California Housing: Past, Present, Futures John D. Landis Crossways Professor of City and Regional...

California Housing: Past, Present, Futures

John D. LandisCrossways Professor of City and Regional Planning

University of Pennsylvania

UCLA Lake Arrowhead SymposiumOctober 12, 2007

‘there are no future facts and no past possibilities’

Robert Sherrick Brumbaugh, 1966

Outline

1. How Many Homes? For Whom?

2. How Many Homes? Where?

3. Alternative Housing Futures

4. Meeting the Challenge

Outline

1. HOW MANY HOMES? FOR WHOM?a. What’s Old: Raising the Roof Revisited

b. What’s New: Raising the Roof Reappraised

2. How Many Homes Where?



Raising the Roof Revisited

2020 Projections

220,000 new homes needed each year (through 2020) to keep pace with projected population and household growth.

Assuming some slowdown in population growth or reduction in household formation rates, California would still need an average of 190,000 new homes each year through 2020.

Southern California will continue to be the epicenter of the state’s population growth and housing production needs.

For demographic reasons, most new California households will be strongly inclined toward homeownership.


Land Supplies & Infill

Except for Los Angeles and Orange counties, California should have enough raw land to accommodate projected housing growth through 2020.

Additional environmental protections, especially Endangered Species Act protections would sharply constrain land supplies in Santa Clara, Alameda, and San Diego counties.

Infill activity and residential densities on the upswing—but unevenly so.

Much of the infill housing constructed in the 1980s and 1990s occurred with local RDA help. What of the future?


Regulatory Constraints

California’s entitlement process is the nation’s most complicated.

Throughout the 1980s and 1990s, the balance between planning (GPs) and permitting (CEQA) tipped to permitting.

This made it much easier for communities and local residents opposed to growth to get their way.

Nonetheless, those communities interested in accommodating new housing production were able to keep the times and costs of the entitlement process in check.


Finance, Fees, and Housing Assistance

Mortgage money should remain “plentiful” for the foreseeable future.

Low mortgage interest rates will make ..[increased lending to moderate-income households, members of ethnic and racial minority groups, and to center city neighborhoods]…. especially attractive.

Rents in many California markets are below the levels required to attract investor capital.

The higher levels of risk associated with land development [in California] may make it difficult for land developers to find investors and financing.


Finance, Fees, and Housing Assistance

California municipalities will have no trouble issuing special-purpose debt, but continuing difficulties issuing general obligation bonds.

As California municipalities continue to increase their development fees, they risk aggravating affordability problems.

If there is no comparable increase in housing assistance levels, the number of low-income households needing some form of housing assistance could rise to about 3.7M households by 2020, an increase of 1.3M households.


A Prospective Housing Shortage?

By one calculation, housing demand exceeded production by 500,000 units during the 1990s.

Such shortfalls are likely to continue, although not necessarily at the same magnitude.

If they do continue, they will put further upward pressure on housing prices and rents, lead to increased cost burdens, depress what would be a large increase in homeownership, further lengthen commutes (already the nation’s longest), and worsen over-crowding.


Policy Challenges & Suggestions

CA: Increase the supply of financing to providers of affordable rental housing.

CA: Find ways to increase infill housing production, especially in Southern California, and especially in Los Angeles County..

CA & Local: Rebalance the planning and permitting processes.

CA & Local: Expand the use of special district/assessment district financing for municipal infrastructure.

Local: Revise impact fees to categorically exempt affordable housing

Local: Consider adopting minimum density requirements where appropriate.

Builders: Make your product better: stop turning out cookie-cutter homes and subdivisions; start building communities.

WHAT’S NEW? Meanwhile, Back at the Ranch….

Continuing low mortgage interest rates:

Enabling many more Californian’s to become homeowners: 6.5M (2000) to 7.1M (2006)

Accelerate the long-awaited recovery of the Southern California housing market.

Produce a speculative construction boom, especially in Sacramento and the Central Valley.

Housing prices continue rising everywhere.

Rents rise accordingly:$750 Median in 2000, to $1,029 in 2006

National, publicly-listed companies continue to dominate the homebuilding business.

WHAT’S NEW? Meanwhile, Back at the Ranch….

California voters approve two large housing bond issues: Proposition 46 (2002): $2.1B Proposition 1C (2006): $2.8B

A combination of growing demand and builder interest invigorates the infill condo market.

