This article was originally written May 30, 2022. The statements were made by Arcata’s Community Development Director, David Loya, at the February 8, 2022, Planning Commission meeting — 20 months ago.
Contents You can use your browser’s back arrow to return to these contents
- What this article is
- Introduction
- Two specific quotes from David Loya
- The video. Six minutes of David Loya speaking
- A few questions from Planning Commission Chair Julie Vaissade-Elcock
- Transcription: David Loya explains his version of Supply and Demand
- Wrap-up
- Further Reading
This article exposes the vast misunderstandings and distorted viewpoints of David Loya, with regard to what determines the costs of housing.
Please read and see if you can make any sense out of what Mr. Loya is proposing for Arcata.
For a more recent version of Mr. Loya’s misconceptions, you can read what he wrote on the topic of Home Ownership for the May 23, 2023, Planning Commission Staff Report, click here. This is full version of this article. To read a condensed version, with just the summary information, click or press here.
Other articles and transcriptions of David Loya talking or writing on affordability issues:
High Density Apartments will cause vacancies in Houses
David Loya on Affordable Housing – May 9, 2023 staff report to the Planning Commission
Here’s what Planning Commission Chair Julie Vaissade-Elcock said, at 1:33:57 in the video:
So I think I made myself clear that I don’t really like this project [the December 2021 draft Gateway plan]. And I’m so sorry. I know everybody works so hard on it, and it doesn’t matter if I like it or not. But Arcata has always been so cutting-edge and non-conforming and innovative, and I just feel like this is sort of common. It’s like the exact same plan you’ve seen so many other cities. I wish we had something a little more tailor-made to our area.
Community Development Director David Loya
On Supply and Demand
From the transcription of the Planning Commission meeting
February 8, 2022
Starts at 1:31:48 to 1:37:58 on the video.
A six-minute uninterrupted response to Planning Commission Chairperson Julie Vaissade-Elcock’s questions.
This transcription is believed to be an accurate rendition of what was said. Discrepancies between what was spoken and what is written here are not believed to alter the intent or meaning of the speaker. Many of the “uh” and “you know” and “um” words have been removed.
Highlights have been added in bold. Some asides are in [brackets].
Commentary, notes, and opinions have been added in Blue or in Green.
First, let’s look at two specific quotes from David Loya
Let’s look at two salient quotes in terms of a misunderstanding of what is viewed as “the law of supply and demand.”
Quote:
“How we tie that to housing affordability is by producing enough supply so that we can disrupt that market factor.”
David Loya:
“How we tie that to housing affordability is by producing enough supply so that we can disrupt that market factor.”
Perhaps David Loya can give us some estimate of how many housing units would have to be built to “disrupt the market factor.”
This is a misguided view of the actual reality of “supply and demand.” Producing more supply may – may – result in prices being slightly lower. Slightly lower – which does not make the houses become affordable. Let’s suppose a 3-bedroom house would have a new price of $550,000 [June 2022]. And let’s also suppose there suddenly was a new sub-division with 100 or 200 new houses. (Which as we all know is not realistically going to happen in Arcata.) In that situation, because the developer made too many homes in too quick a time for the market to immediately absorb — meaning, that is, too many for people locally and from outside the area to come here and purchase — in that situation the developer might lower the prices to, say, $525,000. That does not make that house affordable, only a little less unaffordable. Further, the demand (from within the community, plus from people coming from outside the community) is continuously shifting. What we are seeing is that there is a continuously increasing demand.
As Andrea Tuttle (Ph.D. in environmental planning — click here to see her superb letter) said at a meeting with David Loya, there is a more or less insatiable demand for housing here in Arcata.
It indeed would be impossible to produce “enough supply” here in Arcata to disrupt the market sufficiently to create an affordable market. “Enough supply” to lower prices would require developers to sell or rent at a lower price than their costs of construction – which is simply not going to happen (barring a national or global economic melt-down).
This is terribly naïve and false thinking.
We are in a situation where if there is more housing built here, then more people will move here.
Further, there is the very real likelihood that as more “housing units” in the form of apartments are built the standard single-family residence will be seen as more desirable, and thus will become even higher in price.
This is terribly naïve and false thinking. There is no “producing enough supply.”
Perhaps David Loya can give us some estimate of how many housing units would have to be produced to “disrupt the market factor.”
We are in a situation where if there is more housing built here, then more people will move here.
Further, there is the very real likelihood that as more “housing units” in the form of apartments or condos are built the standard single-family residence will be seen as more desirable, and thus will become even higher in price.
Opinion: The newly-built apartments in Arcata will have the effect of raising prices for any housing that is not an apartment. The rents in the new apartments will be based on the cost of construction — which is at record highs. For that portion of the apartments (15%, perhaps less, perhaps a little more) which are designated low-income subsidized, yes, those rents will be lower. For the rest of the units, we can expect higher prices. A developer is not going to construct an apartment building and rent it for less than the costs of construction.
