Tag Archives: Affordable housing

How Downzoning Kills Affordability & Drives Gentrification: Sunset Junction Edition

We often talk about zoning in the abstract, making it hard to understand just how restrictive zoning destroys affordability. We looked once at how downzoning in Venice is resulting in multi-family buildings being converted into single-family homes, causing a decrease in the housing supply and evictions of current residents. Here’s another example, this time near Sunset Junction.

The project in question is a small lot subdivision. While these projects can be a good way to increase the housing supply, this is an example of the policy going wrong. The project would replace 10 existing units (one single-family home, one fourplex, one duplex, and one triplex) with 14 small lot houses. This is a net increase in housing supply, but all of the existing buildings were constructed before 1978, so 9 of the existing units are rent-stabilized. Though it is much less common than people think, this is a pretty clear case where new development is destroying rent-stabilized units and replacing it with new housing that the current residents won’t be able to afford.

So where does zoning come in to this? The property is currently zoned RD2-1VL, having been downzoned from R4-2 in the first wave of NIMBY downzonings that swept LA in the late 60s and early 70s. This is an 80% downzoning in dwelling units (DU) allowed. The property totals just over 30,000 square feet (SF); here’s what could have been built under each zoning designation, along with what would be possible under R4-2 with a density bonus.

sjz1

Here’s the result of downzoning in Sunset Junction: the only project that can be built is a project that might displace low-income residents. Under the previous R4 zoning, with a density bonus, a project could have been built that would result in no net loss of rent-stabilized housing – perhaps an agreement could have been negotiated to allow the residents of the 9 existing rent-stabilized units to remain in the new dedicated affordable units at their current rents. The loss of rent-stabilized units and displacement are not an accident, they are exactly what we have stated we want to happen with our current zoning policies. Note also that the project that will be constructed is much more auto-oriented than what would have been built under R4 zoning.

To see how upzoning can help, consider that this property is also in the Transit Oriented Communities (TOC) Tier 1 area. Here’s a comparison of what’s possible under the current zoning and the previous zoning using a TOC bonus.

sjz2

Using a TOC bonus, even in the lowest tier, would result in enough affordable units to more than replace the existing rent-stabilized units, resulting in an increase in the affordable housing supply.

The people who downzoned LA in the past, and are trying to downzone it again, got what they wanted. They got a city that is more auto-oriented with fewer apartment buildings. They didn’t care about affordability 40 years ago and despite any claims otherwise, they don’t care about it today. No matter who is going to build the housing, overturning the zoning restrictions that the opponents of new housing put in place is a critical first step.

Advertisements

The Same Challenges Face All Solutions to the Housing Crisis

In the wake of the failure of SB 827 to make it out of committee, there has been a lot of discussion of how cities should grow, and a lot of social media ink spilled over who is to blame for the housing crisis, to put it mildly. I think it’s useful to take a step back and remember what the larger state of play for housing in California looks like.

SB 827 Did Not Fail Due to Left Opposition

Like many people in YIMBY groups, I was disappointed that left groups like the Democratic Socialists of America (DSA) chose to not support SB 827, even after it was amended to include many tenant protections that do not exist today. This seemed like a departure from the DSA Los Angeles (DSA-LA) stance on Measure S, which held that they “distinguish between developers and development” and that existing restrictions on apartment construction, which would have been undone by SB 827, were “pushed by wealthy property owners who did not want apartments built in their neighborhoods.”

On the other hand, it perhaps should not be too surprising that socialists would not support a bill that largely depends on private construction. The DSA-LA endorsement of No on S also stated that the housing crisis “must be understood through a critical lens as an outcome of capitalism,” a lens that I certainly disagree with, but would likely lead one to oppose SB 827.

However, the DSA and similar left groups are relatively minor players in state politics. YIMBY groups were the force behind the election of one state politician, Senator Scott Wiener; left groups have elected none. The driving force behind the failure of SB 827 was opposition from the same players that have thwarted both market-rate and public housing construction in middle class and upscale neighborhoods for decades.

Opposition from Entitled Incumbents is Still the Problem

The sniping conversation between YIMBYs and leftists is unproductive, and probably counterproductive, but mainly irrelevant.

The Los Angeles City Council voted to oppose SB 827, and they didn’t do it because they decided they like the People’s Policy Project plan for social housing better. Mayor Garcetti initially said he would support the bill if it included tenant protections and was then forced to flip flop when Senator Wiener added those protections, saying that apartments would look out of place in single-family neighborhoods. The council and the mayor didn’t decide they want social housing in single-family neighborhoods, they decided they want no new housing there.

