Housing by the Numbers

Timothy L. Coyle
Consultant specializing in housing issues

If you’re following the debate over new housing in California you were probably encouraged to see a recent report of McKinsey and Company which seeks to actually, specifically suggest what can be done to ease the state’s shelter crisis.  I’m here to say it’s for real, too.

The report, entitled A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025 (“the Study”) – like so many before it – borrows from the list of horribles to tell the story about the state’s dismal housing situation:  50% of Californians can’t afford the cost of housing; California ranks second-to-last among all states in housing units per-capita; California housing costs have risen 3 times faster than incomes over the past decade; California has a housing shortage of 2.5 million units.

But, the Study also does something that few if any studies have done before it.  It identifies 15 concrete steps that can be taken by state and local leaders to build 3.5 million housing units by 2025.  In other words, build enough housing to meet future demand.

The tools to get there are all bona fide proposals, falling into four categories:

  • Tools to help California communities identify the land for new housing (housing “hot spots”);
  • Tools to remove barriers to developing housing on this high-potential land;
  • Tools to cut the cost and risk of producing housing; and
  • Tools to help ensure housing access for citizens who are priced out of the market.

For sure, some of the Study’s proposals are spurious and politically meretricious – ones we’ve seen before.  But, many are thoughtful and realistic, like building on vacant urban land that cities have already zoned for multifamily development:

In California cities with populations of more than 100,000 people, we conservatively estimate that there is capacity to build 103,000 to 225,000 housing units on vacant land that has already cleared the multifamily zoning hurdle.  One-third of this opportunity is in Los Angeles County.

This was concluded after McKinsey and Company mapped zoned land in selected California communities.  Likewise, they found additional development opportunities by locating underutilized land:

In California’s cities, a significant portion of land zoned for multifamily residential use is not vacant but is underutilized.  In Los Angeles, for example, a single-story apartment building built in the 1930s might have four units, with most of the lot area dedicated to parking.  But the lot may be zoned for ten units—implying, say, 40 percent utilization of zoned capacity.

These proposals are accompanied by other measures to incentivize urban development:

  • Inventory and publicize vacant sites;
  • Impose higher taxes on idle, underutilized urban land;
  • Accelerate land-use approvals; and
  • Property tax exemptions or infrastructure funding to reward infill development.

The Study also encourages aligning fees with housing objectives and adopting zoning and building-code carve-outs, something that has worked well in the City of San Diego.

Some of the proposals are simply warmed-over mandates that have soundly and repeatedly rejected by the courts and the Legislature and will not likely be advanced anytime soon.  But, if I’m a moderate Democrat, I’d pluck a couple of ideas from this report and introduce them as bills next year.

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