A blog about Marinwood-Lucas Valley and the Marin Housing Element, politics, economics and social policy. The MOST DANGEROUS BLOG in Marinwood-Lucas Valley.
Showing posts with label economics.smart growth. Show all posts
Showing posts with label economics.smart growth. Show all posts
Friday, May 24, 2019
Tuesday, April 23, 2019
Monday, February 19, 2018
Monday, March 10, 2014
Smart Growth and the NEW, Newspeak

see full article Smart growth and the New Newspeak
It’s a given in our representative system that policies adopted into law should have popular support. However, there is a distinction to be made between adopting a policy consistent with what a majority of people want, and pushing a policy while making dubious claims that it harnesses “the will of the people.”
The former is a valid exercise in democracy; the latter is a logical fallacy. Smart Growth advocates are among the most effective practitioners of Argumentum ad Populum, urging everyone to get on the bandwagon of higher densities, compact mixed-uses, and transit orientation because all the “cool cities” are doing it.
Smart Growth advocates also claim this is what people prefer, even if it is not how they currently live. The two core features of Smart Growth land use — high densities and multi-family dwellings — are simply not preferred by most Americans in most places, despite the trendy push for Livability, New Urbanism, Resilient Cities, Smart Codes, Traditional Neighborhood Design, Transit Oriented Developments or any other euphemistic, clever name currently in fashion.
Survey Says!
In the internal data of the 2011 Community Preference Survey commissioned by the National Association of Realtors, no specific question was asked about density, but 52 percent of respondents said, if given a choice, they would prefer to live in traditional suburbs, small towns or the rural countryside. Another 28 percent chose a suburban setting that allowed for some mixed uses (Question 5). Taken together, this shows an overwhelming preference for low densities. Only 8 percent of the respondents favored a central city environment.
As for vibrant urbanism, only 7 percent were “very interested” in living in a place “at the center of it all.” Most people wanted to live “away from it all” (Question 17). An astonishing 87 percent said “privacy from neighbors” was important to them in deciding where to live. One can reasonably infer that a majority of this majority would favor low density places with separated uses rather than crowded, noisy mixed use locations that blur the line between public and private.
When presented with a range of housing choices, 80 percent preferred the “single-family detached house” (Question 6). Only eight percent chose an apartment or condominium. Furthermore, 61 percent preferred a place where “houses are built far apart on larger lots and you have to drive to get to schools, stores, and restaurants” over 37 percent who wanted a place where “houses are built close together on small lots and it is easy to walk to schools, stores and restaurants” (Question 8).
So -- absent the loaded terms and buzzwords that are central to Smart Growth -- a large majority of randomly selected people from across the country showed a strong preference for the land use pattern derisively referred to as “sprawl.”
Yet the press release from the National Association of Realtors proclaimed that “Americans prefer smart growth communities.” This is because on Question 13, respondents were given a description of two communities:
Community A, a subdivision of only single family homes with nothing around them. Not even sidewalks!
Community B: lots of amenities all “within a few blocks” of home. Of course, the description neglected to mention the population density and degree of residential stacking required to put all those dwellings in such close proximity to walkable retail. This was a significant omission, since the first housing option offered in Community B was “single family, detached,” on “various sized lots.”
Community B received 56 percent support.
So, with just one response to an unrealistic scenario, out of twenty answers that included many aversions to Smart Growth, the myth that people prefer Smart Growth was spread. The National League of Cities released a Municipal Action Guide to thousands of elected and appointed officials declaring the preference for Smart Growth, and the online network Planetizen, among others, uncritically helped spread the news.
Missing from the triumphalism was this important caveat in the 98-page analysis of the results by the consultants who conducted the survey:
“Ideally, most Americans would like to live in walkable communities where shops, restaurants, and local businesses are within an easy stroll from their homes and their jobs are a short commute away; as long as those communities can also provide privacy from neighbors and detached, single-family homes. If this ideal is not possible, most prioritize shorter commutes and single-family homes above other considerations.”
