"Smart Growth" and "New Urbanism" Compared with "Large Lot Zoning" (Tom Lane) [ Home Page – Click Here]

(October 12, 2016) – Traditional "Large Lot Zoning" is "Greener" than "Smart Growth" within Urban Growth Boundaries . . . Copyright 2009 – 2016 . . . Tom Lane . . . Photographing California, Arizona, Nevada, New Mexico, Colorado, Utah, Oregon, and Seattle, Washington.

Why Los Angeles is So Expensive – Growth Management and Housing Bubbles in Southern California (November 22, 2014)

1_thousand_oaks_eichler_homes_feb_2014

Cover Image: Mid-Century modern Eichler Homes in Thousand Oaks, California, on a nice tree lined culdesac. While Thousand Oaks has matured into a great suburb with great schools and approx. 20% open space within the City limits, most Southern California cities have failed to follow the planning principles established by the Thousand Oaks city fathers, resulting in Southern California’s horrible legacy of neighborhoods with high density, heavy traffic, crime and unemployment.

Post under construction.

 

New Suggested Title for Part One –

 

How Skiers in Mammoth Lakes Increased Housing Prices for All of their Fellow Californians

Growth Management and Housing Bubbles in Southern California –

Why Greater Los Angeles is So Expensive

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Raw text without formatting below.

November 22, 2014

Middle class affordability report Kolko –
http://www.trulia.com/trends/category/middle-class/

All of us would love to live in Southern California, but we all know that Southern California is too expensive and in economic decline.

But why? What are the reasons? Is it the fault of Sacramento, or your local city or county leaders?

When I started this web site in 2009, it was a reaction against policies that make home ownership too expensive, such as smart growth and impact fees. As a Gen-X-er, I want to someday own my own house, and I’d love to own property in a youthful, diverse, and beautiful part of the country such as Southern California.

In the dozens of posts that I’ve written, I’ve hardly mentioned Southern California. Now that I’ve recently moved back to the Southwest deserts, I find myself with the most incredibly challenging post. Urban planning issues in metropolitan Los Angeles are so complicated, that it is no wonder that the best urban planning schools in the Western US.

As with virtually all other areas that I’ve covered in dozens of posts, the biggest problem is that most cities in Southern California do not like growth. As a result of this urban (suburban) containment, housing prices increased significantly in virtually all census tracts in the mid 2000‘s – the first housing bubble.

Due to urban containment, southern Californians are concentrated in three overcrowded counties – LA, Orange, and San Diego, with very high population densities, horrible traffic, and high crime.

While the remaining 7 counties contain pockets of high density and crime, they are underpopulated, and could definitely grow if not for urban containment.

The following table demonstrates these seven underpopulated southern California counties, starting with the most dense county, Los Angeles.  The statistics are from http://quickfacts.census.gov

County / Population / Square Miles / Density (persons per square mile) / Housing Value 2008-2012 / Median Income 2008-2012 / Percent in Poverty
1. Los Angeles County – 10 Million – 4100 – 2400 – 444K – 56K – 17%
2. Orange County – 3 Million – 790 – 3800 – 537K – 76K – 11%
3. San Diego – 3.2 Million – 4206 – 735 – 419K – 63K – 14%
4. Ventura – 839,000 – 1843 – 449 – 465K – 77K – 10%
5. Riverside – 2.3 Million – 7200 – 303 – 248K – 57K – 16%
6. Santa Barbara – 435,000 – 2700 – 155 – 482K – 62K – 15%
7. Kern County – 864,000 – 8200 – 103 – 171K – 47K – 22%
8. San Bernardino – 2.1 Million – 20000 – 101 – 241K – 55K – 18%
9. San Luis Obispo – 277,000 – 3300 – 82 – 450K – 60K – 14%
10. Imperial – 176,000 – 4200 – 41 – 155K – 41K – 23%

State of California – 38,000,000 – 155,800 – 239 – 383K – 62K – 15%

Clark County (Las Vegas) – 2.0 Million – 7900 – 247 – 186K – 55K – 14%

Nevada – 2.7 Million – 110,000 – 24 – 190K – 55K – 14%

Obviously, counties with population densities of only a few hundred people per square mile can grow! But they’re not, due to urban containment.

As a result, people prefer to live in big cities where the highest paying jobs are, such as L.A. and San Diego. Most of the remaining cities in Southern California have chosen to grow very slowly within urban growth boundaries, resulting in low population densities in their counties. For example, all cities in Ventura County have urban growth boundaries, as I will discuss below. Cities in Santa Barbara and San Luis Obispo counties also have UGB’s.

Expensive Housing when Land Rationed within Urban Growth Boundaries

Dartmouth Land Use Economist William Fischel found that California housing prices exploded in the 1970‘s, due to growth controls. In 1970, California housing values were 35% higher than the nation. By 1980, they were 79% higher, and 147% higher by 1990. (p.233).

In 1990, due to growth controls on the coast, the fastest growing areas of the state were in the Central Valley and in the Inland Emipre (San Bernardino and Riverside counties). But this is undesirable, says Fischel, since commuting is longer and the benefits of urban agglomeration are reduced, which results in less median household income (p. 250).

Allowing more housing growth within L.A. and Orange Counties would have consequences. Already, the two counties have significant issues with unemployment, crime, water, traffic congestion, and air pollution.

However, the other eight counties (see table above) have incredibly low population densities. And, some have low unemployment, low crime, and strong neighborhoods. These counties can definitely keep growing.  These anti-growth coastal counties can acquire drinking water with desalinization plants, rather than using water from the major aqueducts, which is temporarily in short supply due to decades of weak El Nino weather patterns (link).

For example, the least dense coastal county, San Luis Obispo county, only has 250,000 persons. Given the county’s distance from L.A., it could become its own economic engine, and overtaxed businesses in L.A. could move north and find plentiful cheap land.  However, the county’s officials are very anti-growth. San Luis Obispo, Pismo Beach, and related coastal communities in the county remain very small towns based on a tourist economy, agriculture, and a couple of colleges.

The same is true for Santa Barbara county, where there is plenty of room for housing. However, cities such as Santa Barbara, Solvang, Santa Maria, and Buellton all have UGB’s. Residents of Southern California are very familiar with the drive north on US-101 from Santa Barbara to Santa Maria (X miles), where there is nothing except for beautiful canyons filled with oak trees. What would you do if your car broke down in Los Alamos, California?

photo –

Finally, readers know that just like Frank Lloyd Wright, I dislike large, dense cities, and prefer one acre lots with mini farms and natural vegetation, Frank Lloyd Wright style. I will fill in this post, and others, with photos of undeveloped land along US-101 and I-10, that would be ideal for this type of development.

With rare frosts and very warm endless summers, the climate of Southern California is the best in the nation for mini-farms that can grow year round. Therefore, undeveloped lands on US-101 and I-10 are perfect for one acre Frank Lloyd Wright style developments.

Since this area of US-101 (through Santa Barbara, Buellton-Solvang, and Los Alamos) has relatively little fog, with warm temperatures year round, then this would be a perfect area for one acre properties with mini organic farms, Frank Lloyd Wright style. Indeed, there are many organic farms in nearby cities such as Buellton and Solvang. The headquarters of “New Frontiers Natural Markets” is in Solvang, where they produce delicious organic vegetables and fruit. However, these cities do not want any growth, period. Buellton was one of the first to stop growth with an urban growth boundary, with just 4,000 residents! Link —

Closer to Los Angeles, Southern Californians are also familiar with (qoute Fulton) –  Pass –  Ventura county is just under a million, but could support much more if not for its voter approved urban growth boundaries (see below).

Imbalanced Population Density over All of Southern California

The map below shows that population density is too high in Los Angeles, Orange, and San Diego counties, and too low in the other counties. Historically, Los Angeles and Orange Counties, both on the coast, have been the most pro-growth counties in the metro.

Clearly, southern California could support millions of additional persons, extending westward along the coast through Ventura and Santa Barbara counties, and eastward through San Bernardino and Riverside counties, which both terminate at the Colorado river (the Arizona border).

Ventura County, Santa Barbara, San Luis Obispo, Riverside, and San Bernardino counties have low density, as they have one or more of a variety of factors, such as urban growth boundaries, minimum lot sizes outside their UGB’s, high impact fees, and other factors.

Each dot represents 1250 households. Click to enlarge:

1_POPULATION_DISTRIBUTION_INCOME_SOCAL

CLICK TO ENLARGE. Each dot represents 1250 households. Population in southern California is concentrated in Los Angeles and Orange Counties, although there’s plenty of land in surrounding counties, extending west along the coast, and east to the Colorado River (Arizona border). From: http://projects.nytimes.com/census/2010/explorer Accessed: November 22, 2014.

A Brief History of Housing Unaffordability in California

Land use economists for decades have tried to figure out why California has become so expensive, such as Dartmouth land use economist William Fischel, in his landmark book “Regulatory Takings …” (Chapter 6 – Capitalizaing on Land Use Regulation: Evidence from California).

Dr. Fischel asks the same questions that I ask repeatedly on this web site. He writes (p218) –

“The studies that I describe typically ask whether a new or different regulation has an effect on the price of real estate. The answer is that regulations are capitalized in housing and land values.”

Fischel found that California housing prices began increasing much faster than the nation in the 1970‘s, but not in earlier decades:

“[In the 1970‘s], California housing prices rose faster than those of the rest of the country, and faster than at any other time in the state’s recent history. To explain this, one needs to find something that happened in the early 1970‘s that was (a) different than the rest of the country, and (b) different from California’s postwar history. I submit that only the California Supreme Court’s unprecedented and largely unmitigated war against developers covers both conditions.”

Fischel explains how the “Friends of Mammoth” decision of the California Supreme Court dictated new rules for all new housing projects in California (see section below).

The legacy of Friends of Mammoth has harmed California’s real estate industry and its economy. Fischel states,

“I submit that the state court’s concerted war against development contributed to the remarkable incrase in California housing prices that began in the 1970‘s, resulting in a premium over prices in other states that expanded through the 1980‘s (and which in the 1990‘s is being corrected with harsh results.”

Statistics – Expensive California Housing

Fischel summarizes a number of studies on expensive California housing-

1. Wharton professor of real estate Joseph Gyourko (1992) measured housing appreciation in 56 U.S. metro areas from 1971 to 1989. The Pacific region (L.A., Anaheim, San Diego, San Francisco, San Jose) appreciated annually at 4.53% (inflation adjusted), while the remaining 51 metros appreciated at 0.92% annually! By 1989, the average California house cost $119,000, versus $61,100 in the rest of the country! By 1991, these five California metro areas ranked as the “least affordable” in the nation.

If housing had only gone up by inflation (and, not by California’s problems), then the average cost would be $61,100 in 1989, compared to the reality of $113,100. Nationwide, if housing had gone up by inflation alone, it would be $50,900 in 1971 and $51,400 in 1989.

(Notably, Portland and Las Vegas appreciated faster than the rest of the country, but not as fast as the above five California metro areas.)

During the middle to late 1970‘s, differences in inflation rates varied from 50% for Sacramento, to more than 100% for San Francisco, San Diego, and San Bernardino.

In 1960, the value of California homes was only 27% higher than the entire US. By 1970, it was 35% higher. However, by 1980, when California had one tenth of the nation’s population, it was 79% higher, and by 1990, it was 147% higher.

