Blogging Bayport Alameda

April 13, 2015

Supply and demand

Filed under: Alameda, Alameda-ish, City Council, Development — Lauren Do @ 6:03 am

Despite some folks in Alameda “feeling” like housing units have been built unfettered in Alameda lately, as I mentioned in last Monday’s post, the California Legislative Analyst’s office concludes it’s simply not true.  Everyone wants jobs and businesses to come to their cities, but no one wants to build the housing to go somewhere else.  Unfortunately that “somewhere else” is limited and forces those on the lower end of the economic scale to brave six hour round trip commutes while some on the island find navigating from Peets to the Alameda Marketplace “challenging” as a sufficient reason to block housing development.

Excerpts from the LAO report, worth a read if you have the time, or if you are an elected official who, ostensibly, should be using facts and data to shape policy decisions as opposed to gut feelings and anecdotal evidence.

First their super helpful five major points in case you don’t want to read the whole thing and like to make snap judgments about a whole document based on a handful of words:

  1. California’s Home Prices and Rents Higher Than Just About Anywhere Else.
  2. Building Less Housing Than People Demand Drives High Housing Costs.
  3. High Housing Costs Problematic for Households and the State’s Economy.
  4. Recognize Targeted Role of Affordable Housing Programs.
  5. More Private Housing Construction in Coastal Urban Areas.

I think number 1 is pretty much a “duh” section.  We have read article after article about families and individuals being priced out of the Bay Area because rent prices are too high, let alone the cost to purchase a house.  Some of us weren’t so lucky to purchase our homes in the 80s or 90s, so this is not even a question about “saving up” and “trading up” from a condo to a starter home to the house of your dreams, it’s an issue that none of those options exists for a large majority of people and, oh yeah, neither does the rental home exist either in order to save enough money to buy a home, from the LAO report:

California’s high housing costs force many households to make serious trade–offs. In most instances, these trade–offs are particularly challenging for households with low incomes. Notable and widespread trade–offs include (1) spending a greater share of their income on housing, (2) postponing or foregoing homeownership, (3) living in more crowded housing, (4) commuting further to work each day, and (5) in some cases, choosing to work and live elsewhere.

But the LAO went beyond just saying, “hey there’s a problem.”  They decided to identify why there’s a problem, under the section “Why is Housing Expensive in California” these are the conclusions reached:

  1. Building Less Housing Than People Demand Drives High Housing Costs (the blame is largely on coastal communities for not building sufficient housing to meet with demand)
  2. High Land Costs and Low Density Development Make Housing Expensive
  3. Building Costs Increase Housing Costs

The LAO went even further to identify why those coastal communities haven’t built enough housing, it’s pretty much what you think it is since it happens in Alameda for every single housing development project.  The high level conclusions.

  1. Community Resistance to New Housing.
  2. Environmental Reviews Can Be Used to Stop or Limit Housing Development.
  3. Local Finance Structure Favors Nonresidential Development.
  4. Limited Vacant Developable Land.

In super simple terms the four points can be described as:

  1. NIMBY
  2. NIMBY
  3. NIMBY
  4. Little land

The LAO report found that in order to have slowed the skyrocketing housing market, California — particularly coastal communities — should have built more housing yesterday.

…our model estimates that keeping California home prices from growing faster than the nation between 1980 and 2010 would have required the state to have:

Built substantially more new housing—in the range of 70,000 to 110,000 additional units each year.
Shifted more home building to coastal areas.
Built denser housing, concentrated in central cities.

Because of the limited amount of land “central cities” have, the LAO report recommends that denser housing should be built to maximize the number of units per acre.

To wrap up because it’s getting long and I might write more some other time, here’s a whole section on how high housing costs effect families and individuals on the lower end of the economic scale, but here’s the policy takeaway:

Many of the primary factors that make California desirable—moderate weather, natural beauty, and coastal proximity of its major metros—are ongoing. At the same time, we see no signs that coastal community resistance to new housing construction is abating. In addition, many state and local policies that have slowed or stopped development in recent decades remain in effect today. We therefore think that, in the absence of major policy changes, California’s trend of rapidly rising housing costs is very likely to continue in the future. Our analysis suggests that building substantially more housing in coastal urban areas—possibly as much as 100,000 additional units each year—could prevent California’s housing costs from continuing to grow faster than the U.S. In our view, this major finding that demand for housing in California substantially exceeds supply should inform discussions and decision making regarding state and local government housing policies.  [emphasis added]

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13 Comments

  1. with all due respect Mr Mc Mahon soaring rent are only the fruit of extremely greedy landlord , something which started well over a decade ago, Check local landlord price history , you will find they follow cost of leaving ” the single most contributor being paying for public employee wages and benefit which are far higher than the tax payer base

    In this blog a few month ago you were padding yourself for “gentrifying the bay area ” the only small detail they forgot Walmart target and the like only pay minimum wage which is below the poverty level in the bay area . some even prohibit you to have a second job in an industry similar to their further pushing Employee in the poverty level.

    Another aspect , we have done in the bay area a magnificent job of eliminating bleu collar jobs as they call them , the national trend , to satisfy the edge funds or management Co .and like if the school system was graduating Nobel prize student every year.{I rather not go there , like every home owner I don’t see return in my investment “Taxes”} Alameda 30 years ago was nicknamed hub cap City as all the floating hub cap one could throw in the bay were drifting in Alameda , interestingly the education system was better and Higher than it is today ,

    This also had unintended consequences , which are affecting the very basic quality of life , by exporting these jobs we have also imported pollution to a massive level as pollution generated in China alone is responsible for 20% increase in the Western States , fact proven by research from university of Washington , Berkeley , Irvine and UCLA , by buying Chinese you do contribute to that 20% pollution which is made of black carbon “lung cancer ” mercury , arsenic lower IQ and birth defect all which are on the rise on the West . You do not even need to be a scientist simply look at satellite photo of he smog flying out of China and crossing the pacific…..

