Commentary

08/19/2014 by Michelle Bergmann

If you build it, they will stay: Solving millennials’ housing puzzle


Dolores Heights, San Francisco, CA. (Photo Credit: Thomas Hawk/Flickr)

This was originally published on the California Economic Summit website

Josephine Driscoll, 27, rides the Presidio shuttle 40 minutes from her townhouse she shares with three other people to her job as an executive assistant. Oftentimes during these commutes, Driscoll marvels at the beauty of her favorite city, and then slowly her heart begins to break knowing that inevitably she will have to leave. She and her boyfriend have been hunting for their own apartment in San Francisco, but at $3,000 a month for a small one-bedroom, Josephine will remain living in a room fit for a bed and bookshelf.

“It’s frustrating because we graduated and came to the city for opportunities but we lack the ability to live in an environment that lets us thrive,” said Driscoll.

In 2014, in markets like San Francisco, San Diego and Los Angeles, millennials are spending up to 50 percent of their income on rent. They are more often facing decisions their parents never had to make, between the job in a city with a grueling commute and stuffy living quarters or moving somewhere else.

“We are in a pretty sad situation. Often the topic of our dinner conversations are ‘OK, what state are we moving to?’ just because it seems so impossible here,” said Driscoll.

That housing bind is putting a drag on the state's economy. And California needs millennials to stay here, says Colin Parent, a San Diego attorney specializing in housing and land use, as their unparalleled talent is in demand from tech companies located in urban communities up and down the state.

“One of the current trends is that the fastest population growth is happening where housing is less expensive and not necessarily good career opportunities," said Parent. "This is impeding economic growth for California."

California is simply not prepared for a generation, which is actually about equal to the Baby Boomer generation, to hit the workforce and housing market. Options are scarce and the demand from 20-somethings is driving up rental prices.

“Applying for an apartment is just as competitive as applying for a job,” said Tom Gatta, a 27-year-old living with his wife in a 600-square-foot, one-bedroom apartment in San Francisco. Like Driscoll, the Gattas will have to leave their jobs in the city and go somewhere they can start a family.

According to housing and planning advocate Cathy Creswell, building appropriate housing should be at the forefront of California’s economic planning.

“I don’t think you can be concerned about the economy of California without being concerned with housing. Housing is what lead to the recession and housing will bring us back, “ said Creswell, also the co-lead of the California Economic Summit's Housing Action Team.

California needs to build housing for a dominant demographic and build it fast, Creswell added. Plus, more housing could cut down on rental prices, environmental strains and--fingers crossed--traffic.

 “They have a much greater interest to live in urban housing...the problem is the housing producers haven’t caught up to that interest yet. They are not building housing where its needed, creating a mismatch and driving up costs,” said Creswell.

The millennials' demands are making a break from the wants of generations before them: They want affordable, compact spaces close to transit and their peers. For example, micro-housing, or dorm room size studios, has been a growing trend.

David Smith, a real estate development attorney, agrees with Creswell. But first, he says, there needs to be legislative reform, like changing the California Environmental Quality Act or other laws that can hold up projects.

“Ostensibly there are environmental lawsuits by labor workers, competition or the grandma across the street that likes her neighborhood the way it is ‘Thank you very much’,” said Smith.

Tuesday at the California Economic Summit Capitol Day, held in Sacramento, the Summit's Housing Action Team continued their work to alleviate rental woes, emphasizing the importance of growing housing stock and affordability.

The team recommends implementing legislation (like SB 391) that would create consistent funding for affordable housing and expand the authority on infrastructure growth.

“We have way more housing demand than we have supply, so let the private sectors take over and let the government start approving projects, ” said Smith, also a Housing Action Team co-lead.

California's workforce will depend on those projects, which could shape the future of the California economy and potentially keep young workers like Driscoll contributing to a city where she can thrive.


Reach reporter Michelle Bergmann here.

Categories: Economy, Creating Jobs, Californians, Millennials

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