Berkeley Officials Reject Plan to Fast-Track New Housing

HousingAs CalWatchdog reported July 2, the city of Cupertino’s decision to stop fighting a massive mall makeover project enabled by a far-reaching 2017 state law meant to promote more housing construction could someday be seen as a milestone in state planning.

Senate Bill 35 by Sen. Scott Weiner, D-San Francisco, requires cities that have not met their affordable housing requirements to approve projects that are properly zoned, pay union-scale wages to builders and have at least 10 percent of units in “affordable” ranges.

After months of objections from Cupertino elected officials and activists, in June, the city signed off on developer Sand Hill Property Company’s plan to convert the largely empty 58-acre Vallco Mall site to a huge multi-use project with 2,400 residential units, 400,000 square feet of retail space and 1.8 million square feet of office space

Given that 98 percent of cities have been found to have an inadequate supply of affordable housing, according to a state evaluation, the Cupertino precedent seemed potentially huge.

Two months later, new developments related to SB35 appear to point in the opposite direction.

Last week, Berkeley officials rejected a plan to use the law to fast-track approval of 260 apartments and 27,500 square feet of commercial space at 1900 4th Street just east of the Berkeley Marina despite evidence presented by developer Blake Griggs Properties that it was properly zoned and otherwise met SB35’s edicts.

City tactics in fighting project have familiar ring

The tactics that Berkeley is prepared to use mirrored the ways that construction projects have been fought in California for decades: raising a variety of legal objections that could cost developers millions of dollars because of delays, even if they have little or no validity or applicability.

Berkeley planning chief Timothy Burroughs said the project could not proceed because:

  • It would have been built on land designated as a historical landmark because of a Native American burial ground. As a city with its own charter government, it is given deference in protecting its history.
  •  It would have considerable low-income housing but not enough housing for those with very low incomes.
  •  It would have increased traffic in the area in ways not allowed by city laws.

The objections were of the sort that Weiner sought to bypass with SB35. This is why the developer warned of a lawsuit earlier in the summer after the city put up roadblocks to approval.

But in a surprising move reported last week by the San Jose Mercury-News, West Berkeley Investors – part of the group backing developer Blake Griggs Properties – has backed out of the project without explanation. The assumption of many is that it saw the hassles as outweighing the chances for success.

The Mercury-News also reported that a spokesman for Berkeley City Hall said officials would welcome it if developers chose to reactivate a previous application that had far fewer residential units – 135 – and slightly more commercial space – 33,000 square feet.

In his Sept. 4 letter rejecting the latest version of the project, the city planning chief emphasized the historical significance of the Native American burial ground. Why that significance would lose weight in planning decisions if a smaller project were being considered was not explained.

But Burroughs pushed back against the idea his city was hostile to adding housing stock. He said 910 housing units have been built since 2014, 525 are now being constructed and 1,070 are cleared and in the pipeline.

This article was originally published by CalWatchdog.com

UC Berkeley professor blames rent control for California’s housing crisis

UC BerkeleyKenneth Rosen, a UC Berkeley economist and real estate consultant, published a paper Wednesday titled The Case For Preserving Costa Hawkins, in hopes of swaying voters against Proposition 10.

Proposition 10, which will go before voters in November, would repeal the 1995 Costa-Hawkins Act, a state law that severely curtails rent control in California cities. For example, under Costa-Hawkins, only San Francisco apartments built before 1979 may be subject to rent control.

Passing Proposition 10 would not in and of itself create any new rent control housing, but it would allow cities to expand rent control stock for the first time in decades if they so choose.

Rosen, however, argues that turning the clock back to 1994 will stifle new housing and drain apartment stock. …

Click here to read the full article from SF Curbed

It’s no mystery why the cost of housing is so high in California

HousingIf Sherlock Holmes was investigating the mysterious disappearance of new housing construction in California, he and Watson might be in Los Angeles County right now.

There they would have observed the county Regional Planning Commission this week as it approved the project known as Centennial, a new community of 19,000 homes on 12,500 acres in the Antelope Valley on the Tejon Ranch.

The Centennial project has been in the works for so long that a news story about the approval was accompanied by a photograph of Gov. Arnold Schwarzenegger looking over maps of the land with the developers in 2008.

Approval by the Regional Planning Commission is just one step in the process of getting the go-ahead to build the new homes. The project now goes before the L.A. County Board of Supervisors.

