California's NIMBY Problem

 

The Mortgage Corner

Calculated Risk

It’s no secret that California has a housing problem. Its bias for single-family, ‘not-in-my-backyard’ (NIMBY) zoning since the 1960s has finally caught up with reality—in the form of more than 150,000 residents homeless and some 700,000 new homes built last year in California, whereas 1,500,000 new jobs were created.

Where are these people expected to live? It’s no secret that the real problem is affordability. Commuters that work in Silicon Valley, for instance, must travel up to two hours per day to reach their jobs, because homes they can afford are on the farthest outreaches of metropolitan areas, with little mass transit yet planned to speed up the commute.

COVID-19 exacerbates the problem with existing-home inventories dropping to their lowest level in 2020, and annual prices then rising at double-digit rates when consumers came out of their stay-at-home shells looking for too few available to purchase.

The Calculated Risk graph dating from January 2002 shows that existing-home inventories in YoY change (blue line) and months of supply (red line) reached their low in January 2021 and have been rising fairly sharply since then.

Gov. Gavin Newsom, who came into office with bold pronouncements about a “Marshall Plan for Housing,” said he supported plans to increase density near transit, but never endorsed an individual bill that would implement that goal.

California legislators just took a huge step to address the state’s housing crisis by allowing homeowners to double up.  The state assembly passed a bill last week (Aug. 26) that allows for two-unit buildings to be built on lots previously zoned for single-family homes.

It’s a significant reversal of decades of policy built around restrictive single-family zoning. In California, as across the US, allowing for one housing unit to be built per parcel of land has been standard. It’s what gave rise the suburbs as we know them, but has also been used as a tool in racist housing policies that have excluded Black, brown, and Native Americans from homeownership. In recent years, restrictive zoning has been a primary driver of the state’s affordable housing shortage. The median home price in California has risen 27% in the past year alone, and currently sits at more than $800,000.

The bill would allow more building where it’s now illegal, with the intent of reducing California’s fast-rising home prices and increasing access to homeownership through a greater variety of options, according to state Senate leader Toni Atkins, D-San Diego, who introduced the bill and similar versions in the past.

To lessen concerns from more than 100 cities and neighborhood groups that oppose the bill, Atkins on Monday added a few amendments that give local jurisdictions some veto power over units that threaten public health and safety and curtail potential speculation. The bill — approved by the Senate in May and two Assembly policy committees in June — made it out of the Assembly Appropriations Committee Monday and was approved by the full Assembly Thursday on a 45-19 vote.

I reported last week that there is not enough housing to meet soaring demand. The national existing-home housing inventory at the end of July totaled 1.32 million units, up 7.3 percent from June's supply and down 12.0 percent from one year ago (1.50 million) according to the NAR. Unsold inventory sits at a 2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months in July 2020, a historic low.

The housing market is so hot that individual investors or second-home buyers, who account for many cash sales, purchased 15 percent of homes in July. All-cash sales accounted for 23 percent of transactions in July, and up from 16 percent in July 2020.

But first-time buyers purchased just 30 percent of existing sales, which means most young adults leaving school and/or their parents’ home may find rental housing to a more viable option for the foreseeable future.

Much more must be done, in other words. It will take years for this to happen with more multi-family housing amid denser zoning in the cards. And it will be closer to needed public transportation hubs, whether the NIMBYs like it or not.

Harlan Green © 2021

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What Is a Livable City?

The Mortgage Corner

pccfarmlandtrust.org

 

There is a budding national movement to build more affordable housing with the growing housing shortage (and homeless) problem. It is just one more facet of the so-called Livable Cities movement begun in the 1980s that searched for ways to make cities safer for children as well as adults in a friendlier environment less dependent on the automobile.

The YIMBY movement is taking hold in cities all over America, from California to Massachusetts. YIMBY stands for ‘Yes in My Backyard’, a movement to build denser residential units near city centers and transportation hubs, as opposed to the NIMBY, ‘Not in My Back Yard’ syndrome affecting many upscale housing communities that have managed to keep such housing out of their backyards.

NIMBYism is really a local community incarnation of the outlawed redlining by banks that once would not loan or invest in ‘certain’ lower-income neighborhoods, but must do so today to keep their charters. NIMBYism prevails in predominately single-family based communities that have found ways to discourage the creation of high zoning densities near their housing tracts that would enable the building of more affordable housing for ‘those’ people.

“Look around, and YIMBYs are a growing presence,” said a 2017 Atlantic Monthly article as the movement took hold. “There’s a YIMBY group in Somerville, Massachusetts, and one in Los Angeles; there’s a San Francisco YIMBY party and a YIMBY group in Portland. YIMBYtown, a national conference, will take place in Oakland this month; Helsinki is hosting Yimbycon in August (2107).

The situation is most dire today in California. Its homeless population has risen to more than 150,000 in 2018, up 17 percent just from 2017, and the median home price is now $561,000, according to Zillow, with many workers priced out of living in the coastal communities that hold the best jobs.

Hence the one and two-hour commute times for those that work in Silicon Valley, but live in the Livermore.and Castro Valleys or further eastward, at least 40 miles and a two-hour drive during commuting hours.  This is in part because alternate transportation modes such as the Bay Area’s BART light rail have yet to connect to Santa Clara County where most of Silicon Valley is located.

SB50, California’s attempt to override local zoning laws to enable smarter urban planning concepts failed for a second time, which makes it even more urgent to find a solution to California’s perennial housing shortage. It was a valiant effort that sank when some minority and homeless advocates opposed it, of all people.

Their concern was that it would gentrify in some way the areas around transportation hubs by destroying older, existing neighborhoods. It’s really hard to understand that reasoning, as

“Developers, landlords, Facebook, construction unions, the state Chamber of Commerce, Realtors, environmental groups and even the AARP wanted to see the bill pass,” said Cal Matters, a legislative blog that announced its demise:

“Nonetheless Senate Bill 50, a measure that would have forced cities to allow more mid-rise apartment buildings around public transit and next to some single-family homes, failed to get enough votes in the California Legislature to survive in 2020 before time ran out,” it continued.

Younger social activists are behind much of the push for YIMBY housing and new zoning laws that create more affordable housing. Sonja Trauss, a former High School mathematics teacher, co-founded YIMBYlaw.org in 2018, a San Francisco lobbying effort whose mission is to make housing in California more accessible and affordable.

“Our method is to enforce state housing laws like the Housing Accountability Act. We send letters to cities considering zoning or general plan compliant housing developments informing them of their duties under state law, and sue them when they don’t comply,” said Ms. Trauss in her mission statement.

She said her efforts grew out of the frustration in getting approvals for entry-level, affordable housing, because rent control supporters could not unite with those that wanted more housing, resulting in fragmented efforts to build more affordable residences.

An earlier, rural version of YIMBYism sprang up in Washington State called pccfarmlandtrust.org is a nonprofit land trust working to protect and steward threatened farmland in Washington, and purveyors of organic produce from sustainable farming. “We work to keep land in production by making it accessible to future generations of farmers.” is part of its mission statement.

So the drive to provide more housing for a growing population is taking many forms, and signals the demise of suburban sprawl, as we know it. The missing piece in this effort seems to be transportation networks, which need to be improved to connect where we live to where we must work to support such housing.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen