Terner Center Blog: No Limits

Residential Land Use Regulation and the Spatial Mismatch Between Housing and Employment Opportunities in California Cities

Posted on by Noah Durst

This paper is part of a working paper series that utilizes the Terner Center California Residential Land Use Survey to assess the implications of California’s state and local policies for housing. The working paper series is published jointly by the CALIFORNIA ASSOCIATION OF REALTORS®’s Center for California Real Estate and the Terner Center for Housing Innovation at UC Berkeley. Read the full paper here.

by Noah Durst, Michigan State University

When workers can’t afford to live near where they work that often translates into longer commutes and more time spent in traffic—an increasing reality for many Californians amid the state’s housing crisis. Low-income and racial or ethnic minorities disproportionately bear the brunt of the mismatch between jobs and housing, in part because they are less likely to be able to afford housing options in high-opportunity communities. While local land use policies have been shown to shape patterns of exclusion and inclusion, to date, there is little evidence regarding the relationship between spatial mismatches and residential land use regulation. 

Using data from the Terner California Residential Land Use Survey, the American Community Survey, and the Longitudinal Employer-Household Dynamics Origin-Destination Employment Statistics, I examine the relationship between land use regulations and six spatial mismatch indicators in cities across California. These indicators capture imbalance, including the mismatch between residents and workers employed in a city, low-income jobs and affordable housing units in a city, and the earnings of employed residents and workers in a city. I also measure commute burdens by calculating the percentage of workers who live in the city in which they work and the share of workers who commute more than 10 minutes and more than 30 minutes from home to work. My analysis highlights several important takeaways for stakeholders and policymakers:

Cities with affordable housing incentives, urban growth boundaries, and eased restrictions on Accessory Dwelling Units (ADUs) have lower commute burdens.

Cities that incentivize affordable housing development through tools such as expedited permit review, reducing fees, or easing height, parking, or transportation mitigation requirements demonstrate lower commute burdens for workers, after controlling for key variables. Urban growth boundaries are associated with a 5 percentage point higher share of workers residing within city limits, and lower shares of workers with long commutes. Similarly, cities without lot size restrictions on ADUs have a 2.3 percentage point higher share of workers who reside in the city and 2.3 and 1.9 percentage points lower shares of workers with commutes over 10 and over 30 minutes, respectively. 

Cities with affordable housing incentives and no lot size restrictions on ADUs have a better balance between residents and workers, as well as between affordable units and low-income workers.

Cities that provide more incentives for housing development have larger shares of residents relative to workers than those that offer fewer incentives, and provide more affordable units relative to low-income workers. Similarly, cities that restrict ADUs to lots of a certain size house fewer affordable units relative to their low-income worker population.

Cities that prohibit high-density development house residents with higher earnings than local workers.

California cities with higher-density zoning demonstrate more balance between the incomes of residents and the local workforce than cities that prohibit dense development. However, cities zoned for higher densities also have lower numbers of residents relative to workers and fewer affordable housing units relative to low-income workers. This may reflect the fact that high-density areas are often zoned for mixed-use development that accommodates both housing and jobs, some of which are low-wage. 

Local governments can draw on a number of policy tools to encourage affordable housing development and reduce commute burdens for their local workforce.

By removing restrictions on minimum lot sizes for ADUs and parking restrictions, as well as actively incentivizing affordable housing, cities can improve the balance between housing and employment and build more equitable communities.

Key Remaining Questions Following New Amendments to SB 50

Posted on by Terner Center

Senate Bill 50—San Francisco Senator Scott Wiener’s high-profile effort to reform local zoning in transit- and job-rich areas—is back for its second year in the California legislative session. Amendments introduced on January 3rd include new language on local flexibility, among other revisions. The bill now faces a January 31st deadline to be voted out of the Senate and into the Assembly. Major land use reforms, such as those proposed by SB 50, are essential if California is going to alleviate its ongoing housing affordability crisis. Yet, while new financial commitments, tenant protections, and other reforms have all moved the state…

