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  • 2018-07-19 09:50:44
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Title Title
West Coast Housing Crisis Driven by Artificially Inflated Rent Here’s why the critical housing shortage in US is most severe on the West Coast
Summary Summary
Banks on the west coast of the United States are structuring real estate loans to prevent the lowering of rents. It's bad all over, but low-income workers are having a particularly hard time in areas where tech is king
Highlights Highlights
Content Content
  <strong><em>"The rich build sensitive houses and pass their staff around</em></strong>
  <strong><em>For the rest of us, it's trailers on the outskirts of town</em></strong>
  <strong><em>We carry them their coffee, wash their shiny cars</em></strong>
  <strong><em>Hear all about how lucky we are</em></strong>
  <strong><em>To be living in a boomtown" </em></strong><strong><em>– "Boomtown," by Greg Brown</em></strong>
  American folk singer Greg Brown penned the lyrics to “<a href="https://www.youtube.com/watch?v=wcriGgtIVm8">Boomtown</a>” back in 1994, but in 2018 they may feel more relevant than ever, especially for people living on the U.S. West Coast. In the West Coast states of California, Oregon, and Washington, the shortage of affordable housing, especially for lower-income workers, has created a housing crisis that is forcing longtime residents out of traditional neighborhoods and leaving newer residents struggling to find anywhere at all to live (<a href="https://www.npr.org/2017/12/06/568605069/homeless-population-rises-driven-by-west-coast-affordable-housing-crisis"><em>NPR</em></a>).
  The housing issue is playing out across the United States, but it’s particularly acute on the West Coast. According to an April report from the Up for Growth National Coalition, ECONorthwest, and Holland Government Affairs, “from 2000 to 2015, the U.S. fell 7.3 million units short of meeting housing demand.” California had the biggest deficit of all states, with a shortage of 3.37 million homes.
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  According to Allan Lazo, executive director of the Portland-based Fair Housing Council of Oregon and a local affordable housing advocate, the current housing crisis disproportionately affects lower-income workers and families.
  “There’s actually a surplus of ‘luxury’ and higher-end units on the market,” Lazo told <em>WikiTribune</em>. “For example, if you look at the market in Portland for people above 80 percent AMI (area median income), there’s actually a <a href="https://www.nwpilotproject.org/images/GAP%20Report%202017.pdf">30,000-unit surplus</a> in units."
  Lazo contrasted that high-end housing surplus with a deficit of more than 21,000 affordable units for Portlanders who fall below 30 percent AMI (<em><a href="https://www.nwpilotproject.org/images/GAP%20Report%202017.pdf">Northwest Pilot Project</a></em>).
  <h2>Wages not keeping up with rental costs</h2>
  Across the United States wages for workers have failed to keep pace with increasing rental costs.
  According to the National Low Income Housing Coalition’s <a href="http://nlihc.org/oor">“Out of Reach 2018”</a> report, a minimum-wage worker cannot afford a two-bedroom apartment anywhere in the United States.
  According to the report, a minimum wage worker in California would have to work 119 hours per week (the equivalent of roughly three full-time jobs) in order to afford a two-bedroom rental apartment.
  And the U.S. Department of Housing and Urban Development <a href="https://www.huduser.gov/portal/datasets/il/il2018/2018summary.odn">released numbers for 2018</a> that classified a family of four in San Francisco earning $117,400 as "low income."
  In April, <a href="https://www.usnews.com/news/best-states/articles/2018-04-03/is-there-hope-for-californias-housing-crisis"><em>U.S. News &amp; World Report </em></a>highlighted the issue with a story about a popular San Jose State University adjunct professor making so little money that she was living out of her car with her husband and two dogs.
  In Portland, which Lazo says tends to follow the trends of larger West Coast cities, from 2006 to 2015 apartment rents rose 63 percent, while renter income rose just 39 percent (<em><a href="https://www.oregonmetro.gov/news/portlands-housing-challenge-4-charts-ponder">Oregon Metro</a></em>).
  <h2>Victim of own their success?</h2>
  As the epicenter of the booming tech economy, along with its reputation for scenic beauty and liberal lifestyle and laws, has the West Coast simply attracted more people in recent years than it can quickly build housing for? In blunt economic terms, has demand for rental units outstripped supply, leading to an increase in rental prices?
  In Seattle, which has experienced an <a href="http://blog.buildllc.com/2017/10/seattles-housing-crisis-getting-the-facts-straight/">18.5 percent population increase</a> in the past decade and where discussion of the housing crisis “has reached its boiling point” (<em><a href="http://blog.buildllc.com/2017/10/seattles-housing-crisis-getting-the-facts-straight/">BUILD blog</a></em>), price points for housing “below $500,000 are vanishing.” (<a href="http://www.seattlemag.com/news-and-features/concern-seattles-housing-crisis-rising"><em>Seattle Magazine</em></a>)
  [caption id="attachment_79059" align="aligncenter" width="465"]<img class="size-medium wp-image-79059" src="https://s3-eu-west-1.amazonaws.com/wikitribune-uploads-master/2018/07/17014225/IMG_9216-e1531788175568-465x620.jpg" alt="Mississippi Street in Portland, Oregon" width="465" height="620" /> Crowds, like this one at the Mississippi Street Fair, keep pouring into Portland, Oregon. Finding housing is another matter. Photo by Chuck Thompson. Credit: WikiTribune. License: CC 0[/caption]
  One fascinating measure of this phenomenon is the “crane count,” an index of construction cranes in operation around the country published by Rider Levett Bucknall, a global network that provides project management services. According to its latest report, three of the top five <a href="https://www.seattletimes.com/business/real-estate/seattle-has-most-cranes-in-the-country-for-2nd-year-in-a-row-and-lead-is-growing/">“crane count” cities</a> were on the West Coast. <a href="https://www.seattletimes.com/business/real-estate/seattle-has-most-cranes-in-the-country-for-2nd-year-in-a-row-and-lead-is-growing/">Seattle by far led the United States</a> (<em>Seattle Times</em>) with 58 construction cranes in operation. Los Angeles was second with 36 cranes. Denver was third with 35. Chicago was fourth with 34. Portland was fifth with 32. New York had just 18.
