By Catherine Sweeney, The Registry
As California’s housing market become increasingly more expensive, researchers at Chapman University are asking city and state government leaders to reevaluate current development restrictions and consider new ways of providing affordable housing options to the state’s middle- and lower- class populations. In a recent report titled “Restoring the California Dream,” the university’s Center for Demographics and Policy examine the ongoing issue and what can be done to improve affordability and keep California residents from migrating out of state.
“California over the last 10 years has tried to do something that is intrinsically counterproductive; it is trying to have housing built in places where people don’t want to move and can’t afford to live. The problem there is that you’re going into some of the remaining middle class enclaves that are left in the coastal areas, but at the same time, you’re not creating space for the next California middle class,” said Joel Kotkin, Professor of Urban Studies at Chapman University
According to the report, the median household income of the bottom 99 percent of Californians is $55,152 per year. At the same time, Zillow estimates the average price for a home in the state is $734,612. With average rental rates also averaging $1,566 per month, more than 30 percent of California residents lack the appropriate income to meet living costs.
With high costs of living, the report showed more than half of surveyed Californians considered moving out of the state and about 70 percent indicated cost of living as a serious issue for them. Since 2000, the state has lost 2.6 million net residents – just over the combined populations of Anaheim, San Diego and San Francisco. Additionally, in 2020, California accounted for 28 percent of all net domestic outmigration in the United States. Chapman University anticipates this trend to continue, with more than 15 million residents expected to migrate out of the state over the next 30 years.
This is most prevalent in Los Angeles County, where a majority of residents rent their homes. According to the report, more than half of outmigration, or about 1.9 people, come from Los Angeles County.
“I think Los Angeles already has more renters than owners,” Kotkin said. “If you look at the generational charts, you’ll see that the homeownership rate of Californians in their 70s and 80s is about the national average. Among the younger [generation], it’s well below the national average. Much of what is happening is people will go into these apartments because they can’t buy a house. The price of that gets more expensive and then those people – when they decide that they want to buy a house and start a family – they have to go someplace else.”
However, the study showed that most people are willing to move out of larger cities to suburban markets to find housing, with research showing the median family in San Jose and San Francisco would need 125 years to collect a downpayment on a house in the area. In Los Angeles, the median family would need 150 years.
This has led to approximately 90 percent of California’s population growth in the past decade to be centered in suburban markets. According to Kotkin, as more of the population is working remotely, the growth in California’s suburban markets has only strengthened.
“What the pandemic has done is two things. One, it led people to seek bigger spaces, because if you’re going to be in lockdown, you don’t want to be in a one-bedroom apartment. The other thing, which I think is more important, is it accelerated the dispersion of work with more and more people working at home,” Kotkin said. “…If we want to retain a middle class and our skill base, we’re going to have to create the kind of housing people want or else they have other alternatives.”
The report suggests several solutions to create housing that better suits the needs of most California residents. For instance, the authors indicate developers should expand ownership and construction opportunities to more suburban locations where land costs are lower, such as in the San Bernardino, Riverside and Imperial counties.
By creating Housing Opportunity Zones with revised land-use regulations in these areas, developers would be able to develop more housing on underutilized commercial properties. According to researchers, with current restrictions as well as development prices, ground-up developments can be too costly for developers as well as renters as the inflation of construction costs boosts rents even higher. The authors recommend that this proposal could provide needed housing for both renters and first time homeowners.
”The reality is that we have many opportunities, the biggest ones are office and retail…we should be able to go up and down the strip malls of this state and build townhomes and more spacious apartments. We should be providing incentives for cities to convert redundant retail, and redundant office into housing. And then you can build it where there’s already the infrastructure,” Kotkin said.