In more recent years since his book (when?), ballot box voting for such criteria as _
LIST –
reached peak, such as in Ventura county, discussed by Professor of Urban Planning William Fulton in a section below.

However, to arrive at the conclusion that The Supreme Court was responsible, Fischel had to rule out all other possible causes for rapid California home appreciation that began in the 1970‘s.

p. 239 – Insert Chart, affordability index –

The Truth about Why California Housing is So Expensive

Fischel evaluated all possible causes of expensive California housing.  Fischel found eleven factors, summarized below, that did not casue housing prices to increase faster than the national average:

1. California population growth in the 1970‘s, when California housing began to appreciate rapidly, was slower than the 1950‘s and 1960‘s. In fact, the population growth rate in the 1970‘s was the slowest in the state’s history. Therefore, population growth did not stimulate a sudden demand for new housing.

2. California median income was not that much higher than the rest of the nation. In 1960, it was 20% higher; in 1970 it was 9% higher, and in 1980 it was only 2% higher. When California housing prices were rising most rapidly in the 1970‘s, median incomes were rising less rapidly than the rest of the country.

Insert chart p.239 on affordability index

3. California baby boomers purchasing their own homes were not responsible, since prices would go up nationwide, which they did not.

3

4. Federal subsidies to buy homes were not responsible, since again, home prices would increase nationwide.

5. Fischel found that development fees, including impact fees, had a negligible effect on housing inflation (at least, not in the 1970’s and previous decades).

6. Proposition 13, a voter approved voter initiative which cut property tax rates by 20% in 1978, was not responsible, since the appreciation began several years earlier.

7. There was no housing bubble lasting several decades, since by definition, bubbles are fragile and burst after short periods of time. But California’s housing price rise was too sustained over several decades to be regarded as a bubble.

8. California is not running out of land. In 1980, only 3% of California’s land area was urbanized, much of it low suburban densities along the coast. If land was really in short supply, then housing would have started to go up before the rapid appreciation found in the 1970‘s.

(Incidentally, even if the entire state of California was at a smart growth density of 16 dwelling units per acre (16dU/acre), as found in Daly City near San Francisco, urbanization would still cover 1.3% of the state. Today, ___% of the state is urbanized, with a populaton of ____, compared to 3% urbanized in 1980. Therefore, there is no need for high density smart growth.

9. California is not running out of water. Again, if it was, then housing would have increased rapidly in the 1950‘s and 1960‘s. Indeed, 85% of water in California is used for agriculture. It would not be difficult to allow more urbanization for local water districts to pay farmers for water. Therefore, the popular movement of “gravelscaping” has no rational basis.

10. Quality of life has not caused housing appreciation, since again, it was present when homes were not increasing rapidly in the 1950’s and 1960’s.

11. The energy crisis of the 1970‘s was not responsible for droves of people moving to California, since other sunbelt states such as Texas, Arizona, and Florida grew faster than California in the 1970‘s.

What is meant by Growth Control?

When I talk about growth controls, I am not referring to zoning. Instead, I’m referring to policies that limit the rate of growth of new buildings.  Growth control is defined in this context by Fischel, p 221:

“In contrast to ordinary zoning, which is nominally dedicatited to the good housekeeping rule of “a place for everything, but everything in its place,” growth control communities attempt to reduce future residential devfelopment. Allowable growth is held below the rate that was both permitted under previous zoning laws, and below the rate that the community’s vacant land inventory can reasonably sustain.”

Fischel points out that the best studies of zoning and land use planning look for restrictions that are present in some areas, but not in others. Then, real estate prices can be compared between the various locations. On this web site, I demonstrate areas that have very few growth controls (such as Rio Rancho, New Mexico), to those that have significant growth controls (such as Ventura County, California).

Factors responsible for California Housing Price Inflation

1. Friends of Mammoth

Fischel explains that the 1970‘s were the “environmental decade,” beginning with The National Environmental Policy Act (NEPA)
of 1970. This act allowed citizens to demand that “government sponsored projects” have environmental impact statements. In 1970, California adopted its own version of NEPA, called the California Environmental Quality Act (CEQA), which applied to state of California government projects.

However, in the landmark Friends of Mammoth (1972), the California Supreme Court decided that state CEQA environmental standards applied to not only to publically financed developments, but ALSO private developments permitted, licensed, or subsidized by the state.

Therefore, Friends of Mammoth opened the door for thousands of new regulations on growth in California, including new housing developments.

Fischel concludes that home prices began rising in the 1970‘s due to the legacy of Friends of Mammoth.

After Friends of Mammoth, California developers who in the 1950‘s and 1960‘s only had to bargain with local governments, now had to bargain with parties who they were never aware of. The court decision deprived property owners of the exclusive right to develop their property, and if challenged in court, numerous parties could now try to stop them. Court challenges would slow the permitting process, increasing the cost of new homes, if and when they are built.

Indeed, the ruling encouraged local government regulation, and “entitled,” according to Fischel, special interest groups to challenge developments.

The Legacy of Friends of Mammoth

Fischel discusses the legacy of this landmark decision by discussing California regulations on growth, such as voter initiatives to block growth (i.e. urban growth boundaries). However, this began in the late 1960’s, just before Friends of Mammoth, since the California court also stopped the loose review process of anti-growth initiatives. This made it much easier for anti-growth ballot measures to become law. Since the late 1960‘s, the number of anti-growth policies across California has increased rapidly, from less than 10 in 1970, to over 150 in 1992, in a study from Glickfield and Levine (1992) –

Insert Graph –

Fulton explains the various types of voter initiatives to block growth —

 

 

Glickfield and Levine (1992) surveyed communities in California, and found that nearly all communities surveyed had some sort of growth control. They also found that growth controls restricted the construction of rental housing production in the anti-growth cities, where it was built in the periphery of cities. They also found that minorities have been particularly affected by the lack of affordable housing.

Fischel theorizes that this could be due to urban planners learning about growth controls, that benefit local homeowners, from other urban planners. Of course, there are many alternative explanations.

Since Growth Controls Increase Housing Prices, then Why Didn’t Californians Establish them

before Friends of Mammoth?

The California Supreme court became anti-development in the late 1960‘s and early 1970‘s, at the same time that housing began to appreciate rapidly. Berfore this time, in the 1950‘s and 1960‘s, there were very few attempts to limit California development. But why not? Establishing growth controls such as urban growth boundaries are relatively easy, as Fischel points out –

“[G]rowth controls are an easy method by which the net worth of homeowners can be increased. By the stroke of a municipal pen, a community can increase the value of its citizens’ major assets, their homes, by at least 10 percent, and maybe much more.(p227)”

Indeed, beginning in the 1960‘s, voters did vote for growth controls. However, with Friends of Mammoth and other decisions, Fischel found that the California Supreme Court became extremely anti-growth in the late 1960‘s and early 1970‘s, when the court became the most anti-development in the nation. California courts have not respected the property rights of developers, more so than anywhere else in the country.

Fischel found that after 1967, one could predict that whoever would win in court was whatever side anti-growth interests were on. If anti-growth interests were on the side of anti-growth local governments, then they prevailed in court, most of the time.

Before 1967, developers got their way if challenged in court, preventing homeowners and city councils from establishing growth controls! The graph above from Ned Levine above demonstrates that only ___ growth controls were imposed before ___. Much of the suburban California environment that we see today was built in the 1950’s and 1960’s when there were no growth controls, just Euclidean zoning.

Furthermore, many of these mid-century suburban California communities are on large lots, since land had not yet begun its rapid appreciation in the 1970‘s and beyond.

Much of the ugly suburban “cookie cutter sprawl” with tiny backyards in California was a result of expensive land, due to urban growth boundaries and other factors that increased the cost of land. Therefore, from my aesthetic point of view, the Friends of Mammoth legacy has created high density neighborhoods with homes stacked on top of each other. The same phenomenon has occurred in Washington and Oregon, where land is rationed with mandatory, state mandated urban growth boundaries coupled with requirements for high density. This cannot be said about Arizona, New Mexico, and Nevada, where free market forces along with local zoning laws have resulted in high density in some areas, and standard densities in others.

Ironically, Friends of Mammoth, which was original conceived to protect the environment in the Town of Mammoth Lakes, has resulted in more environmental destruction, in terms of “clearcutting” native trees, brush, and chaparral vegetation in California, for high density development with no backyards – within urban growth boundaries.

While the wealthy can own homes on large lots among tall pine trees in the Town of Mammoth Lakes, millions of other Californians have no backyards, no privacy, no swimming pool, no trees, no lawn for the kids to play, and many such residents lost their homes during the last housing bubble.

Economic Consequences of Growth Controls

Fischel points out that surveys of California employers find that housing prices make it hard for companies to attract workers. In addition, businesses leave the state for less costly areas

Nevertheless, the state has a huge amount of developable land. Developers will leave the heavily regulated coastal areas for cheaper land and less regulations in the Central Valley (i.e. Sacramento, Stockton, Chico, Redding) and Inland Empire (i.e. Riverside, San Bernardino, Yucca Valley, and the Palm Springs area). Rural areas for a variety of reasons more likely to accept growth than urbanized areas (See Fishcel 1985 chap 10, Thomas Rubel 1989).

But these cities are a long way from centers of employment. For example, it is well over an hour (with traffic) from Riverside to Los Angeles. Therefore, Fischel points out the inefficiencies of growth containment, such as long distance commuting and less urban agglomeration, which would reduce productivity and disposable income, due to gasoline costs. Therefore, the smart growth ideal to establish cities separated at great distances by “urban growth boundaries” increases gasoline costs, especially for the poor and middle class.

Furthermore, if a local government denies a development, it also loses tax revenues, land use exactions, and jobs.

Indeed, Fischel states,

“[T]ime and effort mean less housing at higher costs. What the California courts did was to create significantly higher transaction costs for development all across the state. The higher statewide housing prices that resulted have adversely affected the national economy by distorting the location decisions of firms and households.”

ADD TO VENTURA COUNTY SECTION —

Since all Ventura county cities have urban growth boundaries, then prices went up everywhere. Developers cannot just go to the next community in the county and start a new project. Indeed, Fischel writes, “By forestalling the production of new homes, existing homeowners in growth-controlled communities reap the benefits of higher prices. Of course, if only a handful of communities restrict growth, there will not be much effect. Developers and homebuyers will just go to the next municipality, where they will find adequate substitutes.”

Indeed, there are very few substitutes in Coastal California, since most Santa Barbara county cities have urban growth boundaries, and, Los Angeles county is virtually build out. Fischel continues:
“Since almost all American metropolitan areas have a large number of local governments, the monopoly effect cannot be very large, unless all local governments suddenly shift into the growth-control mode.”
And, that’s the story along the California coast, places have growth controls and are out of land due to self-imposed urban growth boundaries. This drives prices up, and developers leave town for areas of California more open to growth, such as the “inland empire” counties (Riverside, San Bernardino, and Kern couties).

The Ventura County urban growth boundaries lower the value of land of people outside the boundaries, since they can only build on one acre lots subject to a significant environmental review process. Fischel writes that, in general, growth controls in the legacy of Friends of Mammoth “….transfer wealthy from one class of people, owners of undeveloped land, to another class of people, owners of already existing home . . . Owners of undeveloped land(p251) throughout the state, whose financial interests are the only in-state representatives of housing consumers outside the local jurisdiction, lost their property rights to already-established California residents.”
Why did California Grow Rapidly in the 1980‘s, Despite High Housing Prices?