How Housing Supply Shapes Access to Opportunity

Posted on by Elizabeth Kneebone

In the past few decades, as housing production has slowed, albeit unevenly, and new ownership production has shifted toward larger format, single-family homes, a tightening housing market has seen increasing price pressures, particularly for entry-level homebuyers and renters. To better understand the impact of trends in housing production on who can buy a home, particularly at the entry level, and the barriers renters face in gaining access to higher opportunity neighborhoods, the Terner Center for Housing Innovation undertook an analysis of how characteristics of housing production have shifted over time in the nation’s 100 largest metropolitan areas. Today, the Terner…

Leading Housing Researchers Challenge Proposed Fair Housing Rule Change

Posted on by Terner Center

The NYU Furman Center and the Terner Center for Housing Innovation at the University of California at Berkeley submitted public comments today arguing that a proposed rule from the U.S. Department of Housing and Urban Development (HUD) ignores the demonstrated harms inflicted by segregation, fails to account for the basic structure of local zoning and land-use decisions, and imposes obligations on fair housing plaintiffs inconsistent with the basics of social science.  In light of these major flaws, the university researchers urge HUD to withdraw the proposed rule. Read the joint public comments. The “Disparate Impact” standard is a legal concept at…

2019 California Housing Legislation Round Up

Posted on by David Garcia

The 2019 California legislative season recently came to a close, and several promising housing bills have now been signed into law by Governor Newsom. But the road to this year’s “housing package” was not easy and, at various points, it seemed as if the legislature would fail to pass any key housing reforms.  The session started optimistically, buoyed by a new governor who made bold housing solutions a staple of his campaign. Sure enough, the session got off to a fast start, with the introduction of several sweeping and ambitious pieces of legislation, on issues as varied as land use reform,…

Land Use Politics, Housing Costs, and Segregation in California Cities

Posted on by Jonathan Rothwell

This paper is part of a working paper series that utilizes the Terner Center California Residential Land Use Survey to assess the implications of California’s state and local policies for housing. Read the full paper here. By Jonathan Rothwell, PhD, Gallup It is striking that, at a time when a lack of housing affordability is a highly salient issue for the public and elected representatives, California uses its land so inefficiently. While less than a quarter of the land in the state’s municipalities is zoned for multifamily housing, more than half is set aside for single-family detached homes. Density is closely related to housing affordability,…

Demystifying Development Math

Posted on by David Garcia

For many, the way that housing is built can be mysterious: a developer acquires the land and wins city approval, then at some point construction workers break ground, and eventually the new housing becomes a reality. But what about all of the steps in between? What factors go into whether or not something gets built? And what does it even mean to make a project “pencil”?  If you’ve ever found yourself wondering about these and other real estate finance questions, then our latest Terner Center publication is for you. In our new brief “Making It Pencil: The Math Behind Housing…

Residential Impact Fees in California

Posted on by Terner Center for Housing Innovation

As California continues to grapple with the devastating effects of the housing crisis, more attention is being paid to the rising cost of building new homes. The median home value in California has almost reached $550,000,(1) reflecting both the limited supply of homes as well as the high cost of development. In some cases, the cost of building affordable housing in California has topped $600,000 per unit, or more. Strapped for revenue, localities are increasingly turning to development fees to fund vital public services. In an effort to uncover paths to lower the cost of housing, the Terner Center has…

California’s Rent Cap Debate: Something’s Gotta Give

Posted on by Carol Galante

The Terner Center for Housing Innovation first became involved in discussions around rent control policy in California leading up to Proposition 10, the ballot initiative in 2018 (ultimately defeated) that would have repealed the Costa-Hawkins Rental Housing Act, the statewide framework put in place by the state legislature in 1995 to set limitations on local rent control ordinances. History tells us that the debate over Costa-Hawkins itself was a divisive and hard-fought battle. It’s no surprise that stakeholders and policymakers are having a difficult time finding a path forward today. In May 2018, after research and meetings with a variety…

California Needs to Build More Apartments

Posted on by Jenny Schuetz and Cecile Murray

This paper is part of a working paper series that utilizes the Terner Center California Residential Land Use Survey to assess the implications of California’s state and local policies for housing. Read the full paper here. California needs to build more apartments. By Jenny Schuetz, PhD, the Brookings Institution, Metropolitan Policy Program and Cecile Murray, MSCAPP, University of Chicago So much ink has been spilled over California’s persistently high housing costs that it has become a cliché. Nearly everyone agrees that high costs are a substantial problem – not just for families struggling to pay rent, but also for companies trying to attract and retain workers, and for…