Manipulate the housing market with this one neat trick

Regulations often result in unintended consequences. Money flows to find any crack in the system, after all, and often those cracks are in very odd places. Zoning and building codes are no different, and they can manipulate not just how people do business but how we built our cities.

In Marin, towns regulate density through a few different rules. Most prominent is units per acre, sometimes around 20 to 30 units per acre, but Marin’s various codes use other measures: floor-area ratio, parking minimums, minimum lot sizes, height limits, and minimum amount of open space.

Last month, the blog Urban Kchoze looked at this panoply of regulatory systems to illustrate how they alter the built environment, and found that they often don’t do a very good job of limiting traffic or population density. About Marin’s favorite regulation, units per acre, the author writes:

An interesting point to consider is what happens to the single individuals in North America that seek cheap housing options, since they are largely deprived of the small 1-Bedroom apartments due to regulations restricting the number of units that can be built per area? Well, they share apartments with roommates. Indeed, becoming roommates is the way consumers have devised to go around the excessive parking and density limitations imposed by North American planners. It is not a desirable situation, but when in a pinch, people will do it.

So North American regulations that limit the density of units but are less restrictive on FAR will result in bigger housing units as developers will build big units to maximize profits.

Policies that do the opposite, meaning limit FAR but are favorable to subdividing buildings in many units thanks to a lack of minimum lot size and low or no minimum parking regulation will have the opposite effect: tend to increase housing density but reduce the size of units.

Our current system doesn’t work very well. Rents are spiking, people are aging, traffic is growing, and the poor are crowding into tiny spaces, especially in The Canal.

As Marin continues to wrestle with the future of its town centers, especially in downtown San Rafael, leaders should figure out what exactly they want to limit. If it’s traffic, they should limit parking. If it’s kids for the school system, they should limit height but lift density caps. (Small homes don’t accommodate families well, after all.)

Marin needs to chart a way forward, but the only way to do that is to understand where we want to go, and what tools we need to get there.

Tautological housing study reminds us that demand is more than skin deep

A few weeks ago, the Wall Street Journal reported on a new study by the National Association of Home Builders which found just 10 percent of people born after 1977 want to live in the urban core; the rest want the suburbs or rural areas. The catch was that the study group was only those who had bought a house in the past three years or who plan to do so. In other words, people who want to buy a house want to live in a place where they can buy a house.

But the study, an exercise in tautology if there ever was one, does add some value to the overall discussion about what today’s young homebuyers want out of a home, and the reaction to the study shines light on the foolishness of urban-vs-suburban partisanship.

What the study says

Just 10 percent of young homebuyers want to stay in the central city, while 68 percent want to move to the suburbs. These suburban homebuyers tend to buy smaller, older houses relatively close to the central city, and they put a premium on being within walking distance of amenities like restaurants, stores, schools, and transit.

This is not the typical car-oriented suburb. Rather, it’s a suburban town, the sort of place that grew up along the old streetcar lines before they vanished. It’s a place that can accommodate trips made by car, transit, biking, and walking.

It seems the same things that draw young people to cities remain valuable even when those same young people leave.

What the study leaves out

The NAHB study is a stated-preference study. In other words, it looked at what people said they wanted rather than what they actually did when presented with options, which is called a revealed preference study.

This is most clear in the disconnect between the cost of housing in a dense, walkable urban place and the cost of housing in a sprawling, drivable place. Outer-suburban and exurban homes were the first to lose their value during the Great Recession and have been the slowest to recover. Meanwhile, dense, central cities have seen the cost of housing soar, as have walkable towns near those cities.

These price signals are quite clear: the supply for outer-suburban and exurban homes exceeds demand, and the demand for central-city homes exceeds supply. Similar price stability and price spikes along transit corridors and in the old walkable streetcar suburbs shows this demand isn’t simply for central city homes but for walkable living.