You really need good genes to be a housing developer in California. If the average life expectancy in your family is less than 95 years, choose another field, or another state.

Holmes and Watson might have been puzzled by the ferocious resistance to the Centennial project, as speaker after speaker voiced objections during more than two hours of public comment ahead of the Regional Planning Commission’s vote.

A representative of the Center for Biological Diversity complained that “isolated leapfrog development” was a threat to “the affordability and health of the entire metropolitan area,” when “L.A. could be an innovative leader in urban planning” by “prioritizing transit-accessible affordable housing.” The Center for Biological Diversity is unhappy that an estimated 75,000 new vehicle trips a day will be generated by the Centennial project as residents drive into Los Angeles to work. …

Click here to read the full article from the Orange County Register

Elected Officials to Blame for California’s Homegrown Housing Problem

house-constructionWe see the headlines daily — California has an affordability problem when it comes to housing. People have to live further and further away from their jobs, and even a median-priced condo is out of reach for many. Since this affects so many of us, and since California now has about a fourth of the nation’s homeless population, compassionate people want to do something. But that something could make a bad situation even worse. As former U.S. Sen. Tom Coburn, R-Oklahoma, says, “the best way to make something expensive is for government to make it affordable.”

After emigrating from Jamaica as a child and settling in Florida, I came to California as soon as I could. Our amazing state — with its lack of humidity and flying bugs — has always been attractive to aspiring actors, creators and entrepreneurs, so a higher cost of living was expected as a down payment on living the California Dream. What’s happening now, however, is causing sleepless nights for many.

First, we need to understand how we ended up with this problem. California has lots of people willing to build, so how did we not keep up with the clear demand for so long? For years, the state has consistently added about half the housing needed to keep pace with the population. Our elected officials shoulder much of the blame, by constraining supply due to mandates and regulations. Now, of course, they’d like to be part of the solution. Central planning, however, has never worked, even though it’s been tried in myriad ways and in many different variations.

The first hurdle that politicians enacted was the California Environmental Quality Act. Instead of being used to address real environmental concerns and protect our unique topography, it’s often used as a cudgel to enact wage and other concessions from developers. Over a third of the lawsuits filed under CEQA have to do with housing. This, of course, adds costs and delays to development, and gives pause to anyone considering building in the state. …

Click here to read the full article from the Orange County Register

The End of the Home-Buying Frenzy

http://www.dreamstime.com/-image14115451You may have seen recent news accounts about how home sales have slowed nationwide. So I got curious: What’s going on in the San Fernando Valley area?

I looked back at the local home-sales stats we publish in the Business Journal, courtesy of Redfin. And in the Valley area, home sales have indeed slowed. In fact, they were down way more here than in the rest of the country, at least in June, which is the latest reporting period.

Nationwide, sales of existing homes in June were down 2.2 percent from June of last year. But they were down 11 percent in the portion of the Valley area that’s in Los Angeles County. In Ventura County, it’s more dramatic: Home sales were down 23 percent.

That’s a huge drop off. But then I thought: Wait a minute! There’s a housing shortage here. The sharp slowdown in sales may result from the fact that there just aren’t many homes to buy.

But that supposition appears to be wrong. Home listings – the number of homes for sale – have increased over the last year. The number of unsold homes was up 1 percent in the Los Angeles County portion of the Valley area (including the San Fernando Valley and such areas as Burbank, Calabasas, Glendale, Santa Clarita and Palmdale).

Again, it’s more dramatic in Ventura County. The inventory of homes for sale in June was 3 percent higher than one year earlier.

In short, home sales were down in June while the inventory of unsold homes went up.

Can we declare that the housing shortage is over? No, but we can say that the shortage is now less severe.

Now that I think about it, this slowdown in house-buying shouldn’t be all that surprising. Mortgage interest rates have been going up, making monthly payments higher.

And have you noticed in recent months the sudden reappearance of for-sale signs? For a couple of years, for-sale signs were scarce. Whenever a home came up for sale, the broker who got the listing quickly showed it to his or her roster of home buyers, and a deal was quickly made before a sign was ever planted in the yard.

But lately, not only is there a proliferation of for-sale signs but even some open houses. Again, I don’t think we can declare the housing shortage dead. However, the buying frenzy – all-cash offers above asking price on the day the house hit the market – appears headed to the hospice.

