New Research from UC Berkeley Challenges LAO Report on Housing Affordability

25 05 2016

UC Berkeley's Urban Displacement Project's latest research finds error in the LAO report.

Yesterday, UC Berkeley’s Urban Displacement Project released its latest research, calling into question the validity of a controversial report released by the Legislative Analyst’s Office in February 2016, and providing strong evidence that the most effective strategies for fighting displacement are the construction of affordable housing and policies to stabilize existing tenants – not simply building market-rate development.

The LAO’s report, “Perspectives on Helping Low-Income Californians Afford Housing,” suggested that increasing market-rate development through various deregulation measures is the best means for increasing housing affordability and thus preventing displacement.  Widely circulated since its release, the LAO report has been used as justification for some radical proposals at the state and local level that could undermine long-standing affordable housing and community development policies in San Francisco.

This report has gone largely uncontested until now. UC Berkeley researchers Dr. Miriam Zuk and Professor Karen Chapple have evaluated the LAO analysis, and found that it is based on incomplete data and models.  Their report, “Housing Production, Filtering, and Displacement: Untangling the Relationships,” tests the LAO’s analysis by correcting for these omissions and errors, and finds very different results, including:

  • Affordable housing is still our best strategy, as it is over twice as effective as market-rate housing at preventing displacement: “for every one subsidized unit, we would need to produce two or more market-rate units to have the same reduction in displacement pressure” (p. 4).
  • Market-rate housing becomes less effective at reducing displacement over time.  The Berkeley researchers conclude that “the effectiveness of market-rate housing in mitigating displacement seems to diminish as more market-rate housing is built in a subsequent decade…this result suggests that over time, the construction of market-rate housing may have a catalytic effect on a neighborhood, increasing attractiveness to upper-income residents, rather than a protective effect of filtering” (p. 6).
  • The LAO report presents an incomplete picture of “filtering,” which it cites as the key way market-rate housing prevents displacement.  In fact, filtering of market-rate units cannot address our current housing crisis, as it takes many years for these units to “filter down” to middle- and low-income households (approximately 50 years for households making 50% of median income), and even once middle- and low-income households can access these units, they may not be habitable or affordable to them (p. 4).
  • Though it may reduce displacement at the regional level, new development has little impact on displacement at the local or neighborhood level, again providing strong evidence that “production alone cannot solve the displacement problem” (p. 8).  Instead, the report concludes that we need strong preservation and tenant-protection policies to help with the displacement crisis on the local level.

Read UC Berkeley’s media release on the new report here. 

And check out the blog post by Dr. Miriam Zuk answering some of the big questions about this research.

This fresh challenge to the LAO Report follows earlier critical analysis by researchers Alex Karner of Georgia Tech University and Chris Benner of UC Santa Cruz, who pointed out a major flaw in the work in a Washington Post article from February 19th:

“Most importantly, the report claims that constructing market-rate units will protect low-income communities against displacement. But it relies upon a single imperfect definition of displacement and doesn’t distinguish between parts of the Bay Area that are growing rapidly and where land is cheap from the tight housing markets in San Francisco, Oakland, and San Jose. These three cities account for about a third of new market-rate units in areas the report focuses on. But other top producers include cities on the urban fringe as well as unincorporated areas where displacement pressures are minimal. Grouping together these very different places can make it appear as though new market-rate units prevent displacement, when in fact the opposite might be true.”


Image: Logo of UC Berkeley’s Urban Displacement Project.