UCLA studies add up to grim picture of CA housing costs

????????????????????????????????????California’s politicians have finally made dealing with the state’s worst-in-the-nation poverty rate a priority. Efforts to increase the minimum wage and to increase affordable housing are being championed in the Legislature and in most of the Golden State’s larger cities. But two new UCLA studies raise thorny questions about whether sky-high housing costs in California can be restrained any time soon — or ever, given the many obstacles.

One of the studies — by author David Shulman, a senior economist with the UCLA Anderson Forecast project — notes that California is at the start of a relative boom in construction of housing units:

After a long, hard slog, housing starts (both single- and multi-family) are poised to approach the long-term average (1959-2014) of just under 1.5 million units in 2016. Specifically we are forecasting housing starts of 1.14 million units this year and 1.42 million units and 1.44 million units in 2016 and 2017, respectively. This level of activity is well above 1.00 million units recorded in 2014 and the 2009 low of 0.55 million units.

This would seem to be unalloyed good news. Critics of the standard local government affordable-housing practice of building a relative handful of units say that such policies can never produce enough housing stock to make rents and sale prices go down. So a sharp increase in building would seem to move us toward a place where supply and demand affects costs.

More housing stock — but also much more demand

But another UCLA study says that’s a fantasy, as the rebounding California economy pushes more potential buyers into the market. This is from a City News Service story about UCLA’s research in the Los Angeles Daily News:

Housing in California — already considered unaffordable to many — will become even less affordable over the next two years, with construction unable to keep up with demand, according to a UCLA economic forecast released Monday.

 

UCLA Anderson Forecast Senior Economist Jerry Nickelsburg wrote in his forecast that government agencies need to reconsider their policies surrounding affordable housing if they hope to make a dent in the problem.

 

“The economics are clear,” he wrote. “When affordable housing is provided, say by requiring developers to have a fixed percentage of their new units ‘affordable,’ then the demand for that housing will be in excess of the supply.” …

 

Nickelsburg said the typical response of “just build more housing” is unrealistic since such a move would require major changes in zoning codes, environmental requirements and building regulations.

This has been the standard argument from many analysts. But Nickelsburg suggests a new approach that seems certain to be controversial, per the Daily News:

Nickelsburg added that “the policy itself recognizes that building constraints — natural or regulatory — will not permit a sufficient number of new homes to be built to satisfy the demand at affordable levels.

 

“This being the case, affordable housing policy needs to be explicit about who the housing is for,” he wrote. “For example, one might advocate affordable housing so that teachers in public schools can purchase housing that would otherwise be difficult for them to acquire.”

But teachers are not the face of poverty in California — it’s Latinos and African Americans without much education. Nearly 50 percent of these two groups are either in poverty or near poverty, according to a study by the United Way.

As of last year, the average pay of a full-teacher in California was more than $84,000, per data from Transparent California.

14 comments

Write a comment
  1. Richard Rider
    Richard Rider 3 October, 2015, 08:54

    Here’s a bit more on the CA poverty rate adjusted for the cost of living.

    California’s real poverty rate (the new census bureau standard adjusted for COL) is easily the worst in the nation at 23.4%. We are 57.3% higher than the average for the other 49 states (up from 48.8% higher last year). Indeed, the CA poverty rate is 17.0% higher than 2nd place Nevada.
    http://www.census.gov/…/publications/2014/demo/p60-251.pdf page 9

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 7 October, 2015, 11:11

      Most people do not want gov “programs”, they want a job. A decent job that can pay the rent and buy the food. CA politicians do not seem to understand that. Instead they spend $$$ on infective, terrible programs with cost/benefit factors that are ridiculous. The EDD spends $5 for every ONE dollar they give out in benefits. That ratio/ROI in the real world would be the end of you.

      Reply this comment
  2. Richard Rider
    Richard Rider 3 October, 2015, 08:55

    Houston has more housing starts than ALL of CA

    The vaunted post-recession “housing building boom” in California is fizzling out. Here’s a sobering graphic.
    http://www.aei.org/publication/monday-afternoon-linkage-4/

    In spite of the higher housing demand in Houston, the median price of a Houston home is about 1/3 that of a CA home.

    Reply this comment
  3. Richard Rider
    Richard Rider 3 October, 2015, 09:13

    While the article is on target, the final sentence makes a common error. Here’s the sentence:

    “As of last year, the average pay of a full-teacher in California was more than $84,000, per data from Transparent California.”

    The data source is reasonably correct, but Chris Reed misinterprets “total compensation” as “pay.” So does the referenced LA TIMES article. Much has to do with using properly defined terminology.

    Most people presume that “pay” is what comes in a pay check before deductions. TOTAL COMPENSATION is the total cost to the employer (a.k.a. taxpayers). of the pay AND BENEFITS provided the employee.

    BTW, it should be mentioned that the “total compensation” Transparency tries to disclose is understated — through no fault of Transpaency. No government agency includes the UNFUNDED LIABILITY cost (pensions AND retiree health care) for such employees n their per/employee reporting. Some (such as the San Diego Unified School District) don’t even include pension costs AT ALL (“too much trouble,” they claim).

