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"California's Population Growth: Urban Housing Costs Invade the Countryside,"

by Robert Wiener July/August 1993 issue of Poverty & Race

During the 1980s, California experienced record-setting population growth. This growth was remarkable not only for the sheer numbers of persons involved, but also for the characteristics of the new Californians. The 1990 Census and other data reveal four major demographic trends: unprecedented increases in the state's population; a surge of immigration to California from other countries; increased ethnic and racial diversity; and a geographic redistribution of the state's population toward the interior and rural areas.

The California Coalition for Rural using Project (CCRHP) has sought understand the character of California's staggering growth and its impacts on rural housing affordability-both from the standpoint of the low-income and minority consumers of this housing and the nonprofit organizations whose mission it is to produce it. Who benefited and who paid the price of growth? What does the past experience portend for the immediate future? And what policy actions are needed at the state and local levels to preserve rural housing affordability and manage growth? The answers to these questions will have profound meaning for rural California's increasing numbers of low-income and minority households.

Funded in part by PRRAC, we have undertaken this inquiry by three means. First, we examined data from the U.S. Census and other sources to isolate trends in population and housing affordability peculiar to rural California. Second, six rural housing nonprofits were surveyed to determine the effects of growth on development costs and their ability to provide an affordable "product." And, finally, local planners and housing producers working its three "rural-urbanizing" areas were convened in a series of nine focus group discussions to consider current state legislation and propose new state and local policies.

Demographic Trends During the 1980s

Massive Population Growth. According to the U.S. Census, in 1980 California's population stood at 23.8 million persons. By 1990, over 6 million persons were officially added, a 27.6% increase, the largest population surge in the state over any decade. The rural sector added over 128,000 new residents, to increase to 2.2 million, 7.4% of the state population. California's rural population in 1990 was larger than the total population in 18 states.

Although a sagging economy since 1990 has slowed the population growth rate, California still added 570,000 new residents in 1992. A total of 1.8 million new residents have been added since the 1990 Census. Unlike previous years, the increases are due almost entirely to natural increases and foreign immigration; for the first time, more native-born Americans left the state than moved in. Nonetheless, the California Department of Finance projects that the state will gain another 6.5 million residents by the end of the century and will more than double to 63 million residents by the year 2040. The growth rate for the state is expected to triple the nation's rate of growth at least through the year 2005.

Immigration. Within the nation as a whole, California has had a broad appeal to foreigners seeking a home in the United States. One of four immigrants settled in the state during the 1980s. Statistics on amnesty show that of the 3 million applicants for citizenship in the last five years, over half were from California. The 1990 Census shows Californians to be two of every five Asians nationwide, one of every three Hispanics, and one of every two Southeast Asian refugees. Nationally, there are 1.4 million Filipinos; over half are living in California. More than half of the nation's among also reside in the state. Altogether, immigration accounted for 38% of California's population gain or 2.6 million foreign newcomers. The percentage of foreign-born persons in the state increased from 15% in 1980 to 22% in 1990.

This "globalization" of California will undoubtedly continue into the foreseeable future. The prospects of jobs, family reunification and geographic proximity to Mexico, Latin America and the Pacific Rim countries will perpetuate these migration patterns and serve to channel more growth to the state.

Increasing Ethnic and Racial Diversity. Recent and past immigration, together with natural birth rates, continue to change the face of California. The 1990 Census reveals that the ethnic and racial composition within the state has shifted remarkably, with the white and African American populations showing a drop proportionately in population, and other minority groups growing rapidly. Minorities now make up 43% of the population, up from 34% in 1980. Among minority groups, Hispanics and Asians are the fastest-growing populations with growth rates of 69% and 127%, respectively. The two groups now account for 35% of the state's population, up from one-quarter in 1980. Hispanics concentrated mostly in the agricultural regions in the southern and central parts of the state and near Mexico. Much of the growth of the Asian population in the 1980s occurred in the agricultural Central Valley.

Population projections for the state indicate that by the year 2000 nearly half of California's residents will be nonwhite. In fifty years, whites will comprise just one-third of the state and Hispanics will account for one-half.

Geographic Redistribution of Population Toward Interior. One of the most striking characteristics of the population growth of the 1980s was the spread of population into the interior and rural parts of the state, and away from the more crowded coastal regions. The interior counties, the least populated parts of the state, accounted for almost 40% of the state's population increase. Seven of the ten fastest growing counties during the decade were rural; six are located in the "Gold Country" region of the Sierra foothills.

Much of the population gain in interior counties occurred in small towns and cities, unconnected to a major city. Of the 20 California cities with the fastest growth rates during the 1980s,18 are far from an urban center. This trend has given rise to the California "exurb"- newly developing urban areas that are either a suburban community far from an urban area or a suburb of an existing suburb. The southern California city of Moreno Valley, for example, was a small rural community 20 years ago; 10 years ago it was an unincorporated town of 28,000; today it is a city of over 120,000 residents, distinguished by its lack of a nearby central city.

Rapid growth in rural and inland communities will continue through the next century, according to the California Department of Finance. Population projections for the year 2000 indicate that eight of the 10 counties expected to grow the fastest have 1990 populations under 250,000; 14 of the 20 fastest growing counties will be in the Central Valley and Sierra Foothills.