How could people afford to move to California, especially coastal California, in the 1980‘s? Fischel points out that most of the migration to California was from outside the country. Many Californians sell their homes and move to other countries. Immigrants have the money to buy their expensive homes, which have appreciated in value due to growth controls. But why don’t they migrate to Ohio or Missouri where it’s cheaper? Fischel points out that immigrants are attracted to cities where they find immigrants from their own country, such as the Korean community in L.A.
In addition, California’s economy was booming in the 1980‘s, with rising home prices. People felt safe buying expensive homes, knowing that their property values would increase. However, they stopped rising in the early 1990‘s recession. This recession was more severe than the rest of the nation, since businesses that are suffering are looking for cheaper sources of labor, which is out of state.

 Today’s Second Housing Bubble in Southern California

Today, a second mini-housing bubble in the area threatens housing affordability in southern California. Homes are once again overvalued, meaning that home prices are more expensive compared to long term averages of historical prices, incomes, and rents. (Trulia explains what overvalued means at this link – http://info.trulia.com/download/Bubble+Watch+FAQs+oct2014.pdf
Insert Chart Dqnews.com

http://dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA141013.aspx

However, in contrast to Southern California, the housing market in most of the country, since the bubble, has been undervalued, and many places have been “buyer’s markets. ” Nationwide, Trulia said, homes are undervalued by 3%, as of 2014 Q2, as shown by this graph from Trulia – –
However, homes are overvalued and too expensive by double digit percentages in Southern California –

– from the L.A. Times -http://www.latimes.com/business/realestate/la-fi-mo-housing-bubble-20-not-likely-this-time-new-study-says-20140624-story.html

“Still, if there’s a place where home prices are out of whack with incomes, the Southland is it. Prices in Orange County were 17% overvalued in the second quarter (2014), by Kolko’s estimate. In Los Angeles they were 15% overvalued and in the Inland Empire, 13%. That’s compared with 71%, 79% and 92%, respectively, for those markets at the peak of the housing bubble in early 2006.”

According to Trulia chief economist Jed Kolko – http://www.trulia.com/trends/category/bubble-watch/

Home prices now look 3% undervalued compared with long-term fundamentals. Of the 100 largest metros, 76 are undervalued, ___ are overvalued, and 7 are more than 10%

But __ of these seven overvalued markets are in Southern California – L.A. at #2, Orange County at #3, Riverside-San Bernardino at #5, with northern California metros also making the top 10 list, also due to growth containment – San Francisco at #4, San Jose, at #7, and Oakland at #10.

Insert Table —

Top 10 Metros Where Home Prices Are Most Overvalued
# U.S. Metro Home prices relative to fundamentals, 2014 Q3 Home prices relative to fundamentals, 2006 Q1 Year-over-year change in asking prices, Aug 2014
1 Austin, TX +19% +2% 11.9%
2 Los Angeles, CA +15% +73% 8.9%
3 Orange County, CA +15% +66% 6.0%
4 San Francisco, CA +12% +46% 11.2%
5 Riverside-San Bernardino, CA +11% +87% 13.8%
6 Honolulu, HI +10% +36% 6.7%
7 San Jose, CA +10% +53% 10.4%
8 Houston, TX +8% +1% 10.4%
9 Denver, CO +7% +17% 9.4%
10 Oakland, CA +7% +67% 12.4%
Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.

Insert PDF for all metros -0

Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.
From his October, 2014 bubble watch, Kolko writes:

“The most overvalued market is now Austin, at 19%, followed by the California metros of Los Angeles, Orange County, San Francisco, and Riverside-San Bernardino. The California metros on the top-10 list were all significantly overvalued during the past bubble, ranging from 46% overvalued in San Francisco to a dizzying 87% in Riverside-San Bernardino. By contrast, Austin and Houston are the only metros out of the 100 largest that look more overvalued today than in 2006. Texas markets avoided the worst of the housing bubble during the past decade. Recently, they’ve had double-digit home-price increases.”

Q and A – what does he mean by overvalued –

Insert top 10 table 2014 Q3 –

Compared to California, Texas does not have policies resulting in significant urban or suburban containment. Therefore, Texas did not experience a housing bubble in the 2000‘s. Trulia’s Jed Kolko explains that Texas is overvalued today, compared to historical trends and rising incomes, since they did not experience a housing bubble. They did not have a housing bubble since they do not impose land use regulations like in California. The current mini-bubble in Texas markets is largely a result of rapid economic growth and rising incomes, since Texas leads the nation in job creation (the opposite of California!).

“Eight of the 10 most overvalued housing markets are in California, with Orange County, Los Angeles, and Riverside-San Bernardino in the top four. However, they are not seeing the return of last decade’s bubble. These California markets are much less overvalued than they were at the height of the bubble. Orange County, today’s frothiest market, is just 17% overvalued now versus being 71% overvalued in 2006 Q1. Among the most overvalued markets today, only Austin looks more overvalued now (13%) than in 2006 Q1 (8%) – and that’s because Austin (and Texas generally) avoided the worst of last decade’s bubble and bust.”

California Won’t Build “Texas Style” Growth

Texas cities have limited growth containment, affordable housing, abd low unemployment due to pro-growth state policies. The “success of Texas” has been discussed by numerous authors critical of growth management, such as Urban Planner and Cato Institute Schlorar Randal O’Toole, http://ti.org/antiplanner, and Chapman University professor Joel Kotkin http://joelkotkin.com and http://newgeography.com.

However, people do not move to Texas, fearing that Texans will be intolerant and narcissistic. Yet places such as Austin have recently become liberal, and attracted many young hipsters and yuppies nationwide. I am not an expert on Texas, so will defer discussions to Kotkin and O’Toole. See Joel Kotkin’s “New Geography” web site for numerous articles on the growth of Austin and other Texas cities, along with his various books including, “The Next Hundred Million, America in 2050.”
Also add to sidebar, both of these.

Yet Southern California, and indeed the entire state, has dozens of restrictions on growth. The reasons for the first bubble, land use restrictions and impact fees, have not been eliminated by local political leaders. Therefore, a new housing bubble is possible, if not likely.

Due to population growth and urban containment, the dream of home ownership is over for many people in Southern California, with the current housing bubble. Unless local cities expand or eliminate their UGB’s, then people will keep moving from Southern California to Reno, NV; Redding, CA; Rio Rancho, NM; Chico, CA; Phoenix, AZ; and Austin, TX, for the dream of home ownership (and, a much lower cost of living and lower taxes). In addition, boomers who bought their homes in the 1970’s will not sell their homes to their kids, because their kids don’t have the money.  Instead, they’ll sell their homes for cash to immigrants in the high tech fields.

Anti-Business Attitudes Force Children to Live in Parents’ Basements in Southern California

With a high regulatory environment, many businesses have left southern California. In addition, it’s difficult to start a new business with high taxes, high impact fees, high storefront rents, and land use regulations. Therefore, good jobs are hard to find, and kids live in their parents’ basements.

25 to 34 year olds are necessary for housing demand (household formation). If they are under- or unemployed, then they cannot afford to buy homes. Economist Jed Kolko of Trulia devloped the “housing barometer” to address Generation Y unemployment. http://www.trulia.com/trends/category/housing-barometers/  Currently, unemployment is 25% for those aged 25-34:

“August’s three-month moving average shows that 75.7% of adults age 25-34 are employed, which is just 37% of the way back to normal. Because young adults need jobs in order to move out of their parents’ homes, form their own households, and eventually become homeowners, the housing recovery depends on millennials finding work. Among 25-34 year-olds, just 12% who have jobs live with their parents. By contrast, 21% without jobs do.”

Kolko also found that new housing starts are only half what they were before the recession –

“New construction starts are 49% back to normal, the same as one quarter ago and up from 37% one year ago. Multi-unit starts continue to lead the construction recovery. Year-to-date multi-unit starts are up 23% year-over-year, versus just 3% for single-family starts. Even though single-family starts are far below normal levels, household formation looks too weak to support more single-family homebuilding.”

New Jobs Create Housing Demand for Young Adults – Jed Kolko’s “The Virtuous Cycle”

More housing starts create jobs. Jobs allow young adults to move out of their parent’s basements. Then, they become new homeowners, which helps the economy. But this “virtuous cycle,” as described by Kolko, isn’t happening nationwide, since unemployment is 25% for 25-34 and housing starts are half of normal.

“First, housing should help jobs: construction adds to employment not only in homebuilding but also in related industries like furniture manufacturing and home-improvement retailing. Second, jobs should help housing: young adults are more likely to rent or buy, rather than live with others, if they have jobs. In this recovery, young-adult employment and construction are weak – so the virtuous cycle of housing and jobs isn’t looking quite so virtuous.”

These statements from Jed Kolko are not specific to Southern California. However, southern California as a region is not issuing that many housing permits. And, young adults are stuck renting in their parents’ basements, or renting hotel rooms on a monthly basis.

Wait – Hasn’t The Housing Market Recovered if Housing is “Overvalued?“

Not quite. That is wishful thinking on the part of many Realtors who don’t understand the entire picture.  Kolko writes that full recovery of the housing market is not determined by factors that influence home prices, such as foreign investors flipping properties and selling them at a higher price. Instead, full recovery only occurs if incomes rise, people find jobs, and young people form households. These factors are not happening in Southern California. Instead, young adults are living at home, and foreign investors have purchased thousands of homes and flipped them, raising their prices (such as in Riverside County, see next post on Riverside and San Bernardino Counties, forthcoming).

Meanwhile, young adults and their children, ages 25-34, continue to live at home, or in relatively inexpensive Motel 6 locations that are cheaper than apartments, such as properties in Thousand Oaks, Pismo Beach, and Palm Springs (where I have joined them during my travels). Kolko writes, –

“But as the housing recovery continues, it depends less on the “rebound effect” – this tendency of the housing prices to right themselves – and more on such fundamentals as jobs, income growth, and household formation. These have been slow to improve in this recovery. In particular, the Housing Barometer shows that young-adult employment lags. What’s more, new Census data showed that median income has stagnated and household formation is far below normal levels. In this recovery, jobs and housing can’t get what they need from each other.”

Median household incomes have been falling ever since Obama took office.  However, nationwide, median incomes show no relationship to the political affiliation of the ruling oligarchy. They were doing well under Clinton from 1992-2000, but then stagnated from 2000 to 2008 under Bush, yet have plummeted  since Obama took office in 2008.

1_US_CENSUS_MEDIAN_INCOME_SINCE_1967

Median Household Income since 1967, from the U.S. Census. From: http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf Accessed: November 22, 2014.

Yet home prices have increased at a rate faster than the median income.

Median incomes have declined by 8% since the housing recession in 2007. Conditions have been so bad under Obama that in 2013, real median household income was 8.0 percent lower than in 2007.

30 millions Americans were in poverty in 2000, compared to 45 million in 2012. This is the legacy of the policies of Bush and Obama. These presidents only benefited the top 1%.

Indeed, Los Angeles proper has very little open space, and many people, if they were rich, would move to master planned suburbs in Orange and Ventura Counties, due to the preservation of open space.
Low Incomes Also Threaten the Dream of Home Ownership

Incomes in Southern California counties are relatively low. From the 2005-2009 American Community Survey web address, the most populous county, Los Angeles County with 10 million people, has a median household income of only $55,000. It is harder to get a loan for a home when incomes are less than one third of the home purchase price.  The median price of a home in L.A. is $444,000, which is 8 times the median household income.

