Housing in California & Its Cities

Not only does California lack affordable housing, it also leads the nation in poverty, according to recent Census Bureau data. A full quarter of all homeless people in the nation are estimated to reside in California (more than half of whom reside in Los Angeles County). While homelessness is dropping nationwide, not here.

When it comes to looking at this huge and complex issue, I think it’s imperative we consider the local level and also on the state, and even regional, level as well—the microcosm and the macrocosm, if you will.

Los Angeles County, for example, with a population of more than 10 million faces different problems than, for example, Santa Barbara, just 95 miles to the north-west. Or, for that matter, Bakersfield, which is just more than 100 miles north. The housing crisis, in terms of pure numbers, is most structurally apparent in Los Angeles County, which also leads the nation in terms of poverty and homelessness. But wealth and poverty are, on some level, relative: A teacher working in Santa Barbara likely can’t afford to live there (median house price, according to Zillow: just north of $1.1 million, having risen more than 11% just this year). So its easier to be poor in Santa Barbara, even with a good job, than in Los Angeles. My neighbor, who works in Santa Barbara, spends about an hour every morning, along with all the others, making her way there from the more affordable hamlet of San Buenaventura. In the time it might take to drive from downtown Los Angeles to Bakersfield, she traverses a mere 25 miles.

The state’s population, according to the Census Bureau, has grown modestly in recent years. And I, wrongly, presumed the growth in population would be in places with booming industries, such as San Diego and San Francisco. In fact, the fastest areas for population increase are Placer, San Joaquin, and Merced counties. According to this study, the reason is simple: That’s where the cheap houses are. The median income for a resident of San Joaquin County is just $22,000 annually. You can’t buy a house in San Diego or San Francisco on that. It’s no coincidence, I think, that Merced and Placer counties are adjacent to the impossibly expensive Bay Area. You can work in their shadows—or even in their bellies, with sufficient patience for the commute each way—and still make a living and own a house: The so-called American Dream.

On some level, I don’t think we can or even should ‘solve’ the crisis of affordable housing. I know that might sound cruel, but housing ultimately is not a right, at least not yet in the United States. (This is not to say that it shouldn’t be.) To what other commodity pricing do we say, on a governmental policy level, “That should be cheaper”? Farm subsidies, perhaps. Water. Healthcare, to some extent, and we dabble with higher education. But most other commodities are left to the market to sort out. Nobody says, for example, “Cars are too expensive. Nobody can afford them. We need to increase production of cars so that they are cheaper.” And yet with housing, this is the argument. It’s a moral argument, not an economic one. That is, if you oppose creation of “affordable housing” you are, I suppose, cruel. You are against the housing of people. You are pro-homelessness or at least you are siding with the capitalists who suck every penny possible from poor people trying to put roofs over their heads. And yet, never once in my life have I met a poor developer. I’ve met failed developers, but never a poor one. (Never met a poor libertarian either, for what it’s worth.)

I am troubled by economics dressed up in morality plays. Some people get rich off of housing scarcity (i.e., landlords, realtors, homeowners, banks) and some people make their money building and selling new housing stock (i.e., tradesmen, realtors, developers, banks, materials suppliers).

Houses are expensive because money is cheap. The average American household that uses credit cards owes $15,482. That totals nationally to $927 billion dollars owed. As shocking as that might be, compared to mortgage debt it’s drop in the bucket. There’s an outstanding $9 trillion in mortgage debt nationally!

In Alex Marshall’s The Master Hand, he says, convincingly, that government creates markets. Government created this debt, which in turn exacerbates this problem. It wasn’t malicious. America is predicated on the aforementioned American Dream. George W. Bush touted an “ownership society”: The idea being that the more people own housing, the more they are invested in their communities. Couple that noble intention—and policies to back it up—with cheap credit, and what do you get? Ten years ago the Case-Schiller Index marked the greatest decline in housing pricing in history. It wasn’t supposed to happen. Alan “The Maestro” Greenspan, chairman of the Federal Reserve Bank, had said just such a thing was impossible. He was wrong. Millions of Americans suffered poignantly. Immeasurably. They lost everything.