All of these factors push up annual housing starts: from 148,000 in 2001 to 209,000 in 2005 (starts fall back to 163,000 in 2006)

COGs and MPOs embrace expanded infill development as the central element of their regional blueprint plans: ABAG Smart Growth/Livability Footprint Project, 2002 San Diego County Regional Plan, 2003 SCAG Compass Project - 2% Strategy, 2004 SACOG Blueprint Project, 2005

WHAT’S NEW? Demographic Changes

California Population Projections, 2020, by Race

(in millions)

0

5

10

15

20

25

30

35

40

45

50

2000 2020F (RtR) 2020F(2007)

Non-Hispanic White HispanicAfrican-American Asian & Other

California Population Projections, 2020, by Age

(in millions)

0

5

10

15

20

25

30

35

40

45

50

2000 2020F (RtR) 2020F(2007)

0-15 15-24 25-44 45-64 65+

Updated, slightly lower population forecasts from CA DOF (2007)

New analysis of householdformation rates by PPIC (2004)showing continuing declines

WHAT’S NEW? R-t-R REAPRAISED Reduced Production Needs: 150,000 to 175,000 per year.

Increased Housing Production: 183,000 per year since 2001, up from 110,000 per year in the 1990s.

Housing demand becoming more bifurcated, between long-time equity-rich homeowners ready to move up; and recent arrivals—especially immigrants—who are less and less able to pay rising housing prices.

Land Supply and Entitlements: Rising prices enable large public builders to pay top dollar for raw land and infill sites, temporarily ameliorating land supply issues, and enabling them to cope with still-rising entitlement costs.

Housing cost burdens worsen: 2.3M homeowners with 35%+ cost burdens in 2006, up from 1.2M

in 2000.

2.1M renter HHs with 35%+ cost burdens in 2006, up from 1.7M in 2000.

Federal, state, and local subsidy programs fail to keep pace.

Outline


2. HOW MANY HOMES WHERE?a. Greenfield vs. Infill Shares

b. Infill Options

c. Preferences

d. Trends Extrapolated



HOW MANY HOMES WHERE?Share of Housing Unit Growth in Core vs. Suburban Counties,

1990-2000, 2000-2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SouthernCal 1990s

SouthernCal 2000s

Bay Area1990s

Bay Area2000s

Sacram.1990s

Sacram2000s

SuburbanCounties

CoreCounties

Source: 1990, 2000 Census; American Community Survey

LA, Orange,San Diego

Riverside, SanBernardino,

Ventura

CC, Marin, Napa,Solano & Sonoma

Alameda, SF, SM, Santa Clara

El Dorado, Placer, Sutter, Yolo,

Yuba

Sacramento

HOW MANY HOMES WHERE?

INFILL OPTIONS: Opportunities, Potential, Feasibility

Infill Definitions ….

Infill sites are: Currently VACANT PARCELS (no significant structure). IMPROVED PARCELS in commercial, industrial, multi-

family or other uses for which the improvement value is less than the land value (ILR < 1.0).

IMPROVED PARCELS in single-family use for which the improvement value is less than 50% of the land value (ILR < .5).

Infill OPPORTUNITIES: Inventorying Sites

Steps

1. Obtain and clean assessor’s parcel data.

2. Identify vacant and underutilized parcels.

3. Geo-code vacant and underutilized sites.

4. Identify sites by “Infill Counting Areas”

5. Exclude undevelopable sites.

6. Count infill parcels and acreage by county, city, census tract, and counting area.

California’s Infill Inventory: Statewide Totals

% % %

ALL INFILL PARCELS 494,600 100% 446,800 100% 345,000 100% VACANT PARCELS 56,600 11% 35,200 8% 18,700 5% REFILL PARCELS 438,000 89% 411,600 92% 326,300 95% Currently in multi-family residential use 180,800 37% 165,300 37% 143,235 42% Currently in single-family residential use 173,000 35% 165,600 37% 131,000 38% Currently in commercial use 26,600 5% 25,400 6% 18,700 5% Currently in industrial use 17,500 4% 16,600 4% 5,900 2%

ALL INFILL ACREAGE 220,100 100% 158,100 100% 83,700 100% VACANT PARCELS 64,000 29% 27,100 17% 7,600 9% REFILL PARCELS 156,100 71% 131,000 83% 76,100 91% Currently in multi-family residential use 63,800 29% 50,200 32% 36,900 44% Currently in single-family residential use 29,600 13% 25,500 16% 18,600 22% Currently in commercial use 14,300 6% 12,500 8% 6,600 8% Currently in industrial use 23,500 11% 21,100 13% 3,400 4%

AVERAGE PARCEL SIZE (acres) VACANT PARCELS REFILL PARCELS Currently in multi-family residential use Currently in single-family residential use Currently in commercial use Currently in industrial use

Smallest Infill Counting Area

0.40.4

Largest Infill Counting Area

Middle Infill Counting Area

1.3

0.40.80.30.30.20.51.3

0.41.1

0.10.40.6

0.20.40.20.3

0.20.5

Estimated Infill

Housing Unit Potential

Based on parcel &

neighborhood land uses and densities; and transit service

quality

From 2000 Census or COG Land Use

Maps

From Infill Inventory

How We Estimate Infill Housing Unit POTENTIAL

Current Parcel Size inAcres

NeighborhoodAppropriate

Density Factor

Initial Block–Level Net Density

= x x

Neighborhood Appropriate Density Factors

Neighborhood and Site Character of Infill Parcels

How IdentifiedCurent Transit (Bus) Service

Quality

Vacant and Commercial/

Industrial Density Factors

Residential Density Factors

Minimum Density

(du/acre)

Maximum Density

(du/acre)

1 Intense Mixed-Use Neighborhood High 2.5 1.5 40 80

2 Intense Mixed-Use Neighborhood Moderate 2.0 1 30 60

3 Within 1/3-mile of a Rail Transit Station Identified from state and local transit maps Any 2.0 1 30 60

4 Predominantly Retail or Office Area High 2.0 1 30 60

5 Predominantly Retail or Office Area Moderate 1.5 0.5 20 40

6 Commercial/Industrial Neighborhood High 2.0 1 30 60

7 Commercial/Industrial Neighborhood Moderate or Low 1.5 0.5 20 40

8 High-density Residential Neighborhood High or Moderate 2.0 1 20 50

9 High-density Residential Neighborhood Low 1.5 0.5 20 30

10 Medium-density Residential Neighborhood Any 1.5 0.5 10 20

11 Low-density Residential Neighborhood High 1.5 0.5 5 8

12 Low-density Residential Neighborhood Moderate or Low 1.3 0.25 4 6

13Not previously classified and currently in non-residential use

All 1.5 0.5 10 20

14 Not previously classified and in MF use All 0.5 0.5 20 40

15 Not previously classified and in SF use High or Moderate 0.5 0.5 5 8

16 Not previously classified and in SF use Low 0.3 0.25 4 6

Key:

Low-quality buse service has peak headways of less than 20 minutes and off-peak headways of less than 30 minutes.

High-quality bus service has peak headways of 10 minutes or less; and off peak headways of 20 minutes or less.

Moderate-quality bus service has peak headways of 20 minutes or less; and off-peak headways of 30 minutes or less.

Intense Mixed-Use Neighborhoods include predominantly commercial land uses and have a gross residential density of 10 units per acre or more.

Based on the majority or plurality land use as identified from ABAG, SANDAG, and SCAG digital land use maps. Elsewhere, identified from a statewide general plan map prepared by UC Davis.

High-density Residential Neighborhoods are those with a net residential density of at least 15 dwelling units (du) per acre; Medium-density Neighborhoods have a net density of 5 to -15 du per acre; Low-density Neighborhoods have a net density of less than 5 du per acre.

Based on individual parcel characteristics

Infill Housing Unit POTENTIAL: Statewide Totals

Units % Units % Units %

TOTAL EST. INFILL HOUSING POTENTIAL 3,998,359 100% 3,486,203 100% 2,146,384 100%

Infill Potential of Vacant Parcels 934,056 23% 578,621 17% 233,672 11%

Infill Potential of Refill Parcels 3,064,303 77% 2,907,582 83% 1,912,712 89% Currently in multi-family residential use 787,892 20% 742,635 21% 680,812 32% Currently in single-family residential use 302,635 8% 295,811 8% 266,117 12% Currently in commercial use 458,038 11% 437,492 13% 312,573 15% Currently in industrial use 725,870 18% 685,401 20% 148,136 7%

Largest Infill Counting Area

Middle Infill Counting Area

Smallest Infill Counting Area

Potential Infill Housing Units by Transit Type and Service Quality for Selected Counties

INFILL FEASIBILITY

Starting with a Maximum LICA Potential of 4 Million Units

- Financial Feasibility

- Cumulative Community Character Impacts

- Affordable Housing and Displacement Issues

- Economic Development Pre-emption

- Physical Feasibility: Small and Irregular Lots

- Inconsistent with Current Zoning

End up with 1 – 1.5 Million “Currently” Feasible Units

Most binding

Least binding


Move to Central City Move to Inner Suburb Move to Fringe Community[HH]: Latino HHs (1-2,4-6) [HH]: Latino HHs (1-2,4-6) [HU]: High % of 30-50 yr old homes (1-6)

[ND]: High % of Latino HHs (1-6) [HU]: High % 1-family homes (1-6) [HU]: High % of homes < 10 yrs old (1-6)[ND]: High % of White HHs (1-6) [HU]: High % of Multi-family homes (1-6) [HU]: High % of Multi-family homes (1-5)

[HU]: High % of homes < 10 yrs old (1-6) [M]: Match: Latino HHs (1-2,4-6) [ND]: High % of Latino HHs (1-2,5-6)[HU]: High % 30-50 year old homes (1-6) [M]: Match: White HHs (1,5-6) [ND]: High % of White HHs (1-6)[HU]: High % of Multi-family homes (1-5) [M]: Match: Married-couples [M]: Match: Married-couples w/o children