More than that, the study doesn’t scratch the surface of where young people would want to live if central cities had similar prices and similar school quality to the suburbs. After all, the draw of the suburb might not even be a function of the suburban or urban form per se but a simple function of how inhospitable American cities are to raising a family.

Or perhaps it’s simply housing availability: most new housing development has been in the exurbs, and central cities have been housing laggards.

This last theory is held out by analysis by Jed Kolko of real estate analyst Trulia. Last week, he tweeted the following three charts:

Image by Jed Kolko

Image by Jed Kolko

Image by Jed Kolko

Image by Jed Kolko

Image by Jed Kolko

Image by Jed Kolko

Growth in population closely matches the growth in housing units across the urban spectrum: the more homes, the more people. In fact, a read of the last two charts shows that neighborhoods are adding households faster than homes in all but the most suburban neighborhoods (deciles 9 and 10), with the most pronounced difference in urban neighborhoods (deciles 2-4). As a result, the growth in home sale price is highest outside of the most suburban neighborhoods. While the most urban neighborhoods saw their prices go up fastest, it was the least urban neighborhoods that saw their housing supply and population rise fastest.

This is due to a number of factors, but the largest is the $400 billion worth of federal subsidies (PDF) poured into the most suburban of places. Given the price rises in more urban areas, it seems as though this and state-level policies are working against the underlying demand rather than chasing demand.

It’s a stupid debate

Anti-urban partisans are always quick to crow about the end of the cities and seem eager to pounce all over any shred of evidence that might support this thesis, context be damned. Anti-suburban partisans, alas, do the same about evidence for suburban demise.

Yet being a partisan for a particular kind of urban form is nonsense. The great structural debate about housing and transit in the United States is fundamentally about whether the provision of housing in all its forms has adequately satisfied consumer demand.

The NAHB study doesn’t presage the slaughter of the city and triumph of the suburb any more than the fact that Americans aren’t driving as much presages the opposite. It presents a look at where young homebuyers say they want to live (namely, in places where they can buy homes).

What does this mean for Marin?

Young people want places that look like Marin: walkable, suburban, not too far from the city, with a decent transit network. Consumer demand surveys of all young people, not just homebuyers, found that the strong bias towards walkable living is found among renters and homebuyers alike.

The problem, of course, is that there isn’t enough San Francisco, or Marin, to go around. As I have insisted since the beginning of this blog, the demand for new homes in Marin should be channeled into enhancing and spatially expanding our downtowns.

San Anselmo, for example, has space for 79 of new apartments above stores within its downtown core. That’s 79 new families that could be living and shopping in a totally walkable environment. If downtown zoning were expanded to highway commercial zones, that’s room for dozens more new families and businesses.

Marin could push against its own struggling town centers and try to hem them in, or it could take this as an opportunity to build upon the formula that works: walkable towns adjacent to nature. There is room enough for the entire spectrum of suburban home types in Marin. We can take advantage of that demand, and build a greater Marin out of it.

New on the IJ: Housing close to transit hubs is a time-tested model

Last week, IJ columnist Dick Spotswood wrote that he had a revelation: The best ways to provide new homes in Marin are to add housing to downtowns, emulate downtown forms, and add second units.

It may have been a revelation to him, but it’s not news to the Coalition for a Livable Marin — CALM. We’ve been advocating for just such an approach since we were founded.

Spotswood wrote the foreword to Bob Silvestri’s pro-sprawl manifesto, but he’s starting to understand the wisdom of Marin’s small, dense, rail-oriented downtowns.

Up until the 1940s, Marin was built to maximize ridership on our old light-rail system, the Interurban. Planners put high-density commercial and residential buildings right up next to stations and less-dense homes farther out.

The layout was deliberate. While people today often drive from parking space to parking space on their way home to run errands, yesteryear’s Marinites would walk from shop to shop to run errands on the walk home.

People taking Golden Gate Transit can often still do that, especially at one of the downtown hubs. Take the 27 from the Financial District to San Anselmo, pop into Andronico’s or Comfort’s for the night’s dinner, then walk home.

Most wonderful about this sort of development is how it’s used when people aren’t commuting. Kids can stop by the doughnut shop on a Saturday, parents can watch the street from the coffee shop, and seniors can live their days seeing neighbors and family without ever setting foot in a car.

Marin ought to encourage people to live in places like this, not just for the sake of affordable housing or greenhouse gas emissions but for the health of the town.

Continue reading on MarinIJ.com

Delay tactics plague the county housing element

by Lotus Carroll, on Flickr

by Lotus Carroll, on Flickr

As the county comes down the home stretch of approving its housing element (HE), opponents of the element, led by Marin Against Density (MAD) and Community Venture Partners (CVP) have taken up a tactic of delay. Calling the effectively two-year process a fast-track giveaway to developers, they have called for extending the process out from the end of January to the end of next May.The delay is simple political posturing. Opponents should return to debate over substance, not timetables.

The current HE finds its roots in the 2013 County Housing Element, passed before Plan Bay Area and its raft of tweaks to affordable housing policy in the region. In essence, the county copied the list of affordable housing sites from the 2013 element, developed after an intense yearlong debate, into the 2014 element.

This has opponents crying foul. The 2013 element was based on an old housing needs assessment, when the region required the county to find room for affordable 781 units. The 2014 element needs to only find space for about 185 units. By copying over the last element’s list to the current list, opponents argue the county is accommodating many more homes than the state requires.

This position glosses over the effect of the 2013 element: the Housing Element simply identifies sites already zoned for housing.   The affordable housing sites declared to the state through that element are in the general plan today. Whether the county lists these sites or not, these sites’ legal status will remain unchanged.  The opponents’ argument, that this increases housing opportunities in Marin, is flat wrong.

To fight this, opponents are apparently planning on delay tactics.

Led by Community Venture Partners (CVP), an anti-Smart Growth nonprofit run by Bob Silvestri, opponents are arguing the county timetable is a “fast-track.” First, they were upset that the county was submitting the element to HCD for review without apparently realizing the review was non-binding. CVP declared on their website:

On Monday, August 25th, the Draft of the Marin County “Housing Element” (HE) for the 2015-2023 planning cycle will have its final review by the Planning Commission before being sent to the Department of Housing and Community Development (HCD) in Sacramento.

The Planning Commission will actually hold their last hearing on November 17 to review feedback from HCD, followed by at least two hearings by the Board of Supervisors that have yet to be scheduled. CVP goes on:

The County is fast-tracking the review, submittal and approval of the HE unnecessarily. The County has until May 31st of 2015 to gain final certification of the HE from HCD, without risk of penalty of any kind.

CVP is mistaken here, too. While Marin would not be subject to state penalties, MTC has declared it will prioritize regional transportation funding for cities and counties that submit their HE by January 31, 2015. CVP is gambling the county can challenge MTC’s rulemaking, but that’s hardly “without risk of penalty of any kind.”

Testimony from MAD supporters at a recent Board of Supervisors meeting indicate the aim isn’t to allow more time for public comment but to give opponents a chance to organize. They begged the supervisors to do what the Larkspur City Council did with their Station Area Plan: accede to opponents’ demands. If the county does not, CVP has issued a fundraising appeal for a $15,000 legal team to sue the county over the HE.

From a political standpoint, MAD and CVP are working with a shrewd strategy. A delay that allows them to organize hands them a victory and momentum, which will make the extra four months of organizing that much more effective. As well, a delay keeps housing in the news. The unusual back-to-back Housing Element processes has served as kindling to their cause. Keeping the news cycle on housing will help them maintain the angry fires for a bit longer, which will bleed into the next election cycle.