Meanwhile, Greenspan was embarrassed.

Just in our backyard here in Ventura, there are huge new housing developments slated to be built in Los Angeles County: the so-called Centennial Project at Tejon Ranch (nearly 20,000 houses) and the Newhall Ranch development (nearly 22,000 houses). Both developments are well outside the City of Los Angeles, the largest urban hub in their satellite and a likely place for resident employment and services. Will they alleviate the homeless epidemic in that city? I don’t hold my breath. And I don’t think even 42,000 new homes will drive down home prices much in a state with a population approaching 40 million.

Again, housing is just one issue tied into many. What good is owning a house when you don’t have water or face regular food security? The question becomes, home ownership at what cost?

The biggest challenge with global climate change and aging infrastructure will be securing water deliveries to existing cities as well as new developments. We already see farmers in the Central Valley routinely fallowing croplands to deliver water to cities like Antelope Valley. Water delivery allotments fluctuate hugely depending on reservoir levels and snowpack. Plus, much of the State Water Project lies along the San Andreas Fault. An earthquake could easily disrupt delivery to Southern California, where 22 million of the state’s total population of 36 million resides. In his seminal piece in California Sunday Magazine, A Kingdom from Dust, journalist Mark Arax shows how Central Valley ‘farmers’ are already preparing to sell water—stored groundwater, and state and federal allocations—rather than agricultural products, despite protesting to the contrary.

Where will the food come from and what will happen to the cities and populations of California’s struggling central corridor? What about national security when we no longer control our own food supply? And, to Marshall’s point, how is government policy encouraging this huge shift to happen?

I have throughout my life struggled to find housing I could afford. Having recently received a Social Security statement, I can tell you that I earned $16,000 in 2003 while living in San Francisco (building houses in Marin County, by the way). I’ll add this: I lived there not because I had to, but because I wanted to. I lived frugally, in a less desirable neighborhood, with roommates, and had the time of my life. I also worked to earn more (also reflected on the Social Security statement). Living in San Francisco isn’t a civil right, even if you grew up there. Neither is having a family. Or home ownership. The people I know who remain in San Francisco who aren’t hugely wealthy tend to have no children or have them later, and they get by with less. They move to places like Oakland and Contra Costa County. That’s the cost they are willingly paying. They might complain about it, but who doesn’t complain now and then? And let’s be honest about this: If you’ve owned a house in California for more than a decade, you’ve made good money on that investment. My mother, a single school teacher with two kids, bought a foreclosure in 1982 that’s now worth a chunk of change. There are many like her, and many more who wish to be.

More housing isn’t going to solve homelessness or the opioid epidemic (71,000 Americans dead last year as a result of drugs and alcohol) or bridge the deep tribal divides in this country. Yes, here in California building new houses is a pain. (I, like my father, have worked in construction here). It takes time and money like no other state. But people keep doing it. Why? Because, again, money is cheap. Debt is rampant. People keep buying. The hype machine keeps rolling. This is by design. I don’t have sufficient background in economics to understand how to incentivize a more humane system. But as Marshall noted, Adam Smith said that if the market is the invisible hand then government is its invisible arm. People in power, like Diane Feinstein, are married to people like Richard C. Blum, who has made billions under this arrangement.

Remember that Edmond Brown’s State Water Project is the reason Southern California exists, to “correct an accident of people and geography.” As he said, Whatever it costs you have to pay it. … If you’re crossing the desert and you haven’t got a bottle of water, and there’s no water anyplace in sight and someone comes along and says, ‘I’ll sell you two spoonfuls of water for ten dollars,’ you’ll pay for it. The same is true in California.”

The future is unwritten. Maybe a plague will ravage our populations. Or an earthquake will knock out our water supply. I don’t know. I remain skeptical about the sudden arrival of the Messiah (and also Elon Musk). I do think that we should concentrate humanity in cities to diminish sprawl. Furthermore, we should make Los Angeles County its own state, thus wiping so much human misery off our ledgers and balancing our coffers with regular water deliveries.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s