Category Archives: California

The economic damper

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If  a crisis isn’t mentioned in a presidential debate (as the national housing crisis was not, in either of the televised colloquies over the past week), does that mean it doesn’t exist?bench2

Of course not. Whether the candidates are willing to discuss it or not, the affordable housing shortage remains a damper on economic vitality and job creation. Burlington’s latest housing market analysis (July 31) gets to this point right in the first paragraph:

“Burlington’s housing market is marked by an imbalance between supply and demand. … The rental housing imbalance translates into high housing costs (relative to income) and lower quality rental housing stock. … An imbalanced rental housing market also impedes economic growth since employers have trouble recruiting and retaining their workforce.”

The same can be said for many other communities in Vermont and beyond, as seen in these news bulletins from the last few days:employment4

  • Toyota Financial Services decided to pull out of Los Angeles and move to Plano, Texas, in part because of LA’s high housing costs and rent burdens.
  • Well up the coast, in northwest Oregon, the lack of affordable housing “threatens the viability” of major cheese company that is subsidizing a housing task force in a county, beset by negligible development.bench3
  • In Key West, the Naval Air Station has trouble retaining civilian employees because of high housing costs. About half the base’s firefighter recruits wind up leaving after a few months’ training because they can’t afford to live there, according to the chief.
  • In Travers City, Mich., the housing shortage repels new workers, in a kind of vicious cycle. bench1 “Builders can’t construct housing because they lack works and workers won’t relocate to the area because they can’t find housing,” The Traverse-City Record-Eagle laments.
  • Colorado, the rental market is so tight in some ski towns that some workers are living in their cars or in temporary shelters. Several hundred Vail Resort workers recently confronted another kind of indignity: they were informed that they’d have to share rooms in the employer’s housing complexes.employment3

New life for old idea?

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When the housing-unaffordability problem comes up at a public meeting in Burlington, chances are someone will stand up and call for rent control.  rental1Never mind that the city rejected the idea three decades ago and no one has made a serious effort to revive it locally. It’s an idea that never goes away, though, and is getting some fresh currency these days — where else, in California, the housing-unaffordability epicenter.

Rent control’s heyday was in the ‘70s and ‘80s, apparently. Massachusetts did away with it in 1994 via a statewide vote, but it can still be found in many municipalities in New York, New Jersey and Maryland, as well as California, where tenants’ advocates are pushing to get more communities to sign on and have come up with an organizing toolkit. “Rent control moment gains momentum as housing prices soar,” read a recent news headline, but a closer look suggests that much of the impetus is in California. Most states, after all, have laws that prohibit rent control, although in Washington, there’s an effort to lift the ban for Seattle.

Any groundswell in favor of rent control would have to grow out of large numbers of renters, and renters are certainly on the increase nationally. A new Harvard report announces that “that 43 million families and individuals live in rental housing, an increase of nearly 9 million households since 2005 — the largest gain in any 10-year period on record.”

Renters are a distinct minority in Vermont, where the home-ownership rate is above average. In fact, renters outnumber homeowners in just two cities — Burlington and Winooski — so if rent control were plausible anywhere in Vermont, those would be the likely places. City voters would have to approve a charter change, which would require legislative approval. How unlikely is that?

Burlington voters overwhelmingly rejected rent control in a special election in 1981, during Bernie Sanders’ first mayoral term. (Actually, they rejected the creation of a “fair housing commission,” which everyone agreed was a proxy for rent control.) They were influenced by a publicity campaign against the measure mounted by commercial interests.  burlingtonhouseSanders’ critics on the left complained he didn’t try very hard to see the idea through, and in fact he went on to promote affordable housing via a range of other policies.

Barring a major ground shift, rent control will remain one of those recurrent policy ideas with no traction in these parts. Like single-payer health care.

The co-op alternative

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 Before Burlingtonians succumb to the blandishments of “purpose-built” student-housing developers, they might do well to consider an alternative with a long tradition of affordability: student co-op housing.