Unfortunately for the county, this strategy is terribly unproductive. Rather than focus on solutions to the regional housing shortage, CVP and MAD have chosen to set themselves up as populist outsiders. CVP’s policy proposals, such as they are, are buried beneath cries of an unjust fast-track bureaucracy. And, by using a strategy of delay, both CVP and MAD are placing their own political needs above the county’s policy needs. They are putting millions of dollars in regional, state, and federal transportation funds at risk for political gain; whatever legal mess comes from it will be left to taxpayer-funded county lawyers.

There are sites within the Housing Element that deserve scrutiny because of their location. However, this is not a reason to delay the HE or to put county transportation funds at risk. Democracy must be about compromise, not threats of lawsuit.

—–

Coalition for a Livable Marin (CALM) has a new petition out that asks the Board of Supervisors to respect the original timetable for approving the HE and support the housing element more broadly. Emails from CALM have asked supporters to make their concerns known in a way that doesn’t put the county’s future at risk. I and other steering committee members of CALM have pushed to include more about the organization’s stances against greenfield development and auto-oriented density.

What you can do today is sign up for CALM’s newsletter and sign the petition to the Board of Supervisors.

Anti-smart growth advocate defends urbanism

It’s not often you’ll find people arguing against smart growth while also arguing for urbanism. When it happens, one wonders if it was a mistake. That seems to be the case with a screed penned by Lawrence McQuillan of the Independent Institute in Oakland, though his argument is worth highlighting.

While arguing that density isn’t a very effective way of decreasing greenhouse gases, he makes the market urbanist argument I’ve made time and again in this blog:

If governments ended their war on home construction, builders could buy the land they need to construct the housing that local people want, not housing that politicians and smart-growth activists want. That would increase the stock of affordable housing and help the environment too.

While McQuillan digs at smart growth, his critique more aptly applies to our country’s existing urban policies. We have spent so long trying to structure and restrict where and how our cities grow, especially within already built-up areas, we’ve made our cities totally unaffordable for those who want to live there and our suburbs too far from the core for those who want the big-yard, drivable lifestyle.

McQuillan adds: “[H]ere lies the folly of government master plans to control growth. People are not chess pieces to be moved about at the will of politicians and bureaucrats. People have dreams and aspirations for themselves and their families.” And yet through policies that have been in place for over 60 years, politicians and bureaucrats have played a helluva lot of chess with our lives.

If governments like those in Marin lifted density and parking controls and focused instead on maintaining small-town character, if they stopped artificially segregating commercial and residential uses, if the federal government stopped its $450 billion annual subsidy for single-family home development*, if the state stopped subsidizing 70 percent of road maintenance and construction with sales taxes and other non-user fees, perhaps we’d see some equilibrium return to our transportation and housing markets. We wouldn’t need regional housing quotas or ABAG or affordable housing grants because the housing market would simply meet the demand.

It’s unfortunate that only one kind of government intervention – the kind he doesn’t like – is the target of McQuillan’s ire. The massive and ongoing interventions in our real estate market deserve just such a libertarian flaying.

*Yes, that’s almost a half-trillion dollars every year in direct and indirect subsidies for single-family home development.

Hat tip to Save Marinwood for the article.

Point of agreement: Second units are a good way to add new housing

A second unit. Image from Decker Bullock.

A second unit. Image from Decker Bullock.

Though the pages of this blog are often critical of the so-called “slow growth” philosophy of development stasis, its activists hold up second units as a solution to our housing crunch. While I won’t go so far as to say it is our only solution, they are certainly part of the mix.

Marin’s housing market is faced with two housing shortages. It is part of the overall shortage of housing in the region – the cause of the troubling spikes in rent in San Francisco, major displacement of the poor in Oakland, and threats to our open space in the far East Bay.

The other shortage is a local lack of small units, namely studios and one-bedrooms, in Marin. This has meant a steady increase in small-unit rents at a faster rate than either wages or the county’s rental market at large.