Quote:
“So the way that we add equity into our community — and building equity in your community is a good thing, it’s a positive thing for those who choose to go that route — is by increasing the demand.”
This statement of David Loya’s is counter-productive to housing affordability and housing affordability.
This is a very puzzling statement. What is he saying, what is he implying, and what is the desired goal here?
He says: “So the way that we add equity into our community . . . is by increasing the demand.”
For those who own, increasing demand will result in higher prices and, on paper, greater equity. Simultaneously, rising prices makes it more difficult for people who want to own. For those who rent, rising prices on homes generally translates into rising rents.
Isn’t this statement counter-productive to housing affordability?
Factors such as higher prices in the cities, climate change and “climate change refugees” (escaping from the heat and fires), working from home, fear of Covid in an urban environment, crime in the cities, decreased lack of livability in cities, etc etc — to say nothing of the possibly thousands of unmet housing needs from the expansion of Cal Poly Humboldt University — will all tie in to make Arcata an even more desirable place to live.
The Video: David Loya speaking on Supply and Demand
Planning Commission Chair Julie Vaissade-Elcock spoke from 1:33:51 through 1:36:37 and asked several questions, including:
Chair Julie Vaissade-Elcock 1:33:57
So I think I made myself clear that I don’t really like this project [the December 2021 draft Gateway plan]. And I’m so sorry. I know everybody works so hard on it, and it doesn’t matter if I like it or not. But Arcata has always been so cutting-edge and non-conforming and innovative, and I just feel like this is sort of common. It’s like the exact same plan you’ve seen so many other cities. I wish we had something a little more tailor-made to our area.
Chair Julie Vaissade-Elcock 1:35:30
I’m just wondering how is the City going to encourage home ownership, especially affordable ?
Chair Julie Vaissade-Elcock 1:36:22
What kind of ideas are you guys thinking to help people getting to be first-time home buyers, move into their home, and then build that equity and maybe prosper?
Transcription: David Loya explains his version of Supply and Demand
Time: 1:36:37 to 1:42:53
David Loya:
Yeah, those are great questions. As to the project or the plan being tailor-made: I mean this is the process we’re going through right now is to ensure that. We’ve taken several years of public engagement, took what we heard, created a plan based on what we heard from this community, now reflecting that back to the community and getting a whole other round of engagement. And we’re going to reflect that back to the decision-makers, and they will ultimately tailor-make this plan for our community based on that input.
Nick Lucchesi:
“My guess is that, should you have asked, not one person would have come up with the idea of 5-8 story residential buildings, limited car parking, traffic pattern changes, that are represented here.
You have not asked us what we want.
What this approach represents is a top down vision for the future of Arcata, with a belated attempt at getting buy-in from the public.”
To say “We’ve taken several years of public engagement, took what we heard, created a plan based on what we heard from this community” is very suspect. There have been scoping sessions and discussions where “multi-story” buildings were discussed. It does not seem that the notion of 8-story buildings was ever discussed, even during the Gateway area walks. To quote from the excellent letter from Nick Lucchesi: (to read it, click here)
Nick Lucchesi: “My guess is that, should you have asked, not one person would have come up with the idea of 5-8 story residential buildings, limited car parking, traffic pattern changes, that are represented here.”
David Loya:
So I know that you, know some folks, everybody’s coming at this from a different perspective. Some folks think three-story buildings are too big.
And there were a lot of questions asked by the public that we didn’t get back into and I’m happy to address those if you’re if you’re interested.
But part of the objectives that we have here is to meet not only our state housing goals but our goals for our community as well.
I think a lot of the times we frame the idea that we’re building in the community and that building is for someone who’s not part of the community right now. And so therefore it’s negatively impacting me. Or not building in the community right now, it doesn’t impact me because I’ve already got what I need to live.
And so I’m not one of the members of that group, that cohort, that’s looking for something so I just don’t want to see things change.
The reality is that this does have immediate impacts on us as a community.
One of my one of my co-workers — City of Arcata employee, worked here for years, it’s a good solid job, pay is decent, and makes a living wage — recently became homeless because of the housing situation in Arcata. The people who owned the rental she was in couldn’t find a place for their daughter to live because of the state of the housing market, and so they asked my colleague to leave. They asked her to leave within 30 days and she was homeless because she couldn’t find another place. Just like the person who they moved in couldn’t find a place.
So it’s the people who are teaching our kids, it’s the cops who are patrolling our streets, it’s the nurses that are taking care of us, the County workers, the City workers — it is our community that we need this plan for.
Note: This is all true information, and the story about the City employee is unfortunately not a singular incident. