On Population Growth and Affordable Housing

On Population Growth and Affordable Housing

The main justification of those wishing to build additional housing has been that California’s population is growing by leaps and bounds, and we need housing for all these new people. Recently, I saw some postings on the Internet that refuted this claim. Curious, I did some research. This is what I learned:

First of all, California is not even in the top 10 of fastest growing states. The top three are Idaho, Nevada and Utah according to USA Today. In 2010, California’s population was 37.27 million according to the U.S. Census Bureau. California’s current population is estimated at 39,557,045 as of July 1, 2018, by the Census Bureau in a statement dated Sept. 6, 2019 — about a 6 percent growth rate.

The Census Bureau also estimated that California’s population grew by 141,300 people between July 1, 2018, and July 1, 2019 — a 0.35 percent growth rate, “down from 0.57 percent for the prior 12 months — the two lowest recorded growth rates since 1900.” 

California’s population could start shrinking very soon according to other sources I’ve seen. I have seen claims that California’s population would hit 40 million by 2019 (a forecast that obviously did not occur), and 50 million by 2030 — which, if present trends hold, is very unlikely. 

According to recently released data from the U.S. Census, about 38,000 more people left California than entered it in 2018. This is the second-straight year that migration to the state was negative, and it is an increasing trend. Every year since 2014, net migration has fallen.

Another reason for wanting to build housing, and especially apartments, is the claim that there is no affordable housing. This is true. However, the housing that is being built is not housing that poor people can afford. 

Some people are now supporting the developers, in the hopes that the developers will throw them a crumb in the form of housing they can afford. I believe they are being played. I have worked for African-American attorneys for years, serving a clientele of whom the majority were people of color. In the last 10 years, I watched in sadness as the once lively Black community in the City of Oakland chose to move to Stockton, Antioch and Vallejo — at the same time that Oakland embarked on a massive downtown apartment building program. Why didn’t Black Oakland residents rent those apartments? They couldn’t afford them. 

There is a lot of talk about “building affordable housing,” but “affordable” is seldom defined in public discussion. The U.S. Department of Housing and Urban Development has defined affordable housing as costing no more than 30 percent of a household’s gross income. Per the California Department of Housing and Community Development, “lower income” means 50 percent to 80 percent of local area median income. Median is defined as the center figure in a list of numbers. 

According to the Census, the median income of the City of Alameda is $98,150. This may be due to large numbers of professionals and dot-commers making Alameda their home. Getting out the calculator, that means a “lower income” person in Alameda makes between $49,075 and $78,520 per year. To put this in perspective, a person making $15 per hour and working a 40 hour week makes $31,200 a year and the average salary for an Alameda high school teacher is $55,076 per year. 

Therefore, a developer could set the rent for his apartment units at $1,963 per month (30 of 80 percent of median income, on a monthly basis) and claim they are “affordable units.” Also note that the developer only has to designate 15 out of every 100 apartments built as “affordable.” 

The free market economy is apparently unable to produce actual affordable housing in the San Francisco Bay Area. Such apartments are only being built and/or renovated by nonprofits such as Habitat for Humanity and Eden. An interesting initiative has been put into effect by the San Francisco Board of Supervisors. Apartment buildings that meet certain criteria cannot be sold unless a nonprofit has a chance to purchase and renovate them into affordable housing. 

My conclusions from the above statistics are: California, with its slowing population growth, actually does not need any more market rate housing. There is plenty of existing housing. What is lacking is housing that the person not making a dot-com salary can afford. By my definition (and not the HUD definition) “actual affordable housing” means housing that the 15 dollars-an-hour worker can actually rent -- $780 per month (30 percent of gross income on a monthly basis). Apartments renting for $780 a month are not included in any developer’s plans for apartment buildings. 

In summary, there is no reason to build more housing in Alameda unless the housing built is actual affordable housing.