California’s Housing Problems Require a Better Solution than Densify, Densify, Densify
The Palisades and Eaton fires represent thousands of personal tragedies, but they also constitute a collective disaster, adding new housing shortages to California’s already massive shortfall — a catastrophe that stems not from acts of nature but from human policy blunders.
Gov. Gavin Newsom bought a new $9-million house in November, but too many of his fellow Californians may never own a home or find an affordable rental. Under Newsom, the state has tried reforms designed to increase building and affordability, but precious little has changed.
Home prices in coastal California are nearly 400% above the national average, and statewide, the median cost of a home is 2.5 times higher than in the rest of country. California has the second lowest homeownership rate in the nation, 56% (New York’s is lowest, 54%).
As for renting, the average cost of a two-bedroom apartment in Los Angeles is just shy of $3,000 a month, according to apartments.com, about $1,000 more than the national average.
Of course, these statistics aren’t bad news for everyone. Many California baby boomers — who bought into their neighborhoods long ago — have made out like bandits through escalating home prices. Along with Gen Xers, they have home ownership rates similar to those in the rest of the country. But the rate is half the national level for Californians under 35, and they are precisely the group that is deserting the West Coast for “cost of living” reasons.
The state’s housing crisis has its roots in excessive construction regulations and litigation aimed at developers — for decades, too few residential units were built. Unfortunately, the cure Sacramento is pushing — policies that favor dense, apartment development near transit corridors in the state’s biggest cities — isn’t helping.
For starters, high-density “infill” construction in cities — some call it YIMBY (“yes in my backyard”) development — is costly. City land is expensive, materials costs are high, “prevailing wage” labor rates and onerous permitting, zoning and planning processes and fees add to the bottom line. New multistory apartment buildings packed in along Sunset Boulevard or the Wilshire corridor may add to L.A.’s total housing stock, but even when affordable rental units are required in these buildings, the trickle-down benefit is minimal.
As UCLA and London School of Economics professor Michael Storper’s research shows, forced densification is a “blunt instrument” that brings little in the way of substantial cost savings for housing.
Renting and high-density living is also out of sync with what most people in California want. A recent Public Policy Institute of California survey found that 70% of the state’s adults preferred single-family residences. Not surprisingly, a large majority of Californians, according to a poll by former Obama campaign pollster David Binder, opposed legislation signed by Newsom in 2021 that in effect banned single-family zoning in much of the state. (The law, Senate Bill 9, was overturned in L.A. County court last year, and that ruling is on appeal.)
Climate goals have been a big part of the reason California policies favor multistory, multiunit new construction in cities. The idea is that housing more people in, say, taller buildings will be more energy efficient. And encouraging dense developments near transit is supposed to lower greenhouse gas emissions. But new studies show that the size of buildings doesn’t necessarily correlate with more sustainability, and many Californians are choosing to endure longer and longer commutes to buy a home rather than rent in town. Or leaving altogether. According to a new study by land use attorney Jennifer L. Hernandez, climate-based housing rules have contributed to too few houses being built at too high a cost.
What should the state do?
Some may wish that we could subsidize an expansion of public housing, adding more projects such as the ambitious renewal of Jordan Downs in South L.A., but this will be difficult in a nearly broke city and a state with budget problems as well, and again it won’t match the aspirations of most Californians.
One way out of this crisis would be to expand the streamlined permitting and regulatory processes that Newsom and local leaders are fast-tracking for fire reconstruction, incentivizing rather than punishing townhome and single-family home construction. Instead of laws all but mandating high-density units, usually rentals, in the state’s biggest metros, Sacramento needs to encourage market-driven projects based on consumer preferences.
Peripheral development, away from the high-cost coast, could open opportunities for first-time home buyers. The state could take advantage of technological trends — remote work, for example — to allow for more population dispersion. Master planned communities in inland Southern California or the Central Valley, with local employers, can be part of the solution.
California’s mounting housing problem requires more alternatives, especially for people seeking lower rents and affordable single-family houses. If the state wants to maintain its upwardly mobile chops, it must refashion its housing policies.
This piece first appeared at Los Angeles Times.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Image: Multiunit housing is under construction by the Metro light rail station at Jefferson and La Cienega boulevards in Los Angeles. Source: Mel Melcon, Los Angeles Times.