In addition to spinning the results of preference surveys, Smart Growthers also ignore them. Maryland is a case study in how to disregard what people want while claiming the opposite. In drafting a statewide growth management plan that anticipated “increased demand for housing, an aging population, and diverse communities,” Maryland officials ignored a robust 55+ Housing Preference Survey from Montgomery County that specifically addressed this concern.
The survey showed that most seniors planned to remain in their present homes upon retirement. Only 30 percent planned to move, and, of that group, only a small percentage would consider an apartment or condominium. This should have mattered to Maryland officials trying to gauge housing preferences for their senior population. Instead, the architects of PlanMaryland looked elsewhere to find studies that reinforced their assumptions.
The Great Conflation
There is an abundance of examples like these, and the key to understanding how they influence decision-makers lies in the conflation of specific amenities with the overarching concept of Smart Growth. For example, Todd Litman’s Where We Want to Be, published by the Victoria Transport Policy Institute, claims that “preference for smart growth is increasing due to demographic, economic and market trends such as aging population, rising future fuel prices, increasing traffic congestion, and increasing health and environmental concerns.”
Does this mean most seniors – such as those in Maryland – want to live in high density, mixed use, transit-oriented apartments even when they say they don’t? Hardly. Litman concedes that “most Americans prefer single-family homes,” but finds “a growing portion want neighborhood amenities associated with Smart Growth including accessibility, walkability, nearby services, and improved public transport.”
Those amenities are things like sidewalks, which evidently are now a Smart Growth invention, and shops that are close to (but not mixed into) residential areas. Litman’s clever construction – e.g., sidewalks equal walkability equal Smart Growth policy – is convincing to officials who mistakenly conclude that their constituents must want Smart Growth when, in fact, they do not.
This has been Part One of a Two-Part Series on Smart Growth by Ed Braddy.
Photo by W. Cox: Rail station in Evry, a suburb of Paris
Ed Braddy is the executive director of the American Dream Coalition, a non-profit organization promoting freedom, mobility and affordable homeownership. Mr. Braddy often speaks on growth management related issues and their impact on local communities. He can be reached at ed@americandreamcoalition.org.
Monday, November 11, 2013
VIDEO: Plain Talk about the impact of Marinwood Village on Dixie Schools
For the Full planning meeting: February 11th Planning Commission Meeting
In this clip from the February 11, 2013 Planning Meeting discussing the Housing Element for unincorporated Marin, Lele Thomas, Planner describes the taxes that Marinwood Village will pay.
The total tax burden of Marinwood Village is around $10,000 and they expect to apply for a tax rebate because they are a non profit.
It appears that they DO NOT HAVE TO PAY FOR ANY SCHOOL BONDS!
The Dixie school district will receive a one time impact fee of $200,000 which must be used for construction only. It cannot be applied to teachers. A portable classroom is estimated to cost $150,000 each. With at least 150 school children expected, an estimated 7 teachers, 5 portable classrooms, administrators, teaching materials, computers costing in the millions will be the sole responsibility of the local taxpayers.
For this reason alone, Marinwood Village project should be rejected. It is shocking that neither the planning department, politicians or neighborhood leaders have considered this fundamental problem.
Lele Thomas concludes her remarks with "The bottom line is whether or not there is funding for Dixie Schools, this is not a reason for the Marinwood Village project to be rejected."
We must not let our community be exploited like this. Join us today. The next big planning meeting is March 11th. Please attend.
For related post see: Marinwood Residents Testify at Feb 11 Planning meeting
In this clip from the February 11, 2013 Planning Meeting discussing the Housing Element for unincorporated Marin, Lele Thomas, Planner describes the taxes that Marinwood Village will pay.
The total tax burden of Marinwood Village is around $10,000 and they expect to apply for a tax rebate because they are a non profit.
It appears that they DO NOT HAVE TO PAY FOR ANY SCHOOL BONDS!
The Dixie school district will receive a one time impact fee of $200,000 which must be used for construction only. It cannot be applied to teachers. A portable classroom is estimated to cost $150,000 each. With at least 150 school children expected, an estimated 7 teachers, 5 portable classrooms, administrators, teaching materials, computers costing in the millions will be the sole responsibility of the local taxpayers.
