Too Few Homes, Too Many Homeless: Part One, How it Happened
Apart from the fine weather unique to California, there is little stopping the homeless crisis that grips that state from infecting the rest of America. California’s other even bigger problem, unaffordable housing, is also coming to America. All the elements are in place.
The problem of increasing homelessness boils down to three fundamental policy failures. Massive immigration, overpriced housing, and an inability of state and local governments to properly deal with homeless people.
Volumes could be written about each of these problems, because each of them are symptomatic of deeper challenges. Immigration is fundamentally transforming our culture. Overpriced housing is just one element of the economic asset bubble that offers an illusory, unsustainable substitute for genuine economic growth. And our inability to deal with the homeless is just one example of a stultified society, mired in legal disputes, bureaucratic inertia, and corruption.
Before exploring the specific synergy these three problems have with respect with homelessness, it’s important to declare their larger significance. Because how each of these problems affect homelessness, and how each of them might be solved in order to resolve the problem of homelessness, point the way to larger, more general solutions.
Mass Immigration Raises Demand for Housing
The easiest of these three to understand is mass immigration. It is also the easiest to solve, which unfortunately is only to say the other problems are even tougher. Since 1965, over 60 million people have immigrated to the United States. During that time, the total population has risen from just under 200 million to over 325 million. That is, immigration is responsible for at least 50 percent of the population growth in America during this time. In reality, the number is considerably greater than 50 percent. For example, according to research from the Brookings Institution, over the past ten years, from 2006 through 2017, the population of child bearing age children of native born Americans has dropped by a -0.5 percent per year, while the population of child bearing age children of immigrants has risen by 3.0 percent per year. Immigrants to America are having children at well above replacement levels, while native born Americans are in slow decline.
The point to all that is simple. Demand for housing in America has dramatically increased because of population growth, and population growth has been largely the result of immigration.
One may argue all day that a rising population is necessary to ensure healthy economic growth, but there are important qualifications to that argument. First, while this is generally true, how true it is greatly depends on what sort of immigrants are admitted. The data points to a complex mix. According to a summary of studies done on America’s immigrant population recently published in the National Review, “From 1970 to at least 2000 – and possibly all the way to 2007 – each new wave of immigrants was less educated, relative to natives, than the wave that had come before.” The article went on to state that “The educational decline has ended, but the improvement has not led to economic successes. Another area where the dramatic increase in new immigrants’ education did not result in a dramatic improvement in their situation is welfare use.” With respect to illegal immigration, the data showed them to be the least educated, particularly those from Latin America.
When it comes to immigration, if the United States were able to successfully restrict immigration to skilled professionals, these immigrants would be able to afford homes, and they would be greater contributors to private sector economic growth. But there is a bigger challenge at work, which is what is considered optimal population growth? At what point do Americans decide there are enough people living here, and the downside to mass immigration outweighs the upside? Perfecting an economic model that accommodates slow population growth, or none at all, remains a challenge that no society has met, anywhere on earth. It is a challenge that is most often touted by the American Left for reasons of ecological sustainability, yet the American Left are also the most enthusiastic champions of mass immigration.
Regardless of these nuances, mass immigration has increased the demand for housing in the United States. This has driven up the prices for housing, which has left low income residents – millions of whom are low-skilled illegal immigrants – either homeless or barely hanging on to an overpriced rental.
Political Mistakes Have Artificially Restricted the Supply of Housing
Returning to a numerically moderate, merit-based immigration policy, with secure borders, is a cakewalk compared to rolling back the political mistakes that have restricted the supply of new housing. Across the nation, but especially in blue states like California, it has become extremely difficult for a property owner to develop housing on their land. The array of forces working to restrict housing is daunting – virtually all “enlightened” politicians, powerful environmentalist pressure groups, big land developers, and the financial sector.
In California, for years, state legislation has made it nearly impossible for developers to construct new housing outside the so-called “urban growth boundary.” Instead, development is redirected into the footprint of existing urban areas. Environmentalist laws such as California’s Environmental Quality Act (CEQA) create additional barriers. California’s legislature has now made it necessary for new home construction to be 100 percent “energy neutral” by 2020, greatly increasing building costs.
