California Wages War On Single-Family Homes

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In recent years, homeowners have been made to feel a bit like villains rather than the victims of hard times, Wall Street shenanigans and inept regulators. Instead of being praised for braving the elements, suburban homeowners have been made to feel responsible for everything from the Great Recession to obesity to global warming.

In California, the assault on the house has gained official sanction. Once the heartland of the American dream, the Golden State has begun implementing new planning laws designed to combat global warming. These draconian measures could lead to a ban on the construction of private residences, particularly on the suburban fringe. The new legislation’s goal is to cram future generations of Californians into multi-family apartment buildings, turning them from car-driving suburbanites into strap-hanging urbanistas.

That’s not what Californians want: Some 71% of adults in the state cite a preference for single-family houses. Furthermore, the vast majority of growth over the past decade has taken place not in high-density urban centers but in lower-density peripheral areas such as Riverside-San Bernardino. Yet popular preferences mean little in a state where environmental zealotry increasingly dictates how people should live their lives.

Some advocates do cite market forces to justify their policies. Economists on the left and right have cited the recent housing bust as proof that homes are not great investments, suggesting people would be better off leaving their money to the tender mercies of Wall Street speculators. Some demographers also suggest that young people will choose to live in high-density regions throughout their lives and that as boomers age they too will opt out of suburbs for urban apartment living.

These “facts” may be more grounded in academic mythology than reality. Some widely quoted experts, like the Anderson Forecast at UCLA, cite Census information to say that demographics are shifting demand from single-family homes to condos and apartments, although the Census asked no such question. These experts also fail to address why condo prices have dropped even more in the major California markets than single-family home prices; the percentage of starts that come from single-family houses shifts from year to year, but last year’s number tracks around the same level as seen in the 1980s.

Perhaps the biggest weakness in the analysis lies with long-term demographic factors. As I wrote last week, many of the “young and restless” folks whom city planners try to court tend to move into suburbs and affordable low-density regions as they grow older and begin starting families. Similarly, the vast majority of boomers, according to AARP, want to remain in their old homes as long as possible. Most of those homes are located in suburban, low- to medium-density neighborhoods.

But who needs facts when you have religion? Take the Association of Bay Area Governments (ABAG) and Metropolitan Transit Commission’s (MTC) new “sustainable communities strategy,” a document designed to meet the requirements of the state’s draconian anti-greenhouse gas legislation.

This “strategy” seeks to all but reduce growth in the region’s lower-density outer fringe – eastern Contra Costa County as well as the Napa, Vallejo and Santa Rosa metropolitan areas — which grew more than twice as fast as the core and inner suburbs. Instead the ABAG-MTC projects a soaring increase in demand for high-density housing and its latest “vision” report calls for 97% of all the region’s future housing be built in urban areas, virtually all of it multi-family apartments, to accommodate an estimated 2 million residents

The projections underpinning ABAG’s strategy are absurd. Over the past decade the population of the region’s historic core cites San Francisco and Oakland — where much of the dense growth would be expected to take place — increased by 1.7%, compared with 6.5% for the suburbs. Overall regional growth stood at a modest 5.1%, roughly half that of the previous decade and just about half of the national and state averages.

Given this record, a more reasonable assumption would be population growth at something closer to 1 million, half the projected amount. Assumptions about the economy to support even this growth are also dubious. The ABAG report, for example, fantasizes that by 2030 the Bay Area will increase its employment by 900,000 — a neat trick for an area that overall lost 300,000 positions over the past decade.

So, why wage war on the house? Some greens seem to regard the single-family house as an assault on eco-consciousness. Yet in many cases, these objections are overstated. Research supporting higher-density housing , for example, has routinely excluded the greater emissions from construction material extraction and production, building construction itself and& greenhouse gas emissions from common areas like parking levels, entrances and elevators.

Further, higher densities are associated with greater congestion, which retards fuel efficiency and increases greenhouse gas emissions, a factor not sufficiently considered. Given that less than 10% of Bay Area residents take transit — and barely 3% in its economic engine Silicon Valley — higher density likely would create greater, not fewer, emissions.

