Where’s the IE Housing Boom: Lift Off?

I’ve written a few posts wondering why there’s no housing boom the Inland Empire. Prices have recovered, the zoning is there for it, and there’s limited opportunity to build in Los Angeles & Orange Counties. I started working on this next post as another entry in that series, to show all the approved residential master plans that are out there but not being built.

However, in the last couple months, there has been a noticeable increase in the number of permits pulled for housing construction in the IE.

June 2017 saw 2,076 permits, the first time since August 2007 that the number of permits in a month has been over 2,000. It appears that the IE’s lost decade of housing production might be over. Single-family builders are going to be wrapping up the timid completion of developments in partially built projects, and looking for bigger opportunities. So instead of asking why these residential master plans aren’t being built, consider this a field guide to what might be happening in the next few years.

Chino & Ontario

The closest greenfield developments to LA & OC are probably the best candidates to boom. In Chino there’s a plenty of space to build in The Preserve, and Ontario has a huge amount of development potential in Ontario Ranch.

The map below shows the approved master plans with Chino at the bottom and Ontario at top. I overlaid these from the planning documents, so the colors are not entirely consistent from plan to plan, but they follow the same pattern. Yellow and light orange are single-family, dark orange and brown are multi-family, red is commercial, purple is mixed use, blue is public (schools etc), and green is open space. For reference, the distance between Archibald Ave & Milliken Ave is 2 miles.

Chino & Ontario provide (relatively) easy access to LA & OC, via the 71 north and 60 west to LA, and the 71 south and 15 south to OC. Riverside County is planning to start construction later this year on express lanes on the 15 from the 60 south to the 91, which will make commuting from Ontario Ranch more appealing.

Fontana & Rialto

Further north and east, there’s still a fair amount of undeveloped land in the northern parts of Fontana & Rialto. Fontana’s recently approved Westgate specific plan, near the junction of the 210 and the 15, allows for up to 3,248 dwelling units. Further up the 15, another set of plans allow another 5,000 units. Across Sierra Ave in Rialto, near the top of the image, Lennar is finishing up development in Rosena Ranch, and DR Horton is building the first neighborhood in Lytle Creek Ranch, zoned for 8,400 dwelling units. The distance from Sierra to Citrus is 1 mile.

Lake Elsinore

Heading the other direction on the 15 from Chino & Ontario, south to Lake Elsinore, there are master plans north and south of downtown ready to go, with several thousands of units of potential.

Perris & Menifee

Moving east to the 215 corridor, there are also plenty of developments that could be built. Between Parkwest, Green Valley, Riverglen, & Riverwoods, there is zoning for over 8,000 dwelling units. The Menifee North plan, beween Romoland and Homeland, allows about 2,800 units. And Winchester Hills on Domenigoni Parkway a few miles east of the 215, which has been frozen in time for almost a decade, allows over 5,000 units. The distance from the 215 to Menifee Rd is 2 miles.

We’ll know the IE is back for sure when construction starts on a big project east of the 215. The big projects have been dormant for a long time. But with the closer-in developments in Menifee nearing completion, how long can that last?

Yucaipa to Banning

East of San Bernardino, there’s a string of approved plans in Yucaipa, Calimesa, Beaumont, and Banning. Combined these will allow almost 20,000 dwelling units. The bottom of the large plan east of Beaumont is 1 mile wide.

There’s Lots of Development Capacity in the IE

This is just a sampling of the master plans that are approved for construction in the IE, and doesn’t even account for any of the development that can occur under the normal zoning in the many places not covered by a specific plan.

In previous posts in this series, I’ve argued that zoning is not the defining restriction on development in the IE. This is in contrast to LA & OC, where sky-high prices suggest that upzoning would unleash a large amount of development. Issues in the IE seem to relate more to land costs and impact fees, but perhaps prices have hit a tipping point where these obstacles can be overcome. If so, expect to see the number of housing permits issued in the IE continue to rise.

What Do Anti-Market Rate Housing Advocates Want?

“If you cannot afford to live here and your kids can’t have decent housing, you should look at where you can afford.” So said Jim Righeimer, Mayor Pro Tem of Costa Mesa. While a housing construction moratorium failed in LA, Costa Mesa passed one of the most restrictive development measures in the state last November – any project that would result in 40 or more dwelling units being built within half a mile of each other within 8 years must be approved by a public vote.

This blog obviously doesn’t agree with that point of view, holding that California cities ought to allow a lot more construction of all types of housing. But it is a point of view that is at least consistent with the actual outcomes achieved by its policies. The cost of housing is driven up policies that heavily restrict housing production, and people are left to fend for themselves in the distorted market that results. If you can’t afford Costa Mesa, you go to Corona; if you can’t afford Corona, you go to Beaumont; and if you can’t afford Beaumont, you go to Buckeye. The answer of people who like this arrangement to the shortage of affordable units and high rent burdens is that they really don’t care.

If, on the other hand, you claim that you do care about the shortage of affordable units and high rent burdens, you ought to come up with a set of policies that can achieve the outcome you want. As I see it, there’s three coherent packages of housing policy:

• You can be a NIMBY and be indifferent to the pain caused by housing costs. This is the position outlined above.
• You can favor more market rate construction to meet the housing needs of most people, plus dedicated more dedicated affordable units, housing subsidies, and other policies to meet the needs of low-income people. This is the position of most YIMBY groups in California, despite many straw man claims otherwise.
• You can favor a massive government public housing construction program, where the government provides many or even most people’s housing. This is the position of some of the more radical YIMBYs.

What you can’t do is claim to care about affordability but offer no plan to build housing in the quantity needed – and recall that for LA County alone, we are estimated to be 1,000,000 housing units short since 1980. Changing housing policy without addressing the supply problem is like playing musical chairs. If you have more people than chairs, it doesn’t matter how much you change the rules, someone is not going to get a chair. Someone is going to have to move to Buckeye.

This is where YIMBYs and pro-housing types get frustrated with the current state of housing policy advocacy in California. Arguments to allow a lot more market rate construction get pushed back with claims that the market will never solve the problem. But that only leaves the third option, and it doesn’t seem like any anti-market rate advocates are pushing for construction of public housing on the scale that’s needed. The only ones actually arguing for this are the more radical YIMBYs.

It’s very strange to argue that market rate construction won’t solve the housing shortage, but then pin your hopes on policies like inclusionary zoning and higher below-market-rate (BMR) percentages, which could only hope to have a major impact on affordability if an enormous amount of market rate development to subsidize them is built. It’s very strange to argue that housing is a right, but then, rather than tax the public at large like we do for things like schools and fire departments and food stamps, insist that new market rate development alone bear the burden of ensuring that right.

Many progressives have an instinctual dislike for “developers” as a concept, since they are generally presumed to be well-off businesspeople running big enterprises, looking to get even richer. (Never mind that this is an unfair stereotype that ignores many small-time developers.)

However, politics is the art of the possible, and it seems to me that many people in California need to decide what exactly it is that we want. If we’re going to solve California’s housing crisis, and we’re not going to argue for the state to build 500,000 units in LA County, we need to work with the development community to figure out policies that can work for everyone. And to be honest, I don’t even think the policies are that hard, it’s the politics of getting a pretty diverse set of groups to work together.

But to do it, we have to decide we actually want to solve the problem.