    Reply this comment
    • Richard Rider
      Richard Rider 3 October, 2015, 13:50

      CORRECTION: I said “San Diego Unified School District.” I don’t know about that district’s reporting. It’s the CITY of San Diego that is the culprit in the example I mentioned.

      Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 7 October, 2015, 11:07

      “As of last year, the average pay of a full-teacher in California was more than $84,000, per data from Transparent California.”

      “The data source is reasonably correct, but Chris Reed misinterprets “total compensation” as “pay.” So does the referenced LA TIMES article. Much has to do with using properly defined terminology.”
      The mean/average teacher SALARY in CA, according to the Sac Bee, is $69K, and I estimate benefits at $40K, total comp about $110K, but the contracted work year is only 37 weeks, and the contracted work week is only 36 hour. Good deal, and the pensions, while more modest than CalTURDS, are still a great deal. And there is also 100% bullet proof job security, unheard of in real life.

      Reply this comment
  4. Queeg
    Queeg 3 October, 2015, 11:26

    Comrades

    The poor could become Hittites and rule the night!

    Reply this comment
  5. Bill Gore
    Bill Gore 3 October, 2015, 18:36

    Not wanting to sound callous, but SO WHAT? California is somehow deemed a desirable place to live (go figure..) hence demand outstrips supply. This situation could actually force illegal migrants to self-deport back to their more affordable and modest home countries. This would be a very good thing. Putting it another way, no one has a right to live anywhere they can’t afford to. I would really love to have a big place on Martha’s Vineyard, and I’m a nice guy who would bring a lot of diversity to the area, but alas, I simply cannot afford it, and they don’t offer Section 8 housing for beachside mansions (yet). So again: so what? Jettison the poor, push them out to Texas or New Orleans….

    Reply this comment
    • Richard Rider
      Richard Rider 4 October, 2015, 06:18

      CA may be a DESIRABLE place to live, but that doesn’t mean people are MOVING here to live. Quite the contrary.

      Consider California’s net domestic migration (migration between states). From 1992 through 2014, California lost a NET 3.7 million people to other states. Net departures slowed in 2008 only because people couldn’t sell their homes. But more people still leave each year — in 2013 we lost 49,000. Again, note that these are NET losses. Sadly, our policies have split up many California families.
      https://twitter.com/SenTedCruz/status/464827967747526656/photo/1
      and
      http://riderrants.blogspot.com/2015/04/were-california-real-estate-prices.html

      It’s likely that it’s not the welfare kings and queens departing. They are primarily the young, the educated, the productive, the entrepreneurial, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their nest-eggs provide more bang for the buck.

      Reply this comment
      • Bill Gore
        Bill Gore 4 October, 2015, 07:43

        I’m one of those 3.7 million. I left in 2012 and haven’t looked back (except for gloating on CalWatchdog). Oh, and I kept the entire state of CA as a business territory, though really, californians are a righteous pain in the ass to do business with….Anyway, you can’t ‘solve’ california’s housing situation with more endless subdivisions. Driven around the LA basin lately? Yeah… thousands of square miles of ticky tack beige stucco. Not to mention the water. My solution: soviet style massive ugly apartment blocks, 4 families to a bathroom, ruled by gangs. All free. This will complete the orwellian sovietization of the golden state and give Barbara Boxer and Nancy Pelosi’s army of domestic help an ‘affordable’ place to live.

        Reply this comment
        • californianative
          californianative 4 October, 2015, 18:11

          I also am one of those refugees, 1994, took 4 other native born Californian’s with me. I was back in the Promised Land last month for a family wedding. I recognized the beautiful terrain ( a bit too dry per my memory) but I did not recognize the culture. In my mind I am stuck in the California of my youth, late 1960’s through the 1980’s. Oh well, we are all adapting to our adopted state, at least we have water…

          Reply this comment
          • californianative
            californianative 4 October, 2015, 18:14

            Californians, not Californian’s. No possessive needed. Just wishful thinking…

    • Richard Rider
      Richard Rider 4 October, 2015, 06:21

      “Demand outstrips supply” in CA because we severely restrict supply — and drive up the price of new housing dramatically with government regulations and taxes. This is NOT the free market causing this problem.

      Reply this comment
  6. bob
    bob 3 October, 2015, 19:07

    California’s politicians have finally made dealing with the state’s worst-in-the-nation poverty rate a priority.

    Then I guarantee poverty in this state is about to get worse, at the very least relative to other states.

    Reply this comment

Write a Comment

Leave a Reply



Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

Related Articles

Polls show smarmy Biden loses VP debate

Oct. 12, 2012 Katy Grimes: I couldn’t decide if Vice Presidential incumbent Joe Biden was manic during the VP debate

On energy resources, will CA ignore lessons of North Dakota?

It was just less than two years ago that City Journal had the first high-profile story laying out the enormous

San Jose fire union’s dire claims demolished by 10,000 LAFD job-seekers

The Rough & Tumble news aggregation website had an unusually helpful juxtaposition of two California news stories on Wednesday. R&T