The ABAG report also studiously avoids mentioning the potential greenhouse gas reductions to be had by expanding telecommuting, which is growing six times faster than the fervently pushed transit commuting in the region. The Silicon Valley already has 25% more telecommuters than transit users. Clearly, by pushing telecommuting, you could get big reductions in GHG without a “cramming” agenda.

Ultimately the density agenda reflects less a credible strategy to reduce GHG than a push among planners to “force” Californians, as one explained to me, out of their homes and into apartments. In pursuit of their “cramming” agenda planners have also enlisted powerful allies – or perhaps better understood as ”useful idiots” — developers and speculators who see profit in the eradication of the single family by forcibly boosting the value of urban core properties.

In the end, however, substituting religion for markets and people’s preferences is counterproductive. For one thing, people “forced” to live densely will find other places to live the way they like — even if it means leaving California. This is already happening to middle class families in places like San Francisco and may soon be true of California’s traditionally middle-class-friendly interior as well.

In the end, two markets are likely to grow in the Bay Area. One is low-end rental housing for students and an expanding servant class — after all Google millionaires need people to walk their dogs and paint their toenails. The other is luxury retirement facilities for the region’s growing population of aging affluents. Once a self-consciously “cool” youth magnet, Marin County, for example, is now one of the country’s oldest urban counties, with a median age of 44.5; San Francisco is headed in the same direction.

Developers can drool over the prospects of building high-end assisted living joints for all those aging hippies who made their bundle during the state’s glory days and settled into places like Mill Valley. After all, unlike young families, these affluent oldsters will be able to afford indulging in the state’s mild climate, natural food restaurants and brilliant scenery. And with easily accessible medical marijuana and a good sound system for playing Grateful Dead recordings, the gray-ponytail set could be in for a hell of a good time, at least as long as it lasts.

This piece originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

Photo by Mike Behnken



















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It's the beauty of it.

It's the beauty of it. Having a decent shelter is already enough.
www.temeculaareahomes.com

You have a good point here!I

You have a good point here!I totally agree with what you have said!!Thanks for sharing your views...hope more people will read this article!!!
perfect vision today program

crammed apartment buildings

"The new legislation’s goal is to cram future generations of Californians into multi-family apartment buildings, turning them from car-driving suburbanites into strap-hanging urbanistas."

So true, and this is just purely disgusting. I live in Southern California, and it just amazes me that They arnt doing anything to help out these families. If people cant even afford a house then how could they ever be able to afford to buy a simple log basket or other trifles. Tons of houses have foreclosure signs on them and more and more people are having to live on the street in vans or tents even and all these houses are empty, for what?

California Wages War On Single-Family Homes

Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like.
regent residences
New Launch Singapore

I'm a bit worried about what

I'm a bit worried about what I read in this article for the sake of home owners. California must be a nice place to have a Family Vacation .

Comprehension on the subject

A shame that many do not understand:
Restricting (confining) supply [of land], plus increasing costs, by many other means, increases prices.

This compact design does not pan out as claimed.
Higher density leads to more congestion, plus many other negatives.

Want high transit use:
NYC is an extreme outlier, w/Manhattan at 65,000/mi.
NYC at 26,000; the NYC UA at about 5,000, lower than the LA UA.
Next densest [big] city is SF at 16,000/mi.
Below that is 12,000.

Y'all know that? If not, you have no business commenting.
It's like commenting on the chemistry of ______ without being a chemist.

Does density matter for the urban population, taking <3% of land?
Disagree with: O'Toole, Cox & Reason Foundation?
Have you actually read much material?
VTI has plenty of errors & fallacies, which I have read thoroughly; I can counter & will gladly debate him.

Hey, ya know the recession causes?
Of a dozen causation items, pertaining to housing -- the CRA of 1977, its expansion under Clinton, w/help from ACORN & the the GSEs & the higher than shoulda been credit ratings, etc. -- the biggest factor was the rise in prices.
.!!.Housing Prices increased in certain UAs due to gov policy -- restricting land supply & increasing other costs.

Think about it: the higher demand? Not a higher population increase. However the x-low interest rate & lower lending standards added to demand. That was nationally available, but housing prices were not correlated w/population increases. Normally, w/proper market signals, the private sector increases production for whatever, but there were barriers in many UAs.