What about prices? Since home sales drooped in June as the supply expanded, surely that means prices went down, right? Well, ahem, no.

According to our Redfin data, the median price per square foot in June was up 4.2 percent in Ventura County from the previous June, and up 7 percent in the Los Angeles County portion of the Valley area. From the previous month, prices were up in Ventura County and flat in the L.A. portion of the Valley.

The fact that prices are not going down in the face of weakening sales and higher mortgage rates seems to defy reason.

But here’s a thought: All the prices mentioned above are for June. Since then, things may have changed. After all, whenever a slowdown takes hold, the old psychology may linger. It may take a while, but reality eventually sets in and prices inevitably drop. Maybe that just had not happened yet in June.

Here’s a slight bit of anecdotal evidence: A home in my neighborhood went up for sale in April. I walked by it last week. The house still has a for-sale sign in front, although the owners apparently have moved out. According to Zillow, the seller has cut the price three times for a total of 13 percent. The sales sheet describes them as “super motivated,” which I assume means they’ll slice the price some more.

Last year, that house probably would have been snatched up quickly regardless of price. But this year, after more than three months and three price cuts, still no deal.

The housing shortage is not over. In the big picture, there are still too few houses. However, the worst of the house-buying frenzy does appear to be finished or at least abating. The price cutting will surely follow.

Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].

This article was originally published by Fox and Hounds Daily

Prop. 10 May Cost the State, Communities Millions While Freezing Housing Construction

urban-housing-sprawl-366c0Anyone concerned about the future of the state and local budgets should pay particular attention to what the state’s non-partisan legislative analyst had to say about Proposition 10, the ballot measure that repeals the Costa-Hawkins Rental Housing Act, including protections for tenants and single-family home owners.

The Legislative Analysts Office (LA) noted Prop 10 could cost local governments up to “tens of millions of dollars per year” in new costs and the state could lose up to “hundreds of millions of dollars per year” in revenues. 

In the analysis, the LAO also noted that the value of rental housing would decline and that rental units also would likely be sold and no longer be available for rentals.

This, say experts, would work California’s affordable housing crisis even worse.

In addition, the LAO predicts that “If many localities enacted strong rent control legislation, other economic effects (such as impacts on housing construction) also could occur.”

What does all this mean? For one thing, less money for key government services from healthcare to childcare to transportation. Proposition 10 would create scarcity, not just in California’s already broken housing market, but in state and local coffers. That will set the stage for a new round of budget battles in Sacramento and in cities and counties across California.

Proposition 10 also will cost our state and our communities millions of dollars, reduce the number of available apartments and homes available for rental and could result in a housing freeze – which is the last thing California needs right now.

We all agree that the state needs to take steps to address the chronic housing shortage, and out-of-control housing costs in communities across the state. But Proposition 10 is the wrong solution. It will only make California’s affordable housing crisis worse.

ice president of Public Policy, Los Angeles Chamber of Commerce.

This article was originally published by Fox and Hounds Daily

Southern California median home price jumps to a record $536,250

http://www.dreamstime.com/-image14115451The Southern California median home sale price reached a new all-time high in June, jumping 7.3% from a year earlier, according to a report released Tuesday.

The six-county median — the point where half the homes sold for more and half for less — hit $536,250, real estate data firm CoreLogic said. That’s up $6,250 from the previous record high, reached in May.

Sales, though, plunged to 22,706, down nearly 12% from June 2017. It was the lowest number of closed sales for June in four years.

The drop in sales could signal that people are increasingly priced out of the market or simply unwilling to pay sky-high home prices. …

Click here to read the full article from the L.A. Times

Are builders catching up to Southern California’s housing shortage?

house-constructionSouthern California builders are putting a dent in the regional housing shortage, selling new homes at a pace not seen in nine years.

CoreLogic data shows 18,117 new residences sold in the 12 months ended in May across the four counties covered by the Southern California News Group. That’s the best performance since January 2009, and it’s up 7.7 percent in a year.

This means new housing’s share of sales also grows. Builders were responsible for 8.1 percent of all Southern California home purchases in the past year. That’s the highest share of sales since March 2009.

Still, the upswing looks sluggish compared with housing development before the Great Recession.