It’s interesting to note that the Bay Area counties have higher median incomes than Los Angeles counties –

San Francisco County 70K (compared to 55K in L.A. County)
Marin County 88K
Sonoma County 64K
Napa County 69K
Solano County 67K
Contra Costa County 78K
Alameda County 69K
Santa Clara County 86K
San Mateo County 85K
Santa Cruz County 65K

Renting is Expensive in Southern California

The map below shows that rents are well over $1000 a month for an apartment, except for a few areas such as Yucca Valley and parts of the Coachella Valley.

 

Southern California Schools in Horrible Shape

The map below shows that many rich parents send their kids to private schools. This is unfortunate, indicating a failed academic system in areas of high population density, such as central Los Angeles and in the Coachella Valley. Therefore, removing urban growth boundaries around smaller cities on the coast would allow families to flee downtown L.A. and find better schools:

The percentage of high school graduates reflects the horrible education system in all of southern California –

The White Flight to the Suburbs

Unfortunately, despite its liberalism, the region has made little progress in integrating Hispanics, Blacks, and Whites, as shown by this map-
Blacks and Hispanics live in low income central L.A. They cannot escape to the suburbs for two reasons. First, their salaries are too low to pay for the expensive suburbs. Second, homes in the predominately white suburbs are too expensive since residents are anti-growth. Again, land use policies from rich, mostly Caucasian suburbanites and their elected representatives are to blame.

Fulton points out that in the 1990‘s, whites left their former white suburbs in northern Orange county, the San Gabriel Valley, Burbank, Glendale, and parts of Riverside, Ventura, and San Bernardino Counties. L.A. region is a combination of Anglo run cities and Latino run cities. In the late 1990‘s, new cities formed that were nearly 100% white, especially in south Orange county.

The region, unfortunately, is becoming self-segregated, with Caucasians dissapearing behind expensive gated communities. This “white flight” has been observed all over the Southwest, including the Phoenix metro area, where expensive Caucasian dominated gated master planned communities comprise the outer suburbs (Gober 2005).Metropolitan Phoenix: Place Making and Community Building in the Desert (Metropolitan Portraits)Oct 14, 2005
by Patricia Gober

Therefore, in the L.A. and Phoenix metros, the rich form rings around the poor. Although areas with skyscrapers in downtown L.A. and Phoenix are relatively unimportant in the regional economy (Kotkin ), their immediate suburbs are relatively poor.

This map shows that the rich, predominately white, live in rings around the poor, predominately multicultural, central city areas –

Vulnerable Households – “The Least Amongst Us.” – Households Making Under $30,000

This map shows that thousands of census tracts have incomes under $30,000. Unless they can find better jobs, these folks will never be able to buy a home since there are virtually no homes for $100,000 in Southern California (three times their annual income). Whereas in Rio Rancho or Albuquerque, there are lots of brand new homes in the low 100‘s (link).
Inner city individuals will also not be able to rent in the suburbs, since apartment landlords sometimes require that tenants make “three times the monthly rent.” The Ventura-based _____ Dyer-Sheehan demonstrates this, as a term that is essentially non-negotiable. This policy discriminates against single individuals, especially students, immigrants, single parents, and gays, who will not have a significant other for many years, if ever.

Is it appropriate for a medical student, with endless hours of study, to provide proof that they make three times their monthly rent? Of course not, but this forces our future doctors into scenarios where they have multiple noisy roomates, and they won’t become our best doctors while studying in noisy environments. In contrast, in Texas, these types of requirements are less common, and even if they are present, they are more easily fulfilled, since rents are half what they are in Southern California, due to a lack of urban growth boundaries.

Ventura County – Classic Case of Escalating Rents within Urban Growth Boundaries

I’ll highlight Ventura County as a low density, low crime county that is too expensive, yet has plenty of room to grow. Anti-growth residents have voted themselves urban growth boundaries to keep crime and new residents out. Between the mid 1990’s and 2XXX, voters in Ventura County enacted Urban Growth Boundaries around their cities. As a result, housing prices have skyrocked, and a two bedroom apartment as of September 2014 is now $1900/month in Thousand Oaks, California, according to the Ventura-based Dyer Sheehan Group.  From the October 30, 2014 Thousand Oaks Acorn:

“ Between January and July 2014, the average rent in Thousand Oaks/Westlake increased almost 7 percent, from $1,722 to $1,838, making it the most expensive area in the county to rent an apartment.”

“The average monthly rent for a two-bedroom apartment in the county was $1,719 in July, up 4.7 percent from $1,642 in just six months, and up more than 9 percent from July 2012, according to the survey, which examined the rents of more than 20,300 units in the cities of Thousand Oaks, Westlake Village, Camarillo, Moorpark, Simi Valley, Ventura, Fillmore, Ojai, Oxnard, Port Hueneme and Santa Paula.”

Therefore, like many coastal communities, parents of Ventura County kids may choose to send their kids elsewhere when they turn 18. Many Thousand Oaks parents will send their kids to college in markets such as Reno, Flagstaff, Chico, and Tempe, where they’ll pay 50% less rent than anywhere in Ventura County or greater Los Angeles.

For all of Ventura County, rental appreciation reached a maximum high – one of the top 10 in the county

“The average rent of all apartment units surveyed in July was $1,614, up $78 per month—or 5.1 percent—since January. The rate of appreciation is a new benchmark for Ventura County. Many of the property managers and landlords interviewed for the survey said the market is the strongest they’ve ever seen, said Dawn Dyer, president of the group that has produced the report every year since 1997. “Overall, rents have increased 6.5 percent since July 2013,” she said.

Dyer also said that the rent increases were well above the rate of inflation, and above the rate of wage growth:

“Indeed, back in 2007, average rent for a one bedroom in Ventura County was only $1200 a month. That’s about what you would pay today, utilities included, staying monthly at the Thousand Oaks Motel 6, or the Camarillo Days inn. During my travels, I’ve stayed at these places for a few nights, and observed families with kids living in motel rooms, because rents are too high and apartment vacancy rates are low.”

.http://www.dyersheehan.com/uploads/VenturaCountySample-Full.pdf
See –

Add Graphic –
http://www.toacorn.com/news/2014-10-30/Front_Page/Notso_affordable_housing.html

Dyer states the demand for apartments will continue to increase, due to escalating housing prices –

“The demand for apartments in Ventura County will continue to increase, in part because large down payments, credit and income requirements make it difficult for people to qualify to buy homes, she said.

“(Apartments) are still the most affordable type of housing,” she said. “And psychologically there’s been some shift in the thinking about homeownership after this last real estate collapse in the past decade.”

Rental housing appeals especially to the millennial generation, “many of whom delayed household formation during the recession because they didn’t have the resources,” Dyer said.

“Now as the economy is starting to gain a little bit of traction, albeit slower than many would like, we are seeing young people beginning to form their own households,” she said. “That will continue to put increased demand on the rental housing market, because another trend we are seeing is that the millennials as a generation, and even Generation X to a certain extent, are choosing different lifestyles than their parents or previous generations.

“They’re choosing to get married much later in life, if at all, than earlier generations. They’re delaying having children and starting families. So their housing needs are much different.”

“I will say that the velocity of rent increases will certainly slow down when we hit a place where there just aren’t enough people with the income in Ventura County to pay those kinds of rents,” she added. “If you get to a point where the average rent in Ventura County represents 45 or 50 percent of the average renter’s income, then that’s not going to work.”

Local Opposition to Building More Apartments in Ventura County

Dyer says that developers want to build more apartments in Ventura county, due to high demand. However, local residents oppose multi family housing:

“It’s difficult to develop any type of housing in Ventura County, and it’s particularly difficult to develop apartments. . . .” Dyer said. “People have perceptions about apartments and apartment dwellers as somehow being less desirable neighbors, lowering the value of their homes and adding traffic.”

Indeed, the average of of apartment properties in Ventura co is 37 years, and many are up to 60 years old.
How Ventura County Became Anti Growth

Reference: Fulton, William “Managing Development through Urban Growth Boundaries.”

Unlike Los Angeles and Orange Counties, where cities blend together, cities in Ventura County are seperated by great distances, due to voter approved urban growth boundaries (UGB’s). The county looks remarkably similar to Oregon’s Rogue or Willamette Valleys, where UGB’s seperate cities from farmland and oak woodlands.

In the early 1970‘s, when Oregon developed its growth management act requiring UGB’s, Ventura County officials decided that there would never be more than 14 cities in the county, and they would be seperated by greenbelts.

In 1995, 52% of voters in the City of Ventura voted for the first urban growth boundary in the county, under the SOAR (Save Our Agricultural Resources) initiative.

In the next five years, every Ventura county city adopted UGB’s, following the SOAR legacy. The idea of UGB’s spread out all over Ventura County. Even 65% of the residents of Conservative, wealthy cities of Thousand Oaks, Camarillo,, and Simi Valley, voted for their own UGB’s in 1998. This proves, once again, that individuals of all political persuasions are anti-growth, despite popular blogs that claims that only “far left liberals” oppose growth.

This made Ventura county the only county in the nation with a set of voter approved UGB’s. (Whereas in Oregon and Washington, the UGB’s were required by State Growth Management Acts passed by the legislature, not the voters. Many cities in the great northwest at various times have wanted to expand their boundaries, such as Bend, Oregon (ref), but cannot do so, due to state law.)

The Ventura county SOAR boundaries have virtually eliminated sprawl in the county. As of 2010, there were 824,000 people in the county, with a population density of only 449 persons per square mile – one fifth that of LA county’s density (2400) and one eighth that of Orange county’s density (3800). Indeed, Fulton points out that due to the SOAR UGB’s, Ventura county, unlike Orange county, still retains its agricultural character.

Historically, the county grew from 114,000 in 1950, to 670,000 in 1990. Thus, the county only grew by 154,000 persons in two decades of UGB’s (1990 to 2010, %).

90% of Ventura County residents live within the boundaries, a figure comparable to cities in Oregon’s Rogue and Willamette Valleys. However, many are critical of the SOAR boundaries, since they made housing more expensive in Ventura County cities, making it more expensive to move from congested areas in L.A. to Ventura County. The ballot iniatives were billed as ways to “protect farmland,” and open space, but the end result was the creation of overpriced residential housing in Ventura county cities.

20% of the county’s non-federal land – 150,000 acres total – is within SOAR UGB’s. Of course, the northern two thirds of the county is within the Los Padres Natinal Forest, and part of the coast is within the Santa Monica Mountains National Monument.

Of these 150,000 acres, only half is developed, reflecting the anti-growth attitude of Ventura County cities. For example, Thousand Oaks mayor Claudia Bill-de-la Pena advocates slow growth – http://www.vcstar.com/news/claudia-bill-de-la-pe241a-settles-into-thousand advoctes slow growth. http://www.vcstar.com/news/claudia-bill-de-la-pe241a-settles-into-thousand

In this video, Joel Kotkin addresses the city of thousand oaks on how they have essentially matured as an independent, full service, suburb of downtown L.A. –

But Thousand Oaks even began on a platform of slow growth, when the city was incorporated in 1964. As 2002 City Council Candidate Dan Del Campo wrote in “Slow Growth Defined” = http://www.smartvoter.org/2002/11/05/ca/vn/vote/delcampo_d/paper1.html (Entire speech reprinted at end of web page.)

