My parents left LA in 1990 because it was too expensive. They told me shrewd investors bought up real estate in San Diego, San Francisco, and LA in the 1970s, and they had to leave because rent was increasingly unaffordable - and homeownership was out of the question. They explained that landlords were reaping the rewards they earned for buying property in a state with beautiful weather, top-tier universities, and an abundance of jobs.
When I moved to San Francisco 3 years ago, I expected to get the impression that the city was full - brimming with tall buildings with no more room to grow because I heard stories of artists, blue-collar workers, and minorities being displaced by young techies. California's tech boom catalyzed growth that causes rents and home prices to increase, but land use policies are what continue to sustain inequality and concentrate wealth with landlords, keeping rents unaffordable and homeownership unattainable. Let's explore these policies and how we can change them.
What it is: Apartments are illegal to build on over 70% of land in the the average California city.
Why it exists: Apartments are prohibited for to maintain neighborhood character and preserve property values. But the apartment bans have a darker past, tracing back to policy called "redlining" - designed to keep black and poor Americans out of wealthy neighborhoods. Apartments are too affordable - they let the wrong kind of people in - so people make sure they can't get built in their neighborhood.
Why it's problematic: Apartments being illegal in most of California is the leading cause high rent, displacement, and wealth concentration. In San Diego, LA, and Santa Monica, San Jose, and San Francisco, it's illegal to build more than one single-family home on a property.
Urban planners call the policy prohibiting apartments single-family zoning - one parcel, one family. After racial covenants became illegal, single-family zoning became the implicit way to ensure only wealthy, white people could afford the live in an area. In the following map of San Francisco, notice new housing is illegal in affluent Western neighborhoods and construction is concentrated in lower income industrial areas.
The framework for why apartments are more affordable is this: imagine a house worth $1,000,000. If there were 4 apartments on the same parcel, each apartment would sell for around $250,000 - making room for more families at lower prices.
Rafael Mandelman, one of the few pro-housing San Francisco Supervisors, points out its easier to build a mega-mansion with 22 rooms - a bowling alley and all - than it would be to construct a four unit apartment with the same number of rooms.
Solutions: End apartment bans, especially in wealthy areas. By ending exclusionary zoning, we can lower housing costs and create more diverse communities, not just suburbs for techies. The city of Berkeley, CA was one of the first to implement single-family zoning, but now it's leading the way by [voting to end it](https://www.berkeleyside.org/2021/03/25/berkeley-single-family-zoning-city-council-general-plan-change#:~:text=Housing-,Berkeley votes for historic housing change%3A an end to single,over the next several years.&text=By Supriya Yelimeli March 25%2C 2021%2C 2%3A24 p.m.) after listening to residents who had been displaced and priced out of the city.
What it is: Prop 13 freezes assessed property tax values at their 1978 level, a regressive tax because it benefits people who own expensive property eh most.
Why it exists: In 1978, voters passed a ballot initiative sponsored by an anti-tax group called the Howard Jarvis Taxpayer's Association.
Why it's problematic: In progressive California, usually tax breaks go to low-income residents. Prop 13 is a surprising policy because it subsidizes wealthy property owners, landlords, and commercial real estate companies. Prop 13 benefits can also be passed on to heirs, creating a class of California real estate nobility. This policy has led to underfunded schools and slow housing construction.
Prop 13 is a market distortion that stops land from being used to its full potential. Many of the homes in San Francisco are $2m or more, and higher property tax would encourage homeowners to add an ADU, build a duplex, to pay these taxes and house more people.
In a natural land use cycle, something like this would happen: Property near jobs, beaches, transit, or schools gets more valuable as people move in. Taxes increase on that property, so some homeowners convert properties into duplexes or apartments to pay for increased taxes, and the increased housing supply creates lower rents for everyone. Property taxes are an incentive to use land for a higher value purpose, like housing more people.
Instead, apartment bans and prop 13 have neutered incentives for building new housing, resulting in California having the most expensive, exclusive real estate in the country. Artificially low property taxes allows land owners to levy an infinite cost to a society, which is why we should look to policies like the [Harbinger Tax](https://medium.com/@simondlr/what-is-harberger-tax-where-does-the-blockchain-fit-in-1329046922c6#:~:text=Harberger Tax is an economic,increase general welfare of society.&text=It works by introducing two,pay tax on that value.) for inspiration.