A frequent and entirely valid point made by representatives of public sector unions is that their membership, government workers, need to be able to afford to live in the cities and communities they serve. The problem with that argument, however, is that nobody can afford to live in these cities and communities, especially in California.
There are a lot of reasons for California’s high cost of living, but the most crippling by far is the price of housing. Historically, and still today in markets where land development is relatively unconstrained, the median home price is about four times the median household income. In Northern California’s Santa Clara County, the median home price in October 2014 was $699,750, eight times the median household income of $88,215. Even people earning twice the median household income in Santa Clara County will have a very hard time ever paying off a home that costs this much. And if they lose their job, they lose their home. But is land scarce in California?
The answer to this question, despite rhetoric to the contrary, is almost indisputably no. As documented in an earlier post, “California’s Green Bantustans,” “According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. Think about this. You could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14% of it. If you scattered those homes among all of California’s farmland and grazing land – which is far more likely – you would only use up 3% of it. Three percent loss of agricultural land, to allow ten million people to live on half-acre lots.”
So why is it nearly impossible to develop land in California? The answer to this is found in the nexus between financial special interests, who benefit from asset bubbles, and powerful environmentalist organizations who apparently view human settlements as undesirable blights that should be minimized. In the San Francisco Bay Area, to offer a particularly vivid example, the Santa Cruz mountains are being targeted to be cleansed of human habitation. Instead of creating wildlife corridors, they are eliminating human corridors. Is this really necessary?
Human Cleansing – The Evacuation Plan for the Santa Cruz Mountains
Do you want to live in the mountains?
Forget it. Only billionaires and non-humans allowed.
If you are familiar with the San Francisco peninsula, you will see that the area proposed for the “Great Park of the Santa Cruz Mountains” encompasses nearly the entire mountain range. A coalition of environmentalist organizations and government agencies are proposing to create a park of 138,000 acres, that’s 215 square miles, in an area that ought to make room for weekend cabins, mountain dwellers, and vacation communities. Why, in a region where homes cost so much, is so much land being barred to human settlement? The pristine stands of redwoods in Big Basin and Henry Cowell State Park were preserved a century ago. There is nothing wrong with preserving more land around these parks. But do they have to take it all?
This is far from an isolated example. Urban areas in California, primarily Los Angeles and the San Francisco Bay Area, have been surrounded by “open space preserves” where future development is prohibited and current residents are harassed. Ask the embattled residents of Stevens Canyon in the hills west of the Silicon Valley, if there are any of them left. Once you’re in a “planning area,” watch out. Backed by bonds sold to naive voters, endowments bestowed by billionaires, and the power of state and federal laws that make living on any property at all increasingly difficult, the relentless land acquisition machine continues to gather momentum. Anyone who thinks there isn’t a connection between setting aside thousands of square miles in California for “habitat” and the price of a home on a lot big enough to accommodate a swing set for the kids needs to have their head examined.
It doesn’t end with open space that is actually purchased, cleansed of humanity, and turned into government ran preserves for plants and wildlife, however. Acquiring permits to build on any land is nearly impossible in California. Land developers who fight year round to try to build housing for people shake their heads in disbelief at the myriad requirements from countless state, federal and local agencies that make the permit process take not months or years, but decades. And it isn’t just farmland, or wetland, or special riparian habitats where development is blocked. It’s everywhere. Even semi-arid rangeland is off limits for housing unless you are prepared to spend millions, fight for decades, and have the staying power to pursue multiple expensive projects simultaneously since many will never, ever get approved.
What is the result? Here is an aerial photo of a subdivision in the Sacramento area, one that every hedge fund billionaire turned environmentalist in California – especially one who runs cattle on his own special 1,800 acre fiefdom in the Santa Cruz mountains on a property that just happens to be in a “non-targeted area” - might consider living in for the rest of his life in order to understand the human consequences of his ideals – cramped homes on 40′x80′ lots, at a going price in October 2014 of $250,000. Notwithstanding being condemned to a claustrophobic existence at a level of congestion that would drive rats in a cage to madness, $250,000 is a pittance for a billionaire. But for an ordinary worker, $250,000 is a life sentence of mortgage servitude. And even this, the single family dwelling, is under attack by “smart growth” environmentalists and public bureaucrats who prefer density to having to divert payroll and benefits to finance infrastructure. The excess! The waste! Stack them and pack them and let them ride trains!
