The house I bought for $130,000 in 1983 is now worth a fortune, and that's a big problem for California

Columnist

Sept. 9, 2017 8 AM PT

Out of curiosity, I looked up the value of a two-story tract house I bought in a middle-class San Jose neighborhood back in 1983, for about $130,000.

The home — which I sold for about $140,000 in 1985 — would now haul in an estimated $1 million or more, based on recent sales in the same neighborhood.

That’s roughly eight times more than I paid for it. But in the 34 years since then, California’s median household income has increased by roughly three times, not eight.

Ordinary house, crazy price

So why an eight-fold price increase for a pretty ordinary three-bedroom, two-bath house?

Because of the explosion of the Silicon Valley economy, and because there isn’t enough housing there or in other job centers in California. Limited supply plus high demand equals insane prices, exhausting commutes from less expensive areas, huge portions of income going toward housing, and poverty rates that lead the nation.

How to fix all this can’t be covered in one little corner of the newspaper. The short answer, though, is to build more housing.

But bureaucracy, land scarcity and construction costs, limited funding for affordable housing and well-intended environmental restrictions all stand in the way of new projects. And so do people up and down the state who are OK with new housing unless it happens to be in their neighborhood.

I get not wanting to see the scale or character of neighborhoods radically transformed by cramming high-density housing into every available space. But the population isn’t shrinking, and there’s room for sensible development.

“We need to permit dense housing near jobs and transit,” said Brian Hanlon of Oakland, who has begun countering NIMBYs with his nonprofit YIMBY, or Yes In My Back Yard.

Without that kind of development, Hanlon said, racial and economic inequality and segregation will grow, while long-distance commuters put a toll on themselves, their families and the environment.

But some people aren’t listening.

Affluent community fights affordable housing

In Marin County, one of the wealthiest parts of the state, residents have stalled and opposed new development, and legislation — blasted by affordable housing advocates — would allow parts of the county to continue restricting the size of new developments.

In Redondo Beach, city officials responded to resident complaints about density and scaled back a commercial-residential development. It went from 180 apartments with nine reserved for poor families to 115 apartments, none for low-income people. The developer sued, but Mayor Bill Brand is holding firm.

“Redondo does not have a housing shortage,” he told the Daily Breeze, which is easy to say, I guess, if you’ve already got your feet up.

Brand said the real problem is that his beach community has a traffic crisis, an occasional water supply crisis, and could end up with a school crowding crisis if there’s more residential development.

In Carlsbad, residents have gone to court to kill the city’s approval of a 90-unit affordable apartment project. And in nearby Encinitas, the only San Diego County city without a state-required housing plan for all income levels, residents voted down a proposed solution last fall and the community now faces multiple lawsuits by housing proponents.

Encinitas Mayor Catherine Blakespear called the situation “a black eye and a liability for the city,” but told me she’s optimistic a city task force will finally pull together a zoning plan this year.

In La Cañada Flintridge, former housing commissioner Herand Der Sarkissian told my colleague Liam Dillon — in his expose on the state’s half-century of failure to enforce compliance with housing construction requirements — that it’s fiscally irresponsible for the state to force low-income housing into communities like his, where land costs are high.

“People like people of their own tribe,” Der Sarkissian went on. “I think the attempt to change it is ludicrous. Be it black, be it white, people want to be with people who are like them.”

What decade are we living in?

That kind of attitude and legislative agenda has created segregated communities for decades, and it’s why the state needs to start hammering local officials who don’t comply with the housing-for-all law signed in 1967 by a governor named Ronald Reagan. Those who scream about a loss of local planning control have only themselves to blame.

Pushback in Boyle Heights

But snooty upscale communities aren’t the only ones putting up roadblocks to new housing. In Boyle Heights, a few neighbors and L.A. City Councilman Jose Huizar have stalled a perfectly reasonable plan to build 49 housing units — half for people with a mental illness — and commercial space.

And on the outskirts of Temple City in the San Gabriel Valley, a plan to turn a crime-infested motel into supportive housing for 169 veterans, the disabled and formerly homeless fell apart because of neighborhood opposition and a lack of time for developer Mercy Housing to persuade opponents and beat out other bidders.

Mercy’s Ed Holder said demand for such projects is so great, a crush of people will clamor for a spot in the next phase of an affordable housing development in Wilmington.

“We’re about to open our application list,” he said, “and we’re expecting thousands of applicants for 176 family homes.”

Can the Legislature help?

That’s a good snapshot of the size of the problem, and it’s why several housing bills could come up for a vote this week in Sacramento. Senate Bill 3 would put a $4-billion housing bond on the ballot next year. Senate Bill 2 would fund about $250 million worth of low-income housing and housing assistance each year with a $75 fee on mortgage refinances and some real estate transactions. Senate Bill 35 would prod cities that aren’t meeting state housing production goals to ease regulations and speed up the process.

All of that would only begin to chip away at the housing crisis, but passage is not a guarantee, and SB 2 could be in the most trouble because some people are referring to that $75 as a dreaded tax.

Call it what you will, but if you refinance, the first month savings on your new mortgage payment could well cover the $75 fee. And that money would help build new housing, keep people who are on the verge of homelessness from losing their homes, and offer down payment assistance to first-time home buyers.

“I’m not giving up,” the bill’s author, Sen. Toni Atkins (D-San Diego), told me Friday afternoon, although similar legislation has failed in the past.

Winners and losers

I told her about my old house in Silicon Valley, and how the value has rocketed.

Atkins said she’s thrilled that her own home value has gone up, but her good fortune as a longtime owner means houses are unaffordable for so many others.

“This package of bills is even more critical than it was last year, two years ago and three years ago,” Atkins said, “because the situation has only gotten worse.”

To read the article in Spanish, click here

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