Single-Family Homes in California - The End of an Era?

In the NY Times “The Daily” podcast of October 11, 2022, “The Rise of the Single-Family Home”, host Sabrina Tavernise documents the story of a single plot of land in California over time. The same house and the changes to it and its neighborhood are also featured in a NY Times print/online article by Conor Dougherty from a year earlier (October 8, 2021).The show talks about how California is “the most extreme example of the affordable housing crisis” that the US is currently facing. Median home purchase costs are higher than the country’s, homelessness is soaring, and many people are doubling or tripling up in small apartments, just to have a place to live. And yet, “people still want a single-family home”. The single-family home (picket fence, yard in back, dog, barbecues, kids playing basketball in the driveway) is a core component of the American Dream and is both a physical reality and a symbol of community and economic achievement.Many communities across the country have zoning laws that only allow for single-family homes by right (i.e. no special permit needed, no hearing required – you buy a plot of vacant land of a certain size, you can build a single-family home on it). If a homeowner or developer wishes to build something else – a duplex, a triple-decker, or other multi-family housing – they have to go through a hearing process (and will expect to face opposition by neighbors who want to preserve the character of the neighborhood and preserve their property values and who feel that anything other than a single-family home will negatively impact both).So where did the popularity of the single-family home come from? The United States was a primarily agricultural society until the Industrial Revolution and the arrival of the railroad. Cities arose around mills and factories and the population shifted from 95% rural in the first US Census of 1790 to 51% urban in the 1920 census. The chart below from Statista.com shows the steep change from rural to urban as industrialization took hold (and it predicts the urban march to continue into 2050).In the 1940s, cities started running out of space, and the soldiers who’d lived on farms prior to serving in WWII didn’t really want to go back home to the farm due to the lack of economic opportunity on small family farms. Assembly-line production was being perfected for the auto industry at that time, and the resulting availability of large swaths of land, cheap-to-produce assembly-line housing components, and the widespread availability of affordable automobiles led to the opportunity for the development of the American suburb. The GI Bill gave affordable mortgages to returning veterans to buy these new homes.The Daily episode shares archival audio (with the gee-whiz attitude of mid-century advertising) that tell us “five years ago, this was a vast checkerboarded of potato farms on New York’s Long Island, but today this a community of 60,000 persons living in 15,000 homes all built by one firm.” The audio concludes “that old potato patch has come to a good end.”In 1944, 114,000 new homes were built in the US and six years later in 1950 1.7 million new homes were built. And thus, the single-family home was born.The Daily show then interviews Margie Coats, whose father – a returning veteran – bought a newly built ranch home in a new subdivision in San Diego, California : 5120 Baxter Street in Claremont Villas California. He paid for it $13,250 in 1955. There were four styles to choose from, and the Tote family chose the ranch house, covered patio, two-car garage. Buyers got to choose some interior finishes, but they all looked just like the flyer below.In 1976, the house was sold to the Reeses, another family with a veteran dad looking for a nice place to raise their kids. They paid $51,000, $37,750 more than the Coates’ paid; an appreciation of 284% over 20 years. The median sales price of a single-family home in California kept increasing and by 1980 it was $100,000.One of the Reese’s daughters loved the neighborhood and wanted to stay in it to raise her own family, but couldn’t afford the only house that was available for $117,000 in 1990. So they moved out of California to try to save money with the goal of moving back to their old neighborhood. In the two years they were off saving money, the house they had their eyes on went from $117,000 to $162,000. They kept moving and saving, but what they saved was never enough. The Reese patriarch kept living in the family home all this time, then died in 2019. The daughter then inherited the house, which at this point, needed quite a lot of work, which she thought she couldn’t afford, despite now owning the home free and clear. So after spending decades trying to move back to her old neighborhood, once she had the property, she decided to sell it. She sold it for $700,000 and moved to Texas, where it was more affordable to live.The photo to the right shows Margie Coats, daughter of the home’s first owner, in front of her childhood home, 5120 Baxter Street in Clairemont Villas, San Diego. Margie purchased a house across the street from her old home and has lived there since the 1970s, living for all but 5 years of her life on the same block. In the 1960s and 1970s, environmentalists became concerned about the impact on the natural world and open space, and new environmental laws significantly slowed development. Middle-income homeowners also wanted to protect the value of their home, which was usually their one and only asset. The pressure from existing homeowners and environmentalists resulted in stringent zoning regulations in many municipalities that forbade anything other than single-family development in most suburban areas and also took quite a lot of land out of possibility of development. Housing values skyrocketed in reaction – the age old supply and demand issue.California remained a sought-after place to live and the population continued to grow throughout the 20th century and in 2000 one in eight people in the United States lived in California. But the scarcity of developable land and the restrictions on building multi-families has led to the acute housing shortage the state now faces and has led to a decline in population since 2020.Two solutions have been floated for several years – allowing the construction of “accessory dwelling units” or ADUs on existing lots and allowing multi-families by right on what had been single-family-only lots. There was a great deal of opposition to the multi-family zoning proposition by the two constituents – existing homeowners and environmental groups – who had successfully shaped the zoning laws that protected open space and single-family lots. Opponents said that there was no guarantee that more housing would mean more affordable housing and that the only beneficiaries would be the much-maligned real estate developers. Proponents disagreed and said developers could create more housing for less money by being allowed to create 2-4 units on a lot that hitherto had been restricted to one unit.However, the ADU concept faced fewer objections. Marketed as “granny flats” ADUs are billed as a way to convert a garage or shed, or even build a new tiny house in the backyard to house a family member or college student, but in reality they are often a way for a cash-strapped homeowner to make a decent income from renting out an apartment that is separate from the homeowner’s living space. And not to granny, but to a family that can’t afford to buy a home.Back to 5120 Baxter Street. The Reese heirs that sold the property for $700,000 sold it to a developer who had experience adding ADUs. And now, what was once a single-family home with a garage and a backyard became three residential units: the original home, the garage, and the small two-story house built in what had been the back yard. See listing photo below:This now three-unit property on a lot zoned for single-family homes sold for $2 million in 2022.From 2018 to 2020, 23,000 ADUs were added to the housing stock in California, according to The Daily. There are currently about 100,000 new units (of all types) being built in the state, less than 10% of those are ADUs.The ADU legislation allowed for relaxed square footage and parking requirements. Some cities and were unhappy with those allowances and tried to create local ordinances that countervened the state’s regulations or that levied large permit fees and a lengthy permitting process in an attempt to dissuade people from building them.The Pacific Legal Foundation in an article titled “Still No Place to Live: The Local Barriers to the ADU Revolution” documented the hurdles faced by Malibu, San Marino, Coronado, Oakland and San Diego County homeowners who wanted to built an ADU on their property. The state law requires a ruling on an ADU application within 60 days. In San Diego county, the average time for an ADU permit ruling was 112 days prior to the 60-day requirement taking effect and 187 days after the 60-day rule came into effect statewide.Perhaps softened by the lack of massive impact from the ADU bill, in 2021 the state again considered getting rid of single-family zoning by right and allowed existing single-family lots to be severed into two and also allowed multi-families on all previously restricted single-family lots by right. There was hueing and crying on both sides – proponents expecting it to create 2 million units in five years, opponents predicting climate destruction.Read our next article to learn about what the impact has been so far.