“ The three factors for slow growth progression in Thousand Oaks are: The General Plan, which is the cornerstone of our city’s constitution. The founding planners at the beginning of incorporation in 1964 believed strongly in the inclusion of open space preserved permanently and Measure A voted for incorporation into the General Plan in 1978. These three factors perform as three branches of Government providing a checks and balance for planning in Thousand Oaks.

Slow growth in Thousand Oaks was not invented in the last ten to fifteen years. It was pre ordained by the founding city planners during the incorporation process in 1964. While the original plan called for a city population cap of 200,000 or so, sitting councils from that point forward had the good vision to seek methods for reducing that number. [The population of Thousand Oaks in 2014 is about 120,000].

We are fortunate in Thousand Oaks that the founding leaders believed strongly that open space would play a crucial role in maintaining the quality of life and the semi-rural environment that exists today. They established a process of combing development agreements with developers and the gifting of open space within and around projects. Projects such as the Wildwood homes that are incorporated with the Wildwood Mesa were a product of that process. This insured that density would not be maximized, but minimized.

Finally, I as a Councilmember support the proposal of reducing the annual housing allotments to a number of 250 per year or less.

I applaud Thousand Oaks, along with other low density, visionary, modern executive suburbs such as Bellevue, Irvine, Folsom, Rocklin, and El Dorado
Hills, for their commitment to open space. However, we need more of them in the West, so that housing can be cheaper, and everyone can afford to live on quarter acre lots instead of apartments in congested areas.

In 2007, Ventura County Supervisor Linda Parks praised the County’s slow growth process with SOAR UGB’s.
See this PDF (save on web page) –

http://vcportal.ventura.org/BOS/District2/docs/articles/2007/2007-03_Forecast%20for%20Slow%20Growth.pdf

However, not true by 2013 – Watkins –

http://www.kclu.org/2013/11/08/more-slow-growth-in-forecast-for-ventura-county/

Indeed, I agree with Dan Del Campo and Claudia Bill de la Pena. Small cities with a rural character that develop with comprehensive planning – around large companies such as AMGEN or INTEL that provide middle class jobs – are the best suburbs with the best schools. The planned, low density suburban approach that Thousand Oaks has pioneered in 1964 could have been followed by hundreds of cities in 10 counties in Southern California. Unfortunately, it was not, and the end result is high crime, horrible schools, auto congestion, and air pollution for most cities in the L.A. metro.

And, cities NW of Thousand Oaks, such as Santa Barbara P and San Luis Obispo P , have refused to grow to the size of Thousand Oaks (pop. 128,000). They also have not recruited large companies, such as AMGEN and Bank of America. Therefore, they will remain relatively impoverished college towns dependent on tourism – without a middle class.

But due to urban growth boundaries, there will probably never be another low density executive suburb like Thousand Oaks in ventura county. Outside the UGB’s, lot sizes are a minimum of one acre. Outside the SOAR UGB’s, 100000 acres are protected as farmland, 14,000 acres are developed, and 386,000 acres are not developed, reflecting the county’s anti-growth stance.

Between 1996 and 2006, 8000 acres were developed within SOAR boundaries, and only 1800 acres outside, mostly on land zoned for one acre minimum properties. The county also maintains tree protection for native trees outside the boundary (see photo, Lake Sherwood, Illegal Tree Cutting).

Consequentially, due to anti-growth attitudes on greenfield (undeveloped) land, and the need for affordable housing, cities such as Oxnard and Ventura have started to build upwards, with expensive “smart growth towers,” just like I’ve discussed for Oregon and Seattle. Bill Fulton, former Mayor of Ventura, was instrumental in this process. However, just like Seattle and Portland, increasing population density with smart growth towers has increased traffic congestion. Therefore, I’d prefer to see one acre properties all over Ventura county, where children can have huge backyards, and deer and other wildlife can roam freely.

Photo – Oxnard Smart Growth –

Photo – Ventura Smart Growth –

And, residents who are “priced out” of cities such as Ventura moved to less expensive unincorporated areas along Hwy 33, such as “Oak View,” and “Lake Casitas,” and others moved even further north, to the less expensive liberal art and writers paradise of Ojai (which is my favorite city in Ventura County). Others continue over the 5,000 Pine Mountain Summit down into Taft, Bakersfield, Ridgecrest, and Fresno. But that’s as far as they can get, since Sacramento and San Francisco are now very expensive. Even Reno is costly, the “R” in Reno means “R” for Rich. Meanwhile, in Ventura county, wealthy mountain bikers in Thousand Oaks go to Ojai to enjoy the trails – See photo – van –

Photo – Ojai Valley –

Finally, I should point out that voter implementation of Ventura County UGB’s occured during the peak of “ballot box zoning” in California, as Bill Fulton writes. Between 1986 and 2000, there were more than 600 ballot measures on land use in California, especially along the coastal counties. These included questions about a variety of issues such as”
1- Urban Growth Boundaries
2-Large Lot Zoning
3-Agreements that would tie future development to the financing of infrastructure
4-Future zoning changes must be approved by voters
5-Voter approval to rezone agricultural land for urban use

Ronald Reagan – Formerly of Ventura county – The Solution for Housing Affordability?

In the 1970‘s, Californians voted for the “California Coastal Commissions,

to regulate beachfront property from the coast to 3000 feet inland.

Ronald Reagan’s presidential library is in Simi Valley, in Ventura County. Reagan, in a series of radio interviews, was critical of the newly formed California Coastal Commission, which restricted development of privately owned land. The California Coastal Commission was established by voter initiative in 1972 (Proposition 20) and later made permanent by the Legislature through adoption of the California Coastal Act of 1976.
[[[[ re phrase ]]]]
The Coastal Commission, in partnership with coastal cities and counties, plans and regulates the use of land and water in the coastal zone. Development activities, which are broadly defined by the Coastal Act to include (among others) construction of buildings, divisions of land, and activities that change the intensity of use of land or public access to coastal waters, generally require a coastal permit from either the Coastal Commission or the local government.

Reagan made an important point about the potential for more property ownership on the coast –

“California has [over 1000] miles of coastline ranging from broad sandy beaches to mountains dropping steeply into the surf, and in the north Redwood forests coming down to the waters edge. What most Californians were not aware of [when they voted for the Act in 1972] was that almost half – some 400 miles of oceanfront was already owned by the government. Cities, counties, and the state own and operate miles of bathing beach.

During my administration, the state added more miles based on projections of population increase So much was added that on any hot, sunny, summer weekend you can find long stretches of state beach with virtually no bathers at all.

In spite of this the Coastal Commissions made up of appointees not elected representatives almost from the very first assumed dictatorial powers and displayed what can only be described as hostility to any private ownership of ocean frontage.”

Indeed. Why not auction portions of these 400 miles of coastline, along with their inland valleys of oak woodlands (that are not already public parks), for one acre properties for affordable housing? This would solve California’s affordable housing problem overnight. And, these properties would be close to major transportation infrastructure leading to jobs, such as SR-1 and US-101.

In another radio interview, Ronald Reagan pointed out that the feds own nearly 50% of the land in California. He takes a moderate stance on land use:

“Those of us who are neither anti-ecology or environmental extremists seek an answer [to federal ownership and acquisition of private land in California]. How do we protect our constitutional right to own a piece of this earth and at the same time insure open space and natural beauty for generations to come?”

“It is oversimplification to suggest we don’t need restrictive laws or government land planing but simply the law of supply and demand operating in the free market.
‘”Let those who want to live at the beach or in the mountains or desert buy building sites in the open market from willing sellers. The vast majority of us through choice or necessity will continue to live in cities, towns, and suburbs.

When he wrote this (in the late 1970‘s), many cities had not yet even passed urban growth boundaries. Traffic in the L.A. metro was not as bad as today. Therefore, quoting Regan, “the vast majority” were still living in cities, towns, and suburbs. In the 1970‘s, they were not living in unincorporated Ventura, Santa Barbara, San Luis Obispo, Riverside, and San Bernardino Counties. For example, cities such as Calimesa, in Riverside County, did not even exist until incorporation in 1990; Yucca Valley in
San Bernardino County incorporated in 1991..

However, today, migration has begun to distal counties such as Riverside, San Bernardino, Ventura, Santa Barbara, and San Luis Obispo. However, many cities in these counties have blocked growth with urban growth boundaries, causing housing bubbles.

But Reagan was not entirely opposed to establishing parks in these counties:

“However, we want to know that when and if the desire strikes us there are beaches, moutnains, and desert where we can go for an hour, a day, or extended vacation. We don’t want to feel that private ownership … will shut us out.

Our answer also lies in the open market. We the people can collectively – through government – do exactly what the individual can do. We can estimate wgat we need for our present and future use and then through government buy it . . . In California, the government owns 40% of the total coastline . . . If more is needed we should do collectively exactly what we do individually – go buy it. What we must not do is give ourselves collectively in the name of govt rights we do not posess as individuals. We can have all the open space and recreational land we need. We do not have the rght to tell someone who owns a beach lot that he can’t build on it because we like the view as we drive by on the highway. If the view is that important to us we should buy it.”

Reagan was clearly and environmentalist, favoring open space. However, he also recognized the rights of individuals to develop their privately owned property along the coast. But this has not happened, since urban growth boundaries along with government owned land have prevented growth along scenic stretches of US-101 and other beachfront highways. Ventura, Santa Barbara, and San Luis Obispo Counties are underpopulated areas that could support hundreds of thousands of additional people along US-101. And, they have no traffic, and US-101 fluctuiates between two to four lanes in each direction through these three counties until reaching 12 lanes in la co. Ventura County is even widening 101 between Carpinteria and Ventura.

If these coastal counties would open lands for development, then people can flee crime ridden Los Angeles with its horrible schools.

Dr. William Fischel, Professor of Land Use Economics at Dartmouth College, might agree with Reagan. He calculated that even if every American household was on an acre (with four persons per residence), only 3% of the entire US would be occupied, even when Alaska and Hawaii are excluded!

Dr. Fischel discusses this in his book “The Economics of Zoning Laws: A Property Rights Approach to American Land Use Controls.“ A free google preview of his calculations is found on pages 1 and 2 at this link:

http://books.google.com/books/jhu?id=wlKAfvuP59EC&pg=PA1&dq=one+acre+per+house&cd=1#v=onepage&q=one%20acre%20per%20house&f=false

Reference: “Reagan in His Own Hand: The Writings of Ronald Reagan That Reveal His Revolutionary Vision for America.” Kiron Skinner, et. al. Simon and Schuster, C 2001 by the Ronald Reagan Foundation, pp. 331-341

Coastal Counties in Economic Decline – Ventura, Santa Barbara, and San Luis Obispo

Urban growth boundaries limit opportunities for job growth along the coast. Dr. Bill Watkins, Professor at California Lutheran University in Thousand Oaks, writes that Ventura, Santa Barbara, and San Luis Obispo Counties are in economic decline, and parents are sending their kids away to other states: http://www.newgeography.com/content/00631-the-aging-paradise-ventura-county-california Watkins starts out on a dire note:

“You could say that Ventura County, just north of Los Angeles, represents what is best about California. Some people believe that its amenities – beaches, gorgeous interior valleys and parks – assure perpetual economic growth for Ventura County and California. They are wrong. There is trouble in paradise.”

