California's Housing Policies Create Slums

California cities are being pressured to slow growth and preserve open space. Yet the state's population continues to grow rapidly. The result will be acute housing shortages that create the nation's largest slums in California.

Recent press reports indicate many California cities are being pressured by their citizens to slow growth and set aside more land for open space. Californians are unhappy with rising traffic congestion and shortages of parks and recreational areas. So they want to reduce the number of new housing units permitted within their communities.

What they do not realize is that these policies will inexorably create the nation's largest slums in California.

Why? Because the state's continued rapid population growth will increase demands for low-cost housing at the same time that growth-slowing and open-space-reserving policies limit increases in the
future supply. The result will be acute housing shortages that raise home prices and rents beyond the abilities of many California households to pay. So thousands of poor households will be forced to double-, triple-, and quadruple up in overcrowded housing units -- that is, slums.

Slow-growth advocates hope local limits on new construction will slash the state's growth altogether, thereby cutting housing demand. But high home prices and rents will not deter poor immigrants from entering California from Latin America. Even living three or four families packed into a "normal" dwelling unit here where jobs are plentiful seems a lot better to them than remaining unemployed in their home countries. So they will keep coming, probably at the current rate of 250,000 persons per year. Moreover, the net out-migration of middle-income households from California to the rest of the U.S. that occurred in the 1990s because of the recession is likely to reverse itself in the current prosperous decade.

California will likely gain six million residents in this decade. That is over an increase of about 200,000 households per year. Yet the state has permitted construction of only 125,000 new housing units per year in the last three prosperous years – and only 103,000 per year during the recession.

The resulting massive increase in overcrowded slum housing is inevitable as long as all decisions about how many units are permitted remain with local governments. Almost every such government's decisions are dominated by homeowners, who want to reduce new construction to keep prices of their own homes high, as well as to limit congestion. No local suburban officials have any incentives to worry about overall housing shortages or poor slum-dwellers.

Yet Californians have shown absolutely no inclination to give more power over housing permits to regional bodies or the state government. So get ready for enormous increases in slums, California!

Anthony Downs is a Senior Fellow at the Brookings Institution in Washington D.C., where he has been since 1977. Brookings is a private, non-profit research organization specializing in public policy studies.

http://www.anthonydowns.com/

The views expressed in this article are solely those of the author, and not necessarily those of the Brookings Institution, its Trustees, or its other staff members.

Comments

Comments

Slums

This is a very interesting debate.

I think one of the underlying problems is that the United States is totally addicted to cheap labor. The voting class (typically older, middle aged, and white) loves having the gardeners, the nannies, the busboys, and loves paying minimal wages for them. Big business, particularly agribusiness, is addicted to cheap labor. NONE want to pay the costs of this addiction.

Unfortunately, a "third world" workforce cannot be housed affordably with "first world" standards. Working in the Planning field, I am familiar with REHABILITATION projects that cost $100,000 per unit. Speaking with a California non-profit, he noted that their units cost $140,000 apiece.

All of the smart growth and neotraditionalism in the world won't overcome population pressures and minimal wages.

Granted, the California economy is slowing drastically. It is still far better than the economy in an isolated mountain village in Mexico, or in some impoverished lower cast slum in India. People will continue moving here, unless we create a police state.

Unfortunately, I don't know if there is a solution. I am skeptical about "smart growth." This is boutique development at middle or upper middle class prices. Unless the Federal Government finally acknowledges the impact of its immigration policies and jumps back into providing affordable housing, we will always have a severe shortage. Maybe we should do the Rich Carson and just allow shantytowns to spring up around the edges of every metropolitan area.

Re: Data and Sprawl

Re: your question about state vs. local effectiveness, you probably know about New Jersey's efforts to require that local municipalities provide low income housing. Started by the state supreme court, the legislature eventually caught up. It was far from a cure-all but it was a statewide mandate to correct local housing policy with discriminatory effects.