  Compare metro Chicago’s population (<a href="https://en.wikipedia.org/wiki/Chicago_metropolitan_area">9.9 million</a>) with metro Portland’s population (<a href="https://en.wikipedia.org/wiki/Portland_metropolitan_area">2.4 million</a>) and you get a sense of the disproportionate impact of development on the West Coast – and understand why Portland mayor Ted Wheeler made housing the top issue in his 2016 election campaign (<em><a href="https://www.opb.org/news/series/election-2016/ted-wheeler-portland-mayor-candidate-housing-election/">Oregon Public Broadcasting</a></em>).
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  The rising construction tide, however, isn’t necessarily lifting all boats. “The cranes tend not to be building affordable housing,” said Lazo.
  <h2>Communities of color being displaced</h2>
  The wage-rent disparity has had a disproportionate effect on lower-income workers and communities of color.
  “Wages haven’t kept up with the cost of housing, but a second dynamic, which seems true across the country and particularly in Seattle, Portland and the Bay Area, is a desire for people now to live closer into downtown cores,” said Lazo. “That’s driving up housing costs in inner cities and pushing what have traditionally been lower-income communities outside of the city.
  “You’ll see in Portland (and other cities) a ring around the city that communities of color have been pushed out to. … Displacement is happening because there’s a desire of many companies to stay within the core of these cities.” Many of those companies are in the largely homogenous tech sector, in which 95 percent of the workforce is white (<a href="https://www.forbes.com/sites/lisawinning/2018/03/13/its-time-to-prioritize-diversity-across-tech/#3466327616f8"><em>Forbes</em></a>).
  It is likely no coincidence that in places where the tech boom has been most pronounced – from California’s Silicon Valley up through the so-called Silicon Forest of Washington and Oregon – the lack of workforce diversity has also had a profound impact on the rent burden of non-white communities and lower-income workers, including those in service-industry jobs with whom singer Greg Brown felt empathy.
  <h2>Rent control and “granny flats”</h2>
  Proposed solutions to the housing crisis are many and varied. “It’s an extraordinarily complex issue that is going to take complex and multifaceted solutions,” said Lazo. “It looks different in every community.”
  One measure proposed by various renter-advocacy groups is the imposition of rent controls, broadly defined as legal limits on the amounts landlords may increase rents for tenants. According to <a href="http://www.landlord.com/rent_control_laws_by_state.htm">Landlord.com</a>, currently just four states (California, Maryland, New York, New Jersey) and the District of Columbia have rent control laws.
  In January, despite spirited efforts by activists to repeal an existing law that prohibits rent control, the state of Washington upheld its ban on rent control (<em><a href="https://www.seattlemet.com/articles/2018/2/5/state-will-uphold-its-ban-on-rent-control">Seattle Met</a></em>). Similarly, during the 2017 legislative session in Oregon an effort by tenant advocates to lift the statewide ban on rent control failed (<a href="https://www.portlandmercury.com/blogtown/2017/05/31/19050961/a-proposal-to-allow-rent-control-in-oregon-is-probably-dead"><em>Portland Mercury</em></a>).
  In 2016, California enacted a law that allows homeowners to build small rental structures known as accessory dwelling units (ADUs) or “granny flats” on their properties. The new law removed a significant regulatory barrier for new construction, allowing more rental housing to be built more quickly.
  “Although the deregulation was sweeping, it hasn’t been especially controversial – and it’s getting results,” according to a <a href="https://www.bloomberg.com/view/articles/2018-05-21/california-turns-to-homeowners-to-solve-its-housing-crisis"><em>Bloomberg</em> opinion article</a> published in May.
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  <strong>Add to this article:</strong>
  • What have been other causes of the housing crisis?
&nbsp • What fixes have been proposed?
  • How has the housing crisis played out where you live?
  • Does the housing crisis look the same in other parts of the United States as it does on the West Coast?
Categories Categories
United States  United States, United States
Article type Article type
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  bay area, California, Housing, housing costs, housing crisis, Los Angeles, Oregon, Portland, Poverty, rent, san francisco, Seattle, tech industry, wages, Washington State
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  <p>In practice, the ADUs are frequently used for actual “Grannies”, or nannies, or adult children who are unable to afford to move away from home, so the available rental stock is not increased as much as the number of units would indicate.</p>

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