Paying more for housing in California than you can afford? You're not alone. A new report from the McKinsey Global Institute says that state residents pay $50 billion more for housing per year than what they can afford, with our statewide housing shortage costing more than $140 billion in lost economic output. Indeed, from 2009 to 2014, 544,000 households were added statewide, but only 467,000 housing units were added to greet them.
To close the state's housing gap, California is said to require 3.5 million new homes by 2025. To square that with the present state of affairs, McKinsey mapped cities including Fresno, Los Angeles, and San Francisco, as well as counties including Contra Costa, Sacramento, and San Bernardino, to discover where housing might be most readily built. Analyzing each parcel, they found that five million units could be added in areas that are already zoned for housing, or in areas that are within a half a mile of major transit, or in areas that aren't yet zoned for housing but maybe could be.
“The first thing is transparency, creating a visibility of how this land is being used and what's it's being used for,” report co-author and McKinsey Global Institute Director Jonathan Woetzel said according to the Business Times. “That’s vital to attracting private investment where value can be created.”
To describe urban land zoned for multifamily development that isn't vacant but is not filled to zoning capacity, McKinsey uses the term "underutilized," and the report includes plenty of examples. Here in San Francisco, it estimates that "31 percent of multifamily parcels use less than 50 percent of zoned capacity, with potential to add 70,500 units under current zoning." So, in order to begin to utilize parcels to their fullest zoned capacities, the reports offers these three recommendations:
Mitigate displacement risk: Allocate resources and develop policies to enable largescale redevelopment without displacing current residents, such as preferential or discounted tenancy in new buildings.Publicize underutilized land: Attract private investment by highlighting properties
where value could be created by fully utilizing existing zoning.Create zoning and building code carve-outs: Enable property owners to pursue
creative solutions to add units without demolishing current structures, such as by
building over or adjacent to existing structures on a parcel.
The New York Times also picked up on the McKinsey report, writing that "building on these lots is easier said than done, and some plots have already been subject to controversial development plans." Here, the paper invoked 8 Washington, a development that would have, depending on your political persuasion, created much needed housing or put a wall on the waterfront and catered to the rich. As of now, it's in the "underutilized" category, with tennis courts and parking lots.
Related: Revised Plans Released For 39-Story Housing Development At SoMa Goodwill Site