Student housing co-ops are scattered around the country. Perhaps the best known is the Berkeley Student Cooperative, which dates from 1933 and offers housing to about 1,300 students in 20 properties.  Berkeleystudentcoop1According to the co-op’s website, monthly rent is about $745 in a room and board house (compared to $1,354 in a university dorm triple) and $433 to $881 a month for single room in an apartment. (By comparison, the market rate for a one-bedroom apartment is typically over $2,000.) No wonder there are 1,000 students on the waiting list.

And yes, some of those Berkeley co-op houses have game rooms and hot tubs.

A thumbnail case for student co-ops can be found here, on the website of the North American Students of Cooperation (NASCO). Housing co-ops operate on variations of a shared-equity model. Here’s NASCO’s description of a common form:

“In a ‘Market Equity’ coop, a member joins the coop, buys a share, and lives in a unit.  This is similar to something like a condo complex, but instead of owning one condo, you own a share in the whole complex.  When you decide to leave the coop, you can sell your share at whatever the market will pay for it.”

Housing co-ops also come with shared governance, work expectations, and so on. They’re not limited to students, of course. Champlain Housing Trust has five co-ops with 81 apartment units in Burlington, with another one on the way on Bright Street.

You’ll never be faced with this choice, but it never hurts to ask: Which would you rather see on the northeast corner of North Winooski Avenue and Main Street: purpose-built student housing, with a climbing wall, or a student housing co-op without one?

 

Extracurricular accommodations

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There’s a particular form of workforce housing that’s getting a lot of attention lately: affordable housing for teachers. Much of that attention is being paid in California, of course, where many school districts are having trouble recruiting and retaining teachers who can’t afford the prohibitive housing costs (in Silicon Valley, for example, or San Francisco, where the mayor has announced plans to build 500 affordable units for teachers). Similar plans are afoot in Oakland, San Mateo, L.A.

But housing complexes for teachers have arisen on the East Coast, too, mostly in bigger cities — Newark (pictured),teachersvillage  Baltimore and Philadelphia, with a development in Springfield, Mass., in the pipeline. These are projects aimed at Teach for America recruits for these cities — recent college graduates who spend two or three years in public or charter schools before they move on to other pursuits.

Not all the teacher-housing initiatives are urban, though. Several counties in North Carolina have provided, or pledged to provide, affordable housing for teachers, as has McDowell County, W. Va., in a project carried out with the American Federation of Teachers. In West Virginia, the hope is that the housing will help attract teachers to a place where they otherwise wouldn’t be inclined to settle.

Other states use housing as a teacher-recruitment tool in different ways. Oklahoma offers low-interest loans, for example. Texas offers mortgage assistance for teachers, and Mississippi subsidizes down-payments and closing costs. These happen to be states with pronounced teacher shortages.

Vermont has a teacher shortage, too — perhaps not as dire as those states’, but a shortage nevertheless. According to the Agency of Education’s “Designated Shortage Areas” for 2015-16, teachers of English, Spanish and special education were needed in all counties, and math teachers were needed in half the counties. Could it be that Vermont’s housing costs are a barrier to teacher recruitment? And if so, would it make sense for school districts — which are being encouraged to merge anyway — to collaborate in finding ways to ease the housing burden?

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Another line of argument is that school districts, instead of futzing with housing benefits, should simply pay teachers well enough so that they can afford to live in those districts.

In any case, teacher villages, or housing complexes, come in different forms, and it’s not  always  clear how they gibe with affirmatively furthering fair housing standards. The one in Newark, for example, has been criticized as an oasis for transient young white professionals in a gentrifying neighborhood. (For a nice overview of these programs in The American Prospect, click here.) Still, Vermont communities would do well to think about how they can make affordable housing available to middle-income people – such as teachers – who are hard pressed to pay market rates.

Consider educators in the Burlington metro area. The National Housing Conference’s interactive “Paycheck to Paycheck” matches housing costs (the annual salary needed to afford a house of median price, $225,000) and the salary needed to afford a one-bedroom or two-bedroom apartment.

When you run the model for three educators – preschool, primary and secondary school teachers — you find that:

They can’t comfortably afford the median mortgage…

p2phomeowner

 

 

 

 

 

 

… or the two-bedroom apartment…

p2prenter

 

So what if?