People from the most insufferably entitled jurisdictions in the state, such as Beverly Hills Vice Mayor John Mirisch and Marin County columnist Dick Spotswood, turned up to oppose SB 827. While they are happy to cloak their opposition in social justice rhetoric, (hopefully) no one is under the delusion that they are going to support a social housing program instead.

Overwhelmingly, the opposition to new housing of all types comes from these well-off communities. They fought public housing in the brief era that the federal government tried to build it, and they fought market-rate housing when the private sector tried to build that. Overcoming this widespread opposition remains the primary challenge in solving the housing crisis, no matter what solution is pursued.

This reality is strangely absent from some takes on the crisis, such as Steve Randy Waldman’s long-standing position that YIMBYs are bad and we should solve the housing crisis with “new towns” such as are built in Singapore (or Hong Kong or other Asian countries). Waldman argues that rather than adding density to existing neighborhoods, we should “[build] out extremely dense but nevertheless green, livable, and attractive ‘new towns’… and when we run out of space for those, new ring cities?”

Leaving aside Singapore’s dual housing market (subsidized for citizens, very high rents for immigrants), where exactly would these new towns be built in California without opposition? Like, name me one site in the Bay Area or LA where this could happen without opposition! In fact, the status quo forces the construction of new towns on the suburban fringe, for example Winchester Ranch or Mountain House or Ontario Ranch. I would love to drop a Hong Kong style new town on top of a greenfield high-speed rail stop in Palmdale. The reason these places are not denser than they are is the same reason that Cheviot Hills doesn’t get denser than it is.

Building Housing Costs a Lot of Money

Moving past local opposition, another common problem to all types of housing is that it is expensive to build. The cheapest new market-rate construction in California, in places like the Victor Valley and the Central Valley, starts around $200k, and in LA County, it’s around $450k. Non-profit affordable housing builders face similar costs. Building even one unit of housing takes a lot of capital.

Meanwhile, California’s housing shortage, built up over decades, is huge. We need hundreds of thousands of new housing units in LA County alone. At $500k a pop, half a million housing units in LA County would cost $250 billion. If you could lower it to $300k per house, that would be $150b. No matter who is building the housing – public or private sector – that’s a lot of money. Policies that reduce the cost of construction per unit, such as lower impact fees, low or no minimum parking requirements, higher density, and no minimum unit sizes, will help solve the crisis, no matter who builds the housing. In addition, allowing higher density in more places may reduce the cost of land, by increasing the supply of places you can build.

The People’s Policy Project proposal tries to circumvent this problem by suggesting that the first round of social housing be built on land that cities already own, and then use the profits from those buildings to acquire more land and construct more social housing. Lower cost of land would benefit this proposal as well, but the immediate problem is that most cities don’t own enough vacant land in the right places to make this work. The mistake is the assumption that most profits are going to developers, when most likely the profits are going to incumbent land owners.

Amenity Effects are Real

The concerns of neighborhood activists that new construction might displace existing residents are not unreasonable. Amenity effects are real. If a new building with a Whole Foods in it opens up, it is a signal to people that shop at Whole Foods that this is a neighborhood you might want to live in. Things that make a neighborhood a more desirable place to live make more people want to live there. There’s a reason gentrification always seems to keep moving one more neighborhood to the east, from Silver Lake, to Echo Park, to Highland Park, to Lincoln Heights.

At the same time, the status quo is also not working at preventing gentrification. And the challenges there are similar for all types of housing. Lowering the cost of building new housing would decrease the price difference between new housing and existing housing, which should help, and it would help no matter who builds the housing.

Whether it’s market rate or social housing, the amount of new housing built in a neighborhood is likely to be small relative to the amount of existing housing, and the existing housing is where the concern lies. New housing, even under the People’s Policy Project Plan, is likely to have higher rents than existing housing because it hasn’t had time to filter. Either way, the problems experienced by existing low-income tenants in existing housing will need to be addressed with stronger tenant protections.

Agglomeration Effects are Real

Another take that seems to have proliferated recently is that instead of having more people move to California, we should make other places more prosperous. Kevin Drum laid out the case for this in Mother Jones.

As someone with family roots in Appalachia, let me just point out that if making other places more prosperous was as easy saying, “Siri, fix the economy of the coal region,” someone would have done it already. After decades of decline, the I-81 corridor has recently seen some growth due to e-commerce entities like Amazon killing malls and needing huge distribution centers. But it’s certainly not anything that economic planners saw coming.

