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Monday
Jul082019

The Solution to Our Housing Crisis is More Housing

The New York Times Editorial Board recently focused on Democratic presidential candidates’ proposals for addressing the housing crisis in America. Here in California, this crisis is acute and those of us with children or grandchildren trying to find affordable housing or with our own incomes stagnating while rents soar, are very aware that rental costs are getting out of control. A whole segment of our population lives in the garages or spare rooms of other people’s houses, often crowded into such small spaces with other family members. Those even less fortunate live on the streets. Subsidized housing is difficult to find and existing lists of those who qualify but are still waiting to find a place to live are years long in most communities. The main reason for exhorbitant rental costs is the shortage of rental units. It's a simple case of supply and demand.

A recent study by the New York Times revealed that in Los Angeles, 70% of the land is zoned for single family, detached homes, in San Jose, the figure is 94%. Up the coast, the situation is similar: Portland has 77% of its land zoned for single-family detached housing and Seattle has 81%. The situation is similar across the U.S., with Minneapolis, Arlington, TX, Sandy Springs GA, and Charlotte, NC all zoned at 70% or greater for single-family detached homes. Some major cities, such as New York, at 10% of such zoning and Washington, DC with 36% are different, but the problem remains that a huge part of our current housing crisis is caused by local zoning restrictions. 

California has been trying to address this issue through legislation that would mandate relaxation of restrictions on height and parking facilities in urban areas near transportation hubs, but these efforts have failed. Some of the bills, such as the most well-known, SB-50 have been poorly written and ended up being opposed by renters groups as well as local governments, but overall, it’s the reluctance of citizens and their government to give up what they have in terms of pristine low-rise neighborhoods, a fear of losing property values if tall apartments are built next door, and a fear of the “kind of people”  (often a racist and/or classist sentiment) that will move into areas dominated by home owners or high-priced rental units.

Tokyo is one of the developed world’s few major cities that have not seen a rise in rental costs over the last 25 years. That is because Tokyo allows property owners to replace exiting buildings with new, taller, multi-family buildings with almost not government interference. In 2014, Tokyo, with a population less than a third of California and less than a fourth of England, and virtually no unbuilt-upon land, had more housing starts than either of those two others. Despite relaxed zoning restrictions, Tokyo maintains extremely strict building codes, primarily because of its susceptibility to earthquakes.

Elizabeth Warren, Julian Castro, and Cory Booker, to name three presidential candidates, have proposed either regulations or incentives for cities to relax zoning restrictions and build more multi-family units. Tying federal infrastructure funding to land-use rezoning, as proposed by Castro, makes sense.  So does some variant of SB-50 in California.

I live in a city dominated by single-family, detached homes. A few new apartments are being built, but they are “luxury apartments” with rents beginning at well over $2000 per month and a median nearer $3000. Only 11% of new housing being built in the Los Angeles-Orange County region is classified as “affordable,” which means limited to low and moderate-income tenants. The average for this type of housing is $1850/month.

It’s time for us to address the housing shortage directly, especially for those with low to moderate incomes, by building more affordable housing. To do so, we need to change our zoning restrictions. We need more multi-family houses, especially for low and moderate income families. We need to relax height restrictions on apartment and condominium buildings. Multi-story apartments are no less safe than multi-story commercial buildings and hotels, which are being built every day. We must bite the bullet and stop protecting the single-family neighborhoods we live in, and make room for our children, grandchildren and fellow citizens.

The proposals of presidential candidates who are offering solutions need to be considered in our choice of our next president.

 

Reader Comments (4)

You are exactly right about community attitudes (at the worse being expressions of greed, racism and just plain fear of change) being at the depth of the zoning problem. And there will be enormous pushback as the "good citizens" know that their lovely lifestyles are built of the toil and deprivation of others...just imagine the public hearings on tripling the density of Marin County or a ritzt beach town.

Other approaches might be to create a developer tax that could be used to develop additional housing. Land and property development creates obscene profits that are well hidden from traditional taxing schemes. Evidence developers with multi-billion net worths that have never paid income tax. Tax rates over 50-80% of gross sales value would still leave enormous developer profit on land developments and many rental markets.

A problem just starting that will need curing is the concentration of rental housing units by only a few holders in some markets. Resulting primarily from the lender bailout some markets are starting to show monopoly pricing effects.

Important to note rents are deemed high because people can't afford them.
The easiest fix would be to pay people more and reduce inequality.

