News

U.S. housing starts rose last month to the highest level in more than a year, driven by gains in single-family home building in the South and West.

The weekday commute to the Bay Area from the Sacramento region isn’t easy. It can range from a 90-minute train ride to Richmond to a multi-hour slog to Silicon Valley. More than 17,000 Sacramento-area residents make the commute anyway, according to a Bee review of the latest census data.

Homelessness in the United States went up slightly this year for the first time since 2010. During a one-night count in January, 553,742 people were found living outside or in shelters across the country, a 0.7 percent increase from the year before, according to new data released by the Department of Housing and Urban Development on Wednesday.

The increase is almost entirely due to a surge in homelessness in Los Angeles and other cities facing severe shortages of affordable housing, say HUD officials. Many of the cities are on the West Coast, including Seattle, San Diego and Sacramento, Calif.

The Union-Tribune examined if San Diego County can build more housing to slow the pace of rent and home price increases. What we found:

– Zoning changes, emphasis on townhomes and reduced regulation would likely speed up construction;

– Biggest hurdles continue to be anti-growth sentiments and lack of land zoned for housing;

There is no firm estimate on the number of people who live in vehicles in Silicon Valley, but the problem is pervasive and apparent to anyone who sees RVs lining thoroughfares; not as visible are the cars tucked away at night in parking lots. Advocates for the homeless say it will only get worse unless more affordable housing is built. The median rent in the San Jose metro area is $3,500 a month, yet the median wage is $12 an hour in food service and $19 an hour in health care support, an amount that won’t even cover housing costs. The minimum annual salary needed to live comfortably in San Jose is $87,000, according to a study by personal finance website GoBankingRates. So dilapidated RVs line the eastern edge of Stanford University in Palo Alto, and officials in neighboring Mountain View have mapped out more than a dozen areas where campers tend to cluster, some of them about a mile from Google headquarters.

The Census Bureau reports that home ownership in the United States rose to 63.9 percent in the third quarter of 2017. This continues a rising trend since the second quarter of 2016, when home ownership had dropped to 62.9. This equaled the previous low of 51 years before (1965), just a year after annual data reporting began. Home ownership peaked at 69.2 percent during the housing bubble and had been generally declining since late 2006 (Figure).

Rent control policies in San Francisco may have fueled gentrification, Stanford economists say. Stanford economists Rebecca Diamond and Tim McQuade, who published their findings last month, said occupants of rent-controlled apartments built before 1980 are 20 percent more likely to stay than other renters. It might seem that rent-control policies, therefore, act as a bastion against gentrification, by allowing and encouraging long-term residents to stay, but the researchers say that’s not exactly the case. “Rent control exacerbates the housing shortage by pushing landlords to remove supply of rental housing,” Diamond told SFGATE.

Issi Romem, buildzoom.com’s chief economist has made a valuable contribution to the growing literature on the severe unaffordability of housing in a number of US metropolitan areas. The disparities between the severely unaffordable metropolitan areas (read San Jose, San Francisco, Los Angeles, Portland, Seattle, Portland, Denver, Miami, New York, Boston, Sacramento and Riverside-San Bernardino) and the many more affordable areas in America are described in

“Paying For Dirt: Where Have Home Values Detached From Construction Costs”. Romem points out that: “In the expensive U.S. coastal metros, home prices have detached from construction costs and can be almost four times as high as the cost of rebuilding existing structures.” “Paying for dirt” refers to the ballooning land costs that now comprise an unprecedented part of house values, such as in the severely unaffordable metropolitan markets above. This has created an environment where affordability is impossible. In many of these metropolitan areas, a modest house commands an exorbitant price well beyond the financial capacity of most middle income households. Land has become so expensive that it doesn’t matter what is built on it, whether the average house or a tent, the price will be too high. The market distortions are so great that Romem is able to show that, for example, the average house value in Columbus, Ohio, a delightful metropolitan area, is less than the average land value per lot in Portland (Oregon).

