“Why Millennials Are (Partly) to Blame for the Housing Shortage.”

As part of the on-going boomer conspiracy to dodge responsibility for everything wrong with the world, The Wall Street Journal contends that the country’s housing shortage is due, at least in part, to “the rush of young people to U.S. cities over the past few years”.

“As young people and builders have shifted their focus toward trendier urban markets,” the Journal reports, “overall housing construction has declined”.

Millennials just being millennials has consequences.  “In some parts of the country’s largest and most prosperous markets, such as…San Francisco…housing construction has been stronger than normal in the urban core but weaker in the suburbs, where new housing can be built more abundantly and cheaply, according to an analysis…by BuildZoom, a website for construction contractors”.

So how relevant is this to Silicon Valley’s housing shortage?

There aren’t many builders who’ll tell you that “new housing can be built more abundantly and cheaply” in the suburb called Palo Alto.  But Palo Alto (and Mountain View and Los Altos etc.) certainly qualifies as a preferred location among the Valley’s young people, “many of whom want to live closer to transit, restaurants and their workplaces”.

So let’s call Palo Alto (and Mountain View and Los Altos etc.) the urban core of Silicon Valley.  And let’s call places like south Santa Clara County and the East Bay Silicon Valley’s suburbs, where “new housing can be [and currently is being] built abundantly and more cheaply”.

It seems like a good analogy.  Certainly “high land costs in [the Valley’s “urban core”] have pushed developers to focus on higher-end housing geared toward high earners instead of younger people just starting out”, true of rentals as well as owner-occupied housing.  Except that in Silicon Valley, “younger people just starting out” are not infrequently “high earners”.  And the first home they buy may cost two or three million dollars.

What does the Journal think it’ll take to solve the housing shortage?  Stop me if you’ve heard this before:  “pricey cities need to loosen land-use restrictions…more high-rise condo buildings would make it economical to produce starter homes in these areas”.  And lately that’s the trend here in the Valley.  Suddenly, the political will exists–at least for the moment.  In Palo Alto the pendulum has swung before, in a debate that goes back to the 1960s.  And my guess is that down the road the NIMBYs won’t only be boomers.  As more X-ers and, yes, millennials achieve homeownership, they may well become invested, if only subtly and unconsciously, in the status quo.

But if you think Silicon Valley’s new starter housing will be affordable housing, as many do, I think you’ll be disappointed.

copyright © John Fyten 2017

 

 

 

 

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