I will also point out that the people pitching you this idea never think of themselves as the one who is going to have to leave California and move somewhere else, and they’re probably not telling you that you will have to leave either. It’s similar to the “don’t tax you, don’t tax me, tax that guy behind the tree” theory of taxation. It’s worth stating out loud what the actual policy would be here: obtain political power and use it to either force people out of a city or prevent new immigrants from moving in. The people who would lose would be the people with the least political power. We have a status quo very much like that today, and I don’t care to trade it for a similar situation but with different people losing.

Now, there are some things we know are good for your local economy, for example, having a major state university located in your city. Sitting on top of giant oil and gas deposits seems to work pretty well too. But these are obviously not strategies that can be applied to every place. My impression is that it’s hard to know what places are going to grow and what places aren’t, and the right thing to do is create opportunity for everyone in the places that are growing. So no matter who builds the housing, we need to figure out a way to do it in growing cities and make it work for everyone.

Finally, this solution does nothing to address the concerns of gentrification. We already have de facto caps on the population of many cities in California. A growing economy makes people want to move to LA, and all a population cap would do is accelerate the displacement of lower income people.

Conclusion

Even though SB 827 failed to make it out of committee, it helped move the window on housing in California, which is a good thing. However, the political landscape has not changed much. The primary obstacles to new housing are the same as they were, and the bad policies that prevent new housing from being built are the same. Removing those obstacles and changing those policies will help – indeed, is probably prerequisite to – any housing construction program that has a chance of solving CA’s housing crisis. The sooner we can do it, the better off we’ll be.

Las Vegas is Good

Last weekend I ran a Twitter poll asking people if Las Vegas is a good city. The results were more or less what you’d expect from urbanist Twitter, with people saying Las Vegas is bad by a 3:1 margin.

twitterpoll

Well, I’m here to tell you that Las Vegas is, in fact, good.

Las Vegas, as a very young American city (population was under 50,000 after World War 2), has a physical form that doesn’t appeal to most urbanists or to many people in planning. Like many newer cities, it actually has fewer freeways than older cities of similar size. Las Vegas essentially has 4 freeways, the 15, the 95/515, the 215, and Summerlin Parkway; compare that to similar size metros like Kansas City, Cincinnati, Cleveland, or Pittsburgh.

What Las Vegas lacks in freeways, it more than makes up for in medium density auto-oriented suburban development served by very wide arterial roadways. This makes it easy to see the physical form of Las Vegas as a symptom of urban dysfunction, but this is a mistake. Like Los Angeles before it, Las Vegas is a successful city that creates opportunity for many different people, misunderstood because it does not look like older cities.

To start, I think we need to remember what a city is and what it does. A city is a place that attracts many different people of diverse backgrounds because of the economic opportunity created by having lots of people in close proximity. A larger population allows for increased economic specialization, higher incomes and standard of living, and greater freedom to pursue one’s dreams. It also allows for larger communities of immigrants and marginalized groups to form, creating the support networks needed for those groups to thrive and build the social power necessary to combat discrimination.

This has very little to do with urban form, transportation, or walkability. East of the 100th Meridian, America has lots of places that are pretty walkable with pleasant mixed-use cores. I like to call them… towns. It’s perfectly possible to have a city that is dense and walkable, but failing at being a city because of economic stagnation or decline, and it’s also possible to have small cities and towns that are walkable but not growing very much. This is largely a separate question.

As a simple example of how successful Las Vegas is in allowing economic specialization, consider that Carrot Top has headlined a show at the Luxor since 2005. I submit to you that there is no other city in America, perhaps the world, where this could happen. While Carrot Top is perhaps the silliest example, Las Vegas has created tens of thousands of jobs for artists and entertainers – as of February 2018, almost 22,000 jobs, up 40% from the post-recession low and doubled since 1990. The percentage of jobs in arts and entertainment in Las Vegas is 2.22%, comparable to Los Angeles (2.40%) and about twice that of Houston (1.12%).

LV-entertainment

So, Las Vegas has created opportunity for thousands of people in that industry, enabling them to settle down in one place, rather than have to travel from city to city to perform. In addition, the hospitality industry accounts for almost 30% of jobs in Las Vegas – almost 300,000. So Las Vegas has created a ton of working class employment as well.