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If you’re fed up with the high-priced housing here and want trade the Champlain Valley for the Treasure Valley (Boise, Idaho), be careful. Boise If you’re making less than $35,000 a year, you’ll be hard-pressed to find an affordable apartment, according to this article in the Idaho Statesman. (“Low-income housing crisis,” blares Idaho Public Radio.)  Sure, average rents are lower there than in Burlington, but they’re rising fast. What’s more, developers say they can’t make a profit on affordable housing without more incentives than Idaho makes available.

If you think you’ll be better off in Illinois,Illinois1 be aware that you probably can’t get on a waiting list for a housing choice voucher (72 percent of the Section 8 waiting lists are closed, we learn from a report whose title says it all, “Not Even a Place in Line.” True, average rents in Illinois are a bit lower, as is the “housing wage” — the amount you need to earn an hour to be able to afford a two-bedroom apartment.  (“Afford” means you pay no more than 30 percent of your income for housing.) Vermont’s 2BR housing wage is $20.68 an hour; Illinois’ is $18.78. Don’t spend the difference all in one place.

If you still hanker for California in hopes that you can make do outside the glitzy metro areas, think again. Even Bakersfield, site of a recent “Affordable Housing Summit,” is brooding about a housing “crisis,” with rent inflation far outpacing wage growth. (Bakersfield!)

In Denver, described as “a landlord’s market,” at least you can call a housing hotline for advice, but you might be put on hold. Calls are coming in steadily, with affordability the main concern and callers reporting rent hikes of $200 to $400.

If you think a career in academia will spare you housing-unaffordability travails, you might be right in the long run … but not necessarily in the short run in Ithaca, N.Y.,  where junior faculty at Ithaca College are reportedly struggling.

If you’re a prospective student at Middlebury College with an ambulatory disability, you might wonder if a new townhouse-style dorm under construction – sans elevators — will fully accommodate you. But you can take heart that scores of accessibility/visitability advocates at the college are in your corner.

If you’re an artist hankering for affordable artists’ housing – something that is emerging in warehouses and abandoned factories around the country, as we’ve noted before – you can forget about Burlington’s celebrated artists’ enclave, the Enterprise Zone in the South End. The mayor said no to housing there, as did the City Council, as did the Housing Action Plan. Did anyone take a serious look at whether affordable housing could be introduced there without gentrifying the neighborhood? Not that we’ve heard.

Oh well, Kingston, N.Y., had another idea. An old lace factory Kingston there has been converted to affordable housing  for “writers, dancers, graphic designers, musicians, painters, photographers, and even a puppeteer,” we learn from a local news account.

Better than nothing

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Off-year election round-up:

  • In San Francisco, where housing issues dominated the ballot — or at least the election coverage – Proposition F naturally got the most attention.  sanfrancisco2That was an initiative to restrict Airbnb, which proponents argued is effectively reducing the city’s housing stock via the proliferation of pricey short-term rentals. Prop F inspired a kind of media circus, with Airbnb investing $8 million in a campaign to defeat it, with pro-Prop F forces occupying Airbnb headquarters the day before the election. Voters said no, in any event, 55 percent against. If you want to learn more about Prop F in excruciating detail, click here.

Voters said yes, though, to Proposition A, $310 million in housing bonds for developing and maintaining affordable housing – the first such bonding question to gain approval in San Francisco in nearly two decades, so apparently the affordability crisis there is registering the electorate. They said no, however to Proposition I, a moratorium on market-rate developments in the historically Latino Mission District.

Of course, there’s a school of thought that the housing crisis in San Francisco and everywhere else is mostly a supply and demand problem, and that if development were allowed to flourish without political or regulatory constraints, prices would go down, or at least, not go up so fast. One problem with that argument in a place like San Francisco is that the population isn’t fixed: There are simply too many moneyed people (techies, among them) poised to move in to town to pay the soaring prices that the market can bear when the housing supply grows.