For this reason alone, Marinwood Village project should be rejected. It is shocking that neither the planning department, politicians or neighborhood leaders have considered this fundamental problem.
Lele Thomas concludes her remarks with "The bottom line is whether or not there is funding for Dixie Schools, this is not a reason for the Marinwood Village project to be rejected."
We must not let our community be exploited like this. Join us today. The next big planning meeting is March 11th. Please attend.
For related post see: Marinwood Residents Testify at Feb 11 Planning meeting
Tuesday, August 20, 2013
How You will be Manipulated to Accept Affordable Housing in Marinwood-Lucas Valley
A interesting video, exposing the "Delphi" technique of public manipulation. You will see this all over Marin as professional trained facilitators attempt to sell the community on the One Bay Area Plan. Please let others know if you feel you are getting "less than the truth".
Wednesday, August 14, 2013
The Affordable Housing Disaster in 2000 . Can Marinwood-Lucas Valley learn from mistakes of the past?
This summary is not available. Please
click here to view the post.
Tuesday, July 23, 2013
West County Gateway idea riles Occidental residents (Priority Conservation Areas are coming. Wake up West Marin!)
see article in Santa Rosa Press Democrat West County Gateway idea riles Occidental residents
By SEAN SCULLY THE PRESS DEMOCRAT on Monday, May 27, 2013
The fate of the aging and underutilized community center in Occidental has spawned a bitter controversy that has split neighbors over questions of how best to use public lands — and about the limits of government power.
Residents of the unincorporated town were surprised to discover earlier this year that their community center appeared to have been designated as the future hub ofsomething called the West County Gateway, an expansive vision for linking more than 11,000 acres of parks and open space, using trails and shuttle buses, from Jenner to Bodega Bay and inland to Occidental and Monte Rio.
The humble community center, a nondescript concrete artifact of early '70s municipal architecture that is now the regional home for the YMCA, would be reborn as an Adventure Day Lodge, with a visitor center, bike and hiking equipment rentals, food service and public gathering areas.
Local critics learned of the two-year-old concept in January, when it came up as a minor detail in a county Regional Parks presentation to the Board of Supervisors. The news set off an uproar, with some neighbors arguing that unaccountable bureaucrats were making secret decisions about the community's destiny, and others arguing that risk-averse NIMBYs were threatening progress by refusing to discuss reasonable options for the future.
“It's caused a little bit of division,” said Pieter Myers, one of the residents supporting the gateway idea. “People I used to be close to, we view each other with a little bit ofsuspicion because we're on different sides of the issue.”
An ad-hoc committee calling itself the Town HallCommittee, meanwhile, has been gathering what information it can about the gateway idea and has called a June 4 meeting to discuss the findings. Members say it appears that the Regional Parks agency has invested considerable time and energy on the plan without giving area residents any idea of its scope or implications in terms of new tourists, cramped parking and increased traffic on the narrow local roads.
Many people in Occidental “don't want a government agency coming in and changing it in such a radical way,”msaid Jacques Levy spokesman for the group.
But it is not entirely clear if the West County Gateway is even a real plan. Whether the flap is the result of a secret government plan or a comedy of errors depends on who you ask.
“You've got to recognize that their concerns are about a concept that is unfunded and unplanned and is not a project at this time,” said Caryl Hart, head of the county's Regional Parks Department, which owns the community center. “Right now, the only thing we're involved in is the OccidentalCommunity Center.”
Hart says the West County Gateway was nothing but a concept paper her office dashed off back in 2011 to apply for a small community outreach grant from the National Park Service. Into that paper went an assortment of big ideas about interconnecting the vast patchwork of county, state and federal lands that sprawl across the Sonoma Coast. Much of that land is inaccessible to the public, often simply because it lacks basics such as parking, trailheads, restrooms or even access roads.
Even the name West County Gateway is just a working title, she said. Some area residents don't believe a word of it. Levy points out that the very same details from the grant application, including the name Adventure Day Lodge, were written into the county's official Capital Improvement Plan as part of the project to rehab the community center. The Board of Supervisors just approved the latest version of that plan on May 21.
