According to a recent article from Silicon Valley Business Journal, California seems to lead the country when it comes to lack of housing supply. In fact, based on a report from nonprofit research and advocacy group, Up for Growth California, the state would currently require an additional 3.4 million homes to fully satisfy its housing needs. Given that the nation overall is short by 7.3 million homes, this means California represents almost half of the housing supply problem.
Econorthwest’s Mike Wilkerson, who co-authored the report, elaborated, saying California is not only lacking in sufficient housing, but the homes that do exist are also expensive and out-of-reach to many people.
This report was released at a forum which included California State Assemblymember David Chiu, Bay Area Council President and CEO Jim Wunderman, Denise Pinkston of development firm TMG Partners, and head of the Terner Center for Housing Innovation at the University of Claliforni in Berkeley, Carol Galante.
Wilkerson went on to explain that the Bay Area serves as a microcosm of the larger issue; from 1980 until 2010, the market had the highest price appreciation in the entire nation, though in the years that followed, the amount of new housing added per resident was actually among the lowest in the country.
As Wilkerson put it, “The less you expand (housing inventory), the more your housing costs.” And while this is indeed a complex issue, Wilkerson explained that building more new homes would certainly help improve the situation. What’s less certain, though, is figuring out how to do so, especially in areas that want to avoid urbanization.
Wilkerson went on, “Is there a way to grow our amount of housing without growing our footprint? The answer is density.”
The report recommends for state and local governments to implement new policies encouraging multifamily housing near transit stations, enabling residents to choose public transportation over driving a car. Also outlined in the report is a strategy that involves increasing the amount of homes in single-family neighborhoods by permitting duplexes, triplexes, and accessory dwelling units.
Wilkerson argued that 50% of statewide housing built since 2010 is already in a multifamily development of five homes or more. But as Galante pointed out, housing developers in high-cost cities like San Francisco are spending as much as $800,000-$900,000 per home, which is unsustainable.
As Galante then said, “The demand (for housing) is in the middle-income and lower-income levels and that’s where it’s going to continue to grow… Not only do we need to build 3 and a half million more places for people to live, but we’ve got to get the price points down to a place that middle income people can afford.”
Not to mention, building more housing in California is still much easier said than done; the state’s strict environmental laws and review process cost developers years to gain approval for projects. Adding insult to injury, many cities also maintain zoning that doesn’t allow for high-density housing, nor is small multifamily housing permitted in single-family neighborhoods, as Pinkerton mentioned.
Zoning policies make it virtually impossible for developers to build duplexes and fourplexes, which are much less expensive to build than high-rise residential towers.
Earlier this year, state Legislature enacted a bill, making it easier to develop surface parking lots at BART stations into housing. As Chiu explained, “It was certainly a fight all the way through the entire process of being opposed by dozens of elected officials, particularly in the East Bay, who were very invested in the current status quo of the character of how they perceive their cities despite the fact that everyone talks about a housing crisis and homelessness crisis that we need to address.”
Wilkerson believes these challenges can be overcome by streamlining the approval process, zoning for higher densities, and investing in mass transit. He went on to then say, “The more-of-the-same approach is not financially sustainable… In the long run, affordability requires sustained production of housing.”
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