  • In Maine, voters overwhelmingly approved Question 2, a $15 million bond to underwrite 225 affordable units for older people and to fund repairs for 100 homes of low-income aging. oldguy “That’s a drop in the bucket,” said the Portland Press Herald in an editorial, given the “demographic storm” coming to Maine. (Maine officialdom is anguishing about the  greying population, same as in Vermont.) Still, it’s better than nothing.

 

 

 

 

  • In Summit County, Colo. (home to Breckenridge), voters agreed to maintain a tax that supports workforce and affordable housing. It’s a sales tax of 0.125 percent. Doesn’t sound like much, but again, it’s better than nothing.  Perhaps the Vermont townships that host ski areas can come up with something more generous for their workers.

Where growth yields to high rents

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Here’s another way to look at the housing-affordability problem: as a damper on economic growth. city1

Two economists published a study this summer that essentially made that point. They analyzed growth rates of 220 metropolitan areas and how those rates contributed to national growth from 1964 to 2009. They found, surprisingly, that some of the most productive cities, where pay rates also happen to be high, actually contributed less to overall growth than one might have expected. That’s because employment didn’t grow proportionately in those cities — they cite New York, San Francisco and San Jose in particular — in large part because of housing constraints.

“The main effect of the fast productivity growth in New York, San Francisco, and San Jose was an increase in local housing prices and local wages, not in employment,” write Chang-Tai Hsieh, of the University of Chicago, and Enrico Moretti, of U.C.-Berkeley. “In the presence of strong labor demand, tight housing supply constraints effectively limited employment growth in these cities.”

In other words, workers were prevented from migrating to these productive, high-wage areas because they couldn’t find affordable places to live. By contrast, three-fourths of U.S. growth in those years was attributable to Southern cities and a group of 19 other cities, where housing was more plentiful and wages were lower.

city3

Their article has an overweaning title, “Why do cities matter? Local growth and aggregate growth,” but it’s worth noting their conclusion that the housing constraints in the productive, high-wage cities derived from restrictive or exclusionary land-use regulations. They write:

“Constraints to housing supply reflect both land availability and deliberate land use regulations. We estimate that holding constant land availability, but lowering regulatory constraints in New York, San Francisco, and San Jose cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%. Our results thus suggest that local land use regulations that restrict housing supply in dynamic labor markets have important externalities on the rest of the country. Incumbent homeowners in high wage cities have a private incentive to restrict housing supply. By doing so, these voters de facto limit the number of US workers who have access to the most productive of American cities.”

And here’s what they say about Silicon Valley, the region between San Jose and San Francisco, which has “some of the most productive labor in the globe. But … by global urban standards, the area is remarkably low density due to land use restrictions. In a region with some of the most expensive real estate in the world, surface parking lots, 1-story buildings and underutilized pieces of land are still remarkably common due to land use restrictions. While the region’s natural amenities—its hills, beaches and parks—are part of the attractiveness of the area, there is enough underutilized land within its urban core that housing units could be greatly expanded without any reduction in natural amenities. Our findings indicate that in general equilibrium, this would raise income and welfare of all US workers.”

Sounds like the technological mecca is plagued by exclusionary zoning.

The economists propose two remedies, neither of which is plausible in the current political climate. One is for the federal government to place limits on locally set land-use regulations. The other is to finance mass transit (such as high-speed trains) that would enable workers to commute to these productive areas without having to live there.

Now then, might any of this translate to Vermont? Consider:

Burlington is an analogue to San Francisco. Of the state’s 19 labor market areas, Burlington/South Burlington’s average annual pay is the highest, by far — $48,529, or about $10,000 more than half the other areas in the state.) Burlington also has an affordable housing shortage that could be termed above average: 61 percent of Burlington’s renters are house burdened (paying more than 30 percent of their income on housing), compared to a state average of 52 percent; and 36 percent are severely house burdened (they pay more than 50 percent), compared to a state average of 26 percent.

So, following their argument, might it be that Vermont would be growing at a higher rate if more workers could afford to live in or near Burlington, one of the state’s highly productive cities? Is Burlington channeling much of its productivity growth into higher housing prices and higher wages?