“ People – particularly in the late 20s and early 30s – aren’t leaving Ventura County because amenities have suddenly disappeared. They are leaving because of a deficit in opportunity. Their leaving has consequences. Ventura County’s population is aging more rapidly than it otherwise would. The net result of these demographic changes is that Ventura County’s median real per-capita income is declining, while the County’s median age is rising. Real per-capita personal income has fallen almost $1,000 in only eight years, to $32,718 (Constant 2000 dollars) from $33,797 in 2000.

Ventura County’s demographic changes can be easily summarized. It is losing its middle class and becoming bi-modal. The young families that provide a community’s vigor and future have been leaving. There is no reason to believe that the trend will reverse itself. Ventura County home prices are still relatively high, while opportunity is declining.

The County is left with an aging and increasingly wealthy population along with the lower-income people that service the wealthy aged and the very-low-income farm workers. In a sense, it now resembles what we see in many expensive city cores – even if it is on the periphery!

This creates enormous risks. Most amenities are luxury goods. Poor people don’t invest in luxury goods. Generally, the lower-income population does not have the resources to provide leadership or invest in a community’s future. They have their hands full just taking care of their families, particularly in an expensive place like Ventura County. Their children will likely join the middle class, but in someplace more affordable like Texas, Arizona, or Nevada.

High concentrations of older people and declining incomes are often associated with deteriorating schools, amenities and increasing crime. The aged wealthy are not in Ventura County to invest in its future. They are there to consume it. They will not invest in the future – particularly if their children and relatives have gone elsewhere.

Ventura County is not unique. It is fairly representative of Coastal California. Communities like Ventura, Goleta [near Santa Barbara], and San Luis Obispo used to be middle-class communities that valued opportunity. Things are even more extreme in California’s elite playgrounds: Monterey, Malibu, and Santa Barbara. Populations in Monterey and Santa Barbara have actually declined over the past several years. Similar phenomena may be noticeable in other formerly elite suburbs within our most favored metropolitan areas.

Add, photos, Late Feb 2014 + of Thousand Oaks CAL Eichler Homes and Winding Boulevards
Add – Library Exterior and Interior
Add – Old City Hall with City View

Riverside and San Bernardino County Leaders – Living in Fear of Gays, Hispanics, Bankruptcy, Sprawl, Traffic, and Crime
I don’t want to write this title since it does not reflect my views and is politically incorrect, but unfortunately, it’s true for some government officials who arrive at work each day with these “fears.” As this section unfolds, it will become apparent why I chose this subject heading –

Riverside, San Bernardino, and other Inland Empire Counties could definitely grow. However, given their close proximity to Los Angeles and Orange County, traffic would increase. Due to their lack of high paying jobs, unemployment is very high compared to the coast –

September, 2014 Unemployment Rates, Bureau of Labor Statistics

Inland Empire –
Imperial County – 23.9%
The Coachella Valley (Palm Springs and Eastern Riverside County) – 11%
Kern County – 8.9%
Riverside county – 8.6%
San Bernardino County – 7.7%

Coastal Counties –
Los Angeles County – 7.8%
Ventura County – 6.4%
San Diego County – 5.9%
San Luis Obispo County – 5.4%
Santa Barbara county – 5.3%
Orange County – 5.1%

Since the mid-1990‘s housing bubble when housing was 80% overvalued, city and county leaders have to some extent become afraid of growth, especially since the City of San Bernardino has gone bankrupt.
Co

http://www.reuters.com/article/2014/11/06/us-usa-municipals-bernardino-idUSKBN0IQ2R620141106

RIVERSIDE Calif. (Reuters) – Bankrupt San Bernadino, California, might have to contract out essential services and place a revenue bond on the ballot in 2015 elections after a measure failed this week that would have lowered base pay for police and firefighters, said a lawyer for the city on Thursday.

Paul Glassman, San Bernardino’s bankruptcy attorney, told the federal judge overseeing the city’s bankruptcy that a rejection by voters on Tuesday of a pay-cutting ballot measure for police and firefighters was a “gamechanger” that had thrown the restructuring plan off track.

San Bernardino, a city of 210,000, 65 miles east of Los Angeles, declared bankruptcy in July 2012 with a $45 million budget deficit. “

Meanwhile, the City of Desert Hot Springs, in Riverside County near Palm Springs, is still having financial problems and may need to declare bankruptcy –

http://www.desertsun.com/article/20131116/NEWS01/311160051/Desert-Hot-Springs-Careening-toward-bankruptcy

The Coachella Valley – So Much Land, So Much Potential, but No Coherent Vision

The Coachella Valley remains an area of special interest to urban planners. Despite the opinion of many proponents of “megaregions,” the valley does not function as an economic extension of the rest of Los Angeles. People who live in the valley operate within the framework of radically different socilogical, economic, and even moral, paradigms than the rest of the L.A. metro. I do not want to sound politically incorrect, but the sociological realm of the Coachella Valley comprises groups that don’t like each other. But most importantly, there’s a huge gap between “the rich” and “the poor,” and unlike the rest of L.A., none of the following groups constitute a “middle class” –

1. young gay men working minimum wage jobs in tourism, with no opportunity for promotion (unlike Los Angeles gay areas)
2. older rich Republican gay men with spouses
3. second or permanent home for the Hollywood Elite
3. anti-gay ultra-conservative business owners
4. liberal Hispanics working minimum wage in tourism
5. migrant farm workers
6. morally conservative anti-gay / anti-Hispanic wealthy Republican retirees from L.A. and San Diego
7. most importantly, the Native Americans who were there first (Agua Caliente, Morongo, and Cahuilla Tribes).

However, the valley historically and still continues to be predominately agricultural, despite the misconception that cities such as Palm Springs are the realm of Hollywood Stars. Indeed, nearly 100% of all U.S. winter salad crops originate in the valley.

Due to these diverse demographic groups, the valley lacks a sense of community, and serves primarily as an agglomeration of open residential neighborhoods right next to highly guarded gated residential suburbs, reflecting the self-segregation of these various demographic groups. The demographic groups self-segregate to a much greater extent than anywhere else in metro L.A. Coachella Valley area City councilors and county commisioners must receive the support of all of these groups, in order to get elected.

Most importantly, wages are very low for most groups, since local officials have failed to foster the development of a middle class, by not offering an environment conducive to manufacturing and technology. Indeed, many family farmers make more money than Hispanics and gays working in hotels in Palm Springs.

Therefore, like many other tourist / agricultural based economies in the west, the region remains relatively poor. Median incomes are quite low, with a small class of wealthy retired individuals, along with rich tourists, supporting the low income service workers.

In addition, local officials have been reticent to approve big box stores, who pay excellent wages with benefits, to proliferate within the valley (such as Costco and REI). Even In and Out Burger, who pays $10+ an hour (more than McDonalds) is banned by all of the cities (except La Quinta, the unincorporated area of Thousand Palms, and the Morongo Tribe on their land in Cabazon).

Clearly, old money rules the valley, and business owners and developers are very conservative. Just like Lake Tahoe and other tourist towns, the property owners obviously support the candidates running for office. The candidates must run on a pro-gay, pro-Hispanic, pro-immigration platform.

As a result, wages are low, and those in the tourist industry are underpaid. Since conservative Republicans, or DINO’s (Democrats in Name Only), run virtually all political offices in the valley (and, the county), then there has been no effort to raise the minimum wage, unlike more liberal cities such as L.A., San Francisco, Santa Fe, and Seattle.

However, the same can be said for most conservative agricultural areas, that include cities that attract tourists, such as Bend, Oregon; San Luis Obispo, California; Ashland, Oregon; Reno, Nevada; and Redding-Lake Shasta, California. In all of these places, the newcomers in search of happiness and sunshine do not resemble the demographics of the extant Native Americans, conservative white ranchers, and Hispanic farm workers. These cities have not provided incentives for middle class jobs in manufacturing and technology. The end result is a permanent underclass of individuals who can only make minimum wage, have no promotion potential, cannot put anything in the bank, and can never afford a house in the Coachella Valey. Since they are underpaid, they receive more in public subsidies (i.e. food stamps and health care), than they actually pay in taxes.

In addition, new residents of these markets, tend to “wall themselves off” from the nearby metropolis. For example, in the Coachella Valley, except for commuters, there are virtually no connections between its institutions with the the L.A. metro or even the rest of Riverside County. Coachella Valley Hospitals, such as Eisenhower and Desert Regional Medical Center, do not refer difficult conditions to the very prestigious University of California Medical Centers, several of which are found only 2 hours away in metro L.A. and San Diego.

New residents, especially single gay men, are often perplexed by a variety of issues, i.e. there are no good paying jobs, there are no “In and Out Burger” chains, and medical care for their condition is scant. The rich are amazed that there are only two very small malls – Westfield Palm Desert, and, The River in Rancho Mirage. The other two malls, in Palm Springs, were closed. And, unbelievably, the 13 acre mall in historic downtown Palm Springs was bulldozed to the ground.

Photo –
Clearly, this scenario can be approved, but Riverside County and the Coachella Valley remain strongly anti-growth, with numerous environmental rules and high impact fees. The only way that residents of the Coachella Valley can become wealthier is by creating middle class manufacturing and technology jobs, eliminating the huge gap between relatively poor service workers, and the rich retirees and business owners.

However, for now, local leaders focus on tourism as a way to bring more jobs to the region. Local leaders are trying to revitilize downtown areas in order to create more jobs, such as the public-private partnership between the City of Palm Springs and local developer John Wessmann http://www.wessmandevelopment.com/art/pages/properties.html and La Quinta, this is not a long term solution to increase wages, since the workers in the new tourist establishments will be paid minimum wage.

While Palm Springs redevelopment is on hold, due to another lawsuit against the highly talented, motivated, yet controversial, developer John Wessmann, along with the Palm Springs City Council –

http://www.desertsun.com/story/news/local/palm-springs/2014/10/28/palm-springs-redevelopment-lawsuit/18087301/

La Quinta just elected a new mayor who will revitalize the downtown, with the Silver Rock resort –

http://www.lindaformayor.org/

http://www.silverrock.org/development_overview.html
____________
It is possible that the Coachella Valley, with a summer population of and a winter population of is the largest tourism / agricultural based economy in the United States. Indeed, this seasonality sets the market apart from Las Vegas and Scottsdale, who have major companies that employ the middle class year round.

The coachella Valley to the east of L.A. is essentially the opposite of Ventura County to the west of L.A. Median incomes are one third what they are in Ventura County. And, Ventura Company cities such as Thousand Oaks decided, decades ago, to develop around businesses such as AMGEN that employ the middle class. As a result, Ventura county forms an extension of Los Angeles (or, at least West L.A.), through the migration of executives to and from Thousand Oaks. In addition, median incomes of “service” workers are much higher than in the Coachella Valley, since they are paid more by their wealthy clientele in Ventura County – who is present year round, not just in the winter.

Finally, residents in the Coachella Valley are often transients. They quickly discover that there are no middle class jobs to feed their families, and they either move back to greater L.A. to rent overpriced apartments, or, eastward to find cheaper housing that they can actually own in Phoenix and Albuquerque. Or, they somehow endure grueling commutes to jobs in higher paying jobs in Orange and L.A. counties, commuting 2 hours or more, each way, every day.

Gays, who have frequently have interests in computers, science, and technology, move back to West Hollywood, San Francisco, or Seattle, or, eastward to emerging centers of technology such as Austin, Texas. Gays into the arts often move to Santa Fe, where the cost of living is 40% less, the minimum wage is $11 an hour, and new homes start in the 150‘s in greater Albuquerque-Rio Rancho-Santa Fe.