Second units offer a way to deal with both without dramatically altering the appearance of our neighborhoods. Though regional trends will be a far greater weight on our overall housing costs than new development, it would help solve the problems in our county’s submarket. And, for the region at large, it would allow some housing development to ease North Bay demand.

I say this is a point of agreement with slow growth because, well, they’ve said it often. Frequent TGM commentor Richard Hall certainly thinks so, with comments all over the place about it. Bob Silvestri, too, came out in favor of this strategy in his book (PDF, page 51). The IJ and Patch comments sections are rife with other examples.

My initial concern about allowing this sort of infill development was that it isn’t targeted, but actually that’s just fine. The reasons for the current ban on in-law units are familiar: traffic and parking. Planners feared that allowing second units would cause residents to park on the street (a big no-no in the 1970s) and put undue stress on the big arterial roads like Freitas Parkway and San Marin Drive.

But really, most of Marin’s mid-century sprawl and early 20th Century development is well-suited to the distances traveled by walking and biking. Shopping is typically within a half-mile, as is a bus line. There should be more than enough capacity in our neighborhoods for more small units.

To make this reality, two big changes should happen. First, the state needs to recognize second unit expansion as a viable method to expand affordable housing under its RHNA affordable housing structure. At the moment, it is not.

Second, towns and cities need to allow second units in their residential neighborhoods, preferably targeted in areas that are within walking distance of transit and shopping. Conversion of existing structures should be allowable by right, in other words buildable without more than city staff approval. New construction might go through a planning commission process, perhaps requiring approval from adjacent neighbors.

To really be affordable housing, towns and cities would need to ensure at least some units are built. To do this, they should offer incentive programs to householders who want to build the units. New buildings can be expensive to build well, and incentive programs would ensure these units are of good quality. Just lowering the permit fees could do the trick.

If the county makes it easy for these amateur landlords to take Section 8 vouchers, it would be a major boon to Marin’s affordable housing needs.

Because of the acrimony between the slow growth and smart growth factions in Marin, it’s imperative we embrace the areas where we can work together for a common goal. Second units are the area where we can, and where we must. If Republicans and Democrats can come together for a budget deal in the US House of Representatives, surely we can come together in our living rooms, pubs, and town halls.

And, since the end result would be a greater Marin, that’s something we could all celebrate.

 

Market-rate housing is just as important as subsidized housing

Controversy swirls around the Wincup apartment development in Corte Madera, and the IJ has published a piece detailing every complaint, from the size to the traffic to the fact that it won’t be “affordable” housing.

While there are problems with the piece (they couldn’t find one person who liked it? Or someone who was interested in renting there?), the myth that market rate housing does not help the cause of affordable housing, brought up by a neighbor, is one that we’ve addressed here and bears repeating.

The housing market in the Bay Area is fundamentally constrained, especially at the top. There simply is not enough supply to go around, and so prices are artificially high. A house that might go for $250,000 elsewhere goes for $850,000, and an apartment that might go for $700 a month elsewhere goes for $1,500 here.

Since there’s not enough super-luxury housing for the wealthy, they look for regular luxury housing, displacing the modestly wealthy. Modestly wealthy folk, whose luxury housing is now out of their price range, look for middle-quality housing, displacing the upper-middle class, who look for lower range housing, and so on down the line until the poorest get knocked off entirely.

Traditional affordable housing tries to build housing that’s been set aside for those poorest folk, but that’s only a stop-gap. Without a functional housing market, they’ll never get enough government largesse and charity. The construction of market-rate housing, shifts some wealthier folk back up the ladder, giving space for the poor and lowering prices across the board.

Now, a single project in Corte Madera won’t do this for the whole Bay Area, but it’s counterproductive to denigrate a project for not being “affordable.” We need a stratified, healthy housing market to solve our region’s affordability problem. Market-rate housing, from ultra-luxury on the Embarcadero to just somewhat lux in Marin, is the only way to do that.

The form of Wincup may be off. It may be monstrous, even. But don’t knock it for its prices.

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