MasterPlanning!: The Bay Area Burden
by Tony Chavira
Article after article written about California predicts our doom. Politicians believe it, economists believe it, journalists believe it, and people in the planning community believe it. But no one has a solution that’s viable, simply because no one seems to have a grasp on exactly what the problem is. Some say that our “heavy tax, heavy spend” style was our undoing. Some say that the political polarization of the state is what causes this financial conundrum. Some say that we haven’t been aggressive enough to make our politicians pay, citing examples like kicking Gray Davis out of office for committing the same financial follies Schwarzenegger would later commit. Bond issues didn’t seem to fully pay off, money for large projects evaporated, budgets were stretched, and social programs were cut. Still the forecast is doom.
When you look at these depressing numbers, articles, and circumstances, you can get stricken by an overwhelming sense of depression (as I have). What’s the point in even holding onto vague impressions of hope? What kind of change are we even advocating for? Cheaper homes? Is that it? Is that really our solution?
And then a study like The Bay Area Burden is released, and the fire inside you reignites. You can see for yourself that these problems aren’t unsolvable and that they didn’t originate from unknown sources ... no matter how much everyone seems to enjoy predicting that California’s going to be financially screwed until the end of time. The Urban Land Institute’s Terwilliger Center for Workforce Housing, in partnership with the Center for Housing Policy and the Center for Neighborhood Technology, draws a straight line for us with a simple idea: living in California is costing us so much money that we can’t even afford to meet our basic needs.
But I’m getting ahead of myself. I want to point out that there’s really no one reason why California’s in a terrible budget crisis, and anyone who tells you that it’s just “one thing” or “one underlying belief” is trying to pull the spotlight away from the real problems we have in California. I’m not going to argue that all of our problems are caused by something we previously didn’t notice, deliberately ignored, or advocated for incorrectly. Pundits seeking to grab the spotlight can do that for me.
Instead I want you to think more simply, about how much it would cost to buy a home near your work versus buying a home 30 miles away in a cheaper area. Think of how much money you’d save if you worked in Burbank but bought that home in West Covina. Or worked in Beverly Hills but lived in Van Nuys. How about worked in downtown L.A. but living in San Pedro? The philosophy that “buying further away is cheaper” has piloted the path for development in California for over 50 years now. Naturally, it didn’t account for the fact that eventually so many people would choose to subscribe to it that any savings you’d expect from living further away would be counteracted by a ton of money, time and effort you’d spend trying to get to and from work every day. What’s worse about Southern California is that we’re so driven (no pun intended) by the car culture that we expect to allocate an immense portion of our earnings to transportation costs.
There are two things about the Bay Area we accept as common wisdom, though: living there is really expensive, but the public transit system is good and generally thorough. Naturally, you wouldn’t expect that it’s a place you’d be able to live in cheaply, and the ULI finding that residents pay roughly $28,000 on average annually to live in the Bay Area really emphasizes that point. On top of that cost, add $13,400 annually to the household budget for transportation, and suddenly it costs the average homeowner or renter there $41,400 to simply exist there. With this preface in mind, it’s no wonder that the Terwilliger Center for Workforce Housing is so interested in the Bay Area, when roughly 49% of Bay Area households made less than $75,000 annually in 2008. That essentially means that about half the people living in the Bay Area spent more than 50% of their income on housing and transportation costs in 2008.
More than 22% of the households in the Bay Area make less than $35,000. Just think: how much of that income goes to transportation costs and housing? When you’re suddenly spending more than 60% of your income on housing and commuting to work, you need to start making sacrifices. The first round is usually manageable: get rid of the television, go out to eat less, watch fewer movies, clip more coupons, or buy fewer brand-name foods and clothes. The second round is usually more defining: reduce the size of your residence, walk instead of taking the bus or train, or even stop paying much needed insurance. Then things get dangerous: bills don’t get paid, children go hungry for the night, rent or mortgage payments lapse. The cost of things in the world will not go down, but you never know how much money you’ll be making a year from now. And these things are what we mean by basic needs. Very basic needs.
