The Housing Crisis

California is leading efforts nationwide, but not without controversy

This is not your father’s granny-flat.

California seems to always be at the leading edge of the nation’s trends and troubles. The current housing crisis is a fine example. Like California, workers everywhere are finding it impossible to live near their jobs as rent and home prices soar. Their long commutes, in addition to being demotivating, are, from both a practical and environmental perspective, expensive and time consuming. Gasoline, oil, tires, and general wear and tear cost money. So does childcare, and the farther away the workplace is, the longer you’re gone and the more childcare costs. Families hoping to take the leap into home ownership are stymied by sky-high prices.

Thousands of people are homeless precisely because they can’t afford even a modest place to live. The best some can do is an extended stay hotel. Many of them have children, and living on the street or out of a car is not conducive to academic achievement.

Based on these realities, we can’t fault the state legislature for trying new things. One new law increases population density near public transit access points. Linking apartment complexes and other higher-density housing to rapid transit is an old idea whose time has certainly come.

As one prescription for the problem, California has passed a controversial new law, Senate Bill 9, that supersedes local zoning control in an effort to increase density in suburban neighborhoods, and that has people highly agitated. Beginning January 1st, four homes will be allowed on a single lot, regardless of local rules to the contrary. Owners will now be allowed to split their lots, building additional dwelling units on each side of the split, making for four houses where in many instances there was only one.

The rub of course is that when most bought in a single-family neighborhood, they hadn’t contemplated a quadrupling of homes, or what that means for resale, and infrastructure like roads and schools. It is also notable that cities will not be allowed to require a parking space for each dwelling.

The Los Angeles Times: “California single-family neighborhoods could see existing parcels split in half to build new homes…a plan more modest than far-reaching housing efforts in recent years but sharply criticized by officials in some cities as an overreach on decisions that should be left to local communities.”

Governor Gavin Newsome said, “The housing affordability crisis is undermining the California dream for families across the state, and threatens our long-term growth and prosperity. Making a meaningful impact on this crisis will take bold investments, strong collaboration...and political courage from our leaders and communities to do the right thing and build housing for all.”

SB9 adds density, but how exactly does that enhance affordability, if that in fact remains a goal? Density without affordability does little to solve the housing crisis. Just more people who can afford astronomically priced homes continuing to price many, if not most, out of the market.

In what might be viewed as addition by subtraction, the state proposes to add housing by limiting property rights. It won’t happen everywhere, but the point is, it can. There is one stopgap measure in the law that demands the property developer live in one of the four dwellings, but only for three years. The prospect that your neighbor becomes four neighbors exists, as does the potential that the neighborhood where you made a big investment based on appreciating asset value, might become a transient one where renters outnumber owners, a fact that usually does not enhance values. That is guaranteed to upset some. Others will say it’s a way to fight inequality, and while that might be true, it flies in the face of fair play, creating market unpredictability for potential and existing homeowners.

It begs questions like can you sell all four houses at once? One assumes so. Can you sell in pieces? Same assumption, but I’ll bet issues like this will find their way to a courtroom or two. The regular arguments will ensue: some will contend that the quality of the neighborhood that they originally bought in will be irreversibly and negatively impacted by the new density, and others will decide that very fact is for the betterment of their neighborhoods. It’s thorny, as are most intractable problems.

And what of localism? Some things like educational curricula require standardization. Other things like local zoning, should likely remain local. We must keep in mind that SB9 isn’t a mandate, but an opportunity for some to leverage their properties, but we shouldn’t fool ourselves into thinking that it solves the larger problem of affordability.

I don’t have a better idea, but it’s clear something must be done to make housing more affordable. It’s equally clear that not just anything will do.

©2012 Jon Sinton