And while the county's website has made no mention of West County Gateway until this week, Hart or her staff has mentioned it in an offhanded way at least twice to the supervisors, most recently in January during a discussion of tourist improvements in Bodega Bay.
These tantalizing traces of evidence suggest to Levy and others that the parks agency has been viewing the West County Gateway as something close to a done deal, all without a single public meeting or any environmental review.
“Our contention is that the county and the community need to get together in a way that doesn't imply top-down dictation,” he said.
Others in Occidental, however, aren't so suspicious of the the idea, and welcome some kind of tourist hub. Heidi McNeal, longtime member of a group called Save the OccidentalCommunity Center, said the gateway plan is far from perfect, but she appreciates the agency's effort to find some self-sustaining uses for the center. She worries that the sponsors of the June 4 meeting willsimply oppose any change and kill off any effort to revitalize the property.
“We all get it: Nobody likes everything ... but let's hear where Parks are now,” she said.
Supporters of the gateway concept have been trying to rally like-minded residents to attend the June 4 meeting to provide a counterweight to what they fear will be a largely hostile agenda.
“We have got to get together and talk about what's best and stop talking about what's bad about the gateway,” Myers said.
The dispute appears to have come as a rude shock to Hart, herself an Occidental-area resident who has headed the county parks agency for just over two years. Previously, she was best known as a private activist pushing for land preservation and greater public access to recreational lands.
All she really wanted to do in this case, she said, was help the people of Occidental come up with some interesting way to keep the money-losing community center open. The sharp reaction to the resulting gateway proposal has made her realize that the lofty, high-concept ideas she espoused as a private citizen may not sit comfortably with her new job.
“Now that I am a government official, there are limitations,” she said, with evident frustration. “I have to out what that middle ground is between assisting people in raising money and creating a sense that government is acting too quickly and is going to do something without any process.”
Former west county Supervisor Eric Koenigshofer agrees, saying Hart's relative inexperience as a bureaucrat led to a process that “has gotten out ofsync a little bit with the community.”
Koenigshofer, an Occidental lawyer and a board member of the conservation-oriented Bodega Land Trust, has agreed to moderate the June 4 meeting, saying he hopes to keep it reasonable and fair. The sponsors of the meeting are “understandably confused” by what they know of the gateway concept so far.
Hart, meanwhile, said she has heard the concerns from the community and is in the process of removing phrases like “adventure day lodge” from official documents, including eventually from the capital improvement plan. On Friday, her office posted its first official mention of the gateway concept here.
She promised to call her own meetings over the summer to give residents a chance to say what they do — and do not — want.
“If they don't support it, it's not going to happen,” she said.
See related article: If you own rural land beware
For more on the West County Gateway project see Gateway Project in Occidental and Bodega Bay
![]() |
Jacques Levy leads a group upset with proposals to turn Occidental's community center into the hub of the West County Gateway. ((JOHN BURGESS / The Press Democrat)) |
By SEAN SCULLY THE PRESS DEMOCRAT on Monday, May 27, 2013
The fate of the aging and underutilized community center in Occidental has spawned a bitter controversy that has split neighbors over questions of how best to use public lands — and about the limits of government power.
Residents of the unincorporated town were surprised to discover earlier this year that their community center appeared to have been designated as the future hub ofsomething called the West County Gateway, an expansive vision for linking more than 11,000 acres of parks and open space, using trails and shuttle buses, from Jenner to Bodega Bay and inland to Occidental and Monte Rio.
The humble community center, a nondescript concrete artifact of early '70s municipal architecture that is now the regional home for the YMCA, would be reborn as an Adventure Day Lodge, with a visitor center, bike and hiking equipment rentals, food service and public gathering areas.
Local critics learned of the two-year-old concept in January, when it came up as a minor detail in a county Regional Parks presentation to the Board of Supervisors. The news set off an uproar, with some neighbors arguing that unaccountable bureaucrats were making secret decisions about the community's destiny, and others arguing that risk-averse NIMBYs were threatening progress by refusing to discuss reasonable options for the future.
“It's caused a little bit of division,” said Pieter Myers, one of the residents supporting the gateway idea. “People I used to be close to, we view each other with a little bit ofsuspicion because we're on different sides of the issue.”