From 2000 through 2006, Southern California builders were selling homes more than twice as fast as today at a 43,000 units-a-year pace. (Don’t forget one reason for recently modest homebuilding — that last development frenzy ended badly when real estate’s bubble burst.) …

Click here to read the full article from the Orange County Register

Families earning $117,000 now qualify as “low income” in California’s Bay Area

A report out this week from the Department of Housing and Urban Development finds the median price for a single-family home in the Bay Area is now $935,000. A family earning $117,000 now qualifies as “low income” in the region.

CBS News went to see California’s red-hot housing market with realtor Larry Gallegos. He showed us a house you would think he couldn’t give away. But Gallegos says the home, complete with leaks in the roof, sold for $1.23 million. The buyer beat out six competing offers, all above the asking price.

“It’s a little mind blowing, but it is the norm around here,” Gallegos said.

That norm is fueled by thousands of well-paid tech workers who have driven up the median price of a San Francisco house to $1.6 million dollars, the highest in the country. While housing prices are rising faster than incomes nationwide, nowhere is it more evident than in the Bay Area, where home values have soared a staggering 64 percent over the last five years. …

Click here to read the full article from CBS News

Rent-Control Measure Could Soon Make California Even Less Affordable

HousingCalifornia is an expensive place to live. New residents of San Francisco face median monthly rents of around $4,000 per month, and median rents are cresting $1,900 even in Sacramento. Housing supply runs well short of demand, pushing up prices in more corners of the Golden State than ever before. Many residents are moving to cheaper locales like Idaho or Texas, while others are falling into California’s growing homeless population. Bad as things are, the state might yet make them worse if it goes ahead and declares war on the housing market—that would be the effect if voters approve an initiative on November’s ballot, supported by tenants-rights advocates, repealing a law limiting local rent control throughout California.

The Costa Hawkins Rental Housing Act prohibits rent control on single-family homes and apartments built after its 1995 enactment. Municipalities that already had local rent control laws have earlier cutoff dates; for Los Angeles, this means that rent control is limited to buildings completed before October 1978. San Francisco’s older housing stock means that its 1979 rent control ordinance still applies to three-quarters of the city’s rental units. When a rent-controlled unit is vacated, landlords are free to charge market value. At present, 15 California cities have rent-control ordinances on their books. Repealing Costa Hawkins will allow more localities to impose rent control, which, based on past experience, will deform the market and make it even harder for renters to find affordable housing.

Repeal advocates submitted some 588,000 signatures—200,000 more than needed—and a political fight is brewing that is expected to cost about $100 million in organizing and ad spending. “This ballot measure will pour gasoline on the fire of California’s affordable housing crisis,” said Tom Bannon, CEO of the California Apartment Association, in the Sacramento Bee. Landlord-affiliated lobbying groups are trying to stave off that conflagration by supporting efforts in the legislature to curb “price gouging” as a concession for taking the anti-Costa Hawkins initiative off the ballot.

Economists generally agree that rent control protects incumbent renters at the expense of newcomers, while leading to more gentrification and income inequality. A 2017 Stanford University study found that rent control in San Francisco effectively acted as a $3 billion wealth transfer to protected renters from 1995 to 2012. Over that same period, the city’s rental housing stock decreased by 15 percent, while rents rose by more than 5 percent. In short, a lucky few won the housing lottery at the expense of everyone else.

Scott Weiner, a California state senator who became known for his recent attempt to sweep away housing-density limits statewide, explained to the San Jose Mercury News how rent control could be part of a housing bargain: “We want to make sure that people have incentives to build new rental housing while also ensuring that we have a rent-stabilized housing stock. You can do that. You can find that balance.”

But the cost of using rent control to purchase political support for housing development is high, and its logic is faulty. California real estate investors are already selling off apartment properties or holding off on developing new housing. As the Wall Street Journal reported, Santa Monica, whose leaders have signaled an expansion of rent control if Costa Hawkins is repealed, is seeing the number of multifamily properties on the market jump by 80 percent, to the highest level in two decades. Who wants to own an asset when the government will soon be able to cap its price?

If housing demand is outpacing supply in California, the right answer is to build more housing. The lifting of caps statewide on accessory dwelling units in 2016—and the skyrocketing number of them now being approved in places like Los Angeles—suggests that there is a will and a way to add housing in California. Naturally affordable and invisibly dense development is a more efficient and equitable means of providing dwellings for Californians than locking up their housing stock and throwing away the key.