A city of renters?

Peter Coe Verbica, in the political journal Grassroots shines a light on an often forgotten element of the housing crisis: the precipitous decline in home ownership and the downstream economic, political, and cultural impact of that development.

Verbica notes that much of the hollowing out of the California middle class is due to housing costs--and that's not rental costs, that's purchasing costs. Homeownership in the U.S. is at 50 year low--around 60%, and California rates are 10% below that--and California metro areas are even lower than that.

As many experts have noted, the downsides of this loss in ownership are substantial.

* Lower wealth accumulation: across a lifetime a homeowner will typically be 45x ahead of renter in terms of family net worth.

* Depressed sectors of the economy: home ownership (and new home building) drive many economic sectors (building, construction, furniture, maintenance, appliances, etc.), and when home ownership goes down, the dominoes start to fall.

* Crime goes down with increased homeownership, education and health levels of kids improve with homeownership.

The British Government kicked off decades of economic prosperity with the Housing Act of 1980, which allowed, for the first time, renters of government housing to buy their housing. In the Great Depression in the 1930s, FDR's Fair Housing Act made it simple and cheap to build new housing (many of which still exist in the Bay Area) that even lower income people could buy.

Verbica notes that reform of zoning, CEQA, and other landuse policies that have been 80 years in the making are required for California to "crack open the ownership opportunity for more Californians."

California needs new housing at every price level--but by focusing solely on rental properties, the state invites many unintended negative consequences.