By admin Ethan Evans admitted he was feeling fired up and not in a good way.
Evans, a Sacramento State sociology professor and former executive director of the Sacramento Housing Alliance, had been asked his thoughts on a recently published article about a study, funded by Pew Charitable Trusts, by University of Oxford professor Zachary Parolin.
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The study suggested that states with high housing costs could fight poverty by adopting polices that increase housing construction, such as reduced regulatory barriers. In California, that could reduce one measure of the poverty rate down to the national average, it said.
The general idea of increasing supply in California to reduce the state’s housing crisis has its advocates. Gubernatorial hopefuls Xavier Becerra and Steve Hilton each said in a recent debate that they would enact policies to increase housing construction.
Some Sacramento-area housing experts agree that creating more housing, whether affordable or market-rate, could be beneficial. But others dispute the idea that increasing housing construction could be economically helpful for people earning the least.
“I’m sure there’s a lot of fanfare for this,” Evans said about the idea of pushing more housing production. “But it’s misguided.”
What the study argues
The study zeroes in on 10 states and the District of Columbia where housing costs produce the highest adjustments to the U.S. Census Bureau’s supplemental poverty measure, an alternative to the country’s official poverty measure. The SPM accounts for the local cost of living, while the traditional measure considers fewer factors and is largely focused on income.
Under the supplemental poverty measure, California has the second-highest poverty rate in the nation, 17.8%, in recent years. Louisiana is the only state with a higher rate. Under the traditional measure of poverty, California matches the national average at 10.7%.
Aside from California, the other states with the highest housing cost impact on the supplemental poverty measure are Colorado, Connecticut, Hawaii, Maryland, Massachusetts, New Hampshire, New Jersey, New York and Washington.
In California, the study states that while rents increased 61% from 1985-2023, median incomes rose by 45%. The state had the third-highest rental rate increase during that period.
“A sustained decline in local rents would meaningfully reduce poverty across California,” the study notes. “A 20 percent reduction in local rents would lower the average California poverty threshold by $4,296 for all individuals and by $5,061 for families with children.”
The article published with the study on Pew’s website states that Parolin’s research “bolsters evidence that housing costs have a direct impact on poverty and that policies to enable more housing will help reduce poverty and benefit low-income households in particular.”
Christopher Elmendorf, a UC Davis law professor who writes frequently about regulatory reform and housing abundance, said it was “clearly correct” that building more housing could reduce poverty.
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“There’s a lot of work that’s been done recently on what are called ‘moving chains,’” Elmendorf said. “The work tracks when one person moves into, let’s say, a new fancy apartment building or a new fancy single family. They’re typically moving out of some other unit of housing somewhere else and then their former home becomes available.”
North State Building Industry Association president and CEO Tim Murphy also agreed with the study’s finding.
“The more units that are put into production, the more housing opportunities there are,” Murphy said. “And in some communities, it’s really challenging to find housing, which is why rents have been at historically high levels. So I think that will definitely help with people who are struggling with making ends meet.”
Skepticism among affordable housing proponents
Not everyone shared Elmendorf or Murphy’s optimism about the impact of increased housing production.
Ron Javor, who served as legal counsel for the California Department of Housing and Community Development during Jerry Brown’s first gubernatorial administration, said the study called to mind the policies of another former politician from the Golden State.
“It’s Ronald Reagan’s trickle down again: Let’s build stuff. Doesn’t matter what it is — market, high end, anything like that — and somehow the benefits will trickle down to the lower-income people who will somehow get magically lower rent,” Javor said.
Javor added, “And yes, that may be happening in Austin or a couple other places, but in fact, I don’t see a real impact helping lower rents” for working-class people.
Architect David Mogavero, who has designed many affordable housing projects in the Sacramento area, was skeptical that reducing rent would mean less poverty in California.
“The way the real estate market works, that is extremely unlikely,” Mogavero said. “And for better or worse, the banks really don’t allow overbuilding, like has happened in certain segments. Thirty years ago, the real estate industry was prone to much wilder demand-supply changes than it is today.”
Evans had the most heated response to the study.
“This guy didn’t write this to bring on that type of vitriol,” Evans said. “But shame on those who don’t say something, because to just go, ‘Ooh, how cute! A sustained decline in local rents would meaningfully reduce poverty across California.’ Really? How are you going to produce this sustained decline in local rent just building more?”
Criticisms of Parolin’s study didn’t faze Elmendorf.
“I think the important point is that the different segments of the housing market are connected,” Elmendorf said.
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