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THE EMERGING HOUSING CRISIS A growing crisis in housing supply is helping to drive out families and the middle class from expensive regions, and particularly from the cores of many of Figure 1 Percent Share of Average Annual Expenditures Per Consumer Unit, 1984-2013 Percent Share of Average Annual Expenditures 40% Per Consumer Unit, 1984-2013 Percent Share Percent of Average Share of Average Annual Expenditures Annual Expenditures 30% 40% 25% 35% 20% 30% 15% 25% 10% 20% 5% 15% 0% 10% 5% 0% 1985 1990 1995 2000 2005 Figure 1 Source: “The Evolving Expenditures of U.S. Households,” Townhall Finance, March 26, 2015, http://finance.townhall.com/- columnists/politicalcalculations/2015/03/26/the-evolving-expenditures-of-us-households-n1976354/page/full Housing Life Insurance, Health Care Entertainment Tansportation Pension Savings, Apparel, Other Charitable Contributions Social Security Food & Alcohol Products & Services Education Source: “The Evolving Expenditures of U.S. Households,” Townhall Finance, March 26, 2015, http://finance.townhall.com/- columnists/politicalcalculations/2015/03/26/the-evolving-expenditures-of-us-households-n1976354/page/full Middle-Income 10 Housing Affordability MAJOR 9 US METROPOLITAN More Restrictive Markets: Outside AREAS: California 1950-2014 Median Multiple Median Multiple 35% 1985 Housing Tansportation Food & Alcohol 1990 1995 Life Insurance, Pension Savings, Social Security 2010 Figure 2 8 California (All More Restricted Markets) 10 7 Less Restrictive Markets 69 58 More Restrictive Markets: Outside California California (All More Restricted Markets) 47 36 25 14 03 1950 2 1960 1970 1980 1985 1990 1995 2000 2005 2010 Source: 1 Census Bureau, Harvard University and Demographia. 0 1950 1960 10 CHAPMAN UNIVERSITY • CENTER FOR DEMOGRAPHICS AND POLICY 1970 1980 1985 1990 1995 2000 2005 2010 2000 Health Care Apparel, Other Products & Services Middle-Income Housing Affordability MAJOR US METROPOLITAN AREAS: 1950-2014 Less Restrictive Markets The Affordability Crunch 2005 2010 Entertainment Charitable Contributions Education Figure 2 the most important cities. This shortfall and the consequent price inflation has been exacerbated by planning policies designed to force ever-greater urban density, and squelch development along the periphery. Overall, housing now takes the largest share of family costs, while expenditures on food, apparel and transportation have dropped or stayed about the same. In 2015, rises in housing costs essentially swallowed savings gains made elsewhere, notably, savings on the cost of energy. William Fischel, an economist at Dartmouth University, has shown how the imposition of stringent land use regulations have driven house prices up substantially in California, in relation to prices elsewhere. 5 In 1970, for example, housing affordability in coastal California metropolitan areas was similar to the rest of the country, as measured by the median multiple (the median house price divided by the median household income). Today, due in part to a generation of strict growth controls, house prices in places like San Francisco and Los Angeles are now three or more times higher than in some other metropolitan areas. Given the extraordinary cost of land in places like California, many developers there find it worthwhile to build homes predominately for the affluent; the era of the Levittown-style “starter home”—which particularly benefited younger families—is all but defunct. 6 The rest of the country has also seen a drop in middle income housing affordability, with more production of luxury houses. 7 The reduced housing supply has driven an affordability decline among Rents Source: Census have Bureau, never Harvard taken University up this and Demographia. much of the American paycheck Figure 3 Figure Rent Select Figure 80% Rent 70% Selec 60% 80% 50% 70% 40% 60% 30% 50% 20% 40% 10% 30% 0% Lo 20% From: Zi 10% 0% L From: Z Figure 4 Impact Housin Figure 52 Major Impac Housi 14 52 Majo 12 Ages 5-17 Share of Population Ages 5-17 Share of Population 10 1 8 1 6 1 4 2 0 Derived from Figure 6 Constr Derived from San Fran Figure 6 Const 8 (5) 7 San Fra
Percent Share of Average Annual Expenditures 35% 30% 25% 20% 15% 10% 5% both renters 0% and owners for in some In each of these markets there have peripheral areas as well such as the past been strong increases (income adjusted) decade. 8 Overall, US housing production relative to historic averages. In New dropped not Housing only since Life the Insurance, 2007 Health Care York, Entertainment rents increased between 2010 and Tansportation Pension Savings, Apparel, Other Charitable Contributions recession, but also by almost Social Security Food & Alcohol a quarter Products & Services 2015 Education by 50 percent, while incomes for Source: between “The Evolving 2011 Expenditures and of 2015. U.S. Households,” Production Townhall Finance, has March 26, 2015, http://finance.townhall.com/- renters between ages 25 and 44 grew by columnists/politicalcalculations/2015/03/26/the-evolving-expenditures-of-us-households-n1976354/page/full fallen so far that one Texas metropolitan just eight percent. 