Where the environmentalist inspired mandates leave off, insatiable public sector greed kicks in. According to a study last year conducted by the San Francisco Bay Area Planning and Urban Research Association, the lowest per house city service and “impact fees” were $20,000, in Sacramento, of all places. The highest fees were a mind-boggling $160,000 per home in Fremont, a city in the San Francisco Bay Area.
What is the true motivation for these outrageous fees – ostensibly to pay for public services associated with new homes? Excessive public sector compensation, “negotiated” by government unions that exercise almost absolute control over California’s state and local politicians. In California, public employees collect, on average, twice as much in pay and benefits as the average full-time private sector employee. The biggest cause of this excess? Public sector pensions and retiree health care, which for retirees in California with 30 years of government service average well over $70,000 per year.
Public sector greed is a primary factor in elevating California’s cost-of-living to punitive levels. The irony is deep. Public employees could afford to make less, if they made less.
Complicit in the artificial, politically contrived scarcity of housing in California are the biggest land developers. These politically connected large firms can afford to wait years if not decades for their projects to gain approval, and they can afford to pay thousands if not millions in fees to attorneys, consultants, and government agencies long before they ever reap any profit. But when they finally sell their housing developments to consumers trained to pay $1,000 per square foot or more, their profits are fat indeed.
No discussion of California’s inflated housing values is complete without explaining the benefit these bubble values impart to financial interests. Mortgage lenders build their base of collateral. Pension funds see their real estate portfolios yield impressive gains. Public entities realize growing property tax receipts. But asset bubbles do not constitute economic growth, and pursuing this economic strategy is both exploitative and unsustainable.
Policies to Address the Homeless Are Inadequate and Corrupt
Insufficient supply in the face of unprecedented demand aren’t the only reasons California has a homeless problem. Miserably inadequate “solutions,” mired in corruption are also to blame. Part of the problem is that the available solutions are hampered by an assortment of judicial rulings.
In the City of Los Angeles the estimated homeless population is estimated to exceed 50,000. They have taken over huge sectors of the city. Moving them out of some of the most desirable public spaces is nearly impossible, however, because in 2006, the Ninth U.S. Circuit Court of Appeals in Jones v. City of Los Angeles ruled that law enforcement and city officials can no longer enforce the ban on sleeping on sidewalks anywhere within the Los Angeles city limits until a sufficient amount of “permanent supportive housing” could be built.
To address this growing problem, in 2016, 76 percent of Los Angeles voters approved the $1.2 billion Measure HHH to “help finance the construction of 10,000 units of affordable permanent-supportive housing over the next 10 years.” How these funds have been applied will be read in history books centuries from now as an example of epic corruption. Here is an excerpt from an email received from a local activist fighting to save the Venice Beach from the homeless invasion. It speaks volumes:
“We know there is a serious problem of large populations of homeless people in and around Los Angeles and we know the solution is not an easy one for anyone. We have compassion for these people and we want to help. But the homesteaders along Venice Boardwalk are not your average ‘down on your luck homeless’, they are mostly either out of prison left in the streets with nowhere to go or bohemian drifters and runaways who are hooked on drugs and choose this lifestyle. Many do have a place to go or capability of other means of existence but prefer the ease the Venice community for comfort, camaraderie and ease of obtaining food and restroom facility.”
Clearly, the homeless encampments in Venice Beach, where well over 1,000 vagrants are estimated to permanently reside, are destroying that community. The response by the city? Conversion of a 3.2 acre city owned parcel into a homeless shelter capable of holding, get this, “about 100 people.” The shelter in progress, which will be “wet,” meaning vagrants who are intoxicated will be allowed to enter the shelter, is located less than 500 feet from the beach. In less corrupt city, that property could be sold, and the proceeds could be used to set up and monitor a tent city housing thousands of people. This excerpt from another email received from a neighborhood activist in another afflicted part of Los Angeles explains what’s really going on:
“Unfortunately, there is too much money involved for anyone to be considering tent cities. The costs are running between $400,000 and $500,000 per unit for the projects. All of the parcels they are considering are worth millions of dollars and the taxpayers of LA would be much better off if the city just sold them and used that money to fund government rather than new taxes. Everyone at city hall is pushing these facilities. The city has billions to spend on them. The City Council members get campaign donations from the developers. The developers then use our money to build these buildings. The buildings are then handed off to nonprofits with long term contracts to run them. When we showed up to protest the Sherman Oaks proposed sites, our opposition consisted of LAHSA, United Way and a bunch of other so-called non-profits that stand to get big dollars from these sites.”
