California's Housing Conundrum : The Indicator from Planet Money Almost everyone in California agrees that there's not enough housing in the state. But no one wants building in their backyard.
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California's Housing Conundrum

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California's Housing Conundrum

California's Housing Conundrum

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COMPUTER-GENERATED VOICE: Please stand back from the platform edge.

PAAVO MONKKONEN: We're standing at the Westwood/Rancho Park Expo station, one of the stations in the city of LA's new transit infrastructure.

CARDIFF GARCIA, HOST:

Last week while we were still in Los Angeles, we met with Paavo Monkkonen, a professor of public policy and urban planning at UCLA. And we met Paavo at a place that he chose for a specific reason.

Why did you choose to have us meet you at this metro station?

MONKKONEN: Yeah, I think this is a good example of what's wrong with planning in California. So we've had this massive public investment in a metro system surrounded by single-family homes as far as the eye can see. Most of them are one story, 1950s stock.

STACEY VANEK SMITH, HOST:

This train station surrounded by all these 1950s one-story houses is new. It looks like not that many local residents are using it.

MONKKONEN: Yeah. I mean, I'm very skeptical that they do. But even if they did, you know, maximum 150 people from this neighborhood would be commuting to downtown.

VANEK SMITH: Los Angeles is known for its sprawl - people who drive cars living in flat, single-family houses as far as the eye can see. And near this train station there are no visible apartment complexes.

GARCIA: Paavo says that's too bad. Local zoning laws don't allow for certain kinds of buildings like apartment complexes in certain areas, and that limits the overall housing supply. And that means fewer people using public transit stops like this train station. And also, it means that house prices stay high. And so does the rent.

MONKKONEN: If you look at zoning in Los Angeles, 75 percent of residential land is zoned exclusively for low-density single-family homes. Those low-density single-family homes on average are 20 percent more expensive than houses in multi-family buildings. So I think that a logical housing policy would be to legalize the less expensive kind of housing if in fact we want to make housing more affordable.

GARCIA: And Los Angeles can't do that why?

MONKKONEN: Political opposition to change.

GARCIA: California state legislators had struck down Senate bill 827, or as it's usually just called, SB 827.

VANEK SMITH: The bill would have allowed more construction of apartment buildings close to busy public transit stops like bus stops and train stations. The idea was that building more apartments would mean more options for where people could live, which would mean cheaper rent. SB 827 was meant to address the housing shortage in California, a shortage that has led to sky-high home prices.

And that's not just a California issue. It's a problem that California shares with a lot of other places in the U.S., which is why the bill was so closely watched. And it was kind of amusing to see how many politicians liked what the bill was going to do but then just ended up opposing the bill itself.

(SOUNDBITE OF ARCHIVED RECORDINGS)

UNIDENTIFIED PERSON #1: I do think we have a housing crisis in this state. But we also have to get it right. And I'm unfortunately not going to be supporting the bill today.

RICHARD ROTH: It pains me a bit to have to refrain from supporting the measure today. And I mean that.

UNIDENTIFIED PERSON #2: So I will continue to work with your bill if doesn't get out of this committee today. And hopefully the bill is supported. I have to see what the...

GARCIA: And the reason SB 827 was so controversial is that it would have overruled the zoning laws that were already put in place by cities and towns throughout California, the laws determining where new construction is allowed, what kind of buildings are allowed - apartments versus houses - how many stories high the buildings can be.

VANEK SMITH: Municipalities and communities didn't like the idea that a state law would allow the kind of building that would violate their local laws. They made their voices heard, and the bill was defeated.

GARCIA: Paavo Monkkonen says there's a few reasons that neighborhoods like the one surrounding the train station where we met him don't often allow new building. One reason is that new building can go against the financial interest of homeowners.

MONKKONEN: In the U.S., we've devolved land use controls to local governments. And often they respond very much to neighborhood associations' interests. So I think there are a lot of reasons that people oppose new housing near them. But one of the main ones that's been out there in the literature for a long time is thinking about single-family homeowners as a kind of cartel where they get together and collude to prevent new supply in order that their assets increase in value.

GARCIA: That's interesting 'cause nobody really thinks of homeowners as a cartel. They're thought of as, like, living the American dream.

MONKKONEN: Yeah. I mean, I think - and that's a problem with the way we think about housing in the United States, right? So we want housing to be affordable on the one hand. But if we own a house, we might be happy when that house increases in value, right? And so I think people often in their own minds don't realize what's happening.

VANEK SMITH: A second reason people oppose more building in their neighborhoods is that they could simply be afraid of having their lives disrupted by the physical changes, by the construction.

MONKKONEN: People think that the city might come in and bulldoze their house and put up a public housing unit when in fact what would happen is as people sell their houses from year to year, some people that want a single-family house might buy that and keep it the same. In some cases, a developer might buy it and tear it down and build a four-story building or something. There are neighborhoods like this in LA, and people like them. They're not unpopular neighborhoods. So I don't think that people kind of understand how the change would affect the quality of life. And I think it would be probably minimal.

GARCIA: More legitimately, Paavo says, a third reason is that people worry that there will be more traffic, more congestion in their neighborhoods, though of course that worry is somewhat addressed if the building takes place near public transit. And also, some neighborhood in the city is going to have to accept the traffic. Paavo's point is that the traffic would be more evenly distributed throughout the city if more building were allowed in the wealthier neighborhoods.

VANEK SMITH: A fourth reason that some communities have opposed more building is that they just don't like developers.

GARCIA: Not at all.

VANEK SMITH: (Laughter).

MONKKONEN: We have a recent paper where we look at an experiment where we give people different reasons to oppose housing development. And we found that the one that elicits the most opposition to a hypothetical project is when we say that the developer is going to make a lot of money. So this is the one reason that actually doesn't affect people's neighborhood. But there's kind of this fairness - repugnant idea where developers...

GARCIA: Like, they think they're getting ripped off or something?

MONKKONEN: Well, I think it's connected to people seeing housing as kind of an important necessity for human life and then disliking people that profit off that when often they themselves are profiting off...

GARCIA: Right?

MONKKONEN: ...The fact that there's a scarce supply of housing. So, you know, people are complicated and often hold contradictory opinions.

GARCIA: And finally, one of the effects of preventing new building, Paavo says, is that it can keep a city segregated by wealth and in some cases by race and ethnicity. People who live in apartments and pay rent on average make less money than people who own homes. But those apartments are not getting built in areas with a lot of single-family homes. So a final reason, also the ugliest reason, is that some communities want to exclude categories of people from living in their neighborhood.

VANEK SMITH: Now, there's no simple solution to the conflict between communities that feel they have the right to decide for themselves what their neighborhood should look like and the need for more housing supply. But Paavo said when housing costs remain unaffordable, it doesn't just hurt people who were forced to leave a thriving area because they couldn't afford rent or people who couldn't afford to live there in the first place. It also affects future generations. Paavo cites a paper from economist Raj Chetty.

MONKKONEN: And he finds that kind of some of the counties where it's best, you know, for your life's prospects to be born to a low-income family are in the Bay Area or in LA. And so by preventing low-income households from living here, we're denying their children the chance kind of at a better future.

GARCIA: Right. So in other words, by making it impossible for low-income people to move to some of these high-growth areas, it also has an effect that reverberates down to the next generation or multiple generations even.

MONKKONEN: Yep.

GARCIA: That sucks.

MONKKONEN: Yeah.

GARCIA: (Laughter).

MONKKONEN: Welcome to California.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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