NEW GRADUATE STUDENT HOUSING COMES TO MY NEIGHBORHOOD.

The apartment house at 2711 Shattuck Avenue is nearing completion and will be ready for occupancy soon. The entire building has been rented to the university, which will sublease individual units to individual graduate students. The apartments are all 310 square feet, which is very small. These apartments were built in China and arrived at the Port of Oakland in standard 8′ x 40′ shipping containers. The apartments came fully furnished and ready to move in. Each studio apartment will rent for $2180 a month and are all single occupancy (one student per apartment). This apartment house has no amenities aside from a coin-operated laundry room on each floor. There is no lobby, no yard, and no elevator. That means that if you live on the 4th floor of this building and have 4 or 5 bags of groceries, you have to shlep them up 4 flights of stairs as best you can. There is only one parking space (that’s not one parking space per unit. It’s one parking space for the whole building.) Pre-fab apartments from China are popping up in San Francisco and more are planned for Berkeley. Try to imagine what it would be like to live in an apartment that is only 8 feet wide.

WHY IS RENT SO HIGH IN CALIFORNIA?

The chart below explains it all. It tells the whole sad story. We need to build 180,000 new housing units in California every year to keep up with population growth, but we are only building 80,000, and this has been going on for 20 years. All of the housing problems we have in California, all of them, can be traced back to this one simple fact. Every year, our housing shortage gets worse, and this ever-worsening housing shortage explains why rents keep rising faster than inflation, why the vacancy rate is so low, why people are doubling up in apartments and houses, why people are paying a higher and higher percentage of their income on housing, why college graduates in California move back home with their parents after they graduate, and why thousands of people in the Bay Area are living in RVs, tents, cars, and trucks. Unless we build enough housing to keep up with population, all of these problems will just get worse.

California’s Population Explosion. In 1945, the population of California was 8 million. Today it is 40 million. That means that for every 1 person who was living in California at the end of World War 2, there are now 5 people living here. I live in a house that was built in 1902. In 1902, the population of California was 1.5 million. That means that for every 1 person who lived in California when my house was built, there are now 26 people living in this state. Like most people in the Bay Area, I am not happy about this tremendous population growth. I too wish that fewer people were moving to California, but they are coming here whether we like it or not. And its easy to see why they are coming. This truly is the Golden State! Suppose you were living in a city in a Rust Belt state full of closed factories, where the unemployment rate was 20% and the minimum wage was still $7.25 an hour. Wouldn’t you want to pack your bags and move to California? The unemployment rate in California is 4%, and the minimum wage in California will soon be $15.00 an hour.

America’s Black Hole. My sister Judy once called California ‘America’s Black Hole.’ I never forgot that because it’s true. What she meant was that moving to California is like entering a Black Hole. Nothing that enters a Black Hole comes back out. Once people move to California, they never go back to where they came from.

Adios Baltimore! I grew up in Baltimore, a Rust Belt city. The population of Baltimore peaked in 1950 and has been declining ever since. The heavy industries that once supported Baltimore’s prosperous working class are gone. Baltimore’s shipyards that once employed 50,000 people are gone. The Glen L. Martin aircraft factory that once employed another 50,000 people is also long-gone. The Bethlehem steel mill that once produced 10,000 tons of steel a day is gone. As the jobs dried up, so did Baltimore’s population. Thousands of row houses in Baltimore with their famous white marble stoops are just rotting away. All of Baltimore’s once-fashionable downtown department stores are now abandoned. There are dozens of cities just like Baltimore all over this country, once bustling industrial centers that have been in decline for generations. Without the jobs, what is to keep people in Baltimore? Baltimore is hot and muggy in summer and can be bitterly cold in winter. There are no interesting geographical features in Baltimore like mountains or waterfalls or palm tree lined beaches. We can’t stop people from leaving places like Baltimore and moving to California, and it is a fantasy to imagine that people won’t come here from places like Baltimore if we just don’t build housing for them.

Not In My Back Yard. We need more housing, a lot more housing in California, housing that ordinary working people can afford, but we’re not building it. Most of the city councils around the Bay Area are dominated by NIMBYs. (Not In My Back Yard). These politicians and the voters who elected them support laws that discourage new housing from being built, like downzoning, height limits, and and inclusionary housing laws. They also support laws that encourage landlords to remove existing rental units from the market, like rent and eviction control laws. Rent control gives owners of rental properties, particularly small rental properties, a financial incentive to get rid of their tenants and sell their properties to owner-occupants or to use their rentals for other purposes, like turning apartments into AirBNB rentals or offices. We need to accept this one fact – a lot of people are coming to California whether we like it or not. We are only hurting ourselves by discouraging developers from building new housing and by encouraging landlords to go out of business.

Where Will The Middle Class Live?

Parker Berkeley is the newest apartment house in town. This place is huge! Parker Berkeley covers a whole block plus part of the block across the street. It is not on a spiffy section of Shattuck Avenue, and it is a long way from campus, but it is walking distance to the Ashby BART station. My guess is that the owners of this building are planning to rent to commuters who work in San Francisco. The rental office is now open and here are the rents:

Studio $2,900.
One bedroom $3,400
Two bedroom $4,500
Three bedroom $6,300
Parking is extra, plus the rent is higher if you have a cat or a dog.

If these rents seem high to you, remember that rents for similar apartments in downtown San Francisco are much higher than this. Like all new apartment houses in Berkeley and San Francisco, Parker Berkeley has inclusionary apartments for the poor, but all the other apartments are rented at market rate. So here is my question. If all the new apartment houses in town only have apartments in them for the rich and the poor, then where will the middle class live? I have been asking that question for 30 years. Consider a schoolteacher who makes $70,000 a year. This teacher doesn’t make enough money to rent a market rate apartment at Parker Berkeley but makes far too much money to qualify for an inclusionary apartment. So where will this schoolteacher live? Certainly not at Parker Berkeley orĀ  any of the new apartment houses going up in Berkeley or San Francisco. America has long been a middle class society, but we are building no housing here for the middle class. None at all. Zero. Zip. What kind of society are we going to live in if we only build housing for the rich and the poor? I never, never hear local politicians talking about this issue, the complete lack of new housing for the working middle class. It never comes up. I wonder why.

What Is Low Income Housing?

That depends on where you are. In Palo Alto, ‘low income’ means that you make under $250,000 a year, in which case you are entitled to a low income housing subsidy. That is in Palo Alto’s recently adopted City Housing Element. This isn’t as crazy as it sounds. In Palo Alto, a typical 3 bedroom, 2 bath house sells for round $3 million. If you make $250,000 a year, you would have to spend over 70% of your take-home pay to buy a $3 million house, making it ‘unaffordable’. What does it mean to be poor? Well, one way of thinking about poverty is this – someone is poor if he doesn’t make enough money to own his own home. What do you think? Should someone who makes $250,000 a year be entitled to a low income housing subsidy?