And just like in Southern California, the further one has to go in the Bay Area for affordable housing, the worse transportation costs become. People will still need to work, and work will still (generally) be centralized in the denser parts of the Bay Area. It’s definitely not affordable to drive from your inexpensive condo on the outskirts of Sonoma down to San Jose every day ... and if you do it, don’t lie to me and say you aren’t bothered by the commute. You’ve just gotten used to it. You’ve gotten used to paying tolls every day, paying for a full tank of gas twice a week, and paying for your car to get major service way more than twice a year. How does that offset the supposed benefits of living in a place that costs less? How is it really affordable at that point?
What does affordable even mean when one-fourth of all Bay Area households pay 65% of their income or more on their combined transportation and housing costs? Even people you’d consider “well off” are paying heavily for their housing and transportation. The Bay Area Burden report uses a great phrase to describe exactly how you are losing your money (which I plan to shamelessly commandeer for upcoming articles): “location efficiency.” In a nutshell, “location efficiency” is how close your home is to (a) some sort of transportation hub, (b) your job, and (c) retail centers like the grocery store, and how that determines what you’re actually paying in living costs. Here’s an easy-to-understand example: which of these two situations sounds cheaper to you?
- You live in the outskirts of San Pablo, drive an hour to work every day (and an hour back), and the nearest grocery store is about 4 miles away.
- You live 20 minutes from work by train (and 20 minutes back), and the grocery store is on the way back from work.
I know what you’re thinking: “Option 2 seems cheaper, except that it’ll cost a boatload to live in the city. But, according to the Bay Area Burden study, Option 1 would probably cost just as much and be twenty times as time consuming. Oh, woe is me ... how do I afford anything in the Bay Area?”
You’re right too: woe is you. The Bay Area’s a triple threat of sorts: the Bay Area has the highest median home value in the country, the highest median monthly costs for homes with mortgages in the country, and the highest median rent in the country. More than 20% of households spend more than half of their income on housing alone, where only 12% of the rest of America have to pay that much. Top it off with the fact that households in some parts of the Bay Area (the Outer East Bay, North Bay, and South Bay) spend an estimated 20%-22% on transportation costs, and you’ve just lost about 70% of your income on “just having to live there.”
But the good news is that we know this now. In fact, the National Housing Conference website provides a handy dandy online interactive calculator developed by the Center for Housing Policy (graciously bestowed to me by the fantastic Laura Woods at the NHC) called “Paycheck to Paycheck.” It can help the average Joe or Jane Homeowner to measure their housing affordability based on his or her job, and includes something like 200 metropolitan areas in the United States. This is a fantastic first step to making people aware of what options they have, especially when you see statistics like those above and begin to feel that you’ve totally run out of options.
The ultimate step, of course, would be to develop a web tool that determined your overall “location efficiency.” Based on what job you have and what you earn, where would be the best place for you to live? What are your options for housing and what are your options for transportation? How do you keep things affordable, without feeling like you have no choices? How do we put more money in your pocket to inject into the economy, give to charities, or save for your future? In a lot of ways, a location efficiency tool would be the quintessential go-to application; not only does it remove the uncertainty of whether or not you can afford housing based on your income, but it would be able to help you in case you ever needed to move anywhere for any reason. It would provide that much needed map to help you achieve your personal goals without having to worry about basic things like having a roof over your head or being trapped 100 miles from where you work.
So yes, our state and communities are floundering right now. And yes, a lot of articles starting with “California’s problems were brought on by ...” are trying to force us to accept a deterministic outlook toward California and its ugly financial state. It seems like people would not want to live in California unless they were able to cover the added living costs, but it wasn't always like this. Knowing the real problem is the only way toward finding a real solution, and fantastic research like the “Bay Area Burden” really drives that point home ... an affordable distance, of course.
Be sure to check out their website at BayAreaBurden.org, and maybe drop them an e-mail and ask for a Southern California Burden, even though it doesn’t have that alliterative ring to it.
www.racaia.com | tony@fourstory.org
Comments
Hmmm… good article idea, Florence! Technological ties between urban and rural spaces, and the integration of planning efforts maybe?
In case you’re interested in transitional urbanism to ruralism and how people are bringing new ideas to different spaces, check out the great blog Landscape+Urbanism out of Portland, OR (http://landscapeandurbanism.blogspot.com/). Lots of interesting stuff about ecological urbanism, if i do say so myself. Which I do.
Thanks for the comment!
2009-11-12 by Tony Chavira
this is an excellent and important article. is there anything in your repertoire that you could pull out and write about re: outlying villages surrounded by nature connected to cities via technology?
2009-11-12 by florence