It’s a problem that isn’t going away: the so-called “affordable” housing we’re building in many cities—by which we mean publicly subsidized housing that’s dedicated to low- and moderate-income households—is so expensive to build that we’ll never be able to build enough of it to make a dent in the housing affordability problem

. . . . More broadly, the case has been made that much publicly subsidized affordable housing costs much more to build than market rate housing. Private developers are able to build new multi-family housing at far lower costs. One local builder has constructed new one-bedroom apartments in Portland at cost of less than $100,000 a unit, albeit with fewer amenities and in less central locations than most publicly supported projects. In Portland, local private developer Rob Justus has proposed to build 300 apartments and sell them to the city for $100,000 each on a turn-key basis to be operated as affordable housing. Another possible cost savings measure: off-site construction. The University of California, Berkeley’s Terner Center has a report that explores the possibility for pre-fabricated, off-site construction to reduce construction costs.

Buyers of newly built homes in Fresno are on the hook for a fee of more than $4,000 to ensure they have enough water coming to their residences. But a trio of major home builders is challenging the city’s fees in court, contending they’re too high, are unfair and amount to a tax that violates state law.

The “water capacity fee,” which adds up to $4,246 for a typical new single-family home with a one-inch connection to a water meter, was approved in April on a 5-1 City Council vote following a contentious public hearing at which developers voiced strong objections. Many of those concerns found their way into the litigation now working its way toward a March trial date in Fresno County Superior Court.

After a decades-long battle with California’s building industry, developers who want to fast-track housing production – especially in cities that have not built enough housing to keep pace with rising demand – will be required to pay higher wages and benefits to construction workers beginning Jan. 1.

Five of 15 housing bills signed into law by Gov. Jerry Brown this year include so-called prevailing wage rules for employers and contractors to pay laborers higher wages and benefits for new construction projects.

The requirements, reached after more than a year of negotiations between powerful labor groups and state Democratic lawmakers, represent the biggest expansion of union-backed pay mandates for construction workers since the late 1990s.

Money from a new tax on real estate transactions and a state bond issue will, by official estimates, result in 77,000 new housing units over five years when merged with funds from nonprofit groups, private investors and tax credits for low-income projects.

That’s less than 20 percent of the state’s projected need for additional housing over that period – and it could be years before any of the promised new housing is available. The regulatory fast-tracking in other bills could go further toward filling the need, but no one knows for certain.

Meanwhile, the new tax on real estate paperwork and new mandates to use “prevailing wages” in projects would actually make new housing development even more expensive.

The housing package continues a syndrome one might call “half-a-loafism.”

The official federal poverty measure doesn’t take regional variations in the cost of living into account, so many experts don’t consider it to be the most accurate metric. It’s under “supplemental” poverty measures, dating back to the late 1960s, that California looks considerably different from the rest of the U.S.

Now, researchers at the Public Policy Institute of California and Stanford University are bringing even greater scrutiny to an item that’s consuming more and more of lower-income Californians’ resources: housing.

Their results are startling. When the researchers ran a model of the state’s poverty rate with every Californian bearing costs similar to those in Fresno County, the overall poverty rate declined dramatically — from about 21 percent to 14 percent. That’s nearly 2.4 million Californians who would no longer be in poverty.

The latest quarterly UCLA Anderson Forecast, released Wednesday, estimates how much construction would be required to reduce home prices in the Golden State by even 10 percent, to roughly 2014 levels. “We find that to obtain a modest 10 percent reduction in price requires a little over 20 percent more housing,” economist Jerry Nickelsburg wrote in the forecast, which focused on the state’s economy. “Making housing affordable in California is difficult at best.”

Housing experts say it is the most ambitious move the state has taken in decades – and perhaps ever – to address the issue. They say it is “historic” in part because the state’s housing affordability crisis, with rising home values, skyrocketing rents and rampant tenant displacement, is unprecedented. As costs have grown since the recession, the state has done little until now.

But Californians should not expect the effects to be felt immediately. Even years down the road, the measures will not stop rents from increasing or home prices from trending upwards.

“It’s very hard to get enough housing built to lower the price,” Rosen said. “New funding may build several thousand units, but that’s very small compared to the size of the need. If we make it easier for developers to build housing, the market will be able to better keep pace with demand, and therefore we may be able to slow the rate of increase.”