The key number housing number being bandied about these days is 135,000: this is the ten-year housing unit target recommended by Austin's new strategic housing plan. It includes a mix of market-rate and subsidized housing. Both numbers are unrealistic in my opinion, but that's a topic for another day.
We will hear a lot about this housing target during CodeNEXT. There are already debates about whether that target can be met if 97% of the city remains the same under the new code, as the Mayor has promised.
Before we get too far into this debate, though, it is worth stressing the difference between housing supply and zoning capacity. The housing supply is just the number of housing units that actually will be built. Zoning capacity is just the upper bound on how many housing units can be built. CodeNEXT will (I hope) enlarge our zoning capacity. But expanding our zoning capacity by 135,000 units will not yield 135,000 new units of supply because housing becomes much more expensive to supply as one approaches the zoning capacity. One reason is that it takes ever higher property prices to entice holdout property owners to sell their property for redevelopment -- property owners don't automatically sell their land for redevelopment even when prices justify it. That is the reason there are thousands of single-family homes in central Austin that are not currently being razed for duplexes. A second reason is that the really choice lots tend to get redeveloped first; the more challenging lots go last. The latter are inevitably more expensive to develop.
CodeNEXT is fundamentally about enlarging the city's zoning capacity. Determining how much actual housing the new Code will supply is an intractable calculation because it requires considering all of the soft land use restrictions such as tree preservation and water quality regulations, the willingness of property owners to sell, future construction costs, and a host of other factors. We'll be deluding ourselves if we think we know the answer to that calculation. All we will ever know is the approximate zoning capacity. Whatever that capacity turns out to be, we'll get only a fraction of that --perhaps a small fraction of that -- in new housing on the ground, and the last few units delivered will be very, very expensive.
Los Angeles is a case in point.
Graduate school dissertations don't ordinarily get a lot of publicity. This one did. It is the 2013 Ph.D. dissertation of Greg Morrow, a former UCLA planning student (and current University of Calgary assistant professor.) The title -- "The Homeowner Revolution: Democracy, Land Use and the Los Angeles Slow-Growth Movement, 1965-1992" -- hints at the gist of his thesis.
Morrow's work might have languished in obscurity had USC economist Richard Green not linked to it one day. Since then, Morrow's dissertation got a lot of buzz. This graph, in particular:
Los Angeles has a very high median home price ($616,900 according to Zillow). At least one serious study has identified it as the most unaffordable rental market in the country. This graph suggests the reason: Los Angeles has steadily reduced its zoning capacity even as its population has surged. That's a bad combination.
The "population capacity" Morrow graphs is a "raw" capacity. That is, it is derived from the number of acres in various zoning districts multiplied by the number of allowed units per acre. Morrow did not attempt to adjust the population capacity for the many soft zoning restrictions that Los Angeles has accumulated over the years. That would have been an intractable task.
It is quite possible that L.A.'s current population exceeds its hard zoning capacity. One sign, of course, is the very high home prices and the very high rents. An even stronger sign is that more than 20% of households in LA are "severely overcrowded" under the Census definition(more than 1.5 person per room). In three planning areas, more than 30% of the households are severely overcrowded. I hear Brentwood is nice, though. Back when the City's zoning capacity was four times its population, Los Angeles was an affordable place, even with its nice weather, many manufacturing jobs, and movie stars.
It would be interesting to see a graph like this for Austin -- or for central Austin, since Austin's zoning capacity is constantly increasing through annexation. My guess (and it really is just a guess) is that central Austin's zoning capacity remained more or less level from the 1930s to the 1980s. In the mid-1980s, the city switched from cumulative zoning, which permits apartments on commercial tracts, to noncumulative zoning, which doesn't (except for tracts specifically designated as mixed use). When the city did away with cumulative zoning, it eliminated thousands of commercial tracts as potential multi-family sites. This was likely the largest single down-zoning in the city's history. (If someone knows of a comparable down-zoning, let me know.)
If CodeNEXT is to deliver a zoning capacity that allows the city to grow affordably, we need to focus on the right target, which assuredly is not 135,000 housing units. The correct target is a multiple of 135,000, and our discussions should focus on just how large that multiple ought to be.
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