[M]: Match: Latino HHs (1-2,4-6) [M]: Match: Non-families [M]: Match: Non-family HHs[M]: Match: Non-family HHs [M]: Match: Single-family HHs [M]: Match: Single-person HHs

[M]: Match: Single-person HHs [M]: Match: Single-person HHs[R]:Northeastern MSAs (3,5,6)

[R]:Southern MSAs (3,5,6)[R]: Western MSAs (3,5,6)

Move to Central City Move to Inner Suburb Move to Fringe Community[HH]: Latino Households (1,4) [HH]: Latino HHs (1-2,4-6) [HU]: High % of homes < 10 yrs old (1-2,4-6)

[M]: Match: Non-family HHs [HU]: High % of 1-family homes (1-2,4-6) [HU]: High % of Multi-family homes (1-2,4-5)[HU]: High % of homes < 10 yrs old (1,4-5) [HU]: High % of High-rent homes (1-2,4-6) [ND]: High % of Latino HHs (1-2,4-5)

[HU]: High % 30-50 year old homes (1-2,4-6) [HU]: High % of Multi-family homes (1-2,4-6) [ND]: High % of White HHs (1-2,4-6)[HU]: High % of Multi-family homes (2,4) [ND]: High % of Latino HHs (1,4) [M]: Match: Married-couples w/o children

[ND]: High % of Latino HHs (1-2,4-6) [M]: Match: Latino HHs (1,4) [M]: Match: Non-family HHs[ND]: High % of White HHs (1-2,4-6) [M]: Match: White HHs (6) [M]: Match: Single-person HHs

[M]: Match: Married-couples w/o children[M]: Match: Single-person HHs

Notes:* indicates not significant at the .05 level[HH] indicates a household characteristic; [HU] indicates a PUMA type housing stock characteristic; [ND] indicates a PUMA type demographic characteristic;[M] indicates a match between the demographic characteristics of the household and PUMA type; [R] indicates a major region; [OR] indicates the area or prior residence.1 = alone, 2 = single parent, 3 = single family, 4 = married without kids, 5 = married with kids, 6 = non-family

HOMEOWNERS

RENTERS

Factors Strongly Associated with Recent Moves toCentral City, Inner Suburban, and Fringe PUMAS


THE NEXT 100 YEARS…….?

100 Year Projection: 10 Million New Californians Every Generation

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

1940 1960 1980 2000 2020F 2040F 2060F 2080F 2100F

Popula

tion i

n t

housands

Census

DOF

UCB

Source:

Factors Explaining Urban Development, 1988-1998

Factor Southern California Northern California Sacramento Region

Incorporated Location

+++ +++ +

Proximity to Freeways

+++ +++ +++

Accessibility to Jobs

++ + ++

Community Median Income

- + -

Prime Farmland - - --

In Floodzone n/a - --

Slope - - +

Outlying County - -- No effect

Projected Urban Growth Threats to Environmental Landscapes, 1998-2100

Landform Southern California

San Francisco Bay Area

San Joaquin Valley

Sacramento Region

Central Coast

Prime Farmland XX X XXX 0 X

State & Local Farmland

XXX X XX X X

Unique Farmland

XXX X XX X X

Grazing Lands XXX X X X X

Wetlands X XXX XX XX 0

Hillsides X 0 0 X X

TESA Habitat >= 10

XX X X 0 X

TESA Habitat >=30

XX 0 0 0 X

TESA Habitat >=50

XX 0 0 X 0

Source:

Outline


2. How Many Homes Where?

3. ALTERNATIVE HOUSING FUTURESa. Where are the Jobs Going

b. Development Drivers

c. Alternative Visions


ALTERNATIVE FUTURESWhere Are The Jobs Going?

Basic and Local Serving Jobs by Region and Location, 1994 and 2003

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

S. Cal1994Jobs

S. Cal2003Jobs

Bay Area1994Jobs

Bay Area2003Jobs

Sacram.1994Jobs

Sacram2003Jobs

Suburban Local J obs

Suburban Basic J obs

Core Local J obs

Core Basic J obs

Source: Estimated from zip code-level tabulations of County Business Patterns establishment data

LA, Orange,San Diego

Riverside, SanBernardino,

Ventura

CC, Marin,Napa, Solano,

Sonoma

Alameda, SF, SM, S.Clara

ALTERNATIVE FUTURES: Density and Development Drivers

Outline


2. How Many Homes? Where?


4. MEETING THE CHALLENGE

California Housing: Past, Present, Futures John D. Landis Crossways Professor of City and Regional...

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