An ad-hoc committee calling itself the Town HallCommittee, meanwhile, has been gathering what information it can about the gateway idea and has called a June 4 meeting to discuss the findings. Members say it appears that the Regional Parks agency has invested considerable time and energy on the plan without giving area residents any idea of its scope or implications in terms of new tourists, cramped parking and increased traffic on the narrow local roads.
Many people in Occidental “don't want a government agency coming in and changing it in such a radical way,”msaid Jacques Levy spokesman for the group.
But it is not entirely clear if the West County Gateway is even a real plan. Whether the flap is the result of a secret government plan or a comedy of errors depends on who you ask.
“You've got to recognize that their concerns are about a concept that is unfunded and unplanned and is not a project at this time,” said Caryl Hart, head of the county's Regional Parks Department, which owns the community center. “Right now, the only thing we're involved in is the OccidentalCommunity Center.”
Hart says the West County Gateway was nothing but a concept paper her office dashed off back in 2011 to apply for a small community outreach grant from the National Park Service. Into that paper went an assortment of big ideas about interconnecting the vast patchwork of county, state and federal lands that sprawl across the Sonoma Coast. Much of that land is inaccessible to the public, often simply because it lacks basics such as parking, trailheads, restrooms or even access roads.
Even the name West County Gateway is just a working title, she said. Some area residents don't believe a word of it. Levy points out that the very same details from the grant application, including the name Adventure Day Lodge, were written into the county's official Capital Improvement Plan as part of the project to rehab the community center. The Board of Supervisors just approved the latest version of that plan on May 21.
And while the county's website has made no mention of West County Gateway until this week, Hart or her staff has mentioned it in an offhanded way at least twice to the supervisors, most recently in January during a discussion of tourist improvements in Bodega Bay.
These tantalizing traces of evidence suggest to Levy and others that the parks agency has been viewing the West County Gateway as something close to a done deal, all without a single public meeting or any environmental review.
“Our contention is that the county and the community need to get together in a way that doesn't imply top-down dictation,” he said.
Others in Occidental, however, aren't so suspicious of the the idea, and welcome some kind of tourist hub. Heidi McNeal, longtime member of a group called Save the OccidentalCommunity Center, said the gateway plan is far from perfect, but she appreciates the agency's effort to find some self-sustaining uses for the center. She worries that the sponsors of the June 4 meeting willsimply oppose any change and kill off any effort to revitalize the property.
“We all get it: Nobody likes everything ... but let's hear where Parks are now,” she said.
Supporters of the gateway concept have been trying to rally like-minded residents to attend the June 4 meeting to provide a counterweight to what they fear will be a largely hostile agenda.
“We have got to get together and talk about what's best and stop talking about what's bad about the gateway,” Myers said.
The dispute appears to have come as a rude shock to Hart, herself an Occidental-area resident who has headed the county parks agency for just over two years. Previously, she was best known as a private activist pushing for land preservation and greater public access to recreational lands.
All she really wanted to do in this case, she said, was help the people of Occidental come up with some interesting way to keep the money-losing community center open. The sharp reaction to the resulting gateway proposal has made her realize that the lofty, high-concept ideas she espoused as a private citizen may not sit comfortably with her new job.
“Now that I am a government official, there are limitations,” she said, with evident frustration. “I have to out what that middle ground is between assisting people in raising money and creating a sense that government is acting too quickly and is going to do something without any process.”
Former west county Supervisor Eric Koenigshofer agrees, saying Hart's relative inexperience as a bureaucrat led to a process that “has gotten out ofsync a little bit with the community.”
Koenigshofer, an Occidental lawyer and a board member of the conservation-oriented Bodega Land Trust, has agreed to moderate the June 4 meeting, saying he hopes to keep it reasonable and fair. The sponsors of the meeting are “understandably confused” by what they know of the gateway concept so far.
Hart, meanwhile, said she has heard the concerns from the community and is in the process of removing phrases like “adventure day lodge” from official documents, including eventually from the capital improvement plan. On Friday, her office posted its first official mention of the gateway concept here.
She promised to call her own meetings over the summer to give residents a chance to say what they do — and do not — want.