Finally, Las Vegas has remained much more affordable than California, especially coastal Metros. The cheapest new homes in the distant reaches of the Inland Empire like Victorville and San Jacinto are about $250,000, over 60 miles from the city center. In LA/OC excluding the Antelope Valley you’d be lucky to find anything new for under $500,000. Meanwhile in Las Vegas you can get new construction much closer to the city center, about 10-12 miles out, for $200,000.

Given all of that, it’s no surprise that Las Vegas is a major destination for domestic migration out of southern California. Let’s look at some domestic migration data for SoCal to Las Vegas, and also to Phoenix, another major destination for domestic migration. Here’s net migration to Clark County (Las Vegas) and Maricopa County (Phoenix). All data is based on the 2011-2015 ACS.

C2C-net-all-all

Los Angeles County provides a disproportionately large amount of SoCal’s net migration to Las Vegas, perhaps due to the synergy between the entertainment industry in the two counties. On the other hand, Orange County is a disproportionate amount of SoCal’s net migration to Phoenix.

MichaelB

Let’s dig a little further into the migration data by age and by race, which I think helps make the case that Las Vegas is good.

Here’s four graphs, showing migration by age for each of the four SoCal counties (sorry, San Diego, get your own blogger) to Clark County.

C2C-net-all-age-1C2C-net-all-age-2

Los Angeles County loses population to Clark County for every age group except 18-19, probably representing college students. The biggest age cohorts that move from LA to Las Vegas are 5-17 year olds, 25-29 year olds, 45-49 year olds, and 20-24 year olds. This overwhelmingly represents young people and families that cannot afford to live in Southern California, and are finding opportunity in Las Vegas instead. For Orange County, it’s people in their 20s and their 50s moving to Las Vegas. For the Inland Empire, migration is much more balanced due to the lower cost of housing in the IE, with Riverside County actually gaining children and more or less breaking even overall. San Bernardino County loses children and young people at almost the same rate as LA County, but gains people in their 30s.

For comparison, here are the same graphs for Maricopa County.

C2C-net-all-age-3C2C-net-all-age-4

Again, LA loses many children, 20-somethings, and 30-somethings to Phoenix, while gaining a few college students. Like with Clark County, the IE sees more balanced migration but still overall loses population to Phoenix.

While trends may seem broadly similar based on age, Clark County appears to be doing a better job of creating opportunity for a more diverse group of people. Here’s migration by race from LA County to Clark County and Maricopa County.

C2C-net-all-race-LA

Net white migration and net black migration from LA County to Clark County was practically the same, just over 2,000 each, despite whites being 52.4% of LA County’s population and blacks being only 8.6%, with each group making up roughly 30% of LA County’s net migration to Clark County. Asians, who are 13.8% of LA County, account for 20%, with other or 2+ race people making up the remaining 20%.

Meanwhile, whites made up almost 75% of LA County’s net migration to Maricopa County, with blacks being 18% and Asians 12%. Maricopa County actually lost other race and 2+ race people to Los Angeles County.

I’ll leave the reader to speculate why Phoenix attracts less diverse migration than Las Vegas, but it certainly appears, abstractly anyway, that Las Vegas is doing better at creating opportunity for more people. Note: I certainly do not intend any of this to gloss over or ignore the fact that African-Americans in LA County have paid the worst price for the loss of working class jobs and rising rents in low-income communities. The intent here is to compare places that people are moving to.

Here are the same graphs for the other three SoCal counties.

C2C-net-all-race-OCC2C-net-all-race-RivC2C-net-all-race-SB

Las Vegas is, without question, very auto-oriented. Its one attempt at fixed guideway transit, the monorail, did not exactly deliver inspiring results. Its pedestrian infrastructure is savagely minimal off the Strip, while the Strip itself is a mix of throngs of pedestrians violating punishingly long light cycles and traffic engineering dystopia where all pedestrians are forced to cross on bridges. Its downtown revitalization project is single-handedly run by a tech mogul with some unusual business practices. No one is looking to Las Vegas for urban design ideas.

And yet, Las Vegas is pretty clearly succeeding as a city. California cities would do well to start measuring their success by how many people they create opportunity for, rather than how high they can drive housing prices.

Company Towns Are Bad

This is one of those things that should be surprising to even have to mention, but the concept of company towns pops up from time to time in discussions on California’s housing crisis, so here’s a summary of why they are bad.