Population Growth and Rural Housing Affordability

Impacts on Low-Income and Minority Households. From a housing perspective, the redistribution of population away from the state's crowded coastal cities divided into two main migration streams. Fast, there was the migration of the so-called "equity immigrants"-families acquiring vacation or retirement homes, buying homes for the fast time or cashing out of more expensive homes. Often they were willing to trade long commute times for greater living space, cheaper prices and more livable environments than they could find in their cities of origin. In some cases, the "deurbanization" of industry pushed "equity immigrants" beyond the commuting limits and fueled growth near existing interior communities. The cash resources they could bring enabled them to afford housing veteran rural residents could not. The demand for "upper end" housing resulted in speculation in land and massive construction of expensive new homes for sale, as well as inflationary pressures on existing homes for ownership and rental.

The other group of immigrants was the so-called "no-equity immigrants" -primarily low-income and minority families joining other family members, receiving public assistance or looking for employment and figuring they could stretch household budgets farther because of lower housing costs. Those who did locate work gravitated into the traditional, low-wage rural jobs, as well as to the new service sector jobs that have followed growth. What they found instead of affordable shelter, however, was an increasing gap between rural wages and the cost of rural housing-in other words, urban housing prices. Most growth in the residential sector was designed to meet the labor market need high-cost urban areas. The lack of grog in "lower-end" housing, together with increased competition for an already scarce resource, forced these immigrants to join indigenous rural families on the margins of the housing market.

These observations are borne out by 1980 and 1990 Census data. For example, an analysis of the affordability situations facing rental households in fast-growing rural counties, the majority of low-income and minority households, yielded the following findings:

*Households in these counties doubled their gross rents and paid on average $252 more in 1990 than they did in 1980. Average rents ranged in 1980 from $209 to $338; in 1990, they ranged from $366 to $645.
*Except for several counties where median household incomes were skewed high by high-income immigrants, rents in high-growth rural counties grew at faster rates (103%) than incomes (90%). 9 Households in most of these counties also devoted higher proportions of the incomes to rent in 1990 compared to 1980. Majority-rural counties had the highest rent-to-income ratios in the state in 1990.
*Households at the 50%-of-median-income level experienced rent burdens in 1990, in other words, they paid rents exceeding the federal statutory standard of 30% of income. Such households contributed on average 40% of their incomes and as high as 53%.
*The great majority of households earning $10,000 or less paid 35% or more of their incomes for rent. In 1990, the percentage of rent-burdened households in this income category ranged from 70% to 91%. Of the 10 counties in the state which had the greatest percentage increases in very low-income, rent-burdened households from 1980 to 1990, six of them were fast-growing rural counties.

Impacts on Producers of Affordable Housing. The survey questionnaire exploded changes in the components development cost over the 10-year per from 1980 to 1990 in six rural regions or California served by housing nonprofits. Participants were asked to provide cost
breakdowns for at least three compare projects developed or under construction during the period, as well as information on local government development fees and other factors that made the production of affordable housing more difficult.

Generally, nonprofits developing in fast-growth and no-growth areas experienced the greatest increases in production costs during the decade. The two most significant contributers to cost were increases in land costs and fees. Increases in land costs per region ranged from 39% to 421%. Increases in local fees ranged from 22% to 486%. The fee line item represented approximately 6 to 31% of the cost of a housing unit; in dollar terms, from $1,300 to as high as $12,400 per unit. Labor and materials costs were the most constant.

In these environments, rural housing producers are being pushed out into more marginal areas with fewer services where the costs of land and fees are relatively less expensive. The difficulty of affordable land with sufficient restructure and appropriate zoning has forced some to build smaller, less cost-effective projects than would be built by market-rate developers, on the few available sites where the need for low-income housing has been identified. Moreover, trenchant NIMBY attitudes in conservative rural communities, which often welcome "up-scale" development, compel affordable housing developers to build low-density projects.

Recommendations

To resolve these growth-related problems, advocates have sought to ensure that rural housing affordability is a companion piece of the various comprehensive growth management schemes being considered by the California Legislature. The initiatives, if adopted, could radically restructure the way the state and localities plan for growth and, within that context, plan for the housing needs of their lowest-income residents. Major commendations include:

*Restructuring local government finance (e.g., the property and sales tax systems) to counteract the tendency toward "fiscalization" of land uses; in other words, creating greater tax parity between residential and other kinds of development to make affordable housing more fiscally attractive to localities.
*Operationalizing the balance between jobs and affordable housing at the local level by supporting regional and subregional tax-sharing arrangements among jurisdictions and creating linkages in the delivery of state economic development and housing funds.
*Rationing and directing fair share housing allocations within regions and subregions in ways that foster compact development in "in-fill" areas and preserve rural land.
*Earmarking a portion of projected growth in low- and moderate-income housing to meet the payment ability of indigenous rural residents, such as service workers, farm workers and other resource-based workers.
Imposing statewide inclusionary housing to encourage mixed-income communities.
*Penalizing localities that do not take reasonable actions to meet their inclusionary housing and fair share housing goals for low- and moderate-income housing by withholding and redistributing tax revenues to other localities willing to accommodate affordable housing development and/or revoking their permitting authority for upper-income residential development until they satisfy these goals.
The results of the study will be used to educate the public and policymakers about the unique housing problems faced by rural Californians and make the case for government policies to counter run-away growth and increasing gaps in housing affordability.

Robert Wiener Director of the California Coalition for Rural Housing Project and has been involved in low-income housing policy and development issues since the mid-1970s. CCRHP (926 J St., #422, Sacramento, CA 95814, 916/443-4448) is a statewide advocacy organization that works to promote state and local policies and programs to produce and preserve affordable housing. Its affiliated nonprofit housing corporations have provided over 20,000 low-cost units for farmworkers, the elderly and low-income families living in rural and small towns.
 
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