(Photo – CLEE)
No issue defines both the affordability and climate challenges in California more than housing. High home prices have pushed many prospective buyers to what some consider “affordable” outlying areas far from jobs and services, necessitating long, expensive commutes and often placing households in areas of heightened climate risk.
By Ethan Elkind
As policymakers seek to stabilize housing prices and expand homeownership opportunities by increasing supply, a key question emerges: Where are the best locations, and what are the optimal housing types, for delivering the lowest-cost, most affordable homes for similarly situated buyers?
To address this question, UC Berkeley Law’s Center for Law, Energy, and the Environment (CLEE), with support from The Nature Conservancy and technical support from Economic & Planning Systems, Inc. (EPS), has released a new policy brief, Affording the California Dream: Optimal Locations and Product Types to Increase Home Ownership Opportunities.
The brief draws on three case study geographies and assesses differences in the full cost of homeownership in California based on two criteria. First, location: What are the costs of living in an urban area with existing infrastructure and services versus in an exurban area without them? Second, product type: Is a single-family detached home more or less expensive than a single-family attached home, such as a townhome (with less interior square footage but the same number of bedrooms and bathrooms)?
The research team analyzed comprehensive homeownership costs, including not only purchase price but also transportation expenses and annual carrying costs such as taxes, utilities, and insurance. The study examined three diverse yet representative areas: the City of Fresno and surrounding county; Palmdale/Lancaster and surrounding areas in Los Angeles County; and the City of Beaumont and surrounding areas in Riverside County.
Key findings include:
- New single-family attached homes in existing urban areas are roughly 30 percent less expensive in total annual homeownership costs than new single-family detached homes in exurban areas.
- New single-family attached homes in existing urban areas are roughly 18 percent less expensive in total annual costs than new single-family detached homes in existing urban areas.
- As a result, single-family attached homes in existing urban areas represent the lowest-cost for-sale homeownership option among the scenarios analyzed.
At first glance, these findings may seem counterintuitive. Attached homes in established urban areas often cost more to build on a per-square-foot basis and may carry higher land costs. However, their smaller overall size, more compact lots, and reduced land requirements lower base prices. They also typically require fewer one-time infrastructure investments and generate lower ongoing special tax assessments. In addition, they tend to have lower average property insurance, utility, and household transportation costs.
Based on these findings, policymakers seeking to expand the availability of the lowest-cost new homeownership opportunities should prioritize single-family attached homes in urbanized areas over detached single-family development on the urban fringe or in exurban locations.
Yet this more affordable form of development is often overlooked. Even when substantial capacity for new housing exists within urban areas, developers and policymakers frequently focus on sites beyond the urban edge. In these locations, the cost of extending new infrastructure increases overall homeownership costs and often exposes residents to greater climate risks, including flooding, wildfires, and other hazards.
State and local leaders aiming to address California’s housing crisis would therefore be better served by aligning policies and incentives with the production of the lowest-cost market-rate homeownership options, rather than facilitating higher-cost development patterns. State policy should also recognize that true affordability reflects the full cost of ownership—not just the purchase price, but the total annual costs associated with living in either urban or exurban settings.
Absent such a shift, the California dream will remain out of reach for too many residents.
My question. If I understand correctly you are saying building attached (multifamily units) in an urban area is less expensive because you are cramming more units on a sq foot basis on a parcel than a single family detached home. When you build 175 units per acre or even 149 that becomes very dense living. Second you mention the unit size gets smaller and smaller. When you are single and no children this concept may work but fails when children are involved. So your analysis is based only on numbers not real life experience or needs. Also your anlysis fails to consider other community needs such as park and open space and schools.