“If they don't support it, it's not going to happen,” she said.
See related article: If you own rural land beware
For more on the West County Gateway project see Gateway Project in Occidental and Bodega Bay
Monday, February 4, 2013
More Bubble Trouble in California?
full article: More Bubble Trouble in California?
Just six years since the last housing bubble, California is blowing up another. This may seem like good news to homeowners and speculators alike but it could further accelerate the demise of the state's middle class and push more businesses out of the state.
On its face, a real estate turnaround should be a strong sign of an economic recovery. In Southern California, home sales have jumped 14 percent over last year and the median price is up 16 percent, some 25 percent in Orange County. We may not quite be at 2007 super-bubble levels but we're getting there, particularly in the more desirable areas.
Yet, before opening the champagne, we need to look at some of the downsides of this asset recovery. We are not seeing much new construction, particularly of single-family homes, so the supply is not being replenished as inventory sinks. Meanwhile, many of the homebuyers are not families seeking residences, but flippers, Wall Street types and foreign investors. A remarkable one-in-three Southern California home purchasers paid with cash, up from 27 percent from last year.
It's clear that this increase is not being fueled primarily by income growth among middle-class Californians; these "prices are rising disconnected from household incomes," notes one analyst. Indeed, California incomes have been dropping somewhat more rapidly, down $2,600 per household from 2007-11, according to the American Community Survey, compared with a $200 drop nationwide. California incomes are still 13 percent higher than the national average, but a lot less so than in the past, particularly given the much higher costs and taxation.
This leads to what is becoming the biggest problem facing the state – a decline in the rates of affordability. The previous bubble left us a legacy of more-affordable housing, an advantage we may now be losing. Historically, and in much of the country, the median multiple, which compares the median-price home to median household income, was in the three range. At the height of the previous bubble, the median multiple for the Los Angeles-Orange County metropolitan area, reached 11.5 in 2007, then fell to a still-elevated 5.7 in 2009, notes demographer Wendell Cox. It remained steady in 2011, but in just the past year the measurement has shot up to 6.2. A few more years at this rate, and housing affordability could worsen materially.
The new bubble can be seen elsewhere in the state. The most prominent inflation in housing values can be seen in the San Francisco Bay Area, which has enjoyed the most buoyant recovery from the recession. Never a cheap area, in 2006, San Francisco reached a median multiple of10.8 and Silicon Valley (San Jose) rose to 9.3. When the bubble imploded, the median multiple fell to 6.7 in both metropolitan areas, still well above any level recorded before the housing bubble. But now, amidst a concentrated boom in the western side of the Bay, the median multiple rose the equivalent of 1.1 years of income in San Francisco (to 7.8) and 1.0 years of income in San Jose (7.9) in a single year.
Of course, you can argue that the higher prices in the Bay Area are explainable at least in part by a growth in employment and wealth generated by tech start-ups. But what about soaring prices in places like the Inland Empire (Riverside-San Bernardino), Sacramento or Fresno, where economic growth has been torpid, and unemployment remains well north of 10 percent? Over the past year, Sacramento's median multiple has risen from an affordable 2.9 to 3.2, the Inland Empire from 3.2 to 3.7 while Fresno's has gone from 3.1 to 3.5.
As these prices rises, the California dream, already increasingly off-limits in the coastal areas, begins to become less achievable even in the inland areas. Already, barely 55 percent of Californians own their own home, down from the bubble-period high of 60 percent in 2005 and compared with upward of 65 percent nationally.
Traditionally, the pent-up demand for houses would be met in the marketplace, but California's Draconian planning laws make this very difficult. In the first 11 months of 2012, the Census Bureau reports that the Los Angeles-Orange County metropolitan area had half as many construction permits than much smaller Dallas-Fort Worth, 60 percent of Houston's permits and fewer even than the relatively tiny Austin, Texas, metropolitan area. More to the point, more than 70 percent of L.A.'s construction was in multifamily units while the majority in most areas, (except for such areas as New York, San Francisco, San Jose and San Diego) was in single-family homes.