These inflated costs are well documented. This absurd waste is repeating itself throughout California.
Watch Out, America. This Corruption is Coming to Your State
It isn’t impossible to fix the problem of inadequate, unaffordable housing, and a burgeoning homeless population. What California’s facing isn’t something that had to happen. But powerful special interests like things just the way they are, and those special interests are growing in influence across America.
At the national level, the push for open borders is possibly unstoppable, thanks to the peculiar alliance between all Democrats who want to import voters, hard Leftist globalists who want to undermine and ultimately destroy America as we know it, libertarian globalists naively standing on principle, and big business interests hoping to suppress wages. That’s a tough coalition to crack. But it gets worse. Perhaps even more influential are the financial elite, who have decided on a macroeconomic level that the real estate asset bubble must be maintained in order to preserve credit enabling collateral. These financial wizards view immigrant fueled population growth as an essential factor in maintaining high demand for real estate.
At the national level, an equally daunting alliance has formed to make housing construction more difficult. The environmentalist movement leads the way, clamoring for a smaller “urban footprint,” using “climate change” paranoia as the moral bulldozer to clear away opposition. But the bulldozer is rarely necessary. The intelligentsia – that is, mainstream media, think tanks, and thought leaders in the professions of architecture, design, construction, engineering, and infrastructure – has glommed onto the small-is-beautiful theme, pushing for “new urbanism,” “smart growth,” “in-fill,” “urban containment,” “transit villages,” “light rail,” “densification,” and so on. But they’re not alone.
Right behind the environmentalists are the public employees, whose pension funds and property tax revenues are goosed by real estate bubbles. On a parochial level, but more often than not, an additional incentive cities have for densification and urban containment is that it keeps development within their municipal borders, within confined areas, lowering the per capita cost of providing public services at the same time as it grows revenues.
While California is so far gone it may only serve as a cautionary example, it would be a mistake to assume that any other state is immune from these influences. In Texas, a state where homes remain affordable, voters in November elected a Democrat as the new chief executive for Harris County. Don’t laugh. Harris County is the 3rd largest county in America, covering all of Houston and greater Houston, with over 4.5 million residents.
One may safely presume that Democrats will push for restrictions on housing using the same tactics they use in California – i.e., urban containment, environmentalist construction mandates, escalating fees. But the surprise election of Democrat Lina Hidalgo, a 27 year old with no government experience, is not the first wave assault on home affordability in Houston. It’s the next wave.
A thorough expose of the encroachments “smart growth” zealots are making on policy in Houston can be found in urban geographer Joel Kotkin’s August 2018 article published in City Journal, “The Battle for Houston.” Kotkin explains how despite the success Houston has had to-date with minimal zoning and practical flood control infrastructure, the zealous “experts” are trying to change everything. Instead of upgrading flood control channels and levees, they are proposing mandatory elevated homes, something that would cost more, and disproportionately harm low income neighborhoods. And, of course, the experts are advocating “for the creation of a “thick” (meaning denser) city, with an enhanced role for traditional transit.”
Houston, beware. Everything the smart growth crowd asks for, they’re going to get, as long as Democrats – and their coalition of big business, big labor, unionized government, financial predators, environmentalist nonprofits and their army of trial lawyers – are in charge. The war for California was lost. California has to be recaptured, if that’s even possible. The war for Texas is on, with the largest metropolitan area already in enemy hands.
America, the scarcity profiteers are coming for you.
This article originally appeared on the website American Greatness.
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Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
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