by Joseph Perkins | July 19, 2013 11:30 am
July 19, 2013
By Joseph Perkins
Chris Thornberg is one of the most astute analysts of the California housing market. Back in 2005, when he was senior economist for Anderson UCLA Forecast, he appeared on a San Francisco radio show I hosted, “The Bay Area Housing Report.”
I questioned his assessment that a ginormous housing bubble had reared itself here in California. I challenged his warning that it was only a matter of time before the bubble burst, causing protracted damage to the state economy.
I thought Thornberg overly bearish. I shared the view of many economists (including former Federal Reserve chairman Alan Greenspan) that, while median home prices would not continue to increase by 10 percent or more a year, as they did during the go-go days of the housing boom, the housing market would have a soft, rather than hard, landing.
Well, I was wrong. And Thornberg was absolutely right.
Eight years later, the gimlet-eyed economist has moved from UCLA Anderson to Beacon Economics, a consulting firm he cofounded. And Thornberg is sounding fresh warnings about the housing market.
Not about the return of rapidly rising home prices. But about NIMBYism — Not in My Back Yard-ism. He argues it has created artificial housing shortages in California’s population centers, which threatens the state’s long-term economic health.
In an essay published this week in the Los Angeles Times, Thornberg cites the examples of two major housing developments in the so-called City of Angels, Casden West L.A. and Il Villaggio Toscano.
Both have been substantially downsized because of NIMBY activism by no-growth community groups to which L.A.’s faux-populist politicians shamelessly pander.
Casden West L.A. planned to build more than 600 housing units, along with 160,000 square feet of retail space, adjacent to the Metro Expo Line in West L.A. It’s the kind of transit-oriented “infill” development that’s held out as “smart growth.”
Yet, after fierce opposition by NIMBY groups, the developers of Casden West L.A. last month were forced to reduce the number of homes by 7 percent. And of that 7 percent, more than 10 percent of units were required to be “inclusionary” housing, to be sold at below-market rates to lower-income buyers.
As to the retail, the developers of Casden West L.A. were forced to reduce that by all of 90 percent.
The developers of Il Villaggio Toscanco had a similar bad experience at the hands of NIMBY activists. The mixed-use, urban infill project in Sherman Oaks was to have 500 residential units along with high-end retail. But by the time the local neighborhood council finally approved the development this past May, the number of homes were reduced 20 percent.
Such NIMBYism is not unique to L.A., Thornberg pointed out. It is commonplace throughout coastal California.
“Add up the downsized and failed projects,” he decries, “and the net result is a state housing shortage.” And because of that shortage, the economist explained, “Seven of the 10 least affordable housing markets in the nation are in California.”
In Thornberg’s estimation, “California’s lack of housing is by far the greatest threat to our economic growth.”
And the only way the state is going to produce the housing California needs, is if the NIMBY groups that wield disproportionate influence not only in L.A., but practically every population center throughout the state, are no longer able exercise de facto veto power over housing development.
Source URL: https://calwatchdog.com/2013/07/19/nimbyism-slams-ca-economy/
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