The Atlantic in the past week wrote an article, “Why Housing Policy Feels Like Generational Warfare (To Millennials, at least).” The theme captures my thinking on local land use wars – the divide between the haves and have nots has a very generational component to it, especially when we are talking about housing like student housing and workforce housing.
The article makes a number of points worth considering, including the quote from Jeffrey Horstein’s 2005 history, A Nation of Realtors. He writes, “Americans, particularly white Americans, came to think of themselves as inhabiting a classless society, composed of one big ‘middle class,’ its membership defined to a large degree by actual or expectant homeownership.”
What has happened since then is that locations where real estate is inexpensive and plentiful lack good jobs, while those with lots of jobs, particularly coastal communities, “have seen their real-estate markets go absolutely haywire.”
Unison, a real-estate firm that provides financing for homebuyers through a process of co-investment, has calculated how long it takes to save up for a 20 percent down payment for a home in a given city. What they have found is “the gap between income and home value has been rising. Using Unison’s methodology, it took nine years to save up a down payment in 1975. Now it takes 14.”
To put the numbers into perspective in California, it takes 43 years in LA, 40 in San Francisco, 31 in San Jose and San Diego, and moving northward, even Seattle and Portland are up there at 27 and 23 years.
The Atlantic argues that this has huge consequences, not only in an era of vast income disparity but also generationally. To put this into perspective: “Imagine you’re a 30-year-old in Los Angeles with the median income. By Unison’s math, you can imagine buying a home at 73.”
The result: “For young people in high-opportunity metro areas, the route to home ownership is basically blocked without the help of a wealthy family member or some stock options. Meanwhile, older people who bought under much more favorable circumstances have seen their equity stakes grow and grow and grow.”
The data here are suggestive of the problem in places like Davis where there is a jobs-housing imbalance. Our most recently available data show that a large number of people work in Davis but do not live in Davis (in 2014, that number was 21,000 of the 28,000 people employed in Davis) while, at the same time, 16,655 of 24,000 who live in Davis (and work) commute outside of the area.
But the Atlantic’s point is far broader – it suggests the mismatch between real estate and jobs. The places where people can go and find that home prices are reasonable are places where they will not find jobs. So people’s suggestion that the solution is simply to move to other locations turns out not to be a real remedy.
What is driving this gulf? The Atlantic suggests, “One part of the problem is easy to identify: housing scarcity. The Bay Area has become the poster child for this factor.”
They point out that from 2010 to 2017, the Bay Area created half a million jobs. But they only built 76,000 housing units.
“You don’t have to be a market fundamentalist to see how that could cause problems,” the Article points out. “The simplest way to read these numbers is that the real-estate market in job-rich cities like San Francisco does not work for the vast majority of young people. That’s why so many housing debates in big coastal cities feel like generational warfare.”
This has produced a policy gap as well. The Atlantic points out that changes to restrictive zoning have been pushed by some politicians responding to the needs for housing. But those policies are opposed by many homeowners who see “see propping up real-estate values as what the government does.”
We have seen those types of policies at play in Davis as well. It took a pretty large shortage of student housing to convince the majority of voters to support Nishi. Housing concerns seemed high enough that even when the project was senior housing – housing that the developers at least argued might free up existing single-family homes – the majority of the community backed it.
Getting demographics for the support of Nishi and WDAAC (West Davis Active Adult Community) might be instructive in understanding the local dynamics.
I think understanding these larger trends helps to illustrate the local situation in Davis better. Given the gulf between real estate and jobs, it is understandable that a proposal which is primarily a jobs proposal like the Aggie Research Campus would want to have workforce housing tied to it as well.
—David M. Greenwald reporting