Monday Morning Thoughts: The Supply Crisis and Situating Davis in the Broader Housing Debate

Photo by Brandon Griggs on Unsplash

By David M. Greenwald
Executive Editor

The challenge that the Davis community faces is how it’s going to find ways to build new housing and re-invigorate the community with more young families as it faces problems what the rest of the country is experiencing—unaffordable housing and an age (or in Davis’ case, bifurcating) population.

Increasingly over my time writing for the Vanguard, I have grown to see housing inextricably linked with social justice.

Because I live in Davis, I often focus on Davis housing issues to illustrate the problem.  And while Davis is in some ways unique, Davis represents an example of how local issues filter up and help drive the overall state and national housing crisis.

Over the break, I was reading a couple of pieces in the Atlantic that I think are helpful for understanding the overall problem of housing.

For example, Annie Lowrey writes, “The U.S. Needs More Housing Than Almost Anyone Can Imagine.”

She starts with the question that we often find ourselves asking each other: “How many homes must the United States’ expensive coastal cities build to become affordable for middle-class and working-poor families again?”

This is a core of the argument that we have over and over again here in Davis.

Just as we’ve discovered in our debates and conversations over the years, the answer is not simple.

Lowry writes, “I expected a straightforward response: If you build X units, you reduce rents by Y percent—which means that Washington, D.C., needs to build Z units to become broadly affordable again.

The answer: not so easy to compute.  No surprise to any of us who have dived into it.

Jenny Schuetz of the Brookings Institution: “That’s a difficult question with a lot of moving parts.”

“Are we assuming that all of these homes drop out of the sky today?” asked David Garcia, the policy director at the Terner Center for Housing Innovation at UC Berkeley.

“All the numbers we have that address this question are huge. They’re massive,” Garcia said. “And they’re all a massive undercount.”

Lowry quickly figures out the problem here: “That strikes me as a problem. No one can say just what it would take to make Brooklyn affordable for workers who don’t have a college degree, render San Francisco accessible to families with kids and elderly couples on fixed incomes, or allow extended-family members in Boston to buy apartments within a few blocks of one another. That means we have no policy vision of how to make our biggest, most productive places affordable for all, and no plan to get there.”

Bingo.

Those of us who have had to live this debate for the past decade know how this ends up.  An undefinable solution means that everyone creates the one that they favor.  For some, it argues that the market in intractable, that there is no amount of housing that we can build to solve the problem.

For some this means that this is bigger than just one community.  It must be solved at the regional level.

The problem with both of these is that they become an excuse for non-movement.  If you don’t believe you can build your way out of the housing crisis, then why not at least protect your own.  If you don’t believe that there are local solutions to the housing crisis, then wait until a more global solution comes along—and all the while things get worse.

Lowry goes on to show all of the problems that come out of this.

She notes, “The problem is largely, if not exclusively, the result of the country not permitting enough homes where people want them.”

“The reason California has the affordability problems we have now is because we did not build,” said Garcia, of the Terner Center. “In the 1960s, 1970s, even into the 1980s, we built between 200,000 and 300,000 homes per year. In our most recent economic boom, we were building 100,000 a year.” He added: “That is the start and the end of the story when it comes to California.”

People want housing, strangely, because they need jobs and the chance at prosperity.  And the places that have those jobs and opportunities for prosperity have not built enough housing in recent decades.

But we don’t want to admit this problem, Jerusalem Demsas argues.

So people are pushing skepticism about the nature of the problem and the solution.

Demsas writes, “Supply skepticism and shortage denialism are pushing against the actual solution to the housing crisis: building enough homes.”

Demsas writes, “Anyone who’s been in a dumb recurring fight knows that the entire problem could be cleared up if everyone could just agree on exactly what was said or done. But you can’t, so you end up stuck in a cycle of relitigation. Housing-policy discussions are like that. They descend into crushing bickering because even the basic facts are up for debate.”

Bingo again.  It’s almost like these two writers have been reading the Vanguard over the last decade.

For Demas: “The most basic fact about the housing crisis is the supply shortage. Yet many people deny this reality.”

In general the experts agree on these points.  As Demsas notes, “the fundamental point is that we need more homes near good jobs and schools, and that give people access to the communities and amenities that make life more enjoyable.”

This isn’t rocket science—right?

And yet, it sort of seems like it.  I keep recalling having this conversation with Davis Councilmember Will Arnold.   He’s mentioned it to me several times that he hearkens back to the water supply campaign from 2013.  At the time, all of the experts suggested that the city needed to have a new water supply.  But citizens—a sizable minority—simply ignored the expert analysis and came to their own conclusions.

Arnold told me he couldn’t fathom people ignoring experts.  And yet, that has become a harbinger for the contemporary political landscape.  And it is not just happening in under-educated communities or red states, it is happening in well-educated Davis.

Demsas calls this “shortage denialism” or “supply skepticism.”

She cites research “looking at San Francisco, New York, Boston, and 52,000 residents across 12 U.S. metropolitan areas have all found that new housing brings down prices.”

Shocking.

She cites another new study from a trio of professors at the University of California (Clayton Nall, Chris Elmendorf, and Stan Oklobdzija) reveals that shortage denialism is not the only missing “shared fact” plaguing housing discourse.

Those reserachers found that between 30 to 40 percent of Americans believe, “contrary to basic economic theory and robust empirical evidence,” that if a lot of new housing were built in their region, then rents and home prices would rise. This posture is referred to as “supply skepticism.”

Demsas writes: “Shortage denialism, which I have observed in my own reporting, and supply skepticism, which these researchers revealed through their survey data, are related phenomena. Not only are they false, but they are false in the same direction. They push against the actual solution to the housing crisis: building enough homes. After all, if there is no shortage or if building new homes doesn’t reduce rents, then no one has to tackle NIMBYism, no one has to work to bring down housing-construction costs, and no one needs to build millions of new homes in America’s cities and suburbs. In fact, this magical thinking goes, we can fix our housing crisis without changing much of anything at all.”

There are those who believe we can’t solve the problem through market rate housing of course.  We need to be able to build a huge amount of subsidized affordable housing.  I’m not opposed to a solution that creates more big “A” affordable housing but we have to acknowledge at some point that we need more housing and if the solution is affordable housing, then find ways to finance it and subsidize it.

But in the end, reading these two articles once again convinces me that Davis is not an anamoly, it is an extreme case study of a much broader phenomenon and the arguments we have are not unique either—they are being thrown out there nationally in response to the housing crisis that too many people simply do not want to solve, and that is to the detriment of those living on the margins and even many who aren’t.

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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43 Comments

  1. Ron Glick

    Get rid of Measure J. Build thousands of homes around Davis. Become part of the solution instead of part of the problem. Otherwise continue to lament the reality you support.

    1. Matt Williams

      Ron’s comment is naive.  Getting rid of Measure J will not cause builders to build houses in Davis that sell for under $500,000 (or whatever affordability threshold you set).  So his recurring comment is simply spewing hot air … or taking glee in poking David in the ribs … or both.

  2. Matt Williams

    Demsas writes, “Supply skepticism and shortage denialism are pushing against the actual solution to the housing crisis: building enough homes.”

    .
    Reading the quote above brought to mind an interchange that took place in a City Council meeting several years ago.  The discussion was regarding housing affordability in the Willowbank 10 development hearings.  One of the local developers was answering questions from the Council at the public comment podium, and Sue Greenwald asked him “Wouldn’t the houses cost less if you built them smaller?  Wouldn’t a house that is 1,500 square feet, or smaller, be more affordable?”

    Without missing a beat, the developer responded, “In my whole career have never built a house that is 1,500 square feet or smaller … and I NEVER will build a house like that!”

    That interchange illuminates a root cause problem that today’s article never addresses.  Specifically, with few exceptions developers/builders have no economic desire to build houses that have a price tag that “is affordable.”,/em> Smaller houses produce smaller profits for a developer/builder, and they are in the business of generating profits.

    1. David Greenwald

      There is a problem as this article from another location a few days ago notes: link

      “The current cost of materials and labor alone can make building a new house more expensive than the median home price”

  3. Ron Oertel

    “The current cost of materials and labor alone can make building a new house more expensive than the median home price”

    If true, how is it that building more would then lead to cheaper housing prices?

    Without missing a beat, the developer responded, “In my whole career have never built a house that is 1,500 square feet or smaller … and I NEVER will build a house like that!”

    Young families (assuming that the “goal” is to attract more of them into new housing) aren’t looking for houses that small.  They also want at least a two-car garage, a yard, etc.

    For those looking to move to the area, they will purchase in places like Woodland, instead.  And even there, it’s going to cost them more than $500K for a new house.

    Probably quite a bit cheaper for a “used” house.

    Now, if Davis could control what Woodland (or other locales) does, maybe the result would be different.

    The challenge that the Davis community faces is how it’s going to find ways to build new housing and re-invigorate the community with more young families as it faces problems what the rest of the country is experiencing—unaffordable housing and an age (or in Davis’ case, bifurcating) population.

    I believe you meant to say “aging”, above.

    The problem is believing that this is a “problem” in the first place.

    All housing eventually turns over – as a direct result of the “aging” you cited, among other reasons.

    There is also nothing “wrong” with seeking better opportunities elsewhere.  In fact, that’s how Davis and the region grew in the first place.  Probably more than half the population is not originally from Davis.

    Opportunities (e.g., for employment and/or “cheap” housing) do not remain constant in any city.  Nor do demographics remain the same.  Those looking to make it that way are looking backwards, rather than forward in time.  (Which is tempting to do, given that humans have a tendency to beat themselves up over lost opportunities, or opportunities that they believe they “should have” had – even those before they were born.)

    The other problem with feeling sorry for yourself over missed opportunities is that you’ll continue missing out on new opportunities that arise, due to the debilitating nature of looking backwards with regret.

    I have seen this behavior in myself, as well.

    New opportunities constantly arise, but in different forms. If one stops looking at the past with regret, you’ll see them.

    Thousands already do, every year.

  4. Tim Keller

    That atlantic article is simultaneously reassuring and distressing… because one one side, it is reassuring to know that it “isnt just us” that is massivley under-built… but it also raises the spectre… that if we do build, we get into a situation like people complained about with the cannery…. we just ended up making room for people to retreat from the Bay area… and didnt really help students, or UCD staff / faculty..

    The other thing that clearly rang true was the comment that discussion “devolves into bickering because even the basic facts are up for debate”…   that one really cuts close to the bone for those of us who have participated in these kinds of debates in Davis…

    That is a big part of the reason why I think we really need to take a big-picture look, as a community, at our situation and start with those basic facts.   Most of the people whom I disagreed with on Measure H are inherently reasonable people, I have had direct conversations with many of them, and I think that if we focused on identifying the problem and finding facts we can agree on FIRST, then we are likely to agree on a whole lot more when we try to conceive a solution together.

    If we try it any other way, its just going to be more of the same bickering.

  5. Ron Oertel

    Agendas drive discussions on here, not “problems”.  At least, not problems for most people.

    On a larger scale, I have yet to see any actual, objective analysis regarding how a “housing shortage” is determined or measured in the first place, or at what point it would supposedly be “solved”.  Not to mention the ever-changing numbers from state officials, such as Gavin Newsom – who also opposes broader rent control.  (While still pursuing business expansion – which is the underlying cause of “housing shortages” in the first place.)

    The population itself is not growing in California, and is actually shrinking in places like San Francisco.  How does that lend itself to claims regarding a “housing shortage”?

    And, how is it that declining housing prices (which by all accounts, is still in its early stages) still aren’t making these same folks “happy”?

    As someone used to say on here, “follow the money” regarding agendas.  Including “who” is paying for politicians’ campaigns.

    There is an enormous disconnect between reality and agendas. And as far as relying upon surveys is concerned, one might start by fully examining the methodology used in the first place. As well as the “reason” that some questions are asked (or the manner in which they’re asked). How about starting with those “facts”?

    It does seem that there’s a full-on campaign (in coordination with news outlets) to “shape” people’s views.

    You can talk about “problems” which don’t exist for most people until you’re blue in the face, and you’re still not going to generate interest.

      1. Ron Oertel

        For homeowners (and renters who enjoy rent control), it’s not a problem. They have a place to live, with costs that are largely controlled. And in many places, that’s the majority of the population.

        The state itself does have rent control now, but it’s still quite generous to landlords. As I recall, state officials only reluctantly supported even that limited measure. (Partly to stave-off more significant efforts by tenant groups.)

        It’s primarily a “problem” for those who (for often-undisclosed reasons) want continued growth (which has always been the “status quo”). The reason for that is ultimately due to money (e.g., Ponzi scheme, desire for continuous business expansion, etc.).

        Again, all you have to do is to look at the underlying business interests which aren’t satisfied unless there’s continual, never-ending growth.

        1. David Greenwald

          From the Atlantic: “ The best evidence for how much housing we need to build lies in the prices that people pay today. Nationwide, the share of renters who are considered “burdened”—spending more than 30 percent of their income on rent and utilities—has climbed to 47 percent; one in four renters—about 11 million—spend more than half their income on shelter. Renters today spend about 10 more percentage points of their earnings more on housing than they did in the 1970s. Meanwhile, rising prices have also forced millions of younger Americans to delay homeownership, making it impossible for many to buy their way onto the property ladder, particularly in California and New York”

          Then again, if you own two houses, then I guess it’s not a problem.

        2. Ron Oertel

          The Atlantic is a pretty conservative publication, as I recall.  And they’re just now becoming concerned about “poor people?  And, you’re citing them as a source?

          Nationwide, the share of renters who are considered “burdened”—spending more than 30 percent of their income on rent and utilities—has climbed to 47 percent; one in four renters—about 11 million—spend more than half their income on shelter.

          This sounds more like a discrepancy in income, than anything else.  I was just reading an article earlier today, which shows that the wealth gap is increasing in this country.

          This isn’t the article, but gives you some idea:

          The top 1% have more money than the entire middle class.

          https://www.businessinsider.com/top-1-have-more-money-than-the-middle-class-2021-10

          Also, how are the statistics you cited not an even stronger argument for rent control?

          Renters today spend about 10 more percentage points of their earnings more on housing than they did in the 1970s.

          How is this not an argument for rent control?

          Meanwhile, rising prices have also forced millions of younger Americans to delay homeownership, making it impossible for many to buy their way onto the property ladder, particularly in California and New York”.

          I wouldn’t recommend that (most) young people try to do so in (most places within) California or New York.  Of course, other locales are experiencing declining housing prices even faster than California and New York, at the moment.  (After rising much faster in the first place.)

          (If it was up to me, I wouldn’t devise a system which supports homeownership as a method of gaining wealth in the first place.)

          Given that this is a nationwide sample (and includes locales where there are few restrictions), what is the “theory” regarding the reason that developers are supposedly not “building enough”?

          The housing market is declining.  This is even more of an actual problem in places like Atlanta – where lots of lower-wealth individuals already own homes.  (I was just reading an article regarding that, as well.)

          Then again, if you own two houses, then I guess it’s not a problem.

          I don’t know who you’re referring to, but it’s not a problem for those who own any number of houses, including one.  (Wealthier people often don’t even occupy or rent-out their additional housing units.)  Again, I’d refer you to the increasing wealth gap, between those at the top, vs. the middle and lower-classes.

          But at the most basic level, you’re conflating rising prices (which have impacted all costs) with “shortages”.  These are two different issues – again, referring to the nationwide sample which includes markets which have few building restrictions.

          You noted (yourself, above) that the cost of labor and building materials alone are driving up housing prices above the existing median.

          And remind me again regarding the reason that there’s a claimed “housing shortage” in a state with a declining population?

          Isn’t this actually the way it’s supposed to work? Folks pursuing opportunities where job opportunities are more plentiful, and housing prices are lower?