The specific proposal often takes different forms, but they are all variations of Gilded Age company towns (or Communist countries with internal movement controls if you like):

  • Workforce housing: because California’s housing crisis is so bad it’s impacting middle class professionals like teachers, some liberal communities have begun to feel embarrassed that people with “respectable” jobs can’t afford to live in the city where thy work. This generosity rarely extends to people who do things like work at 7-11, who are expected to have to endure long commutes as the price of their insistence on working in the service industry.
  • Company housing: misdirected anger at the tech companies that are a big part of California’s economy results in calls for these firms, which certainly have the profits to do so, to build housing for their employees to take pressure off the local housing stock.
  • Tying new office development to new residential development: this is a proposal to force cities to permit enough housing to accommodate the employees in new office space that they permit.

The first two proposals are similar enough to discuss as one, with the main difference being that in the first the government provides housing for its employees, while in the second the private sector provides housing for its employees.

These proposals are bad because they demote the employees to second class citizenship, where the ability to secure housing is contingent on employment with a single employer. It is not hard to see how this will easily lead to employees surrendering their rights and not speaking out against institutional problems, because of the fear of losing their housing. It also implicitly creates a third class citizenship, occupied by the elderly, the unemployed, government employees whose jobs are not deemed important enough to get them housing, and people employed by businesses that do not have the huge profit margin needed to provide subsidized housing.

Simply put, people’s ability to find housing should not be dependent on them staying at the same employer.

The third proposal may seem appealing because it targets recalcitrant municipalities like certain Silicon Valley cities that permit new office space and see a large amount of job creation, but allow almost zero new housing to be built. The idea here is to force these cities to build more housing, to relieve pressure on the housing stock in nearby cities that have not had the same amount of job growth.

The unintended consequences of such a policy are likely to be bad. The recalcitrant cities are just as likely, if not more likely, to respond by stopping or slowing office development. This will lead the high-profit industries to outbid small businesses and lower margin industries for office space, hurting the region’s economy and the people who work for those smaller or less profitable places. If we want to make cities that don’t build enough housing build more, we should just do that and not make it any more complicated than it needs to be.

History suggests that jobs-housing balance can only be achieved on a regional level. While coastal communities like Santa Monica and Venice complain about too much job growth (oh, the entitlement!), cities towards the edge, like Santa Clarita, Palmdale, and Moreno Valley worry about a jobs-housing imbalance in the opposite direction – too many houses and too few jobs. Employment always seems to like to concentrate to a greater extent than housing, perhaps because the efficiencies achieved are greater. It seems likely that we will always have more jobs than housing near the employment centers and more housing than jobs on the edges. In addition, policies to try to achieve jobs-housing balance at a local level ignore the fact that people changes jobs from time to time, and many households have more than one income earner.

There are a few places where company towns or workforce housing make sense. These are generally isolated towns where the economy is dependent on one enormous employer or one dominant sector. Examples are mountain resort towns, island resorts, and remote mining towns. Resort towns often feature a large number of second homes, owned by people with much greater means than local service industry workers. They may also face serious natural or imposed constraints on development, such as very limited space suitable for building, limited water, or business development plans that place a high priority on keeping the town to a small size or maintaining the appearance of natural surroundings.

These unusual circumstances certainly do not apply to any city in California (except maybe Avalon due to water availability, a desalination plant would be expensive for a city so small). People in California already face precarious housing situations due to the high cost of owning and renting; many would have a hard time keeping their housing upon loss of a job. The solution is to make housing cheaper for everyone in California and reduce people’s dependence on any particular employer for housing, not increase it.

Zoning Capacity Needs to Be Much, Much Higher

If you follow on Twitter, you’ve probably seen the graph below showing how much building capacity was lost due to downzoning in Los Angeles. The number of people that could be reasonably accommodated was reduced by more than half.

FrameWORK_Housing_ZoningCapacity-1024x748

When pro-housing advocates talk about the need to upzone, one common response from opponents of development is that there already are underutilized parcels that have fewer housing units than permitted by zoning. Why, they ask, is upzoning needed if developers aren’t even using existing parcels to their full potential.

It’s not hard to understand why upzoning is still necessary on a technical level. The microeconomic decisions of many actors will mean that a city is always below its zoned housing capacity. In many instances, owners are satisfied with the buildings already on their property, and don’t want to rebuild. In many other instances, there may be available zoning capacity, but not enough to make it profitable to reconstruct. For example, a lot might have 4 units on it and be zoned for up to 5 units. That property will not be redeveloped until prices get extremely high. Similarly, LA has many one-story retail buildings on C2 commercial zones, that could be redeveloped to R4 density (1 unit per 400 SF lot area) but with a max FAR of 1.5. It’s not worth it to demolish a rent-paying commercial structure for so meager a residential FAR.

