For decades, people have moved to California in pursuit of the “California dream” – the idea of owning a home in the most beautiful state in the country, with beaches, mountains, deserts, and forests, blessed with abundant opportunity and the freedom to live the life you want to live.
Most Californians today would probably tell you they still hold on to that dream – but the high cost of housing is making it seem impossibly out of reach. Ironically, there’s an aspect of that dream that may be partially to blame: Our outdated ideas about how many homes can be built in our cities.
For the early phases of California’s growth as a state (and the growth of the U.S. as a nation), it was possible to let everyone live on their own plot of land, with a big house and a sprawling lawn surrounded by a fence. As our state urbanized, this view of housing quickly became problematic: You can’t have productive, diverse, affordable cities made up of thousands of mini-ranches.
And indeed, we’re now facing the consequences of this outdated mode of housing development: The median price of a home in California is now nearly $1 million.
Much of this insane cost of housing is actually not the house itself, but the land beneath it. Land value is not inherent to a piece of dirt; it grows from all the valuable things that are happening around that land – in the case of cities like San Diego, Los Angeles, Long Beach, and others, that value is the sum total of good-paying jobs, great schools, cultural amenities, theater, arts, restaurants, beaches, mountains – all the things that people would pay good money to have in their community.
But our current system of land use regulations has shut most people out. Strict zoning that prohibits the construction of more homes on existing parcels of land has forced more of our neighbors to leave. And the restrictions can launch a vicious cycle, as local governments lose out on the increased property tax revenues that would result from allowing more homes on large residential parcels.
These rules block the construction of entry-level, “starter” homes that the average working family can afford. They have their roots in racial segregation and exclusion – and they must be reformed.
In an effort to create more home ownership opportunities for working Californians, state Sen/ Anna Caballero has proposed SB 1123 – a fundamental land use reform that has the potential to bring back the “California dream.”
California has the second lowest homeownership rate in the country, primarily because of the lack of “starter homes.” While many moderate income families could afford to buy a smaller home or townhouse, the supply is stagnant – this type of home is mostly illegal to build in our cities. The result – middle-income Californians, mostly our Black and Brown populations – are forced to rent, rather than being offered a pathway to affordable homeownership.
Today, Latino families make up 40 percent of California’s population. And there’s a striking difference in the wealth of those families who own homes, versus those who don’t: Latino homeowners have an average net worth of $233,000, while non-homeowners have only $8,000.
And yet, Latino homeownership rates are 19% lower than for white Californians. For Black Californians, it’s even worse: homeownership rates are 26% lower.
Over 77 percent of residential land in the Greater LA area is zoned for a single home, with an average lot size of 6,500 square feet of land. The average single-family Los Angeles home, now priced at just under $900,000, generates a little over $10,000 in property taxes annually. If we allowed this same 6,500 square-foot lot to be subdivided or redeveloped to instead accommodate four smaller, for-sale homes priced at $600,000 each, a steal in Los Angeles, the property tax revenue would almost triple. In Los Angeles where property tax represents over 20 percent of the city’s budget, by and far the largest revenue source, simply changing zoning laws would enable the city to dramatically expand its capacity to improve public safety and infrastructure, and support K-12 education.
SB 1123 will make this process faster and easier by legalizing and streamlining the process of building up to 10 homes on vacant lots in single-family zones near jobs, schools, transit, and other amenities.
In other major US cities, homebuilders have already shifted their focus to smaller residential parcels to meet this pent-up demand for affordable starter homes, like bungalow courts or townhouses. Seattle did it in the 1990s – and as a result, thousands of single-family, detached homes were converted to townhomes.
Last month, Berkeley – where a typical home is valued at nearly $1.5 million – became the first California city to implement a new law, AB 1033, which allows cities to let homeowners sell ADU’s on their property as condos. This opens the door for homeownership for first-time homebuyers – but also for last-time buyers: grandparents who want to downsize, and live close to family.
Our state’s prosperity hinges on the affordability of our housing – and the ability of Californians to take the first step toward homeownership. Single-family zoning stands squarely in the way: It perpetuates a racist legacy of exclusion; limits individual property rights; artificially caps government revenues; and makes homeownership unattainable for the majority of residents – in essence, it is cold water in the face of the California Dream.
We can address California’s housing crisis while helping to bolster struggling state and local budgets – but only if California legislators are willing to champion bold policies to remove the chokehold of single-family zoning on our communities.
Ricardo Flores is executive director of LISC San Diego. Konstantin Hatcher is senior director of community impact at California YIMBY.