          The same reason that folks moved “to” California, in earlier decades? (And still move to “cheaper” places like Davis and Sacramento, from the Bay Area?)

        3. Ron Oertel

          Yeah, I just looked (before you wrote that), and it seems that you’re right regarding the Atlantic, per what I just saw.  My impression of it is apparently incorrect.

          Now, I’m wondering if they support rent control, and how they view continuous economic and population expansion, gentrification, the wealth gap, etc. That might tell you more, regarding their views.

          Truth be told, I don’t think I’ve ever read an entire article in that publication.  (Which has nothing to do with its content, however.)

          I’m probably closing in on five comments.

      1. Ron Oertel

        With your comment coming from someone who claims that adding 2,500 claimed jobs (but only 460 housing units) doesn’t create a housing shortage.

        As usual, the housing/development advocates refuse to acknowlege the cause. Which leads one to conclude that they don’t care one bit about housing shortages, and have a different agenda in mind.

        There’s a total and complete lack of honesty regarding this issue, starting with (as you and David put it) basic “facts”.

  6. Richard_McCann

    Ron O

    Your comments reflect exactly the denialism that the articles highlight. The evidence is placed squarely before you and you continue to deny it because it inconveniently blows apart your personal perspective. The rest of us can clearly see your inability to accept that your position is unsupportable.

    Instead of spewing a bunch of nonsense that is strongly refuted in the Atlantic articles, please read those articles yourself. Those, and many others in both that publication and others, many of which I’ve posted here, describe in detail the housing crisis in the the U.S. and in California. A basic economic fact – rising prices are an indicator of both stagnant or shrinking supply and/or rising demand. While the state’s population growth has slowed in general, and probably only for a moment while we reset after the pandemic, population is still rising in areas with more jobs and growing economic opportunities. When you are willing to give up your personal wealth and redistribute to the younger generation so they don’t need to pursue those opportunities, then you assert that they don’t need to be concerned about economic growth. If not, you’re just another entitled, privileged white man protecting your position. The bottom line is that the jobs are in California and New York and population follows the businesses, not the other way around. So what are you doing effectively about this situation? (The housing market bubble is deflating after the run up the last 2 years, but as we saw after 2008, the housing market will likely resume its upward march after a correction.)

    As for the cost of housing, half or more is caused by land costs, not construction materials and labor, and that land cost is unaffected by rising materials costs. Instead, land owners will absorb changes in housing prices, which includes falling prices even in the face of increased building costs.

    Most of the houses in Davis are about 1,500 sf. I live in a house that is 1,300 sf with a 300 sf office. Most of those of those houses have a garage and a yard. 1,500 sf houses are being built today in Sacramento and West Sacramento. The developer that Matt quotes was being disingenuous so as to avoid being told to build smaller houses.

    But more importantly, new houses decrease the competition for existing houses. Higher income household usually are more interested in the new housing, and middle income households can then better afford the existing housing. As I’ve pointed out several times, the housing market is dynamic and complex. Simplistic statements are not adequately descriptive of what happens with increased housing supply.

    If you’re solution is rent control, that’s a sure way to stifle new housing construction. Numerous studies show that the supply stagnates with rent control, and rent control benefits most the upper middle class who don’t move as often as lower income households. Rent control, as any New Yorker will tell you, closes out opportunities for new people moving into a community.

    The people looking backwards in Davis (which as a Woodland resident you are not representative) are those who want to “preserve” a mythological vision of what they imagined Davis was. Those are the people trying to stop progress in this community towards one that supports UCD and opportunities for young people in our state and nation. A bifurcated population with a missing middle will not be a healthy vibrant community. Consensus will be even more difficult as students and the aged are pitted against each others interests.

    You can fantasize about how people accrue wealth or controlling population growth, but those fantasies are irrelevant to the public policy debate.

    For David G., Measure J can be changed in one of three ways, either by changing the approval process as I have suggested several times, by a lawsuit that highlights that Measures R and D were in violation of the 2003 state law on growth control laws, or the state legislature overrides all local laws of this type. These are all entirely realistic scenarios.

    1. Ron Oertel

      Your comments reflect exactly the denialism that the articles highlight. The evidence is placed squarely before you and you continue to deny it because it inconveniently blows apart your personal perspective. The rest of us can clearly see your inability to accept that your position is unsupportable.

      What position is that?

      The article that David cites discusses cost (compared to income), not “shortages”.  And the article noted that labor and material cost results in housing that costs more than the existing median.

      But again, I ask three questions:

      1)  Does pursuit of continued economic development create “housing shortage” in a given area?  All evidence shows that it does.  (Various articles may “overlook” this, but they can’t deny it.)

      “Demand” is not fixed – and is the result of decisions made.

      2)  Why is there a claimed “housing shortage” in areas of the country in which there are few building regulations?  (I’m not necessarily claiming to have an answer regarding that, but could it be that wages aren’t keeping up with rising costs, in general?)  Again, not actually a “shortage”, but rising cost – per these types of articles.

      3) What data and methodology are they using to determine “housing shortages”? And why did Newsom drastically-reduce the number of housing units that he claimed are “needed”? Are he (and others) just pulling numbers out of a hat? (If so, that hat would tell him that it’s difficult to claim a housing shortage, in a state with a declining population.)

      Instead of spewing a bunch of nonsense that is strongly refuted in the Atlantic articles, please read those articles yourself.

      What part of the Atlantic article “strongly refutes” anything I’ve said?

      I’ve read tons of articles like this, and none put forth their methodology – nor do they analyze cause/effect beyond “build, baby, build” – including in areas of the country in which they’re already doing so (and where housing prices are now declining).

      Those, and many others in both that publication and others, many of which I’ve posted here, describe in detail the housing crisis in the the U.S. and in California.

      Again, they’re actually referring to an “affordability” crisis (for some).  For which there is not one singular cause.  With much of the “message” delivered by politicians and media which are supported by business/development interests.

      A basic economic fact – rising prices are an indicator of both stagnant or shrinking supply and/or rising demand.

      Again, I ask – why aren’t developers building more in places with few restrictions, which (also) claim to have a “housing shortage”?

      And again, does rising labor and material cost have anything to do with this?  According to the article, it does.

      And again, do stagnant wages (and increasing wealth disparity) have a role in this?

      While the state’s population growth has slowed in general, and probably only for a moment while we reset after the pandemic,

      It’s not “slowing” – it’s reversing/declining.  It’s been “slowing” for much longer than that.

      population is still rising in areas with more jobs and growing economic opportunities.

      There you go – finally an acknowledgement.

      When you are willing to give up your personal wealth and redistribute to the younger generation so they don’t need to pursue those opportunities, then you assert that they don’t need to be concerned about economic growth.

      I don’t understand this comment.  It’s written in an unclear manner.

      If not, you’re just another entitled, privileged white man protecting your position.

      Is that right?  Well, that settles that, I guess.

      The bottom line is that the jobs are in California and New York and population follows the businesses, not the other way around.

      Ever hear of Austin?  

      And do you think things remain the same forever?  Are you familiar with Detroit?

      So what are you doing effectively about this situation?

      I’m fighting the misinformation, obviously.  Which is pretty difficult to do on the Vanguard at least.  (Try reading “48 Hills, for a different, but still-progressive analysis/conclusions.)

      (The housing market bubble is deflating after the run up the last 2 years, but as we saw after 2008, the housing market will likely resume its upward march after a correction.)

      All prices eventually rise, over time – not just housing.  But every article I’ve read recently states that we’re only at the beginning of a housing downturn.

      As for the cost of housing, half or more is caused by land costs, not construction materials and labor, and that land cost is unaffected by rising materials costs.

      Support for this comment?

      In any case, maybe you should talk with your developer friends about this.  They’re the ones who gain the most, when farmland is rezoned for housing.

      Instead, land owners will absorb changes in housing prices, which includes falling prices even in the face of increased building costs.

      What?  First of all, land owners are not always developers.  And developers stop building when it doesn’t make economic sense for them.

      Most of the houses in Davis are about 1,500 sf. I live in a house that is 1,300 sf with a 300 sf office.

