Home-Ownership Alliance a Laudable Idea Sure to Fail
The recent formation of the Orange County Affordable Home Ownership Alliance, whose mission is to create “business-oriented solutions to some of the county’s most pressing housing problems,” is a well-meaning effort that’s doomed to fail.
The economics of the balance between housing and employment, combined with the prevailing model of residential development and our dependence on the automobile, simply will overwhelm the alliance. They don’t have a chance.
Orange County became one of Greater Los Angeles’ bedroom communities as cheap land prices and the interstate highway system made such expansion possible. Now, with Orange County an economic power in its own right, the new bedrooms needed to house its burgeoning work force are to be found to the east, in Riverside and San Bernardino counties, where land prices are still affordable. The difference is that the transportation infrastructure has not expanded sufficiently. Instead, it’s estimated that Southland commuters spend 82 hours per year in dealing with traffic delays. That’s $1,370 a year on wasted gasoline and $12,405 when everything is totaled up, including the value of waiting time. While that may not be a fun way to spend the equivalent of two working weeks of one’s life, it fits perfectly well--in an economic sense--into the big picture.
As of the second quarter of 1999, the average home price (new plus existing) in Orange County was $278,398. For Riverside and San Bernardino counties combined it was $154,480, a difference of $123,918. The house purchasing power equivalent of the $12,405 a year spent on average for “excess” commuting could buy $148,000 more house at 7 1/2%, which is not far off the $123,918 figure. The point is, things are pretty much in equilibrium and, once in equilibrium, they tend to stay there.
There are good reasons to attempt to reduce the commuting “penalty” for Southland employees, but simply accommodating more cars is not necessarily it. Other than expanding on existing rights-of-way, the costs and challenges inherent in building sufficient new roads are formidable. We are experiencing such challenges in conjunction with the extension of the Foothill tollway to the south, for example. The only real option is to put commuter rail lines into the existing corridors, such as the Riverside Freeway/91 Express Lanes, with feeder stations along the way. Some of this is finally happening in metropolitan Los Angeles.
Chapman University’s latest economic forecast estimates that the housing/jobs balance in Orange County going into 2004 will be close to being even. But that says nothing about the fact that the homes being built can’t be bought by the majority of people who now hold and will hold the jobs being created. Over the past five years the county’s economy recovered all the jobs it lost during the recession and has begun to grow again. But the federal Bureau of Labor Statistics estimates that six of the 10 occupations expected to add the most jobs by 2006 pay only $10 an hour or less. In order to afford the Orange County median home (now priced at $247,000) and using conventional assumptions regarding down payment and mortgage size based on income, it would require more than three full-time wage earners making $10 and hour to pool their resources.
The bull market has made it possible for many people to spend more on housing, and the real estate developers have responded accordingly. The cities are given incentives to expand commercial and high-end residential development by virtue of the revenue generation options and taxing authorities they operate with. So on we sprawl.
The alliance can’t possibly stop this steamroller. The most constructive thing its members could do in the short run, in order to alleviate the lack of affordable housing in Orange County, is to focus on means to build more high-density apartments and condos. That’s the only way to overcome the high cost of land and development fees. Increased density also lays a firmer foundation for better transportation solutions than just more cars and more roads.
Ultimately, the future pattern of housing, employment and transportation in Orange County will be a complicated mixture of existing conditions, job and income growth, local and regional governmental policies, and life style preferences. Absent effective regional control, the future will be dominated by a decentralized approach that must lead to more of the same, namely more urban sprawl, more road congestion, more unhappy commuters, and more barriers to doing business due to escalating employee-related costs. “Not in my backyard!” and “Not in my city!” became the marching cries of the ‘90s. They are also the primary barriers to sensible regional planning going forward.
