California has an increasingly expensive housing market which leaves many either homeless, struggling to pay rent, or unable to purchase a home. California has not been building enough units to house all those in need and the small number of units that have been built are not affordable. The housing issue in California – though grave, is not a lost cause. There are tools our legislators can use to alleviate the pressure the housing market is causing on lower income individuals.
As of November 2019, the median home price was $600,000 with median rent at $3,000 a month. The US Department of Housing and Urban Development has a less than 30% benchmark regarding rent/mortgage, this means that if a household spends over 30% of their income on housing, they’re going to have a hard time affording other goods and services. A household must make at least $10,000 a month to be able to comfortably afford a $3,000 apartment.
One of the main drivers of the increasing prices in housing is the lack of physical buildings for people to live in. The number of housing units built is controlled by local governments, some of these governments have very strict zoning regulations which make the construction of new housing very difficult.
This upcoming November 2020, our California ballot will include a split roll proposal – Proposition 15 which will update the long-standing Prop 13. Prop 13 assessed properties at their 1976 value and limited the increase in property taxes to 2% per year until reassessed when sold, among other provisions. This update allows reassessments on commercial properties valued at over $3 million retaining reassessing limitations on housing which is a win for homeowners. This legislation will in fact generate more income for our local governments which may be invested in community programs, housing, schools, etc. However, we must also look at other possible consequence of Prop 15. This initiative may only further incentivize city officials to allow and encourage leasing of property for commercial purposes as it will produce higher income for them. The uncertainty a proposal like this brings only highlights the housing issue much more at the same time illustrating the urgency in which we need to address this problem.
The bottom line is that we need to build more housing. In late 2019, governor Newsom vetoed housing plans from local Southern Californian leaders, he instructed them to build 1.3 million new homes in the next ten years. Sacramento needs to step in and force local governments to build more housing through subsidies, incentives, and penalties. 1.3 million new homes is a great start but not enough. YIMBY (Yes in My Back Yard) groups have estimated that California needs over 3.5 million new homes to house all those looking for an affordable place to live.
Sacramento, this is where you come in.
Approximately, two-thirds of the residential area in Los Angeles allows for single-family housing exclusively. This leaves very few options for building density in the form of affordable apartments. Last year, Senator Wiener introduced SB 50 which made it easier for developers to build housing near busy transit stations and job centers in response to the housing crisis in our state. In January 2020, SB 50 was updated to allow timeline flexibilities. It gave cities 2 years to meet density requirements instead of having to do it right away. However, this legislation died later that month due to a lack of support in the senate. SB 50 was a good start; however, it needed to look more like the seemingly successful Transit-Oriented Communities project in Los Angeles. TOC incentivizes developers to build multi-family units near high transit stops. Developers must include a number of affordable units in their project and in return they’d receive special permits which may allow them to stray from local zoning codes and other incentives and breaks alike. For programs like this to exist there has to be incentives, which SB 50 did not include. In three years, TOC has planned for close to 20,000 new units.
Out of the defeat of SB 50 came SB 1120 which allowed duplexes on single-family lots, essentially ending the rule of single-family exclusivity. Unfortunately, this bill died early September as the senate didn’t get an opportunity to vote for it before the deadline.
If action is not taken now, in a few years none of us will be able to afford to live in the places we know and love in California.