13 area, Houston, produced nearly as many These high costs particularly new single-family homes in 2014 as the impact young families, especially entire state of California. 9 those with school age children. Indeed, Middle-Income These high housing Housing prices particulaly Affordability metropolitan areas with the highest boost rents, largely by forcing potential prices relative to incomes (the highest MAJOR US METROPOLITAN AREAS: 1950-2014 Figure 2 buyers into the apartment market. Rental median multiples)—New York, Los costs 10 now comprise the largest share of Angeles, the San Francisco Bay Area, Less Restrictive Markets income 9 in modern US history. In part, Miami, Seattle and Portland, for More Restrictive Markets: Outside California this is due to California a still-weak (All More Restricted economy Markets) 8 that example—generally have a lower is generating 7 little in the way of income percentage of school age children. In gains. 6 10 Since 1990, renters' income has contrast, family formation is strongest been 5 stagnant, but inflation adjusted in areas with more favorable housing rents 4 have soared 14.7 percent. 11 affordability. This also includes areas 3This situation is most severe in the within large metropolitan areas, for highest-priced 2 markets. In New York, example, San Bernardino-Riverside Los 1Angeles, Miami and San Francisco, outside of Los Angeles, or Pierce County for 0example, renters spend 40 percent (Tacoma) south of Seattle. of their 1950 income 1960 on rent, 1970 well above 1980 1985 the 1990 1995 2000 Young, 2005 2010 first-time buyers who, unlike national average of under 30 percent. 12 older buyers, have not benefited from Median Multiple 1985 1990 Source: Census Bureau, Harvard University and Demographia. 1995 The Affordability Crunch Rents have never taken up this much of the American paycheck U.S. Rent as Share of Income 31% 30 29 28 27 26 25 24 23 22 1979-03 1984-06 2000 2005 2010 1989-09 1994-12 2000-12 2005-06 2010-09 2015-06 Comment JK8: Mike Krieger, “The Oligarch Recovery – Renting in America Is Most Expensive Ever,” Zero Hedge, August 14, 2015, http://www.zerohedge.com/news/2015-08-14/oligarch-recovery-renting-america-most-expensive-ever Figure 5 Under Age 35 Home Ownership UNITED STATES: 2000-2014 Figure 3 BEST CITIES FOR PEOPLE 11 60% 50% 40% 30% 20% 10% 0% Los Angele From: Zillow Figure 4 Impact of Housing A 52 Major Metr Ages 5-17 Share of Population 14% 12% 10% 8% 6% 4% 2% 0% Hou Derived from Census Figure 6 Constructi San Francisco Compared to Detached (5) 8 7 6 5 4 3 2 1 0 Detached (5 per Acre) Derived from FBI Sta Figure 7 Age 5-14 P 52 Major Metro 16%
Page 1: FOR PEOPLE RESEARCH IN ACTION WILKI
Page 4 and 5: C HAPMAN UNIVERSITY Center for Demo
Page 6 and 7: AUTHOR Joel Kotkin is an internatio
Page 8 and 9: 6 CHAPMAN UNIVERSITY • CENTER FOR
Page 10 and 11: 8 CHAPMAN UNIVERSITY • CENTER FOR
Page 14 and 15: 80% 2014 70% Middle-Income Historic
Page 16 and 17: Figure 7 Figure 7 % of Population 5
Page 18 and 19: 16 CHAPMAN UNIVERSITY • CENTER FO
Page 20 and 21: W : American Community Survey 2013,
Page 22 and 23: Incidence of Property Crime Core &
Page 24 and 25: Job Location 30% 20% 10% 0% Urban C
Page 26 and 27: level out of 134 countries, accordi
Page 28 and 29: Figure 26 26 CHAPMAN UNIVERSITY •
Page 30 and 31: Job Location 50% 40% 30% 20% 10% 0%
Page 32 and 33: Figure 28 Change: Predominant Commu
Page 34 and 35: Percent Children Under 18 Years Old
Page 36 and 37: Zip Code Analysis Zones) Small Area
Page 38 and 39: Figure 41 Growth in Residents with
Page 40 and 41: Foreign Born Share of of New Househ
Page 42 and 43: Population (Millions) Population (M
Page 44 and 45: Section Four: Creating a New Urban
Page 46 and 47: Institution, a proponent of smart g
Page 48 and 49: Home Ownership UNITED STATES: 2000-
Page 50 and 51: Less Money to Spend One-way bet Med
Page 52 and 53: that a metropolis’ heart exists w
Page 54 and 55: MIDDLE CLASS ASPIRATION INDEX: ECON
Page 56 and 57: Miami, Las Vegas, Los Angeles—are
Page 58 and 59: categories: increases in median fam
Page 60 and 61: What areas are families increasingl
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IN RANK ORDER Table A.1 MIDDLE CLAS
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ETICAL SCORES Table B.1 MIDDLE CLAS
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ETICAL RANK Table C.1 MIDDLE CLASS
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1. Fernand Braudel, The Structures
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30. This actually understates the s
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55. Richard Florida, “The Power o
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85. Author’s analysis of EMSI 201
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housing, schools”, SFGATE, Octobe
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142. Elliot Schimel and Jennifer Ma
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167. Paula Span, “New Old Age”,
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197. Martin Dreiling, “New Urbani
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224. Wendell Cox, “84% of 18-to-3
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Design Notes Best Cities for People
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