      Congratulations.  Is it filled with young kids?  (Again, this isn’t what most families look for.)

      Most of those of those houses have a garage and a yard. 1,500 sf houses are being built today in Sacramento and West Sacramento. The developer that Matt quotes was being disingenuous so as to avoid being told to build smaller houses.

      I don’t think so.  I haven’t seen any 1,500 square foot houses built in mass anywhere in the region, recently.

      Though Davis is on track to get some pretty small houses at Chiles Ranch, which I would expect to sell (at a high price per square foot).

      But more importantly, new houses decrease the competition for existing houses.

      Did The Cannery lower housing prices?

      Does Spring Lake lower housing prices (in Davis or Woodland)?

      Again, why do the development activists continue to ignore artificially-created demand (e.g., in the form of pursuit of endless economic growth)?

      Higher income household usually are more interested in the new housing, and middle income households can then better afford the existing housing.

      Again, did The Cannery lower housing prices?  Did Spring Lake?

      As I’ve pointed out several times, the housing market is dynamic and complex. Simplistic statements are not adequately descriptive of what happens with increased housing supply.

      Then why are you and others advocating for “build, baby build” as a “solution”?  Especially since there’s other causes which won’t be addressed by that totally-unsustainable approach?

      If you’re solution is rent control, that’s a sure way to stifle new housing construction.

      New buildings are generally exempt from rent control for a number of years.

      Numerous studies show that the supply stagnates with rent control, and rent control benefits most the upper middle class who don’t move as often as lower income households.

      You have no support for this claim.  By the way, do “lower-income households” necessarily remain that way forever?  (Unlike rent control, Affordable housing encourages households to remain “poor” to qualify.)

      Rent control, as any New Yorker will tell you, closes out opportunities for new people moving into a community.

      Well, what’s the goal?  Continued growth, or control of costs?

      The people looking backwards in Davis (which as a Woodland resident you are not representative) are those who want to “preserve” a mythological vision of what they imagined Davis was.

      You’re right – I’m not a “representative” of any locale, and neither are you.

      I have no “mythological vision”.  However, I do see that Davis is still surrounded by some nice farmland at this point.  And still without crushing traffic.

      Those are the people trying to stop progress in this community towards one that supports UCD and opportunities for young people in our state and nation.

      I apparently define “progress” in a much different way than you do.  Claiming that I’m trying to “stop progress” is not progress.

      A bifurcated population with a missing middle will not be a healthy vibrant community. Consensus will be even more difficult as students and the aged are pitted against each others interests.

      Define “healthy”.  And what makes you think that a so-called “missing middle” would create “harmony”?  They’re going to automatically be “allies” with students, in your mind?

      All housing eventually turns over.

      You can fantasize about how people accrue wealth or controlling population growth, but those fantasies are irrelevant to the public policy debate.

      Oh, I’m not “fantasizing” – it’s occurring (despite the efforts of politicians connected to development/business interests to “force” growth and development – even in cities where the population has already been declining).

      For David G., Measure J can be changed in one of three ways, either by changing the approval process as I have suggested several times, by a lawsuit that highlights that Measures R and D were in violation of the 2003 state law on growth control laws, or the state legislature overrides all local laws of this type. These are all entirely realistic scenarios.

      Good luck with that.

      Though in a sense, I agree with Ron G in that David should just come out and (more honestly) try to undermine Measure J, given his interests in doing so.  Why is it important to be on a “winning side” of an issue in the first place?  Is David running for office, or something?

      I say, “give it a try” – as it would be more honest (and amusing).

    2. Ron Oertel

      Quoting myself:

      I’ve read tons of articles like this, and none put forth their methodology – nor do they analyze cause/effect beyond “build, baby, build” – including in areas of the country in which they’re already doing so (and where housing prices are now declining).

      To clarify, the reason that prices (in all areas) are declining has very little to do with the amount of housing that they’ve recently built, and everything to do with rising interest rates and a probable recession.

      Though the areas which saw the most significant price increases are also the areas which are now seeing the biggest price declines.  (These do tend to be the areas where developers attempt to “get on the bandwagon”, and make their money before the entire thing collapses, again.  As it always does.)

      Sort of like a game of musical chairs, where the last developer standing is the loser (along with all of the homeowners who recently purchased houses).

      Phoenix, Vegas, Austin, parts of Florida, and even (more-recently) places like Boise come to mind.  (The latter locale primarily due to the ability to telecommute, but which is now crashing in a manner similar to the usual, aforementioned hell-holes.)

      You’d think that the activists who claim to be concerned about “housing shortages” (or more accurately – rising prices) would be celebrating, but no. Again, leading one to believe that they don’t actually care about the issue at all.

      I’d suggest that it’s those who realize what the greedy pursuit of “economic development” leads to are those who are most concerned about “housing crises”. And if you don’t believe that, there’s an entire valley made out of “Silicon” to prove it (but which is also now experiencing contraction).

      Again, nothing stays the same forever, including “business centers”. The world is forever changing (the latest significant change due to technological advancements and change in policy regarding telecommuting).

      Or, maybe you think Detroit is still an economic powerhouse? Or, the rust belt in general?

  7. Ron Oertel

    There’s actually quite a few articles/blogs like the following on the Internet.

    There is not really a shortage of houses.

    The housing “shortage” will correct itself as it is not built on population growth and “real” demand.

    https://www.fairviewlending.com/is-there-really-a-shortage-of-houses/

    Meanwhile, cities like Tulsa, Oklahoma, are paying people to move in. With an average home value of $235,000, and a $10,000 incentive from the government to buy one, some towns still can’t find enough residents to fill their lots. Capitalizing on the pandemic, West Virginia now has a state program dedicated to bringing remote workers to the state, complete with $2,500 in mortgage assistance, $12,000 cash, and professional-development opportunities.

    It’s no wonder Americans can’t afford houses: they’re all trying to live in the same five places. Meanwhile, cities like Tulsa, Oklahoma, are paying people to move in. With an average home value of $235,000, and a $10,000 incentive from the government to buy one, some towns still can’t find enough residents to fill their lots. Capitalizing on the pandemic, West Virginia now has a state program dedicated to bringing remote workers to the state, complete with $2,500 in mortgage assistance, $12,000 cash, and professional-development opportunities.

    It’s no wonder Americans can’t afford houses: they’re all trying to live in the same five places. Such disproportionate demand has made it harder for the locals in those places to buy in their hometowns, while outsiders with money can come in and scoop up the most desirable lots. But it also has the more lasting effect of creating discontentment.

    https://www.theamericanconservative.com/its-not-a-housing-shortage/

    Today’s “housing shortage” or “affordability crisis” is artificial.

    Total demand for housing is driven by population. That’s not rising fast. Growth is going to fall off a cliff unless we find a way to bring immigration up.

    https://www.danablankenhorn.com/2022/03/there-is-no-housing-shortage.html

    Chuck Collins (Institute for Policy Studies, see Opinion page, Sept. 2, 2021) states it is who owns the supply of housing and rentals that counts. He noted that anonymous shell companies designed to shield actual wealth own 40% of rental housing in the U.S., per U.S. Census data.

    So do we really have a housing shortage? Alex Schwartz and Kirk McClure (“The Conversation,” published Nov. 27, 2021, Philadelphia Inquirer) state that “In much of the country, there is actually no shortage of rental housing. The problem is that millions of people lack the income to afford what’s on the market.”

    https://democratherald.com/corvallis/news/local/as-i-see-it-is-it-really-a-housing-shortage/article_6cf42dca-bc33-11ec-ab17-77e8de15b789.html#:~:text=Alex%20Schwartz%20and%20Kirk%20McClure%20%28%E2%80%9CThe%20Conversation%2C%E2%80%9D%20published,the%20income%20to%20afford%20what%E2%80%99s%20on%20the%20market.%E2%80%9D

    1. David Greenwald

      of the problem here is that you are attempting to respond to something when it doesn’t appear that you read fully the two Atlantic articles. As one of the articles makes it clear, there are parts of the country where there is sufficient housing, the issue is housing combined with jobs and markets and that’s what you are not addressing.