Priced to Sell at $250,000 – Housing for Humans on 40′x80′ Lots
No mountain air, ocean breezes, or open space for the little people.
Buy a permit, get in line, visit for a day, but then come home to this.
When public employee union leadership talk about the importance of paying their members a “middle class” package of pay and benefits, they’re right. Government workers should enjoy a middle class lifestyle. But they need to understand that the asset bubbles caused by high prices for housing are not only making it necessary to pay them more, but are also creating the inflated property tax revenue that they rely on for much of their compensation. They need to understand that the phony economic growth caused by everyone borrowing against their inflated home equity is what creates the stock market appreciation that their pension funds rely on to remain solvent. And they need to understand that all of this is a bubble, kept intact by crippling, misanthropic land use restrictions that hurt all working people.
There is another path. That is for public employee union leadership to recognize that everyone deserves a chance at a middle class lifestyle. And the way to do that is not to advocate higher pay and benefits to public employees, but to advocate a lower cost of living, starting with housing. One may argue endlessly about how to regulate or deregulate water and energy production, essentials of life that also have artificially inflated costs. But as long as suburban homes consume less water than Walnut orchards – and they do, much less – build more homes to drive their prices way, way down. There’s plenty of land.
Ed Ring is the executive director of the California Policy Center, where this piece first appeared.
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California's Alleged "Green Bantustans" & Remote Grazing Lands
The logic of the argument in this article escapes me. What does setting aside open space in the steep, mostly uninhabitable Santa Cruz Mountains have to do with affordable middle class housing?
Also, the argument regarding converting low value grazing lands in many parts of California into middle class housing also is missing much logic. First, most of the allegedly available grazing lands are generally around the fringes of the Sacramento and San Joaquin Valleys, e.g., very long commuting distances from where people want to be, e.g., Sacramento, the Bay Area, greater Los Angeles and surrounding counties, San Diego and so forth.
Second, there are relatively little restrictions on building in many relatively remote areas such as the Mojave Desert around the Antelope Valley, Victorville and other inland valleys such as around Hemet and other locations, a 2+ hour drive from Los Angeles and Orange County in both directions. The problem is that most people don't want to live that far out, given the long commutes and the requirement of living in your car 25%+/- of your waking hours.
Third, where is the water to support all this supposed to come from? And I also challenge the claim that suburban houses at 4-5 units per acre use less water than walnut orchards, particularly orchards that have converted to drip irrigation. And much of the grazing lands don't use much water at all, meaning new housing would cause skyrocketing water demand in such areas.
Fourth, another huge problem is providing transportation infrastructure to relatively remote areas where large swaths of vacant land exist. In Southern California, as previously mentioned, these are areas such as the Antelope Valley, Victorville and environs, as well as inland remote valleys in Riverside County.
In the north, this includes San Joaquin County east of the Altamont Pass and perhaps the hilly areas of Solano County north of Contra Costa County across the Sacramento/San Joaquin Rivers and east of Fairfield and Vacaville. However, opening up these areas further will require huge investments in the tens of billions, to provide massive increases in freeway and/or transit capacity. In fact, one purpose of the current High Speed Rail project is to greatly speed up transportation between the Antelope Valley and the Los Angeles Basin, which certainly would make living in Lancaster and Palmdale more plausible for hundreds of thousands of more people.
However, just the Lancaster-Los Angeles segment of HSR is likely to cost $25-$30 billion or more.
Much faster rail service between San Joaquin & Stanislaus Counties and the Bay Area/Silicon Valley would cost several billion, which is probably feasible; dramatically improved access to Eastern Solano County would require something like a $15-$20 billion investment in new bridges, freeways, BART extensions, etc. to make massive development in the area feasible.
In any case, such infrastructure investments would probably make Ed Ring's vision of $250,000 housing prices highly unlikely, through huge commuting costs and massive infrastructure debt in effect adding tens or hundreds of thousands in costs per unit. Some of this investment makes sense (e.g., Altamont), but this is no general panacea for the many millions of people who want to live "close in" with commutes of less than 3-4 hours per day.