Has transit improved or the greenism per the bubble? We all like nature & cleanliness -- strange that those most enjoying nature, live in rural areas. Huh? Want open space-- then live in crowded cities. Huh?

Requirements vs. Reflecting Public Costs

There's a strong difference between REQUIRING people to live in certain areas, and regulating things such that the 'hidden' costs are more accurately reflected in the price.

For instance, the street infrastructure costs associated with suburban growth are huge compared to urban costs. Since state taxes are used for such street infrastructure, those who live in dense urban areas are often subsidizing the lifestyle of those who live in low-density suburban areas. This is not /necessarily/ unfair, but is currently a hidden cost that could be made more transparent in some way.

I'm the last one to call for higher taxes, but they can be a tool for policy.

Anyway, I hope this is coherent. I'm sleep deprived from a new baby. :D Feedback is welcome.

Can't take this seriously

Such snarky, contemptuous drivel. NewGeography is turning into a right-wing fringe website.

Exaggerated Criticism of Smart Growth Policy Reforms

Mr. Kotkin offers opinions rather than real analysis. Nobody is blaming homeowners for recessions, obesity or global warming. There are, however, good reasons to support transport and land use policy reforms that help create more diverse transportation systems and more compact, multi-modal communities.

There is plenty of evidence that current demographic and economic trends are increasing consumer demand for more compact housing types (small-lot single-family, townhouses and condominiums) and more accessible locations. The U.S. has a large stock of large-lot single-family homes, many of which will be on the market during the next two decades as baby boomers retire and downsize. The demographic segment that prefers such housing (families with children) is projected to stay about its current size; growth will primarily occur in other groups (young singles and couples, and seniors), segments that often prefer other housing types. As a result, real estate experts predict that the growth in housing demand will consist primarily of more compact housing. For information see:

Todd Litman (2009), "Where We Want To Be: Home Location Preferences And Their Implications For Smart Growth," Victoria Transport Policy Institute (www.vtpi.org/sgcp.pdf ).

NAR (2011), "2011 Community Preference Survey: What Americans Are Looking For When Deciding Where To Live," National Association of Realtors (www.realtor.org/press_room/news_releases/2011/04/smart_growth ).

Arthur C. Nelson (2006), “Leadership in a New Era,” Journal of the American Planning Association, Vol. 72, No. 4 (http://law.du.edu/images/uploads/rmlui/conferencematerials/2007/Thursday... ).

There is clearly significant latent demand for more compact housing which is is not met due to current zoning codes and development practices (restrictions on higher-density, mixed, multi-family housing, and generous minimum parking and setback requirements) which discourage compact, infill development. Urban developers often fight to increase the density and reduce the parking requirements in their projects, yet are prohibited by zoning codes and other regulations. This reduces true affordability by prohibiting the development of lower-cost housing in accessible locations. The policies Kotkin criticizes will allowing more compact, infill development, which responds to consumer demands and helps reduce other costs.

For information see:

Jonathan Levine (2006), "Zoned Out: Regulation, Markets and Choices in Transportation and Metropolitan Land Use," Resources for the Future (www.rff.org).

Todd Litman (2010), "Affordable-Accessible Housing In A Dynamic City: Why and How To Support Development of More Affordable Housing In Accessible Locations," Victoria Transport Policy Institute (www.vtpi.org/aff_acc_hou.pdf ).

USEPA (2010), "Smart Growth: The Business Opportunity for Developers and Production Builders," U.S. Environmental Protection Agency (www.epa.gov/smartgrowth/sg_business.htm ).

There is also plenty of evidence that more compact, multi-modal development patterns do provide substantial energy conservation and emission reduction benefits, as well as other savings and benefits, including reduced costs of providing public services, reduced per capita traffic fatality rates, and habitat preservation. The claim that smart growth increases congestion to the point of eliminating energy savings was proven wrong long ago by studies which simply measure fuel consumption rates for residents in various geographic locations: the results show substantially lower rates in more compact, multi-modal areas.

For information see:

Pamela Blais (2010), "Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl," UBC Press (http://perversecities.ca).

CARB (2010-2011), "Research on Impacts of Transportation and Land Use-Related Policies," California Air Resources Board (http://arb.ca.gov/cc/sb375/policies/policies.htm).

