Quick Take:
Economist Richard McGahey, who has held federal, state and local leadership roles and is regarded as a national expert on urban and regional economic development, has a message for Santa Cruz: Stop supporting misguided housing petitions and policies aimed at curtailing growth. The only way to move Santa Cruz off the list of the nation’s most expensive cities, he says, is to build. He lives part-time in Santa Cruz and points to the petition by the group Housing for People as an example of ill-considered advocacy.
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As Santa Cruz and California wrestle with housing affordability, some sincere but misguided advocates are supporting policies that will make the problem worse.
Research shows increasing housing supply is essential for reducing housing costs, and progressives (I’m one) need to endorse more supply, while also pushing for strong affordability measures.
Christopher Neely’s recent Lookout article profiled sincere opponents of Santa Cruz housing density who want further limits on density and building heights and to make larger projects subject to referendums. These are misguided policies that will worsen the housing affordability crisis and increase inequality.
I’m a progressive economist who studies cities and inequality, and this year I published a book called “Unequal Cities,” about America’s racially discriminatory and anti-urban history. I split my time between an apartment in New York and a mobile home in Santa Cruz.
Here’s what I know: Recent research strongly supports increasing housing supply in order to bring down costs. And contrary to what some believe, more supply does not automatically result in displacement.
Neely wrote about a local group of density opponents circulating a petition calling for community input into buildings taller than existing height limits. Again, this is a terrible idea that will only delay needed housing, as I will explain.
One of the density opponents profiled in Lookout, Susan Monheit, says she fears larger buildings will be “something that nobody wants to be in,” like downtown San Francisco. But she also says, “supply and demand arguments do not work … [in] Santa Cruz, where there always will be unlimited demand.”
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Which is it? Nobody will live there or there’s unlimited demand for housing?
In July, President Joe Biden advocated increased housing construction and density around the nation. His report correctly says wrong-headed policy “constrains housing supply, perpetuates historical patterns of segregation, prevents workers from accessing jobs and increases energy costs and climate risk.”
The president’s right — and the anti-density advocates are wrong.
Anti-density policies already have helped make liberal Santa Cruz one of the nation’s most unaffordable housing markets. In fact, the June 2023 National Low Income Housing Coalition report found that the Santa Cruz metropolitan area is the most expensive rental jurisdiction in the entire United States — worse than Boston, San Francisco or New York City.
The project being fought proposes building more dense housing downtown, near the bus terminal. That’s an ideal location, near mass transit with good connections to the university.
Environmentalists in particular should support housing density — if we don’t build up, we’ll build out.
Refusing more dense housing in city centers drives housing production to the edge of cities. This chews up farmland and creates more sprawl, more traffic and more pollution — bad for the environment and bad for affordability.
We also need a lot more multifamily housing. Santa Cruz, like the rest of America, is overloaded with zoning for single-family homes. According to UC Berkeley’s Othering and Belonging Institute, 64% of all residential zoning in the city is restricted to single-family homes. And America’s legacy of single-family zoning has been a major contributor to racial segregation and inequality.
The state is helping expand housing in these zones by authorizing accessory dwelling units (ADUs) along with other steps. But cities need to implement these laws quickly, standardize pre-approved plans for ADUs (as San Jose has done) and not create new layers of review or delay. And ADUs alone can’t solve the housing supply gap.
Let’s return to the anti-density advocates’ hope of subjecting larger projects to ballot referenda. Here’s the problem: Voters don’t have the attention span to assess the details of every project and its finances — that’s why we have elected representatives and planning experts. While voting sounds like a good use of democracy, ballot initiatives, in fact, often are low-turnout elections, dominated by wealthier homeowners who vote against housing and housing finance.
The same goes for more “community” input.
Overly extensive and repetitive meetings to rehash project details are seen as democratic. But again, research shows such processes often are dominated by a small group of wealthier — and whiter — homeowners. They aren’t a true reflection of the entire community, especially lower income and non-white households, students and renters.
As I said, I’m a “second home” owner (a mobile home). And I support the second homes tax and other ways to finance and build affordable housing. Santa Cruz homeowners already profit massively from restrictive zoning and from Proposition 13. We don’t need more anti-housing policies that will drive existing home prices even higher.
As an economist, I know markets can’t automatically solve social problems.
Housing developments need strong, enforceable affordability requirements built into their legal structure. Interested people should check out and support the excellent work of Santa Cruz YIMBY (“Yes in my backyard”), advocates for affordable housing and inclusion.
Increasing housing supply — of all kinds — helps lower prices and rents. Increasing density, especially in a downtown with mass transit, is good for the environment and for fighting sprawl. We need more housing supply that includes strong affordability requirements, not anti-density proposals that only will make our housing problems — and inequality — worse.
Economist Richard McGahey studies cities and inequality at The New School in New York City. His 2023 book, “Unequal Cities” (Columbia University Press), was nominated for the National Book Award. He was executive director of the Congressional Joint Economic Committee, assistant secretary for policy at the U.S. Department of Labor, and economic advisor to Senator Edward M. Kennedy (D-Massachusetts). McGahey also was director of impact assessment at the Ford Foundation. He blogs regularly for Forbes, and divides his time between New York and Santa Cruz.