When California lawmakers tried earlier this year to force local governments to allow four or more homes on land zoned for single-family residences, fierce pushback from suburban communities stopped the plan in its tracks. For many, the long-standing neighborhood template of a home, backyard and garage on a lot was too intrinsic to the California lifestyle to upend. LA Times, October 10, 2019.
Last night, yet another progressive city — Berkeley — concluded exclusionary zoning isn’t progressive. Huge win in our fight to end a system that causes segregation, makes housing unaffordable & worsens climate change. Will SF also be progressive on housing & take this step? A Tweet by California State Senator Scott Wiener @Scott_WienerCA State Senator. Chair, Housing Committee. Former Chair, Legislative LGBTQ Caucus. Housing/transit/climate/criminal justice reform/health. Democrat. San Francisco, California scottwiener.com
During my working life, which every year seems to fade further into the opaque fog of the past, I worked in the homebuilding industry. Every business, everything, really, is subject to the cyclical swings of the economy but homebuilding is more susceptible than most, everything is leveraged but the leverage that makes it possible to buy a house worth way more than a person’s yearly income also works backward. When interest rates change, house prices also change because, to the average person, it is the monthly payment that governs affordability.
Builders build what they think the greatest number of people want (times sales price, very roughly). That often puts builders at odds with what the city and neighbors want and the zoning requires. In California, at least, Merchant Builders spend a lot of time and effort getting the zoning changed.
As an aside, sometime in the mid to late 1970s, I went to the annual Homebuilders Show in Houston. Most of the people at the Show – all the people I knew anyway – were Merchant Builders. Merchant Builders are builders who build buildings, large groups of houses in our case, for sale, and the Convention was probably like every other convention except that we spent a couple of days driving around the suburbs looking at other people’s new houses. That was almost fifty years ago and I still remember four things. It was raining off and on and every time it rained, the construction crews would stop working, get in their cars or trucks to wait for the rain to stop, and then, when the rain did stop, get out of their cars and start working again. When I was a carpenter in California, on the unusual day that it rained, we just went home. In Houston, we went to one upscale project and I was shocked at how big the houses were, how detailed, with the doors and cabinets even being antiqued, how they had no fences – because nobody spent any time outside – and how the Houston suburbs looked like the San Jose suburbs. The latter was the most surprising because Houston had no zoning. End aside.
San Jose had zoning but the developers were always fighting it. I particularly remember, in 1972, we were building a project in what had been known as East San Jose and was now known as North Valley (because East San Jose was considered a barrio, we merchant builders changed the name to North Valley to class it up). We were building a tract near the corner of Capitol and Hostetter and it was zoned to have two gas stations on Capitol, one on each side of Hostetter and we were trying to get the Zoning changed because we didn’t want gas stations next to our houses. I was the General Superintendent at the time but I remember that we did get the zoning changed. At the time, Shappell spent a lot of time changing the Zoning and I was impressed that Houston, without zoning, ended up looking about the same.
A couple of years later, I started my own development/building company with Sam Berland, and several years after that, Sam died. We had just bought a large piece of land known as Haskins Ranch which is a little bit misleading. Haskins was a grading contractor and his ranch was a place out in the boondocks where he could store his equipment. But, by 1979, it was no longer out in the boondocks, it was across the street from the soon-to-be Blackhawk Shopping Center, and Haskins was selling his property to move further out.
When we bought the property, Jimmy Carter was President, Paul Volcker was the Fed Chairman, and the homebuilding business was booming, but inflation was also booming, especially in housing. I remember a conversation with a fellow builder and he said that, according to his banker, less than one percent of Californians could afford an average new California home (the banker still made the loan). It did not seem like a sustainable situation and, maybe the buyers didn’t think so either, but, every weekend, our sales office was full of buyers clamoring for new homes before the price increased again. Sales outpaced production. People were buying new homes faster than we – the collective we, in this case, being the homebuilding industry – could build them. Two months after Volcker took office, the Fed raised interest rates, and then again, and again until interest rates hit twenty-one percent. One weekend the Sales Office was full, crowd control was the problem, and the next weekend, the Sales Office was empty. Now, anybody who hadn’t Closed Escrow wanted their deposit back, the celebrations turned sour, very sour. And we still owned the empty half of Haskins Ranch.
At the same time, ABAG which stands for the Association of Bay Area Governments and is in large part funded by the Federal Government was pushing the various cities to increase their density. The cities panicked and started making plans to do just that. Then the local people reacted to what they assumed would be a deterioration of their environment and the cities just sort of ignored ABAG (although they were still willing to take ABAG’s money). But during the brief period when cities were still concerned about following ABAG’s directives of increasing density, we brought an application for a revised project to the City Council in Danville, California. We wanted to change the existing R1 Single Family on large lots to a Planned Unit District – PUD, pronounced P, U, D – with smaller lots and duplexes on the street corners. There was a large contingent of NIMBYs, Not In My Back Yard, fighting it, they were concerned that the revised project would bring in “undesirables” from poorer areas which would hurt their property values and expose their children to the wrong element, especially in their schools. I wouldn’t have worded it that way, but our whole plan was to build less expensive housing to make it more affordable to a wider range of buyers.
On her campaign website, AOC talks about her mother moving 40 minutes north of their family home and the Porto Rican community in the Bronx to Westchester County so Sandy Ocasio could get a better education and we expected our smaller homes, especially the duplexes, to enable a similar result. But, like almost everything about Alexandria Ocasio-Cortez, her move to Westchester was unusual. Most minorities prefer to stay in their communities, something that surprised me then but doesn’t anymore. Now, here is the kicker, the buyers in the new PUD were roughly the same demographic as the buyers in the bigger, more expensive houses; white, aspiring upper-middle-class, Republicans. The biggest surprise was the buyers of the ten duplexes. There may have been an exception or two, but the buyers were recently divorced women who wanted to keep their kids in the same school district that they had been in pre-divorce or young people wanting to live in the neighborhood they grew up in. All the NIMBYs imagined horrors – and in our case, hopes – of less expensive housing bringing in a different demographic didn’t happen.
That was over forty years ago and, if anything, people are more segregated by race and income than ever. Eliminating the 1 in R1 and allowing an increase in the density of housing in, formally, single-family neighborhoods will increase the housing stock by increasing density but I doubt that it will result in greater diversity.