Lawrence D. Frank , et al. (2011), An Assessment of Urban Form and Pedestrian and Transit Improvements as an Integrated GHG Reduction Strategy, Washington State Department of Transportation (www.wsdot.wa.gov/research/reports/fullreports/765.1.pdf ).

Todd Litman (2011), “Can Smart Growth Policies Conserve Energy and Reduce Emissions?” Portland State University’s Center for Real Estate Quarterly (www.pdx.edu/realestate/research_quarterly.html), Vol. 5, No. 2, Spring, pp. 21-30; at www.vtpi.org/REQJ.pdf.

TRB (2009), Driving and the Built Environment: The Effects of Compact Development on Motorized Travel, Energy Use, and CO2 Emissions, Special Report 298, Transportation Research Board (http://onlinepubs.trb.org/Onlinepubs/sr/sr298prepub.pdf ).

ULI (2010), "Land Use and Driving: The Role Compact Development Can Play in Reducing Greenhouse Gas Emissions," Urban Land Institute (www.uli.org/ResearchAndPublications/PolicyPracticePriorityAreas/Infrastr... ).

Todd Litman is founder and executive director of the Victoria Transport Policy Institute (www.vtpi.org), an independent research organization dedicated to developing innovative solutions to transport problems.

You are ignoring real problems that people are having.

I would criticize Joel Kotkin for not adequately confronting other factors that inflate housing prices. When I lived in New England, a major cause of unaffordable housing was the attempt by many towns to preserve their character and using large lot zoning regulations to force people away from centers. This has resulted in the average New Englander living at very low densities in high population density states. In some cases, the preservation was successful, some of these towns are just as sad and depressing as they were two hundred years ago (despite actually being located in affluent areas).

However even though I am sympathetic to New Urbanism, as a father of young kids I am glad that people like Joel Kotkin and Wendell Cox are out there defending housing affordibility for families. I believe you are in denial about the many real problems accompanying densification policies. Housing affordibility is better in Massachussets than in California despite more than 3 times the population density and a better economy.

In the recent articles covering Auckland to which you responded, your responses largely ignored the very real problems encountered by people living there. As a result of Auckland's housing prices, my brother-in-law commutes 50 minutes each way into Auckland. This is an undesirable result by any measure. And here in the USA, even Paul Krugman attributed the housing bubble to zoning regulations (NY Times article by Krugman titled "That Hissing Sound")

Ultimately if you are right about market trends (and I believe to some degree you are, but not to the extent you may want), this should not cause a problem for anyone else, you just need to fight to ensure their needs are met, not put restrictions on anyone else. I like a lot of what New Urbanists are doing, there is a need for better urban areas and suburban areas.

I also believe you are over estimating the availability of suburban housing. Even though I believe New Urbanism is a good solution for older people, in our area I see people deep into their seventies and eighties hanging onto the same 3000 sq foot homes on 3/4 acre lots that they brought up their kids up in. Additionally, the fact that there is plenty of affordable suburban housing in Detroit does not help.

Luke

Defining Housing Unaffordability Problems

Luke, thank you very much for your comments.

I am very concerned about unaffordability problems and I have been working for more than two decades to find practical ways to increase true affordability. See, for example, the following reports:

Parking Requirement Impacts on Housing Affordability (www.vtpi.org/park-hou.pdf )

Transportation Affordability: Evaluation and Improvement Strategies (www.vtpi.org/affordability.pdf ).

Affordable-Accessible Housing In A Dynamic City: Why and How To Support Development of More Affordable Housing In Accessible Locations ( www.vtpi.org/aff_acc_hou.pdf ).

Memo From Future Self: Hope For The Best But Prepare For the Worst (www.planetizen.com/node/39418).

However, I define affordability differently than Kotkin and Cox, because I believe it should reflect housing and transport costs combined, rather than housing costs alone. Households often make tradeoffs between housing and transport costs; there is no increase in overall affordability if accessing lower-priced housing
increases transportation costs. Several recent studies have investigated these issues and identified the locations and public policy reforms that provide true household affordabilty (see the "Housing and Transportation Affordability Index" http://htaindex.cnt.org ).

