contested SB827 seek to dismantle local zoning to boost densities, allegedly to address state’s housing affordability crisis. High density housing is far more expensive per square foot to build than townhouse or single-family construction. Nearly all the new market-rate housing built in the state is “luxury” by middle-income standards, and more expensive than what it replaces.

In reality, the YIMBY’s suggestion that new, dense housing will improve affordability for all is patently absurd. Decades of densification in Los Angeles has seen ever higher rents, displacing low-income, especially minority households. Many former transit customers have been driven to lower-rent areas with less transit service, precipitating a massive decline in ridership, even as billions continue to be spent building new rail lines. The Wiener Bill could exacerbate this trend, and likely increase the need for low-income housing, already well beyond the capability of public coffers.

Nowhere, here or abroad, has densification materially improved housing affordability, whether for low income households or the larger number of middle-income households. Density-oriented policies have helped drive prices up so high that Bay Area, $200,000 salary engineers cannot afford a home near their headquarters. In the meantime, many young families are increasingly leaving the state for less heavily regulated and less expensive states like Texas, Nevada and Arizona. Among those under 35, 80 percent of all homes purchased nationwide are single family houses and virtually all surveys of millennials express an overwhelming desire for this kind of residence.

Crowding to save the planet

Planners and most academics, including many conservatives, have long favored densification policies, but concerns over warming now serve as the densifiers “killer app.” This claim to improve the environment is also largely specious. Even the pro-density UC Berkeley Termer Center, acknowledges that virtually banning urban fringe development will account for barely 1 percent of the proposed state GHG reduction by 2030 — a pittance for polices that could drive house prices and rents even higher. On a global basis such restrictions represent statistically irrelevant noise, 0.003 percent of current annual worldwide emissions.

State enforced density also creates other unanticipated effects like ever higher levels of congestion and emissions. The whole policy assumes density will force more people unto transit, a dubious suggestion with transit ridership plunging in both Los Angeles and the Bay Area. The idea that in the age of Lyft, Uber, and eventually autonomous cars, more people will be forced onto traditional transit is deluded, at least without coercion beyond the stomach of most Americans.

Finally, in their zeal to squash single-family homes and suburbia, the zealots ignore the many positive environmental attributes — such as water retention, species habitats, tree cover and improved health outcomes — that can be achieved, as MIT’s Alan Berger has noted, in modern suburban development. In addition, suggests Britain’s Hugh Byrd, low-density communities are ideally suited for an eventual transition to solar energy generation in ways that high rise cannot emulate.

Modest proposals to address the affordability crisis

The false premises preferred by the forced densifiers do not mean we should not expand housing of all types; there is plenty of high density zoned property available for purchase by developers for denser housing. Local zoning also should encourage repurposing surplus retail and office space, creating new product that does not destroy neighborhoods or displace people. But ultimately, prices can only be brought down by allowing more construction on the fringe, restoring the competitive market for the price of land. Economists Edward Glaeser and Joseph Gyourko have shown that higher land prices are largely responsible for coastal California’s exorbitant house prices.

Finally, if we want to build more affordable housing, we look at non-profit organizations — including churches and charitable groups — to build housing without the need to create high returns or raise rents on their market-rate customers.

California sorely needs to build more housing, but can do so without forcing everyone back to the “glory” days of the city of tenements.

Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism ( Wendell Cox is principal of Demographia, a St. Louis-based public policy firm, and was appointed to three terms on the Los Angeles County Transportation Commission.

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