      The last cite is interesting, “there is no actual shortage of rental housing. The problem is that millions of people lack the income to afford what’s on the market.” Why is that? Demand for the housing has driven costs beyond the affordable reach of people. What’s the solution? Increase the supply to bring down the costs. We go around in circles here in part because we can’t agree on the facts, but part of that is that because insufficient attention to the points being raised.

      1. Ron Oertel

        It seems like you’re the one who is “selectively reading” to support what you already believe.

        The article that you are citing goes on to note this:

        And given the well-documented wealth gap in our country, it is not a surprise that many Americans cannot afford housing in the communities where they work.

        So it seems investors buy up housing and increase prices for a greater return on their investment, which reduces the supply of affordable housing. This puts a burden on the taxpayer to subsidize those who can’t afford what landlords are demanding for rents, another example of corporate welfare. (Perfect.)

        Again, from the article above: “In fact, there is not a single state, metropolitan area or county in which a full-time minimum-wage worker can afford the ‘fair-market rent’ for a two-bedroom home, as designated by the U.S. Department of Housing and Urban Development.

        There is no developer willing to build housing at this cost level, without a subsidy. And what we have here are investors “creating” a lack of affordability, which then has to be borne by taxpayers – as noted.

        1. Ron Oertel

          Again, builders aren’t going to build at that cost level – period.

          All evidence shows this to be the case.

          We’re already seeing them pulling back, due to interest rates, recession, etc. At all housing prices.

          What makes you think that they’re suddenly going to start building to address those at the lowest-end of the wealth spectrum, when they didn’t even do so when the economy and demand for housing was stronger?

          Why do you suppose that the so-called “housing crisis” hasn’t been addressed in areas where there’s few regulations?  (In other words, in the “build everything” areas of the country?)

          For that matter, do you view (even) the Sacramento region as a place where new construction is in “short supply”?

          What we have here is an increasing wealth gap, in which investors are able to take advantage of those at the lowest-end of the wealth spectrum.

          Again, they are not going to build housing at a cheap-enough level to address those whom you’re concerned about. It doesn’t “pencil out” for them – even in areas of the country with few regulations/restrictions.

          There are, however, markets where existing housing is plentiful and cheap – as noted. And where they’ll actually pay you to move there. (I’d do it, if I was younger and in need of housing.)

        2. Matt Williams

          David Greenwald said … “You don’t need to build housing at that cost level, you need to increase the supply to reduce the curve of cost increases.”

          How does that IMPROVE the affordability problem that we have in Davis?  What you are saying is that the current unaffordable houses in Davis will continue to be unaffordable, and their level of unaffordability will continue to increase, just at a somewhat slower rate.

          That is a textbook example of Einstein’s definition of insanity.

        3. Tim Keller

          To respond to David point.. I dont think we really need to even focus on reducing housing costs… There is not enough housing PERIOD… market rate, affordable or anything…   The last two times my family had to move we had to find someone who was moving out before they listed their property so that we could get in ahead of the game…

          Its like manhattan where people look for real estate in the obituaries.

          I still really think we need to do a cell-phone GPS traffic study… see just how many people are forced to commute here everyday…

        4. Ron Oertel

          Tim:  As I recall, you previously stated that you are a renter.  Here’s some available places for you right now.  (55 of them, to be exact.)

          https://www.zillow.com/davis-ca/rentals/

          And if you want to purchase a place, here’s some that are available.  33 of them, to be exact.  (Including some which have already dropped in price. Look for that trend to continue next year, as well.)

          https://www.zillow.com/davis-ca/

          And if you want “more for your money” – either as a renter or buyer (and/or new construction) – have you considered Spring Lake?  You could also expand your business at that planned technology park, if you’d like.  (And/or live in the 1,600 additional housing units planned there, which were added after it “moved” from Davis.)  You’d fit right in, there.

          Alternatively, you could also wait for Chiles Ranch to be built, if you want a new house in Davis. I think that’s going to be a nice little community, albeit small and overpriced houses. Who knows, you might even be able to get your car out of s shared driveway, which I (at least) imagine that they’re probably planning. (Have you seen the shared driveway that they’re planning at the site of the former Davis skilled nursing facility – by the same developer no less? Yikes.)

          But seriously, Chiles Ranch might be kind of nice, otherwise. If you don’t think about the former history of that place, at least.

           

          1. David Greenwald

            A few years ago, I had an employee looking for an apartment in Davis. It took her three months to get one. Yes, there were plenty of them listed, but by the time she contacted the landlord to take a look, they were already rented. I have no idea if the market is as hot as it was in 2017-18, but I got a birds eye view of how it looked.

        5. Ron Oertel

          To clarify, I’m referring to the streets themselves as “driveways”, as some don’t seem to serve any other purpose.  Not sure if they’ll be privately owned.

          In any case, it appears to be pretty challenging to back out of one’s own driveway (e.g., at the Pole Line development).  And I’m guessing that as a practical manner, you can really only have one car per household.  (Probably true at Chiles Ranch, as well.)

          It’s unclear to me if the ADUs at Chiles Ranch would have a separate driveway/garage space.

          https://foutshomes.com/chiles-ranch/elevations-and-floor-plans/

          Overall, I’d say that most people would get more for their money with a “pre-owned” home – maybe in the adjacent Mace Ranch. They come on the market quite often.

          Or, as I said – in Spring Lake. (No doubt, some of those developers are likely more than willing to “make a deal”, at this point. And even more so in a few months from now.)

          Or even better – get a “used” home in Woodland, if you want more for your money.

          Though I do realize that Davis is still (overall) a more-desirable town, in my opinion. Can’t beat those bike paths, for one thing. Still, there’s less congestion at least in Woodland, in addition to the “better deal”. And an easy commute to Davis/UCD.

        6. Tim Keller

          This is a great example the intellectual defects in Ron’s approach to many things… he “Thinks” something should be easy, or solve-able based on the information he has sought out… which just so happens to align with his pre-established world-view.

          At the same time he entirely writes off the lived-experiences of those around him.

          David asked if “consensus” is possible in the Davis housing debate a few months back… and my reponse at the time was… “consensus among whom?”…

          There can be no consensus with Ron, because he is not looking for it.

        7. Ron Oertel

          Tim:  Your comment has no relationship to anything I’ve said.

          I did have a specific suggestion for you (actually, more than one), to which you have not responded.

          Maybe you’re just too inflexible to consider it.

          As far as “anecdotal stories” (which happen to align with one’s views), I take those with a grain of salt.

          Though I have no doubt that students have had a disproportionate impact on Davis’ rental market. (Perhaps that will change.)

          However, if I was looking for a rental (and had no need to be directly-connected to Davis every day), I’d look elsewhere. Why pay a premium and go through a lot of hassle if you don’t need to?

        8. Ron Oertel

          And for that matter, why would non-student renters want to be around student renters, who dominate the rental market?

          The only way to avoid that is to rent an entire house, in an area not dominated by students. (Parts of town are still that way, but it will always be limited.)

          But yeah, you’d probably save $1,000/month by renting a house in Woodland (compared to Davis), for example. Maybe that kind of money means nothing to you?

          And you already know that the failed “Davis Innovation Center” moved what was left of it to Woodland, and added 1,600 housing units. Perfect for those who want a “live/work” environment, with easy access to UCD.

          Just pointing out the obvious alternatives, which might make more sense for you. (But certainly doesn’t make sense for someone with an “inflexible agenda”, or who might be looking for a subsidized place for their home or business in exchange for “activism”.)

      2. Richard_McCann

        Matt

        No, we’re talking about fundamental economic principles. The complexity of the world creates a situation where countervailing forces are at work constantly, and we never see the full effect of a particular action. In this case, building more housing will not lower the price of housing from today’s prices because the countervailing force of higher demand will still push up prices–but prices won’t go up as much as they did before. This is also mutes Keith E’s contention that developers won’t build in a market where prices will fall–the added housing rarely creates such an overabundance that prices fall (2008 being the salient and unique counterexample). So there’s no insanity here–there’s recognition of complexity.

