How I Caused California’s Housing Crisis

(Bloomberg Opinion) -- The Southern California housing crisis turns out to be my fault — indirectly, that is.

When my husband and I moved to Los Angeles in 1986, we were thrilled with how easy it was to find a place to live, even on the desirable Westside. Compared to Boston, where we’d previously been, apartments were plentiful and reasonably priced. Although we rented a place in a mid-century fourplex, the city was full of new construction, including sizable apartment and condo complexes.

Unbeknownst to us, however, the backlash had begun. Horrified by the rapidly changing urban landscape, longtime residents were organizing to block new construction.

“What I am seeing now — the trees coming down, the hills bulldozed and the cheap apartment houses and stores going up, with no regard for the surrounding neighborhood — breaks my heart,” a San Fernando Valley activist told Los Angeles Times architecture critic Sam Hall Kaplan, himself a cheerleader for the growth-control movement. A homeowner in Highland Park, one of L.A.’s first suburbs, complained about "the bulldozers knocking down the fine old California Craftsman-styled bungalows here to put up those cheap, three-story, ticky-tacky stucco apartment houses."

That fall, anti-growth initiatives were on ballots across the state. Most succeeded. Aside from enacting specific policies to slow development, they sent a message to elected officials: Approve new building projects at your peril. The result, three decades later, is a housing crisis.

The irony is that it was all an overreaction to a passing trend. In the 1980s, the defense buildup under President Ronald Reagan gave an enormous boost to the state’s economy. It directly benefited Southern California’s large aerospace industry and spilled over to technology companies in Silicon Valley, which was in the midst of the personal-computer revolution. As Texas suffered through oil and real estate busts and the Midwest became the Rust Belt, jobs of all sorts were plentiful in the Golden State.

The result was a surge in new residents. California’s population grew 26 percent in the 1980s, to nearly 30 million. Los Angeles County alone grew by 1.4 million, compared with 445,000 in the previous decade and 1 million in the 1960s. Most of that growth came not from residents having children but from adult migration, particularly of younger baby boomers like my husband and me. Some came from other states, some from Latin America and Asia. Regardless of origin, they were all outsiders crowding up paradise. Longtime residents just said no.

Then the Cold War ended and the state’s economy, particularly around Los Angeles, went into a prolonged slump. Aerospace jobs vanished. So did many other manufacturing businesses, in part due to the pressures of tighter environmental regulations.

“This rapid reversal of economic fortunes was a whipsaw on the psyches of all residents in the region, including homeowners who saw their house values sharply decline after the previous decade’s optimistic gains,” writes demographer Dowell Myers of the University of Southern California’s Sol Price School of Public Policy. “The great majority of every racial or ethnic group saw life in Los Angeles turning for the worse.” The downturn was particularly hard on younger workers, especially black and Latino men.

The result was a dramatic slowdown in population growth. L.A. County grew by only 656,000 in the 1990s and 299,000 in the 2000s. The area ceased to be a Mecca for young households. Population growth increasingly came from births, not migration. “In the longer view of things, the 1980s boom was quite the exception,” writes Myers.

The recession of the 1990s depressed housing construction. When the economy turned up, it was harder than ever to get new projects approved, especially in major cities. Homebuilding instead sprawled into outlying areas where middle-income families took on long commutes and risky mortgages to claim their piece of the California dream. Places like San Bernardino County, east of Los Angeles, still haven’t fully recovered from the real estate crash.

But the big cities have. And now they have a housing problem.

Outsiders are no longer flocking to California. For the first time in its history, a majority of the state’s residents are natives. But native-born Californians tend to want to stick around — preferably not in their old bedrooms. To form their own households, millennials need places to live. The growth restrictions put in place by residents upset by newcomers like me are putting houses and apartments out of reach for all but the richest of the younger generation. If California doesn’t want to turn into an expensive retirement village, it needs to make room for its children.

Monday: The trick to adding new housing? Finding policies that appeal to the interests of homeowners.

©2018 Bloomberg L.P.

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