The Complex Dynamics of Inequality: Social Structure,

Spatial Distribution, and Housing Policy

Victoria Basolo, Ph.D., AICP

Planning, Policy & Design

University of California, Irvine

May 12, 2006

Percent in Poverty

Source: SOCDS, Accessed at http://socds.huduser.org/index.html

0.0000.0200.0400.0600.0800.1000.1200.1400.1600.1800.200

1969 1979 1989 1999

Year

Per

cen

t

LA-Long Beach PMSA

Orange County PMSA

Riverside-San BernardinoMSA

San Diego MSA

Households Living with Conditions (Owners), 1990 & 2000

Source: HUD Special Tabulations of Census 1990, 2000

0%5%

10%15%20%25%30%35%40%45%

LosAngelesCounty

OrangeCounty

RiversideCounty

SanBernardino

County

San DiegoCounty

Area

Pe

rce

nt

1990

2000

Households Living with Conditions (Renters), 1990 & 2000

Source: HUD Special Tabulations of Census 1990, 2000

48%

50%

52%

54%

56%

58%

60%

62%

LosAngelesCounty

OrangeCounty

RiversideCounty

SanBernardino

County

San DiegoCounty

Area

Pe

rce

nt

1990

2000

Median Household Income & Median Housing Value, Percentage Change, 1970-2000

(in constant $s)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

LA-Long BeachPMSA

Orange CountyPMSA

Riverside-SanBernardino MSA

San Diego MSA

Area

Per

cent

age

Cha

nge

Md HH Income

Md Housing Value

Source: SOCDS, Accessed at http://socds.huduser.org/index.html

Production Lag in the 1990s

Source: California Department of Finance and U.S. Census Bureau.

State of California

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

YEAR

NO

. UN

ITS

Single-FamilyUnits (Permits)

Multi-FamilyUnits (Permits)

2003

Production Lag in the 1990sOrange County

Source: Counting California

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

YEAR

NO

. OF

UN

ITS

Single-FamilyUnits (Permits)Multi-Family Units(Permits)

1990 2000

Source: U.S. Census Bureau, 1990 Census, STF 1

Percent Whites, Not Hispanic 1990 & 2000

N

Source: U.S. Census Bureau, Census 2000, SF 1

N

Percent in Poverty, 1999

Source: U.S. Census Bureau, Census 2000, SF1

Median Household Income, 1999, by Race/Ethnicity

Median HHHousehold Income

White, not Hispanic or Latino $65,160 Asian $58,501 Black or African American $49,972 Hispanic or Latino $44,676

Source: U.S. Census Bureau, Census 2000, SF3

N

Percent of Housing Units Lacking Complete Plumbing, 2000

N

Source: U.S. Census Bureau, Census 2000 SF 3

N

Homeownership Rate, 2000

Source: U.S. Census Bureau, Census 2000, SF1

Housing Markets are segmented into submarkets of quality (cost): 2000

Income Mortgage Loan1

$150,000 or > $498,000 or >

$

Housing Sub-Markets

17.4%

20.7%

9.6%

Need subsidy; rent ($625)2< $25,000

$25,000 - $49,999 Rent ($625 - $1,250); ~$165,000

$50,000 - $74,999

14.0%

$165,000-$250,000

13.9%

$75,000 - $99,999 $250,000-$333,000

High

Low

Sources: U.S. Census Bureau. 2002. Census 2000, STF 1 and 3. 1Assumes 30-year fixed loan at 8.29% (at 30% of income) 2$625/mo. (at 30% of $25,000 income); FMR 2000=$891

Example: County of Orange

MHI 1999 = $58,820

Median Sales Price 1999 = $280,900

24.5%

$100,000 - $149,999

US HUD. Fair Market Rents History. California Association of Realtors from Counting California website HSH Associates, Financial Publishers

$333,000-$498,000

Purchasing/Renting a Home in Orange County, 2005

Median sales price of existing home in 2005:

$593,0001

Income needed (at 30% of income):

$10,652/mo. ($127,824/yr.)

Income needed (at 40% of income):

$7,989/mo. ($95,868/yr.)

1 At 6% with a 10% down payment 2 Two-bedroom unit

Fair Market Rent in 2005:

$1,3922

Income needed (annual):

$55,680

$26.77/hr.

Housing Wage (40-hr wk):

Estimated MHI 2004 = $64,416

Sources: American Community Survey, 2004. Orange County Report 2006 at http://orangecoastrealestate.com/news_annual.htm

Subsidized Housing: Housing Choice Voucher Program

Voucher program is the primary strategy to assist lower-income people with their housing needs

Voucher household pays 30% of their income toward rent with public subsidy paying the remainder up to “fair market rent”

Voucher program allows household to move with assistance

Not to scale

Location of Voucher Holders, 2002 (OC and Santa Ana)

Voucher Holder

Source: Basolo, 2005

Minority households with vouchers live in worse neighborhoods, compared to Non-Hispanic Whites with vouchers, even when mobility and rent are held constant

Female-headed households with children using voucher assistance live in worse neighborhoods than other voucher households

Major Findings Voucher

Study

Source: Basolo & Nguyen, 2006; Basolo, 2006

Housing Policy

• Federal leadership on housing policy has been declining for 35 years, escalating in the last few years

• State policy in California has been trying to fill the void through legislation and ballot measures

• Local governments have a mixed record on implementing housing policy funded by state and federal governments and, existing research from the 1990s indicated that over 50% of the cities in a national sample spent no local dollars on affordable housing programs1

1 Basolo (1999)

State-Local Housing Policy

• California state law requires a housing element that includes planning for a regional fair share of housing at all income levels

In 2002, one-third of the cities were out of compliance1

• Numerous attempts in the California legislature to strengthen regional fair share housing provisions have failed

1 Lewis (2003)

Housing Policy

• Many jurisdictions in California, including cities in Southern California, such as Los Angeles, Anaheim, and San Diego have adopted inclusionary housing policy

• California State Law requires local jurisdictions to adopt a density bonus (granting developers additional units above that allowed by existing zoning, if they include a certain percentage of affordable housing in their developments)

Again, not all local jurisdictions have complied with this law

Continued fight with builders. Biggest opportunities are in areas with larger tracts of open land, which appear less likely to adopt IH policy

Housing Policy

• California State Law requires local redevelopment agencies to set-aside 20% of their tax increment funds for low- and moderate-income housing

Some jurisdictions are sitting on this stockpile of funds, instead of producing housing

Housing Policy

• California legislators keep returning to the ballot box to approve funds for affordable housing development

2002: Prop 46 = $2.1 billion for housing

Bond issues cause expansion/contraction of administering agency with loss of experience among staff – unable to plan long term1

Developers and local jurisdictions compete for funding, causing geographically uneven benefits

2006 (Nov.) Bond on ballot includes $2.8 billion for housing

1Basolo (2006)

Conclusions

• (Southern) California has a “housing crisis”

• Housing prices have increased at a much steeper rate than household incomes

• The housing crisis disproportionately affects minorities and lower- and middle-income households

• Market forces, and existing public efforts, are not resulting in substantial gains in adequate, affordable housing

Future Policies

• A permanent source of state housing funds

• Land use planning with mandatory fair-share housing development

• Regional negotiation among jurisdictions to meet fair share requirements (link to tax-sharing)

• Incentives to link housing, jobs, and transportation within the region

• Employer-based cooperative solutions