Applying this logic to other common human necessities reveals on a much more fundamental level how weak the arguments against upzoning due to available capacity are.

For example, when you go to the supermarket looking for bananas, you don’t expect to be told that they have plenty of canned soup and won’t be ordering any more food until those are used up. People like to cook and eat many different things, and reasonably expect the supermarket to offer a wide variety of things to buy. How dull a culinary world would it be if we produced just enough food for people to survive and nothing more? If a farmer goes to plant kale, we don’t stop them from doing it because we’ve already got plenty of soybeans.

When you go to buy clothes, you don’t expect the retailer to have only one outfit, and told to take it or leave it. People like to wear lots of different kinds of clothes. How dull would the world be if everyone had to wear the same thing? Or consider a bookstore. Would you be satisfied if you went to Amazon and they only had 100 books, and weren’t planning to order any more until those were gone?

Likewise, people need a huge variety of buildings in cities to thrive. Providing people with more options creates greater opportunity for them to live their lives and pursue their dreams. A city that is zoned to allow barely enough housing is going to forfeit an enormous amount of human spirit and dynamism, in addition to burdening many of its residents with high housing costs. Zoning needs to allow people the flexibility to grow and try new ideas. In SoCal that means we need our zoning capacity to be much higher than it is today.

Are Suburbs Triumphant?

In a recent post, I speculated that suburban development in the IE might be on the rebound after a decade of slow housing construction. Other cities, especially in the Sunbelt & Texas, have reached their pre-crisis housing output.

After the financial crisis, there was a moment when urban counties were growing faster than suburbs, and pop wisdom held that suburbs were dead and people were returning to cities. This was always suspect, because severe zoning restrictions were clearly going to make it difficult for many people to do so. Now, though, with suburban construction picking up and surveys consistently showing that most people want to own their own single-family home, it feels like the pendulum of pop wisdom has swung too far in the direction of suburban triumphalism. So let’s look at a few ways that post-crisis suburbanization is different than the pattern that had held since World War 2.

Suburbs Are Back, But They’re Not the Same

Like an athlete returning to play after a serious injury, the suburbs don’t have the same range of skills they once did.

One of the most obvious ways suburban development is different is a lack of golf course development. When I worked in highway design, we did a fair amount of land development work for new residential projects, including communities centered around golf courses. Nobody is building golf course development now; the number of courses in the US has been slowly declining. The decline has created a desire for infill development in some places; for example, Rancho Cucamonga is allowing housing to be constructed on a former course.

Another obvious difference is the lack of new commercial construction. Whether it’s due to oversupply from before the crash or the increasing impact of online retail, as of a few years ago, no new enclosed malls had been built since before the financial crisis. (I tried to find updated info but couldn’t.) Mall vacancy was very slow decline after the recession and has actually ticked up the last couple months. Since many suburbs depend on sales and property taxes generated by commercial development, the lack of growth in retail space strains municipal budgets.

Meanwhile, while some cities have recovered, national housing production remains at historically low levels, including for single-family housing. Some fast growing cities, like Atlanta and Phoenix, are still not producing as much housing as they once were, despite increasing prices. As Calculated Risk frequently notes, suburban builders are not producing entry-level homes they way they once did.

The Desire for Cities is Real

While the increase in desire to live in cities, or at least walkable neighborhoods and older suburbs close to cities, may have been overstated, it is nevertheless very real. On a recent walking tour of neighborhoods in East Hollywood, Silver Lake, and Los Feliz, someone mentioned this to me as one of the primary differences between now and the 1980s, and I think they’re right.

In the past, except for a few enclaves like Beverly Hills, Bel Air, and Hancock Park, people with the means to move to new development in the suburbs generally did so. For whatever reason, some people with money have decided they want to live closer to the city, and they are outbidding lower income people. Jed Kolko did an analysis in 2016 and found that people aren’t urbanizing, but money is. The result is that the people moving to new suburbs aren’t the wealthier people, at the same time that suburbs are not producing entry-level housing and are being squeezed by lackluster commercial growth.

We Still Need to Upzone Cities

A lot of new housing is going to be produced in suburbs, and we need to look at the reasons why it’s not as affordable as it once was. But that still won’t solve the problems in cities outlined above. People want to live closer to cities, and if we don’t build enough housing, somebody will lose out.

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.

IE-permits

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.

01-Chino-Ontario

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.

02-Fontana-Rialto

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.

05-LakeElsinore

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.

04-Perris-Menifee

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.

03-Yucaipa-Banning

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.