Lake Champlain Burlington, Vermont.

Perhaps, perhaps not. In Burlington’s favor is a higher rate of employment growth than (3 percent, from 2014 to 2015) than most anywhere else in the state.

On the other hand, employment here might well grow even faster if more workers from the provinces could afford to live here.

Housing notes from all over

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shippingcontainers1

  • Before you dismiss the idea that shipping containers can be used for housing, consider this student-housing complex in Amsterdam, as described by The Guardian. Can you imagine something like this on the northwest corner of Burlington’s Main Street/S. Winooski intersection, which has been suggested as a possible site for privately developed UVM student housing?

 

  • The City Council in Portland, Ore., where a “housing emergency” has been declared and where rents have risen more than 20 percent over five years, boosted the city’s affordable housing fund by $64 million. The money comes from a property-tax set-aside, and the council is looking for more revenue sources.  Portlandcoliseum And one of the councilors has lofted an idea that some other cities beset by under-used mega-athletic complexes might want to seize upon: sell the Portland Coliseum for to a developer who will put affordable housing in its place.

 

 

 

  • As we’ve noted before, the nationwide initiative to affirmatively further fair housing calls for affordable housing development (at least a good share of it) in low-poverty, “high-opportunity” areas. A country club would seem to fit that description, at least generically. So we were interested to learn that the Planning Board in Mahwah, N.J., recently approved the redevelopment of a country club there for affordable housing.

mahwahclub

Before you get too excited, though, you should know about the downside: Much of the land is contaminated from years of pesticide spraying, and the cost of remediation (which includes removal of hundreds of trees) contributed to a reduction in development’s affordable capacity: down from 350 multi-family units to less than 100 single family homes.

  • Uber will deliver $1 million to Oakland’s affordable housing fund for the privilege of turning a former Sears building into an office space. oaklanduberThe deal was prompted partly by fears that Uber’s corporate arrival, with an anticipated 3,000 employees, would lead to gentrification and even higher housing prices.

 

  • Attention, City Market, Hunger Mountain, et al: A food co-op in affordability-challenged Asheville, N.C., is contemplating adding affordable housing to its expansion plans, which also (and less intriguingly) include enlarging its existing store, parking lot and office space. ashevillecoop

 

 

 

 

  • Speaking of parking, the Berkeley City Council has voted to target underused parking-lot space for affordable housing development. Berkeleyparkinglot2 Council members were reminded at the meeting that the average cost of a 1 bed-room apartment is $1,400 a month, and that’s under rent control! The average cost of an apartment not under rent control? $3,256 a month.

California’s sideshow

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Nowhere, seemingly, is the U.S. housing crisis more acute than in California.

GG1

So you might suppose that here, in unassuming, modestly-overpriced Vermont, we can safely ignore what’s unfolding in California. To the contrary, it does make sense to pay some attention, for these reasons:

 

  • California social trends and public policies have a way of diffusing through the rest of the country. Not only that, middle-class Californians, in exodus because they’ve been priced out of the housing market, are moving in droves to other parts of the country and effectively bidding up housing prices in the places where they relocate.
  •  Sundry housing-affordability initiatives in California might give us some ideas about what to do here. San Francisco has a Nov. 3 election with a ballot full of affordable housing measures. Redwood City, to the south, just approved an affordable-housing impact fee over developers’ objections. People in L.A. are looking into the prospects for land trusts, something Vermonters already know a fair amount about. And as we’ve mentioned before, school districts are facilitating workforce-housing developments merely to attract and retain teachers.
  •  California generates much of what we consume here as mass-media entertainment, so we should be aware of the social context.
  •  Unavoidably, the part of entertainment value in what we’re hearing about the extraordinary California housing market, especially the one in the Bay Area, is in the form of Schadenfreude. Apparently, “there goes the neighborhood” applies when Apple employees start moving in.

Any dreams you have of moving out there should be dispelled by this short film, “Million Dollar Shack,”

a middle-class lament is filled with tales of egregiously over-priced properties, skyrocketing rents, absentee overseas investors, etc.