        1. Ron Oertel

          In this case, building more housing will not lower the price of housing from today’s prices because the countervailing force of higher demand will still push up prices–but prices won’t go up as much as they did before.

          Prices are falling today, and will continue doing so without building one stick of additional housing.  Across the entire country, for that matter.

          One other factor that you consistently ignore is that people (and businesses) seek alternatives, e.g., when conditions are more conducive to growth and development elsewhere.  That’s one reason for the shifting of businesses and growth to places like Austin.  (But that’s only “one” of the type of alternatives, in regard to supply and demand. There are also other types of alternatives.)

          Another example of (the same type) of alternative is the migration from the Bay Area to the Sacramento region, including Davis.

          Exploration and pursuit of alternatives (for those seeking a particular goal or set of conditions) is also a fundamental economic principle, in regard to supply and demand.

          And all of this ensures that there’s ultimately a market CAP on prices that can be charged. If Davis, for example – only had one housing unit in the entire town, it would NOT be worth $100 million dollars.

           

      3. Richard_McCann

        Tim

        Absolutely agree about Ron O’s perspective. He lives in his own echo chamber of disinformation.

        But yeah, you’d probably save $1,000/month by renting a house in Woodland (compared to Davis), for example. Maybe that kind of money means nothing to you?

        And in addition, he doesn’t even live in Davis–he chooses to live in Woodland! He assumes that everyone’s preference must match his own and he can’t understand why people want to pay a premium to live here. I have no connection to UCD yet I’ve rented four different houses here. I don’t think I’d want to live on a street that’s entirely students, but I have lived next door to them. Having younger students around makes the neighborhood more lively. I’m in Davis because its more socially engaging that Woodland. I see many more people out walking around. I could not create equivalent groups of friends in Woodland. So of course, me, and many others including Matt who also has no connection to UCD, choose to live in a vibrant Davis and pay the extra rent or house payment. That’s how the market works. But now we need to work at preserving that vibrancy and not turning it into Sun City. Ron has already left Davis–why does he keep bothering the rest of us to try to convince us of the error of our ways?

        1. Ron Oertel

          You sound about as inflexible at Tim.  However, unlike Tim, you’re not struggling to establish a business, seeking loans from the city, etc.

          Woodland (especially Spring Lake) has the families that Davis is supposedly “craving”.  Isn’t that what you and the other claim to be advocating for more of? Why not just move to the location that better-suits your preferences?

          And as far as business opportunities (for something like Tim’s business), you already know about the planned technology park (and its 1,600 housing units).  Not to mention the “non-profit”, subsidized technology startup incubator that’s located in Woodland.  (And which has a governing member who was connected to the Vanguard, itself.)

          As far as “choices”, you know nothing about my situation.  One sometimes has to make the best decision possible for themselves (overall), which (for almost everyone) includes living in a location that would otherwise not be their first choice. For that matter, choices are not necessarily “permanent”.

          I’ve already noted that Davis is a better town that Woodland (overall), in my opinion.  However, there is no location in the region that’s among the best places in California.  (Not even close.) I can provide you with a list of superior locations, if you’d like.

          I’ve noticed that whenever you run out of logical arguments, you focus on me, – rather than the subject matter. This is a form of trolling, and is not serving you or the Vanguard well. This is also a tried-and-true method of political posturing that politicians like Trump prefer to engage in.

        2. Ron Oertel

          Quoting myself:

          “You sound about as inflexible at Tim.  However, unlike Tim, you’re not struggling to establish a business, seeking loans from the city, etc.”

          I want to clarify this further.

          Some people seem to be “glued” to Davis (even if they’re not originally from Davis), while at the same time expressing constant “dissatisfaction” with its (relatively) slow-growth policies.

          Why do these folks insist that the community should “adjust” to suit their demands?

          I’m also pointing out that for some folks, opportunities for what they seek are not difficult to find elsewhere – including nearby.

          Of course, this may not apply for someone (like Tim) who is already a commercial tenant of the DISC developer, as noted in previous Vanguard articles.  As a result, I would think that the DISC developer would appreciate Tim’s constant advocacy.

          Quoting you:  “So of course, me, and many others including Matt who also has no connection to UCD, choose to live in a vibrant Davis and pay the extra rent or house payment. That’s how the market works.”

          I don’t believe that Matt lives in Davis, though El Macero isn’t cheap either.

          But I agree – if you want to pay a higher amount of rent (or purchase price) to live in Davis, it’s worth it for some.

          But apparently not for the majority of younger, less-established, newer residents to the area, who might want a garage, yard, etc, – at a price that they can afford.

          In fact, many Davis residents, including “older” residents – have also moved to places like Spring Lake. I believe this is one of the reasons that there’s an entire development in Spring Lake which consists of nothing-but large, single-floor houses.

          But unless housing turns over at a high rate, even an infusion of newer residents in newer developments is not going to address what you and others claim to be concerned about.  Everyone ages (increasingly “in place”), and their child-rearing years are actually quite short in duration, with fewer children to boot. (This is a primary reason that even Woodland is experiencing a decline in enrollment, in older sections of town.)

          Time to stop looking at a Ponzi scheme as any kind of “solution”.  In fact, it’s totally harmful in regard to continuous paving-over of farmland.

           

  8. Ron Oertel

    You don’t need to build housing at that cost level, you need to increase the supply to reduce the curve of cost increases.

    This is otherwise known as the “trickle-down” theory of economics.

    And as usual, it’s not working.

    San Francisco, for example – built 150% of its most-recent “market-rate” housing allocation, without even being prodded by the state.

    Building expensive condos for (even more) tech workers and/or international investors doesn’t lower housing prices.

    Much the same as The Cannery didn’t lower housing prices.

    The market ultimately addresses “housing shortages” without intervention.  The ability to telecommute is one of the more-recent tools that is already being used to address it. As is the relocation of companies and workers to places like Texas.

    But, those at the bottom simply don’t make enough to compete in expensive markets.  (And again, no one is going to build housing for them at a level they can afford, in those locations.  They’ll build market-rate housing which further prices them out – rather than “lowering prices”.  Again, all evidence shows this to be the case.

    Of course at some point, they’ll start charging $20 for a burrito or other fast food (and probably already are).

    Of course, those with vested interests still have an incentive to lobby for reduced regulations (and cry “housing shortage”), so that they can make even more money than they already do. (But, they still won’t “lower their prices” as a result.)

    How many developers do you suppose are in the “top 1%” category? (Which of course, includes Donald Trump as well.)

  9. Richard_McCann

    Ron O

    Your position is that there is no housing shortage and all of those people who want to invade your space in California should just go look in other states where housing is less expensive. However, the two fold problem with your position is that (1) the best paying jobs and many of the most social and economically beneficial policies are in California and the other high prices coastal states and (2) even then the housing shortage as demonstrated by the multitude of studies extends even beyond the coastal states.

    The blogs that you refer to live in an echo chamber, much like the climate change denialists, who refuse, much like you, to acknowledge the facts put in front of them that refute their treasured perspectives. And anecdotes about places like SF where job growth and resulting population growth far outstripped added market rate housing does not refute the fundamental empirical data driven analysis that shows that added supply decreases prices.

    If you want to know why developers aren’t building in less restrictive places, read the articles that I’ve linked in the past and David has linked here. I’m not going to do your work for you.

    No, California population is projected to continue growing. Unless you can show me your demography degree and professional experience in the field, your feelings about this are not useful: https://dof.ca.gov/forecasting/demographics/projections/

    I can’t respond to all of the other gibberish in your comments that try to divert attention away from the basic economic points. The fundamental economic points are all still valid. Obviously you’re not following the development patterns in the region. And prices won’t necessarily fall–they will rise less quickly. That’s a counterfactual construct that non economists like you have difficulty following. You have to ask what would have happened otherwise? In Davis, housing prices would have risen even faster without the Cannery. Spring Lake likely also decreased price increases in Davis and Woodland.

