2015 CA Summit - Rescuing the California Dream: Policies for an Affordable Future

Los Angeles Housing Market Status

• Los Angeles is identified as the least affordable rental market in the United States, a distinction driven by wage stagnation rather than just the highest absolute costs (unlike Silicon Valley).
• Housing starts have failed to recover to expected levels post-recession; the recovery has been "nonexistent" compared to historical cycles.
• Scott Laurie notes a "false market" on the West Side of Los Angeles, citing a recent home sale in Santa Monica at 35% above the previous cycle's peak with no corresponding economic justification.
• The for-sale market has seen a near-total halt in new "podium builds" due to financing constraints, whereas construction activity is dominated by multifamily rental units.
• A disparity in wealth has widened significantly; the 1% of earners in California now make in one week what the average Californian makes in a year.
• California's Gini coefficient for income inequality rose from a middle-of-the-pack ranking in 1969 to the fourth most unequal state by 2013.

Supply Constraints and Entitlements

• Statewide housing production dropped 85%, falling from an annual rate of 200,000–220,000 units to just 35,000 units, while the state simultaneously adds 220,000–250,000 households annually.
• Two-thirds of California Environmental Quality Act (CEQA) lawsuits target residential housing projects in urban areas, near jobs, and near transit, precisely where density is needed to lower costs.
• Public resistance to density is often driven by fears of increased traffic and declining single-family home values, despite data suggesting density near employment centers reduces traffic.
• Scott Laurie indicates that the "second home" market (buying multiple properties for investment) is unlikely to return to post-recession levels, permanently altering market dynamics.
• Developers report building is constrained to specific corridors (e.g., downtown LA, LAX, San Gabriel Valley) because that is where the income base exists to support projects.

Affordability Definitions and Costs

• To afford the average rental in California, a person earning minimum wage ($9/hour) would need to work 118 hours per week.
• The "affordable" entry point for a new development in Pasadena has shifted from the $300,000 range to the $600,000–$700,000 range due to land costs and regulatory requirements.
• Building a single underground parking space in coastal California costs between $30,000 and $35,000, a cost passed directly to renters or buyers.
• Sean Burton reports that a project with 20% designated affordable units in Foster City generated 3,000 calls in 24 hours, crashing their phone system and website, indicating extreme demand for units at $800–$900/month versus $3,000 market rates.

Wages and Workforce Solutions

• Manuel Pastor identifies three necessary, simultaneous policy actions: promoting overall economic growth, growing the middle class through career trajectories, and lifting the bottom of the labor market via minimum wage increases.
• The U.S. job market has shifted from a "high school gateway" to a "middle-skill gateway," with 65% of future jobs requiring some level of college credentialing or certification.
• Despite 63 million new jobs created over 35 years, the number of jobs available to those with a high school degree or less has actually declined by 2 million.
• Career Technical Education (CTE) programs at community colleges show high ROI: graduates in health informatics earn an average of $61,000 and electrical power line workers earn $137,000 within five years.
• Manuel Pastor notes that California's labor force participation has declined due to long-term unemployment and discouraged workers, a trend more severe in Los Angeles County (6.3% unemployment) than the state average (5%).

Educational and Fiscal Policy

• Manuel Pastor argues that Prop 13 has created a "fiscalization of land use," incentivizing cities to chase commercial retail sales tax over industrial jobs or housing.
• The state of California currently ranks in the bottom six to seven states for per-student spending on K-12 education.
• There is a severe labor shortage for skilled trades (framers, electricians, plumbers); wages for these trades have remained stagnant at roughly $22/hour since the 1980s despite rising material costs.
• Community colleges are moving toward a regional coordination model to share the high costs of specialized training facilities (e.g., mock emergency rooms) across multiple districts.
• Scott Laurie highlights that successful affordable housing often requires community outreach and "social infrastructure" to build consensus, citing Pasadena's process of increasing minority participation in planning from 10% to 40%.

Future Outlook and Recommendations

• Manuel Pastor urges business leaders to proactively advocate for moderate wage increases and educational investment to avoid extreme political measures like Prop 13 or a $15 minimum wage imposed by ballot initiatives.
• Developers are encouraged to partner with community colleges to design curriculum, ensuring a pipeline of skilled workers for the construction and manufacturing sectors.
• Von Ton Quinlivan suggests that the "four Cs" (critical thinking, communication, collaboration, creativity) combined with technical skills are the only defenses against AI and automation for future workforce planning.
• Scott Laurie emphasizes that while developers want to provide affordable housing, the lack of land availability at viable prices requires cities to drive solutions through density bonuses and streamlined entitlements.
• The panel concludes that solving the housing crisis requires a "cross-sector" approach where government, education, and business coordinate on regional capacity and funding, rather than acting in isolation.