Monday, January 16, 2017

More evidence Californians are overpaying for housing - Part VII

A state department report outlines a variation of the Smarter Smart Growth Law as recommended answers. Will state and local politicians finally adopt this proven solution for California's working families?

Too Expensive: Housing prices and rentals just north of the Irvine Business Complex are a disgrace to workers.
Source: Zillow

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director
riversidetransit@gmail.com



Critical mass has been reached in Southern California's expensive housing issue, and that is an understatement.

Just take a look at the housing market a few miles north of the Irvine Business Complex area and the numbers provided by Zillow should speak for themselves. While the market is active in this area as shown on the map above, inventory shortage have led to morally illicit pricing for hardworking families.

I could never imagine growing up that regular single family tract housing just east of the 55 freeway in between Tustin and Orange can creep into the $1 million club with single family rentals going for over $2.5k to $3k per month. These are not luxury mansions; these are regular single family homes without the extra bells and whistles of clubhouses, gated streets, or community swimming pools. These are basic housing units within a 20 minute bus ride away from the Irvine Business Complex job hub via OCTA Route 71. It just goes to show that we are in a financial mess for something basic like shelter with reasonable commute times to-and-from work.

For the record, the home referenced on the map above in Tustin near the Tustin Avenue corridor listed for $105,000 is actually a 3 bedroom fixer condo. A 30-year mortgage for that would appear to be very friendly at $500 per month at zero down. However, the posted land-lease fee of $1,242 and the HOA at a whopping $360 is an additional $1,602 per month bringing the monthly house bill of this fixer-upper to $2.1k per month plus the repair costs to make the unit livable. Sorry folks...

It should be clear that homes in excess of $750,000 and single family rentals creeping toward $3,000 per month have led to an increase of transients and have forced the family provider into super-commuting if they want to purpose about 30% of their net income after taxes to housing.

The 91 freeway is a disgrace; the 91 Express Lanes extension slated to open in just a few months and additional Metrolink trains through Corona cannot come fast enough. The I-15 freeway corridor on the south side of the Inland Empire is another example. That links the Southwest region into San Diego County and has become the new 91 Corona Crawl with morning rush hour traffic starting at 5 am and afternoon congestion through Temecula sometimes backing up 15 miles into the rural Pala Mesa area. Temecula surface streets suffer with through-commuter traffic as housing have now become expensive there. Thankfully a local infill growth master plan is in the works just west of the I-15 freeway in Temecula but major I-15 freeway improvements and high occupancy vehicle and rail transit infrastructure are decades away.

The state government has at least finally acknowledged the source of this problem and the local press has been covering it. Last week, the state's Housing and Community Development department released the report "California's Housing Future: Challenges and Opportunities." The Press Enterprise and OC Register spread the news and opined in an editorial that every politician and decision-making official should read.

The report provides yet even more evidence that the cost of living has gotten out of control. The stats and hard supporting evidence there are overwhelming. I could double the size of this now 7-part blog post series and spend several months just talking about it.

For starters, the report cites home ownership slipping to 53.7% in the state, 10 points below the national average in 2014 and lowest of all states except New York and Nevada. New York's housing situation is driven primarily by a similar inventory shortage in New York City. That means that almost half of the hardworking families in California are at the mercy of land owners and rental hikes. This is a disgraceful stat, and this must change.

Affordable: Workers in Las Vegas have plenty of market choices for shelter.
Source: Zillow
Nevada's placement on the list is interesting as this shot of Zillow just west of Las Vegas speaks otherwise. Housing is affordable in the low land. It's possible that the foreclosure crisis and resulting negative credit scores could be contributing factors in the Silver State as Vegas was hit hard last decade. However the resort casinos and other industries continue drive the market economy there. I hypothesize that incentives to rebuild buyer credit may be needed in Nevada.

In addition, we have more hard data that while the population in Southern California has shot up, home development has actually been in a deficit of about 100,000 units per year. That should be direct proof that a supply shortage is leading this entire issue and that we need game-changing solutions to entice developers to expand infill housing all over the region.

The HCD report spotlights the Smarter Smart Growth Law as the answer: Reform development regulations and reduce the government red tape and stumbling blocks to increase infill housing supply. This has to happen at both the state and local level. Essential rules like earthquake resistant structures, fire codes, and street access need to be maintained. But unnecessary issues like CEQA abuse on infill development must be reformed.

The buck stops with the governments reforming such regulations to get to the bottom of this crisis. Whoever takes the lead on this campaign will be a hero for California's working families.

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