Meanwhile, the permanent population of the valley continues to live in poverty, suffering under a virtual Oligorachy of conservative city and county leaders, who refuse to bring middle class jobs, cancel impact fees, and raise the minimum wage.

As for the definition of oligorachy, this layman’s definition from wisegeek.com perfectly describes the political environment of the Coachella Valley, and Riverside county in general!
http://www.wisegeek.org/what-is-an-oligarchy.htm#didyouknowout

An oligarchy is a form of government in which most of the political power effectively rests with a small segment of society, typically the people who have the most wealth, military strength, ruthlessness or political influence. The word “oligarchy” from the Greek words olígos, which means “few,” and archo, which means “to rule”. Some political theorists have argued that all societies are inevitably oligarchies, regardless of their supposed political system.

How Oligarchies Form

Oligarchies are often controlled by a few powerful families whose children are raised and mentored to become inheritors of power, often at some sort of expense to those governed. In contrast with aristocracy — or government by the “best” — this power might not always be exercised openly, with some oligarchs preferring to remain “the power behind the throne,” exerting their control through economic means. Unlike plutocracy, oligarchy is not always a rule by wealth, either, because oligarchs can simply be a privileged cadre. It also has been suggested that most communist states fit the definition of oligarchies.

As for a a less technical definition of Palm Springs, free from economic terms such as “impact fees,” my readers who are not urban planners will love this one from Urban Dictionary. I hate to reprint this, but as with all of us in urban planning, I’d like to see the Coachella Valley reach its full economic and sociological potential. This can start by establishing term limits, which would gradually decouple the link between the oligarchical leaders from those who put them into office. And, the Coachella Valley Association of Governments should be dissolved, and the Southern California Association of Governments should control the Coachella Valley, in order to foster business connections between L.A. businesses and the Coachella Valley –

http://www.urbandictionary.com/define.php?term=Palm+Springs

“ A place that conjures up “life styles of the rich and famous”, but the harsh reality is Palm Springs is the new Southwestern United States ghetto. The weather is hot and miserable eight months out of the year. The other four months are blowing sand. The Coachella Valley. is rift with over-development and downtown P.S. is no exception vacant store fronts etc. The freeway into the Coachella Valley is littered with garbage which shows the amount of pride residents have in their community. This is no surprise since the area is full of tweekers and crime. Famous for its many golf courses: aka: prison resorts to keep said tweeker rift raft out while projecting a resort lifestyle reminiscent of a Japanese interment

Hell, well pretty darn close to it in the summer. In the “winter” lots of old rich people visit and drive slow. Best place to torture a teenager because there is nothing to do. The strip has been dead for 15 years. Everyone is asleep by 8 because 90% of the people are over the age of 95.

Fear of Gays and Hispanics in the Coachella Valley

The Coachella Valley, in eastern riverside county, (Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, La Quinta, Indio, Coachella), has a large gay population. However, local leaders, who are mostly Republican and morally conservative, are “concerned” about more gays moving in, since they are single and frequently unemployed upon arrival. Unlike gay friendly cities such as Seattle or San Francisco, there are no readily available jobs available upon arrival for gays. The unemployment rate for ages 25 to 34 in the entire valley is 50%, compared to a national average of 25%.

Leaders also are “concerned” about the Hispanic immigrants working in tourism and agriculture, who demands more services than they pay in taxes. That is, of course, the fault of the leaders. They should allow Hispanics to work good construction jobs, by slashing the high impact fees required under the antiquated RCIP passed in 1999, which was partially responsible for the County’s first housing bubble.

Riverside County assesss a transportation fee of _____.

The city of Palm Springs has a large gay population that is relatively poor, and unfortunately, the City is neither gay affirming nor gay welcoming. This is demonstrated every weekend by the clash between the gay poor locals working in tourism, compared to the rich, elitist, and frequently demanding gay tourists who stop by every weekend from Los Angeles and San Diego. Hispanics play a similar role working in the tourism industry, and both groups end up renting old, expensive, run down apartments, although not as expensive as my previous example of Thousand Oaks

Sadly, one’s education level in the Coachella Valley makes no difference as to one’s chances of getting a job. Of 11% who are unemployed (it was 5% in 2007), 25% have less than a high school education; 25% have a high school education; 25% have some college; and 25% have a college degree. HARC says this is due to the Valley’s scarcity of jobs requiring a college degree.

=====

Unemployment rates by age group are the reverse of most metropolitan areas. 37% of individuals age 25-34 are unemployed, compared to 25% nationwide. 20% of those 45 to 54 are unemployed, while only 5% ages 18 to 24 are unemployed.

Due to low median incomes and “Covered California” (California’s version of the Affordable Care Act, i.e. “Obama Care”), it is difficult to see a primary care provider. Coachella Valley residents get free visits under Obama Care to primary care doctors, but only if they make less than $15,856. In contrast, those employed 40 hours a week at $9 an hour make $18,720 a year, must pay $24 a month to get coverage WIHOUT a primary care doctor, but MUST pay $55 a month to get a primary care doctor. That expensive premium is 5% of a minimum wage worker’s annual salary. Therefore, people do not sign up for obama care and there are high rates of undiagnosed diabetes, untreated depression, and lots of pot and cigarette smokers who would like to quit, but cannot afford to see a primary care doctor to do so. In addition, specialists from Los Angeles in Neurology and Psychiatry do not move from L.A. to the coachella valley, due to horrible reimbursement rates from insurance companies. Therefore, a Single Payor Plan, following 20024 and 2008 Dennis Kucinich’s plan, would be most appropriate for Riverside county, especially The Coachella Valley.

It appears that the most conservative cities in the county do not want to grow, and wish to retain the status quo. They might be fearing problems from increasing Hispanic and gay populations. For example, the City of Calimesa’s web page states that the town’s primary goal is to ______

====

Certainly, the Coachella Valley could continue to grow as a very low density area, due to large lot zoning in many of its cities (i.e. Palm Springs, Palm Desert, and La Quinta). In addition, the Coachella Valley already has an efficient surface street grid pattern and transportation network, and virtually all new boulevards have three lanes in each direction.

However, the valley includes hundreds of for lease and for sale signs, even for properties of several hundred acres. While many of these properties are for lease by the local Agua Caliente Indians, many are privately owned.

photos –

To make matters even worse, Riverside County maintains its antiquated RCIP, with high impact fees that discourage development. The Coachella Valley (Palm Springs, Palm Desert, La Quinta, etc.) could easily support several hundred thousand more households. However, growth has slowed, and new homes are too expensive, going for $350,000 and higher.

Riverside County, through high impact fees under its RCIP, has failed to provide enough incentives to bring high paying jobs to the region, and they refuse to raise the minimum wage. Therefore, businesses prefer to locate elsewhere. For the existing population, this is unfortunate, since median salaries are not rising. The only way to improve one’s financial status is to move. Many gays, and Hispanics, ultimately move back to places with a middle class, such as Riverside, Los Angeles, Phoenix, and Albuquerque. Consequentially, the Coachella Valley does not have a high rate of entrepreneurs, since people don’t stay around that long – it’s a transient area with a small middle class, in the same category as Flagstaff, Santa Barbara, or Chico.

To make matters worse, leaders of Palm Springs and Palm Desert don’t want a large populations of gay single men and Hispanics making minimum wage in their cities. Instead, they only want rich, retired, drug free wealthy gay retirees from the coast, and both gay and straight Canadian couples. Therefore, they only issue permits for expensive homes and condos for retirees. Yet these service workers in the hospitality industry who serve the rich cannot afford to purchase these new homes and condos.

Overpriced Housing in the Coachella Valley – Only for the Rich Retirees and Wealthy Canadians – Not for Singles

New housing developments in Palm Springs and the Coachella Valley are very expensive, from the mid 200‘s to well over a million, as shown by this table in an article by Jim Zang in “Canada South,” the desert’s first magazine for Canadians –

Insert Table –

(The data for this publication are from http://desertrealestate.com/)

Resale prices are also expensive in the Coachella Valley. The average resale prices in August, 2014 were unbelievable – $485,000 for a single family home, and $256,000 for an attatched structure. At the lower end of the spectrum, something for $300,000 is only 1500 square feet, according to the magazine.

Rich retirees who purchase these properties are surprised to find a huge gap between the rich, and the poor, along with few retail shopping options.

Insert Table –

Canadians have plenty of money to invest in Palm Springs, due to a strong economy in Alberta and Saskatechwan based on oil, natural gas, agriculture, with a concomitant influx of people to southwestern Canada.

In sharp contrast, the Albuquerque-Rio Rancho and Santa Fe markets both contain a high percentage of Hispanic and gay service workers. However, these markets do not have urban growth boundaries, and they all cut impact fee rates. If someone is gay and single, they can afford to buy a home in New Mexico, but not in Palm Springs In addition, Santa Fe raised its minimum wage to $11 an hour.

(Of course, there are wealthy, elitist gay Republicans who run places like Palm Springs, and, middle income humble gay liberal Democrats who run places like Santa Fe.)

In sharp contrast, Rio Rancho, the general fund has increased due to slashing impact fes, see -http://www.chuckwilkins.com/pulse-of-the-city.html
Wilkins Hispanics and gays can afford brand new homes as low as $120,000 in these markets.
In addition, other low density cities west of Palm Springs on I-10, such as Calimesa and Yucaipa, conveniently located along I-10, could definitely grow. However, both suburbs, just like Ventura County bedroom communities, maintain low densities and preserve farmland. Insert Calimesa and Yucaipa Zoning maps –

One additional low density area that is overlooked is the high desert near Joshua Tree National Park. The cities of Yucca Valley and 29 Palms can definitely grow. While 29 Palms and the unincorporated area of Joshua Tree are both anti-growth, the Town of Yucca Valley wants to grow, and has recently built a Home Depot, Superwallmart, and other big box retailers.They are completing a sewer system, as required by California state law. After this is completed, they would like to grow much more. They would like Costco to come, but Costco requires that the entire high desert area reach 100,000 persons. That will occur in the next decade or two, as people flee the coast in search of homes with private yards.
Here is a “dashcam view” on You Tube from Yucca Valley, in the high desert, down to Palm Desert, in the low desert. As you can see, the entire area is very low density, with lots of buildable land –

Finally, nearby high desert areas in L.A. county, such as Lancaster and Palmdale (in the Antelope Valley), along with Victorville, Adelanto, and Barstow, all in the high desert, can grow more.
_______________________________
Families Don’t Like the Inland Empire

Most people who desire cheaper homes with private yards find the “inland empire” undesirable, for several reasons. First, schools are not as good as cities along the coast. Therefore, some lower income families prefer to stay in expensive apartments on the coast. Second, with rare exceptions such as Palm Springs and Yucca Valley, the subdivisions consist of cookie cutter homes, with gravelscaping and few native trees. Third, there are few good paying jobs in the desert, and commutes to higher paying jobs in Orange and L.A. counties are tremendous. Therefore, inland empire cities generally have a less educated workforce, working in jobs that pay less such as sales and hospitality.

Most people prefer luxurious master planned suburbs in the trees near the coast, such as Thousand Oaks or Irvine, compared to obscure desert or chaparral communities, no matter how nice the nearby mountains are, such as Yucaipa or Yucca Valley. Indeed, in the 1990‘s L.A. recession, the recovery was two tiered, with high technology, good paying jobs going to Irvine and Thousand Oaks
(Fulton 2001).