    As for the relative shares of housing costs, take a look at your property tax assessment. You’ll see that “improvements” (your house) and “land” make up roughly half each of the total assessed value. It doesn’t matter who owns the land–who ever sells it to build houses on it will receive a price based on the net residual value after accounting for construction costs. That residual value decreases if housing prices remain the same and construction costs increase–simple math.

    Rent control without vacancy controls won’t solve the problem because renters generally move so often. And rent control is not imposed anywhere based on a building being new for a period of time. In California, all housing built after 1995 is currently exempt. I have posted numerous times in the comments studies showing the adverse impacts of rent control. Did you bother to read them? If you haven’t then your claim that I have not supported my statement is wrong and unsubstantiated.

    The goal is affordable housing for those who want to be able to work in a location with a vibrant economy supported by a public university funded by state taxpayers. Currently, Davis is failing to meet that goal. A healthy community doesn’t look like Sun City or a retirement home. Harmony and consensus are not synonymous.

    Given that you live in Woodland with no discernable links to Davis, what you think about reforming Measure J is irrelevant.

    BTW, Austin also is facing a housing crisis for the same reason as California.

    Interestingly enough, the first blog you linked from Fairview has this passage:

    Mismatch of housing types/locations: Just as in past cycles there is a desire to be in “trendy” markets like Miami, Denver, Atlanta, etc…  so demand in these markets is off the charts, at the same time, there are plenty of houses available in places like Detroit (here are 18 markets where inventory is growing).  Even with a work from home revolution, there is a continued conglomeration in hot markets that has caused an acute shortage in particular markets due to growth.

    This author fails to acknowledge the fundamental truth about housing markets–people move to where there’s work, not the other way around. These markets aren’t “trendy”–they are economic necessities to those who want to earn a living. I’ve commented extensively in the past about this fundamental truth. You’ve had no real response to this because you can’t. The quotes you draw from other blogs make the same mistake. Housing demand is not simplistically about population growth, its about the dynamics of the economy and how workers move to staff businesses. It’s fueled by the agglomeration effect that I’ve written about several times. There are few well paying jobs in Tulsa or Detroit and unlikely to be so for a number of reasons. If you believe that people should be willing to live in Detroit or Tulsa, why don’t you simply move to those places. Why should you be privileged to live in Northern California and slamming the door on others who want to live here? The privileged arrogance in that attitude is all too obvious.

    The assertions that there is sufficient market power in rental housing to dictate prices are without foundation. (And I testified on behalf of the California Parties in the FERC Energy Crisis proceeding demonstrating the exercise of market power in the electricity market.) The ownership is simply too diffuse and the markets too localized to enable this market power. The simpler, easier explanation is the one described in the studies referenced–local growth control measures that constrain housing. The investors are exploiting that situation to maintain high rents.

     

    1. Ron Oertel

      I’ll go ahead and respond, but the “quote” feature is not working properly when copying-and-pasting here.  Therefore, I’ve put some of my responses in bold text, to differentiate them.

      Your position is that there is no housing shortage and all of those people who want to invade your space in California should just go look in other states where housing is less expensive.

      Interesting, though I didn’t say that.  I did say that there’s nothing wrong with folks pursuing better opportunities for both employment and housing in other locations.  (The same phenomenon which led to California’s growth in previous years, and is still leading to growth in the Sacramento region from places like the Bay Area.)

      Based upon your comments in another article, “your” position seems to be that as soon as we run out of water for farmland (due to climate change caused by sprawl), we should build more sprawl on it.

      By the way, do you believe that supporting growth in this (sprawling) region (from folks moving from the Bay Area, where services such as public transportation are better) is “environmentally-responsible”?  Because that’s exactly what you’re supporting.

      However, the two fold problem with your position is that (1) the best paying jobs and many of the most social and economically beneficial policies are in California and the other high prices coastal states and (2) even then the housing shortage as demonstrated by the multitude of studies extends even beyond the coastal states.

      The “best paying jobs” in coastal areas, sure.  But, they aren’t sufficient to make up for high housing costs in those areas.  Particularly for those who don’t occupy those “best-paying jobs”.  The people serving you burritos, for example.

      Those working in better-paying jobs are increasingly able to escape from those high housing prices, due to telecommuting.  Do you even read the news?

      As far as “social and economically beneficial policies” being in California, it seems that many are disagreeing with you at this point – and are proving it by leaving.

      Richard:  “The blogs that you refer to live in an echo chamber, much like the climate change denialists, who refuse, much like you, to acknowledge the facts put in front of them that refute their treasured perspectives.”

      Those are simply articles I found within 5 minutes of searching.  Would you like me to find more?
      Unfortunately, much of the “information” that you prefer is directly sourced from YIMBY-type interests.

      The first source was from a commercial real estate professional.  It seems to me that you’re the one who lives exclusively in an echo chamber.I am not a “climate change denial” activist, though folks like you who support developments and sprawl (such as DISC) most certainly are.  
      Richard:  “And anecdotes about places like SF where job growth and resulting population growth far outstripped added market rate housing does not refute the fundamental empirical data driven analysis that shows that added supply decreases prices.”
      Again, not demonstrated by what they actually build.  And yet, San Francisco and the Bay Area are one of the primary “targets” of the state’s efforts in the first place.
      Richard:  “If you want to know why developers aren’t building in less restrictive places, read the articles that I’ve linked in the past and David has linked here. I’m not going to do your work for you.”

      It’s not discussed, other than noting that labor and material costs are leading to high housing prices.  (They leave out the increasing wage gap, however.)
      Richard:  No, California population is projected to continue growing.
      Unless you can show me your demography degree and professional experience in the field, your feelings about this are not useful: https://dof.ca.gov/forecasting/demographics/projections
      I’ve already posted many articles showing that California’s population is declining, and had already been significantly slowing for years prior to that.  I’ve already “done the work for you”, in this case.
      Richard:  “I can’t respond to all of the other gibberish in your comments that try to divert attention away from the basic economic points.”
      Name-calling doesn’t refute facts.
      Richard:  “The fundamental economic points are all still valid. Obviously you’re not following the development patterns in the region. And prices won’t necessarily fall–they will rise less quickly.”
      You’re the one not following development patterns.

      Seriously – you’re suggesting that the Sacramento region is “short” on new development?  Look around – as you say, I’m not going to do your work for you.
      Richard:  “That’s a counterfactual construct that non economists like you have difficulty following. You have to ask what would have happened otherwise?”
      What happens is that employers eventually leave, and bring their employees with them.
      Richard:  “In Davis, housing prices would have risen even faster without the Cannery. Spring Lake likely also decreased price increases in Davis and Woodland.”
      Conjecture, though I’m glad to see you admit that Spring Lake is housing a lot of new residents.  It is not clear what is creating the “demand”, in this case – other than UCD.

      How many more of those type of developments do you want to see in the area?

      Richard:  “As for the relative shares of housing costs, take a look at your property tax assessment. You’ll see that “improvements” (your house) and “land” make up roughly half each of the total assessed value.”