    Comment by Joel Rambaud — April 13, 2015 @ 8:33 am

  2. NPR had an interesting discussion on this topic this weekend. The mayors of Cupertino, East Palo Alto, and another silicon valley city I can’t remember right now were discussing the issue of limited housing, impacted transportation and forced long commutes, especially as it relates to their tech industry base. As with many high paying industries, there are lots of lower wage workers who support the higher wage folks and where do they get to live when the price of housing, due to scarcity, goes through the roof? Same issues as in Alameda; NIMBYism, impacted traffic, etc. So “those people” live far away and have two hour or more commutes each way, while the higher wage workers can pay to live nearer their places of employment. Everyone wants the jobs, but noone wants the housing. Sort of like that old chestnut, “Everybody wants to go to Heaven, but nobody wants to die.”

    Comment by Kate Quick — April 13, 2015 @ 8:48 am

  3. There is one reason everyone wants to live here, even if they have to be homeless doing so: Geography. California has the best and most protected ocean coastline in the United States, and the best weather. No tornadoes, no hurricanes, no blizzards. This factor trumps “job availability” every time.

    I find discussion of “jobs” irritating without describing the types of jobs you’re talking about. You can pretty much forget doctors, lawyers, bankers, professors, and engineers: all of these professionals will be commuting out of Alameda because their industries will never be located here.

    What does that leave? Employees who change jobs frequently. Do you expect them to move with each job change? Hardly a reason to live near where you work.

    From the WSJ: http://www.wsj.com/articles/SB10001424052748704206804575468162805877990

    “These surveys have been used by researchers at the Bureau of Labor Statistics and elsewhere to count the total number of jobs in a lifetime. Their findings suggest that job stability hasn’t changed all that much in the U.S. since the late 1990s. For example, the typical American worker’s tenure with his or her current employer was 3.8 years in 1996, 3.5 years in 2000 and 4.1 years in 2008, the latest available data.
    BLS economist Chuck Pierret has been conducting a study to better assess U.S. workers’ job stability over time, interviewing 10,000 individuals, first surveyed in 1979, when group members were between 14 and 22 years old. So far, members of the group have held 10.8 jobs, on average, between ages 18 and 42, using the latest data available. “

    Comment by vigi — April 13, 2015 @ 9:25 am

  4. In many industries, especially tech and tech-related, the jobs are located in a specific area and while people may switch from one company to another, the new job may not be located very far from the last job. Many years ago, people often worked for the same employer from first job to retirement, but that is not the pattern now – to promote, or do more advanced work, in tech jobs particularly, you must go to another company. Since there are few old fashioned retirement plans left, holding on to a job to vest in the company’s retirement scheme is not a driver of staying put anymore.

    Comment by Kate Quick — April 13, 2015 @ 10:07 am

  5. I’m stumped, most people who live here don’t want more traffic, however some want more jobs (which brings traffic), some want more housing (which brings traffic). So if we can just stop creating more jobs, and stop building more houses, we have solved the problem. Does this make sense??. How easy was that.

    Comment by John P. — April 13, 2015 @ 11:42 am

  6. Interesting side effect of the booming tech economy and NIMBYism producing soaring rents…. a HUGE portion of the economic value created by this amazing, innovative regional economy ends up being transferred to wealthy landowners who are providing very little benefit to society. Would be a good subject for an Econ PhD.

    Comment by BMac — April 13, 2015 @ 4:52 pm

  7. Jesus H Christ, whom in this society gives a shit about benefiting “society” or how to benefit anybody but their own economic wellbeing. Maybe you should take a course in the economic history of this country. This isn’t about altruistic mumbo jumbo, it’s about making money and hats off to wealthy landowners if they’re smart enough to keep what wealth they have finangled to earn.

    Comment by jack — April 13, 2015 @ 6:45 pm

  8. Jack: as a good libertarian, you should care that the landlords are making this huge profit only because of government interference stopping the building of housing. You don’t have to care about anyone to see that as problematic.

    Comment by BC — April 13, 2015 @ 8:13 pm

  9. 49% of California is owned by the Federal Government……The Base the City just received is .001 %

    http://www.propertyrightsresearch.org/2004/articles6/state_by_state_government_land_o.htm

    Comment by Cobalt Black Keys Johnson — April 13, 2015 @ 9:12 pm

  10. 49% of California is owned by the Federal Government……The Base the City just received is .0000007

    Comment by Cobalt Black Keys Johnson — April 13, 2015 @ 9:40 pm

  11. Jack, some people actually think a political system should be designed to enable the most people possible to live free and pursue happiness. Self interest is not going anywhere, but when designing a set of laws and institutions, why reward wealth accumulation for accumulation’s sake? The workers are getting the education needed and performing the work required to create this new wealth. Yet, due to the land use decisions made a generation ago, they have to fork over an unusually large portion of that generated wealth to landowners rather than invest in other areas that would have greater economic and societal benefits.

    The majority of working class folks acting in concert to further their own self interests by doing things that preserve their own generated wealth (like passing sensible zoning laws to allow enough market rate housing to keep housing costs down) is not “altruistic mumbo jumbo,” as you put it. Its called democracy.

    Comment by BMac — April 13, 2015 @ 9:57 pm

  12. How about opening up some more land in CA…… The FED could give every family in CA 71 acres and maybe that might create new cities and affordable housing and communities instead of cramming everyone in unaffordable housing they are subsidizing anyhow.

    Comment by Cobalt Black Keys Johnson — April 13, 2015 @ 10:31 pm


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