In contrast, free trade agreements signed by Bill Clinton decreased the manufacturing jobs in San Bernardino and Riverside counties (show figure). Today, the largest two employers in Riv and San Bern Counties are government and health care.

===============

Wealthy slow growth communities such as Thousand Oaks will probably never change, and always be expensive. College graduates will concentrate in anti-growth communities since they work at places such as AMGEN in Thousand Oaks.

How to Make the Inland Empire More Attractive to Families

How can we improve these smaller, remote, high desert places to make them more appealing to families who want good paying jobs, good schools, and homes with private yards? Some, but not all, city councilors in the inland empire want this for their current and future constituents. They want manufacturing and technology jobs, in order to attract coastal residents who have skills. Otherwise, those with skills will leave their expensive apartments on the coast for cities that are attracting high tech companies, such as Reno, Rio Rancho, and Phoenix.

Victorville and Barstow are bringing in high tech jobs in aerospace and other industries (see ______________).

City councilors in desert cities should also pay attention to special features in expensive master planned suburbs like Thousand Oaks that people enjoy, such as parks, open space, bike lanes, community athletic facilities, and performing arts centers.

______________________________

Los Angeles and its Suburbs have “Failed”

A city, irregardless of its size, has failed when it has a “central area” of impoverished people living in high crime, who cannot afford to buy a home in the suburbs. They are unable to escape, trapped by low incomes that do not allow them to make a down payment on a nice home in Irvine, Thousand Oaks, or even lower priced Yucaipa within the foothills of the San Bernardino Mountains.

Furthermore, government policies, such as affordable housing into “smart growth towers,” further entrap these individuals in their high density crime ridden downtown areas. Smart growth policies concentrate these individuals into areas where they cannot escape, and are dependent on government housing subsidies.

While some people in downtown L.A. want to live in high density condo housing, the majority would prefer home ownership in the L.A. suburbs. Therefore, tactics of exclusionary zoning that drive up housing costs, such as impact fees, urban growth boundaries, building expensive “smart growth towers,” and only issuing permits for expensive housing for the rich, are regressive policies constituting “exclusionary zoning.”

Urban planners and city councilors who participate in these schemes have denied millions of Americans the dream of home ownership in the last two decades. Their policies have also caused the largest housing bust in U.S. history. They have also ignored much of the literature on the consequences of urban containment, which is frequently referenced on this web site.

Clearly, new approaches are needed in Southern California to decrease poverty and increase home ownership. The first step would be to repeal these regressive policies, especially smart growth and urban growth boundaries.

In summary, all these factors – the recent housing bust, foreclosures, the new housing bubble, and impact fees, demonstrate that low density suburbs surrounded by open space are sustainable for decades. For some reason, these low density cities such as Thousand Oaks and Irvine ultimately develop the best schools, along with significant housing appreciation. One cannot blame the motivations of the anti-growth residents of Irvine, Palm Springs, Palos Verdes, or Thousand Oaks, since they do not want the economic problems of Los Angeles to enter their cities.

Therefore, the only way to provide affordable housing in southern California is to create more, not less, master planned, auto- and family- oriented cities with large yards in undeveloped areas, well away from existing suburbs and large metro areas. In Southern California, this could occur near cities such as Santa Barbara, San Luis Obispo, Riverside, San Bernardino, and Palm Springs.

The current trend to increase density and concentrate people into expensive smart growth towers, built for wealthy Caucasian renters, in places such as Hollywood and Ventura,

Caveat – Not Only the Coachella Valley, but Also Metro L.A., Simultaneously Sliding Into Urban Decay

But even Los Angeles faces similar problems to The Coachella Valley. William Fulton, in his 2001 Afterwood to his book The Reluctant Metropolis, writes:

“If the experience of other cities is any guide, it would seem that Angelenos will have to wait until they feel the slow and agonizing slide into urban decay, before they snap out of their delirium. This has certainly been the case in New York, Cleveland, and any number of other cities that spent decades denying their urban problems before they began to address them. Hatched as a place to escape urban problems, L.A. may have a tougher time than most in shedding its cocoon-citizen tendencies [i.e. he means, in part, self-segregation of the demographic groups].”

Indeed, in the Coachella Valley, this L.A. problem involves self-segregation within gated communities, who want nothing to do with the working poor in tourism and agriculture, who live in old, run down apartments.

But the Coachella Valley lacks something that the rest of the L.A. metro has. Fulton continues –

“The most amazing thing about L.A. is the way it retains its youthful vibrancy. After a century of striving, L.A. is a rich, powerful, and mature place that can make a legitimate claim to being the most important metropolis on Earth . . . L.A. retains a raw energy so palpable that you can feel it just by walking – or more accurately driving – down the street. It’s an energy that sizzles equally in the crowded immigrant districts and the tony neighborhoods. It’s the most endearing and exciting quality this sprawling metropolis has, and to be perfectly honest, I can’t quite figure out why it persists. But thank goodness it’s there.”

But will the Coachella Valley ever develop this youthful energy? Fulton continues, again, in reference to L.A. –

“So maybe Los Angeles will succeed in producing, at last, a civic culture that is both enervating and enduring – one that can serve as the foundation for the very kind of regional citizenship and sense of common destiny [that it currently lacks] . . . This would be an unexpected development, of course. But even today, anything is possible in L.A. Which is not something you can say about every reluctant metropolis you run across.”

And, the Coachella Valley could choose to join the rest of L.A., if it ever wants to, to form a giant megaregion extending 150 miles, from the beaches of Ventura, to the shores of the Salton Sea.
Add Photos Late Feb 2014 – Ventura Smart Growth

will only create more problems with air pollution, crime, traffic congestion, and health conditions related to urban containment.

Insert Table south LA on health problems

The intelligent suburbs recognize this and limit their growth, such as Thousand Oaks. But this raises rents and home prices, excluding newcomers to their cities. Therefore, the only solution is to eliminate county urban growth boundaries, and create new master planned cities like thousand oaks along US-101, I-10, I-15, SR-118, SR-33, SR-62, and elsewhere.

Southern California County

UGB maps have not been provided here and will be included when this post is updated.

Where is growth going?

Due to growth controls and high impact fees and business taxes, growth has slowed in the metro L.A. region and moved to other southwest metros, such as Reno, Phoenix, Salt Lake city, and Albuquerque. However, there is at least one place left that is still not anti-growth …. central San Bernardino County. This area includes cities such as Hesperia, Adelanto, Barstow, Victorville, and Apple Valley. And, the growth is balanced, encompassing residential, commercial, and even manufacturing and aerospace. Examples include …

Manufacturing:
– Dr. Pepper / Snapple
– Rubbermaid
– United Furniture

High Tech –
-Aerospace – Boeing, General Electric, and several others
-The Southern California Logistics Airport, One Million Square Feet, with the 2nd longest runway in the US
-Three million square foot Aluminum Production facility in Barstow –
– 800,000 square foot commercial / retail space in Barstow
– 1200 Acre Industrial Park
-WalMart distribution Center
-600000 square foot shopping center from Lewis Retail Centers

Much of this growth could have gone to Riverside county, especially in the Coachella Valley. However, the county has not recruited these employers, who chose locations 70 miles to the north in this high desert of San Bernardino County, between L.A. and Vegas.

Indeed, it could be that the Spanish Trail, that originally went all the way to Los Angeles, may reverse its course as new businesses appear in the Mojave Desert in San Bernardino County. While coastal communities will continue to gentrify, young people will migrate eastwards out of the Los Angeles basin. Their talents will not be utilized by existing L.A. area employers, who instead may have to recruit wealthy young people from the east coast. Therefore, the L.A. metro area, through decades of excessive growth regulations and high taxes, has failed to provide an environment conducive to entrepreneurship and household formation for its own children. As a resident, photographer, and schlorar of this region, I am not optimistic for the future of L.A., although I see hope on a variety of horizons to the east and northeast.

Closing – LA Cities need to Collaborate to increase employment and housing affordability

Oligorachy –

http://www.bbc.com/news/blogs-echochambers-27074746

SLOW Growth Defined, Thousand Oaks, California ?(Ventura County)

By Dan Del Campo

Candidate for Council Member; City of Thousand Oaks; 4 Year Term

This information is provided by the candidate
The three factors for slow growth progression in Thousand Oaks are: The General Plan, which is the cornerstone of our city’s constitution. The founding planners at the beginning of incorporation in 1964 believed strongly in the inclusion of open space preserved permanently and Measure A voted for incorporation into the General Plan in 1978. These three factors perform as three branches of Government providing a checks and balance for planning in Thousand Oaks.
Slow growth in Thousand Oaks was not invented in the last ten to fifteen years. It was pre ordained by the founding city planners during the incorporation process in 1964. While the original plan called for a city population cap of 200,000 or so, sitting councils from that point forward had the good vision to seek methods for reducing that number. They had the insight and foresight to recognize that between the goals of open space and developable land, the population holding capacity of the city had to be significantly lower when build out occurred forty or more years later.
We are fortunate in Thousand Oaks that the founding leaders believed strongly that open space would play a crucial role in maintaining the quality of life and the semi-rural environment that exists today. They established a process of combing development agreements with developers and the gifting of open space within and around projects. Projects such as the Wildwood homes that are incorporated with the Wildwood Mesa were a product of that process. This insured that density would not be maximized, but minimized.

In 1978 Measure A was placed on the ballot and voted on by the people. Measure A was the next logical tool for controlling growth for the next 20 years, with the ability of the Council to extend the measure. The Council in 1999 did in fact extend Measure A. Voters approved Measure A into the City’s General Plan. Measure A regulated the number of housing allotment points of 500 per year and uses criteria that ranks the validity of the project. This processe addressed the quality of the project which demonstrated a need for additional housing.

The most current example of slow growth planning is best illustrated by examining the four planning years of 1999, 2000, 2001, and 2002. During this period there were 2,000 total housing allotments available for Council approval. However, during my four years of tenure, the cumulative allotments approved were under 500 in total. There are no substantial developments such as Dos Vientos, left within the boundary limits of the City. There are approximately 1,500 to 1,800 housing allotments left under the General Plan. This year alone there were only 38 approved. Using the last four years and averaging them, the remaining allotments would be spread out over the next 10-15 years. The total number of housing units was set at 50,000. It is important to note that it is unlikely the City will reach that number due to reductions through acquisition of land for open space.

Finally, I as a Councilmember support the proposal of reducing the annual housing allotments to a number of 250 per year or less. This will continue the tradition of slow growth planning in Thousand Oaks for the foreseeable future. It is that kind of slow growth vision that I have believed in and supported during my twenty four years in the community.

To read about other growth issues got to: http://www.dandelcampo.com

To read about other growth issues got to: http://www.dandelcampo.com

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2 comments on “Why Los Angeles is So Expensive – Growth Management and Housing Bubbles in Southern California (November 22, 2014)

  1. Howard
    2016

    Sometimes hard to tell what side you’re on. Also, why are good jobs not flocking to the Inland Empire?

  2. Howard
    2016

    Maybe the Coastal Commission should loosen up, but housing really close to the beach, or in hills with views, will never be really affordable no matter how much there is. So I can’t shed many tears about the Coastal Commission. Three to five miles inland and beyond, another matter.

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