Given the state's planning preference for high-density housing, even in suburban and exurban areas, there's little hope that California single-family home buyers can expect much relief. As millennials age, and seek out this form of housing as they start families, they will likely look increasingly elsewhere, for example, in Dallas-Fort Worth, Houston, Phoenix or Atlanta. The great California exodus, which slowed during the housing bust, will likely pick up, joining up with the continued movement of employers to more business-friendly states.
In the short run, of course, not everyone loses from a new bubble. Owners of homes, particularly along the coast, will see a big increase in their net worth. There could be good times ahead again for what author Bob Bruegmann calls "the incumbent's club." With projected new units running at one-half their 2007 level until 2015, scarcity will help the state's graying gentry. These same citizens also enjoy a double bonus, since most are protected by Proposition 13 from paying higher property taxes on their rising property values.
The bubble may also have short-term positive impact on local governments, which may benefit from high property taxes if more homes change hands at higher prices. The "wealth effect" could also bring new capital-gains income to a state government whose revenue stream increasingly depends on the upper-class taxpayer, particularly after the passage of Proposition 30, which increased the state's reliance on high-income earners. In this sense, the asset inflation could help Gov. Jerry Brown enjoy his much-trumpeted surplus, and he may even avoid the deficit projected next year by the Legislative Analyst.
These positive effects may be outweighed by bigger concerns. The pushback against single-family homes will restrain the growth of the construction industry, still down 400,000 jobs from its 2006 peak. This is particularly critical for working-class Californians, many of whom previous made decent livings in this industry.
But workers and homebuilders won't be the only ones affected; so, too, will consumers. Without a loosening of regulatory constraints, pent-up demand for housing, particularly the single-family variety, will remain largely unaddressed. This will further inflate the bubble even in unfashionable areas. We may soon see a surplus of rental apartments, but not enough single-family homes; the ownership market, as evidenced by the rising median multiples, will continue to tighten, and prices could rise even more, even in a mediocre economy.
The groups hit hardest by this scenario will be middle- and working-class Californians, particularly above the age of 30-35, most of whom desire to own their own home. Unable to qualify, or unwilling to overleverage, many will be forced either to give up their dreams or look elsewhere, taking their talents and, eventually, their offspring, with them.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the Orange County Register.
Photo by Sean Dreilinger: One of two adjacent bank owned homes
by Joel Kotkin 02/04/2013

On its face, a real estate turnaround should be a strong sign of an economic recovery. In Southern California, home sales have jumped 14 percent over last year and the median price is up 16 percent, some 25 percent in Orange County. We may not quite be at 2007 super-bubble levels but we're getting there, particularly in the more desirable areas.
Yet, before opening the champagne, we need to look at some of the downsides of this asset recovery. We are not seeing much new construction, particularly of single-family homes, so the supply is not being replenished as inventory sinks. Meanwhile, many of the homebuyers are not families seeking residences, but flippers, Wall Street types and foreign investors. A remarkable one-in-three Southern California home purchasers paid with cash, up from 27 percent from last year.
It's clear that this increase is not being fueled primarily by income growth among middle-class Californians; these "prices are rising disconnected from household incomes," notes one analyst. Indeed, California incomes have been dropping somewhat more rapidly, down $2,600 per household from 2007-11, according to the American Community Survey, compared with a $200 drop nationwide. California incomes are still 13 percent higher than the national average, but a lot less so than in the past, particularly given the much higher costs and taxation.
This leads to what is becoming the biggest problem facing the state – a decline in the rates of affordability. The previous bubble left us a legacy of more-affordable housing, an advantage we may now be losing. Historically, and in much of the country, the median multiple, which compares the median-price home to median household income, was in the three range. At the height of the previous bubble, the median multiple for the Los Angeles-Orange County metropolitan area, reached 11.5 in 2007, then fell to a still-elevated 5.7 in 2009, notes demographer Wendell Cox. It remained steady in 2011, but in just the past year the measurement has shot up to 6.2. A few more years at this rate, and housing affordability could worsen materially.