Slums and Growth control

I've heard the argument that growth management leads directly to slums before, and am disappointed to see this author advancing it. He should know better;there are multiple causes for slums, not least of which is absentee landlords interested only in milking properties for maximum dollars, coupled with over burdened code enforcers.To the best of my knowledge, slums existed before growth management controls, and have persisted despite infusions of federal dollars to provide affordable housing (not just public housing.) In addition, arguing that housing needs would be best served by approvals granted by the state overlooks the fact that it is local government that provides the sewer, water, roads, police and fire (unless things are VERY different in California), and it is unrealistic to assume that an abundance of housing approved by the state will solve problems if local services can't be provided. A better approach is to argue that local codes should be amended to allow for smaller lot and house sizes, mixed use development, cluster housing,etc, A variety of housing types can allow for more affordability, while at the same time not overburdening ability of local governments to serve.

Slums

The author fails to properly account for one critical factor in his analysis, and compounds his error by relying on an assumption that is not certain.

First, as to the missing factor. Rising property values typically results in the owners of marginally valued propertys investing funds in those properties to maximize return, or in selling those properties to others that will invest funds. This is "urban homesteading," and is common when young professionals and young families inevitably seek housing. What the author should be concerned with is the lack of affordable and low income housing for those who can not obtain any housing. These already-present individuals typically leave the community, rather than double up in unacceptable housing.

Secondly, the U.S. is currently in the midst of an unprecedented period of economic growth, that has resulted in attracting immigrants. however, it is absurd to assume that this period of prosperity will last far into the future. In other words, the assumption that additional families will immigrate to California is faulty.

Thinking differently

We cannot think in isolation any longer. It isn't enough to think of OUR prosperity. We need to ask why are others so desperate to move here? What can we do to encourage inprovements where they live?

How can we have development which does not destroy the natural resources of the area? Our lives are much diminished by the loss of clean air, nutritious water and rich soil. How can our zoning laws be improved to reverse this trend? Would not Conservation Design fit? In Conservation Design prime land (rich soils, wetlands, forests) are identified and built around rather than on. Housing, freed from miniumum lot size, reach the same value and number as typical zoning yet surround open space and offer healing by the same.

Or, city Neighbor Designs where we eliminate roads, walk, bike and return to parking in alleys?

This is what many people want. Our main problem is having no time or mechanism to talk to one another. Most of us are on the consumer treadmill: living less, working (everyone working) more and making money for less and less.

Housing shortage

The primary cause of the current and forecast housing shortage in California is California taxation law, which provides no incentive for local governments to encourage money-losing new housing construction, but ample incentive for them to pursue sales tax-generating commercial development. Large commercial developments are typically located in affluent areas that can support them, but the jobs they create are low-paying service jobs that can't support household formations in the affluent areas. So not only does the current taxation law discourage new housing construction, it also encourages jobs/housing imbalances with increased long-distance driving and air pollution.

Data and sprawl

I understand that its simple math to point out that anecdotally and factually that its true that number of newhouseholds in California < number of new units being built, BUT I'm uncertain if it can be proven (as opposed to supposed, however reasonable as its presented here which I think it is) that state/regional bodies can be more generous/effective in dealing with the issue of the lack of affordable housing than local bodies.

Can anyone here point to studies that demonstrate regional/state bodies as being more effective in delivering affordable housing than local governments? What were the results?

As far as sprawl goes, mentioned by another commentator, but the genie is already out of the bottle. In reality, its easy to see that focusing on sprawl as an issue only fans fires of nimbyism when we should be concerned about generating a sense of mutual responsibility for liveable communities and focus on wider, more unifying issues that bring people together instead of turning people against each other. Arguments over sprawl are either you are or aren't against it and I think that only makes it difficult to dialogue and solve problems.

Smart Growth, Not Slums...

But what is the alternative, to allow growth and urban sprawl to continue unabated? The result of unmititigated growth will be slums... or worse. What is needed is smart, well-planned growth that sensibly deals with housing needs.

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