      Property tax assessments have absolutely nothing to do with the value of the land, when it’s converted from farmland to urban zoning.  And over time, individual assessments have even less to do with reality.
      Richard:  “It doesn’t matter who owns the land–who ever sells it to build houses on it will receive a price based on the net residual value after accounting for construction costs. That residual value decreases if housing prices remain the same and construction costs increase–simple math.”
      What does this have to do with the value of farmland before, and after it’s approved for development?  Why do you think that developers spend so much on campaigns, EIRs, and traffic studies before a given farmland parcel is even approved for development?
      Richard:  “Rent control without vacancy controls won’t solve the problem because renters generally move so often.”
      No, they don’t.  Especially when they benefit from rent control.
      Richard:  “And rent control is not imposed anywhere based on a building being new for a period of time. In California, all housing built after 1995 is currently exempt.”
      Did I disagree with that?  New rental housing is exempt for a period of time, to encourage new development.
      Richard:  “I have posted numerous times in the comments studies showing the adverse impacts of rent control. Did you bother to read them? If you haven’t then your claim that I have not supported my statement is wrong and unsubstantiated.”
      Apparently, renters (and governments) in places like New York, San Francisco, and Berkeley disagree with you.  And it’s spreading beyond that (even to places like Antioch), as well.  Maybe you should go speak with them, and tell them the “errors of their ways”.
      Richard:  “The goal is affordable housing for those who want to be able to work in a location with a vibrant economy supported by a public university funded by state taxpayers.”
      Affordable” housing (as in “subsidized”) places limits on income, thereby ensuring that those residents won’t be able to participate in a “vibrant economy”.  (And by the way, UCD is only partially funded by taxpayers.  Increasingly, these type of institutions are funded by increased tuition costs, for those who don’t qualify for a subsidy.)
      Richard:  Currently, Davis is failing to meet that goal.
      What “goal”?  You already claim that UCD is providing a “vibrant economy”.
      Richard:  “A healthy community doesn’t look like Sun City or a retirement home. Harmony and consensus are not synonymous.”
      That’s certainly one (subjective) opinion.

      All housing eventually turns over.

      If you’re concerned about too many “old people” (or racist policies), where was your “concern” regarding WDAAC and their Davis-connected buyer’s program?
      Richard:  “Given that you live in Woodland with no discernable links to Davis, what you think about reforming Measure J is irrelevant.”
      What you think about Measure J is irrelevant to the 83% of voters that you want to disenfranchise from decisions regarding converting farmland outside of city limits for sprawl.
      Richard:  “BTW, Austin also is facing a housing crisis for the same reason as California.”
      I assume that you mean that they greedily-pursued “economic development”, which resulted in pricing-out locals.  (Of course, Austin is one of the places where housing prices are now crashing, however.)
      Richard:  “Interestingly enough, the first blog you linked from Fairview has this passage:”
      Mismatch of housing types/locations: Just as in past cycles there is a desire to be in “trendy” markets like Miami, Denver, Atlanta, etc…  so demand in these markets is off the charts, at the same time, there are plenty of houses available in places like Detroit (here are 18 markets where inventory is growing).  Even with a work from home revolution, there is a continued conglomeration in hot markets that has caused an acute shortage in particular markets due to growth.
      Richard:  “This author fails to acknowledge the fundamental truth about housing markets–people move to where there’s work, not the other way around. These markets aren’t “trendy”–they are economic necessities to those who want to earn a living. I’ve commented extensively in the past about this fundamental truth. You’ve had no real response to this because you can’t.”
      Interestingly-enough, you’re viewing the same quote and information that I am, but are arriving at an opposite conclusion.  The apparent reason for that is because you LOOK FOR WAYS to support development.

      Why do you think that housing prices are so high in Silicon Valley?  Do you think it’s because of the unbridled pursuit of economic development, or because pre-existing residents are sick of these interests dictating the destruction of their communities?
      Richard:  “The quotes you draw from other blogs make the same mistake. Housing demand is not simplistically about population growth, its about the dynamics of the economy and how workers move to staff businesses. It’s fueled by the agglomeration effect that I’ve written about several times. There are few well paying jobs in Tulsa or Detroit and unlikely to be so for a number of reasons.”
      Get out of your “bubble”.  Jobs increasingly-exist in areas where they did not before, in places like Nashville, Carolina, Austin, etc.  

      I brought up Detroit because it’s an example of “change”, in regard to economic activity.  You mistakenly and repeatedly claim that economic activity is limited to specific areas on a permanent basis.
      Richard:  “If you believe that people should be willing to live in Detroit or Tulsa, why don’t you simply move to those places.”
      Probably because I don’t need to.  If I was starting out, I’d probably view things differently.
      Richard:  “Why should you be privileged to live in Northern California and slamming the door on others who want to live here? The privileged arrogance in that attitude is all too obvious.”
      I don’t view Northern California (especially the Sacramento region) as some kind of “paradise” in the first place.  However, I do view folks like you as attempting to wreck it – and for no particular reason.
      Richard:  “The assertions that there is sufficient market power in rental housing to dictate prices are without foundation.”
      I’m saying just the opposite of that.  There’s an increasing wage gap, and investors are stepping-in to take advantage of that.  Especially in places where housing prices aren’t all that high. 

      These factors are what’s causing the “housing crisis”, in places that aren’t that expensive in the first place – and are part of the “national” scope of the issue as discussed in articles such as The Atlantic.
      Richard:  (And I testified on behalf of the California Parties in the FERC Energy Crisis proceeding demonstrating the exercise of market power in the electricity market.)
      So?
      Richard:  “The ownership is simply too diffuse and the markets too localized to enable this market power. The simpler, easier explanation is the one described in the studies referenced–local growth control measures that constrain housing. The investors are exploiting that situation to maintain high rents.”
      Again, the problem largely exists in places where few regulations exist in the first place.  And those are the same areas where corporate investors are taking advantage of poor people – not in places like Davis.

      On a related note, let me ask you again – do you think there’s some kind of “shortage” of sprawl – even in Sacramento region?  Including 7 miles up the road, in Woodland?

      Do you want more of that, and believe it will “solve” whatever problem you’re claiming?

      Builders aren’t going to provide housing at the cost level that you seem to be implying, though I have yet to see any development activist on here put forth some numbers regarding what they believe housing “should” cost in the first place.  Or, how it would be achieved.

      Put forth some numbers regarding the amount of housing that you think would be needed, to lower housing prices to (XX) amount.  And then tell me if you think that local governments would be “happy” to receive less tax revenue per unit, as well.  (Not to mention all of the folks who recently-purchased housing at temporarily over-inflated prices.)

      And while you’re at it, tell me what the environmental impact would be regarding what you advocate.

      Really? Sacramento doesn’t have enough sprawl for you, already? (And it’s not even among the worst offenders in the nation.)

      We are truly doomed, if folks like you get their way.

  10. Ron Oertel

    Another interesting article, from a couple of years ago.  The only thing which might be incorrect about this is the “timing”:

    As shown in the long-term chart of housing inventory, recessions matter when it comes to inventory levels. The long-term linear trend of “supply”has remained at about 6-months on average since 1963.

    As we head into 2021, potentially higher rates and continued economic weakness could collide with elevated housing prices in some areas. Such will result in the rapid reversion of “housing activity” and a surge in “supply.”

    The next time you hear someone in the media saying the housing market will never go down again because of an “inventory shortage,” it may be worth questioning their view.

    As with all data, it is crucial to understand the data’s calculation to derive its real meaning. The problem with most analysis by the media is they tend to extrapolate a current data point into an infinite future.

    Reality rarely works that way.

    3 Reasons Why There Really Is No Housing Shortage | Newsmax.com

    Another factor (not mentioned in this particular article) is that many existing homeowners “locked into” a low interest rate, when they had a chance.  And cannot replace it, if they move.  (Again, this is not indicative of a “housing shortage”, but it can impact inventory for pre-existing housing which is subject to a mortgage.)  That particular problem does not exist in regard to the massive amount of housing that is still under construction, at this point at least.

    3 Reasons Why There Really Is No Housing Shortage | Newsmax.com

    Below is another article (regarding Atlanta), but not the even more-interesting one I saw earlier today.

    Atlanta is a particularly-interesting market since it’s not particularly expensive, and they’re essentially one of the “capitals of sprawl” – to a degree that makes Sacramento look like Marin county in comparison.

    When you think of the average Atlanta homeowner, you might imagine a young family ready to settle down,” Samyukth Shenbaga, managing director of Community Development at ARC, said in the report. “However, the reality is often much different. Instead, it’s corporate investors with all-cash offers who turn around and rent properties for sky-high rates. We’re seeing a national corporate housing buying crisis, and metro Atlanta is very much at the center of it.”

    https://www.ajc.com/life/private-quarters/heres-where-the-atlanta-housing-market-stands-in-2022/TUQDXDDJUVGQPFPWPD5A3ROKKQ/
    ;

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