The new bubble can be seen elsewhere in the state. The most prominent inflation in housing values can be seen in the San Francisco Bay Area, which has enjoyed the most buoyant recovery from the recession. Never a cheap area, in 2006, San Francisco reached a median multiple of10.8 and Silicon Valley (San Jose) rose to 9.3. When the bubble imploded, the median multiple fell to 6.7 in both metropolitan areas, still well above any level recorded before the housing bubble. But now, amidst a concentrated boom in the western side of the Bay, the median multiple rose the equivalent of 1.1 years of income in San Francisco (to 7.8) and 1.0 years of income in San Jose (7.9) in a single year.
Of course, you can argue that the higher prices in the Bay Area are explainable at least in part by a growth in employment and wealth generated by tech start-ups. But what about soaring prices in places like the Inland Empire (Riverside-San Bernardino), Sacramento or Fresno, where economic growth has been torpid, and unemployment remains well north of 10 percent? Over the past year, Sacramento's median multiple has risen from an affordable 2.9 to 3.2, the Inland Empire from 3.2 to 3.7 while Fresno's has gone from 3.1 to 3.5.
As these prices rises, the California dream, already increasingly off-limits in the coastal areas, begins to become less achievable even in the inland areas. Already, barely 55 percent of Californians own their own home, down from the bubble-period high of 60 percent in 2005 and compared with upward of 65 percent nationally.
Traditionally, the pent-up demand for houses would be met in the marketplace, but California's Draconian planning laws make this very difficult. In the first 11 months of 2012, the Census Bureau reports that the Los Angeles-Orange County metropolitan area had half as many construction permits than much smaller Dallas-Fort Worth, 60 percent of Houston's permits and fewer even than the relatively tiny Austin, Texas, metropolitan area. More to the point, more than 70 percent of L.A.'s construction was in multifamily units while the majority in most areas, (except for such areas as New York, San Francisco, San Jose and San Diego) was in single-family homes.
Given the state's planning preference for high-density housing, even in suburban and exurban areas, there's little hope that California single-family home buyers can expect much relief. As millennials age, and seek out this form of housing as they start families, they will likely look increasingly elsewhere, for example, in Dallas-Fort Worth, Houston, Phoenix or Atlanta. The great California exodus, which slowed during the housing bust, will likely pick up, joining up with the continued movement of employers to more business-friendly states.
In the short run, of course, not everyone loses from a new bubble. Owners of homes, particularly along the coast, will see a big increase in their net worth. There could be good times ahead again for what author Bob Bruegmann calls "the incumbent's club." With projected new units running at one-half their 2007 level until 2015, scarcity will help the state's graying gentry. These same citizens also enjoy a double bonus, since most are protected by Proposition 13 from paying higher property taxes on their rising property values.
The bubble may also have short-term positive impact on local governments, which may benefit from high property taxes if more homes change hands at higher prices. The "wealth effect" could also bring new capital-gains income to a state government whose revenue stream increasingly depends on the upper-class taxpayer, particularly after the passage of Proposition 30, which increased the state's reliance on high-income earners. In this sense, the asset inflation could help Gov. Jerry Brown enjoy his much-trumpeted surplus, and he may even avoid the deficit projected next year by the Legislative Analyst.
These positive effects may be outweighed by bigger concerns. The pushback against single-family homes will restrain the growth of the construction industry, still down 400,000 jobs from its 2006 peak. This is particularly critical for working-class Californians, many of whom previous made decent livings in this industry.
But workers and homebuilders won't be the only ones affected; so, too, will consumers. Without a loosening of regulatory constraints, pent-up demand for housing, particularly the single-family variety, will remain largely unaddressed. This will further inflate the bubble even in unfashionable areas. We may soon see a surplus of rental apartments, but not enough single-family homes; the ownership market, as evidenced by the rising median multiples, will continue to tighten, and prices could rise even more, even in a mediocre economy.
The groups hit hardest by this scenario will be middle- and working-class Californians, particularly above the age of 30-35, most of whom desire to own their own home. Unable to qualify, or unwilling to overleverage, many will be forced either to give up their dreams or look elsewhere, taking their talents and, eventually, their offspring, with them.
Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.
This piece originally appeared in the Orange County Register.
Photo by Sean Dreilinger: One of two adjacent bank owned homes
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