Also, I believe that Kotkin and Cox misdiagnose the ways that land use policies affect housing costs. They focus on the increases in land costs per acre causes by urban growth boundaries, but ignore other policies that reduce housing affordability, and ways that smart growth policies can increase affordability by reducing land requirements per housing units, allowing more diverse housing types (such as townhouses, garden apartments and condominiums), reducing parking and setback requirements, and by reducing development and utility fees for more compact housing to reflect the lower costs of providing public services in such areas. For information on these issues see:

Pamela Blais (2010) Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl, UBC Press (http://perversecities.ca).

Jonathan Levine (2006), Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land-Use, Resources for the Future (www.rff.org).

Todd Litman (2010), Understanding Smart Growth Savings, Victoria Transport Policy Institute (www.vtpi.org/sg_save.pdf ).

Described differently, physical or legal constraints on urban expansion only cause housing inaffordability if the market is prohibited from responding with increased density. Even people who prefer single-family housing benefit from smart growth policies that allow more compact development because that frees up land for their housing: you benefit if your neighbors can find an infill townhouse or apartment because they are not bidding for the suburban lot you desire.

As I mentioned previously, there is clearly latent demand for compact housing, as indicated by the efforts developers make to increase density and reduce parking requirements in urban locations. Unfortunately, our current policies and planning practices discourage such development, and affordable housing is the first casualty. Smart growth policy reforms help overcome these constraints, creating a housing market that is more responsive to consumer demands, particularly in the more affordable range.

What do you think?

Todd Litman is founder and executive director of the Victoria Transport Policy Institute (www.vtpi.org), an independent research organization dedicated to developing innovative solutions to transport problems.

Todd, thanks for taking the

Todd, thanks for taking the time to respond.

Increasing the cost of land through restrictions results in a transfer of wealth to existing landowners. This is independent of whether one responds by building up or not, people are paying more per square foot. There is no social value in this transfer, there are better uses for that money - improving build quality is one I can think of.

Ultimately the question of how density should be managed may in time be answered by comparing how densification evolves in areas like Houston (and Houston is densifying) compared to the more actively managed areas. I saw recently that the number of building applications for multi-family developments in Houston was similar to LA.

Economic Impacts of Higher Land Values

Thanks for your feedback, Luke.

As I said before, I think it is very important to improve true affordability by reducing total housing and transport costs. Many strategies reduce one or the other, but only by creating more affordable-accessible housing (affordable housing in accessible, multi-modal areas) can we achieve both.

An increase in land values is an economic transfer: some people gain (those who own the land) while others lose (those who must pay more). This may seem unfair when you are a home buyer, but benefits you in the future when you become a home seller. On the other hand, vehicle and fuel expenditures are true resource costs: they are consumed leaving little or no residual value. As a result, over the long-run a household becomes much wealthier by paying more for housing and less for transportation than vice versa. For example, if you pay $20,000 annual mortgage payments and $5,000 annual transport expenditures (one car driven low annual mileage, and some transit fares) for an urban home, at the end of ten years you will accrue about $125,000 more equity value than if you had paid $10,000 annual mortgage payments and $15,000 annual transport expenditures (two cars driven higher mileage) for a cheaper but automobile-dependent suburban home (assuming 6% annual interest).

Yes, many cities and towns that started off being totally automobile-dependent are now becoming more multi-modal, including Houston, Dallas and Denver, and yes there is plenty of evidence of significant market demand for more compact housing, particularly in the lower price range (see www.vtpi.org/sgcp.pdf ). Current planning regulations and development practices are not responsive to these changes. For example, most municipalities still limit density, multi-family housing, and require generous parking supply. Smart growth policy reforms allow the market to respond to changing demands.

Todd Litman is founder and executive director of the Victoria Transport Policy Institute (www.vtpi.org), an independent research organization dedicated to developing innovative solutions to transport problems.

why so angry and sarcastic?

Joel, what happened to your usual dispassionate tone? This article is a little over the top.

The ABAG-MTC study is merely suggesting a realistic solution (i.e. density) to a pressing problem (i.e. too many people).

There is more to life than "what costs cheapest." With the Bay Area expecting 2 million more people, public transport makes sense. Density makes sense. I normally agree with you, but in this piece you endorse endless suburban sprawl, which trashes the environment, increases our dependency on foreign oil, and is the essence of short-term thinking.