Do keep in mind that the equitable share of the nations income is over $66,000 per every person, over $247,000 per year nearly tax free income for every family of four....plenty to pay rent. BTW if we did share every family would also have over a $1,300,000 net worth

Also please recall that just 3 men own as much as half of all Americans combined...there is plenty that can be shared.
Even passing a $20 minimum wage would help

**Notes USA GDP (2020 projected income) is $21 Trillion divided by 315 Million people equals $66,666 per person share or over $266,000 for four people
USA net worth Dec 2018 was $104 Trillion divided bt 315 million equals $331,000 each, $1,320,000 every family of 4. The income and wealth figures should be adjusted up a minimum of 10% to account for the assets held tax-free overseas by Americans

July 8, 2019 | Unregistered CommenterDariel Garner

Daniel Garner- $20/hr minimum wage? You do understand a person needs to produce in excess of $20/hr in labor to justify that wage. Most jobs in the US can't do that. So you're basically making the majority of jobs in the US illegal by any rational standard. And with that proposal you've just hollowed out the majority of the work force because there is no way to create entry level jobs that produce that much labor across the board. So you'd kill most small businesses while causing major employers to simply dump low-end workers in favor of automation or job consolidation in order to create the kind of jobs that produce in excess of $20/hr worth of labor. Thank you for that insightful proposal.

As far as sharing wealth goes, I'll be glad to take my fair share of everything you own and all the money you earn....and why stop there? I'm also entitled to an equitable share of your intellectual property as well since that is the true driver of income and wealth. So essentially your profitable ideas and innovations really don't belong to you, they belong to the collective. But your unprofitable ideas and innovations that harm the collective still belong solely to you and for which you will be solely punished, probably through banishment or corporal punishment of some form. Knowing this, other innovators will remain uninspired and silent, creativity will die and we will succumb to an atavistic dark age. Well done, Sir!

July 16, 2019 | Unregistered CommenterMark Wheeler

Thanks for finding the errors in my thinking Mark.

The $20 per hour minimum wage that I mentioned was just to adjust the current minimum wage to the level of the 1970's accounting for the tremendous increase in worker productivity that has occurred in those years. As I am sure you are aware that increase in productivity did not go to people that work but to people that own companies and industries expressed as incredibly increased net profits.

The US economy currently produces an average of $64.00 of value for every hour worked. (That's $21 Trillion Gross Domestic Product divided by 157 million workers, divided by 52 weeks, 40 hr. per week-- ). Every worker produces nearly $134,000 per year...but only a tiny few are paid that much. Clearly the problem is not in having enough to share...the problem is that a very few take it all (legally).We are the most unequal nation in the history of the world.

If we believe in the sanctity of human beings and resolve to treat others with respect and dignity with the same respect and dignity we desire then the only course is to share equally...ultimately, the universal wage should be $64 per hour...notice that is not a minimum but an equal sharing of the bounty of our creation. Please notice I say ultimately as it is important to note we do live in regressive times only a hundred years after chattel slavery and need time to mature as a civilization.

Soon however all this becomes mute. Artificial intelligence and automation are ending work as we know it. My sense is that the currently accepted estimates of only half of all US jobs disappearing in the next 15 years are optimistic at best. The cuts will be incredible. Keep in mind that China is leading implementation of the technology and replacing workers that earn a small fraction of their US counter-part. All jobs are at risk...retail, service, managers, CFO's, programmers, sales staff, even doctors and artists. Indeed my history as a capitalist taught me repeatedly that the real gains in reducing workers were in reducing managers and professionals.

What does it look like when half the people are without work?...And when the wealth divide continues to grow at compound interest rates?

Generally the system breaks and something new is born.

BTW Mark...Innovation does not necessarily grow from greed. I started over 40 businesses in my career several of them pioneering businesses. I never considered the wealth created by my success as the reason I did that. I can't even imagine an entrepreneur being driven by $$ as it seems such a guarantee for failure...someone will always have more and as you point out some businesses will fail.
The urge entrepreneurial urge is much deeper and can certainly be served in a communal atmosphere.

July 16, 2019 | Unregistered CommenterDariel Garner

The flaws in applied thinking here are almost beyond belief. First, you can't apply national averages of work value to any individual business. Some businesses are highly profitable, others barely manage to stay in business. So any determination of generic wage is wildly inapplicable because every worker will absolutely not produce 134,000 dollars of value per year. So because the results of various businesses are widely disparate, why should their be an equal sharing of the bounty? Plus, the actual necessity of some goods and services are radically different as well. Does the forty hours per week my doctor works have more value to the community than the forty hours per week worked by the antique dealer? Obviously so. Not all work has equal value.

As for innovation, I don't care whether greed or humanitarianism drives innovation. I'm saying that if innovation is tied to the well being of the socialist collective, then the innovator shares the credit and benefit of their innovation. When it goes wrong, the collective well being suffers and the collective responds with violence. This is why innovators need to receive the full benefit of their innovation because they will certainly receive the full dis-benefit.

July 17, 2019 | Unregistered CommenterMark Wheeler

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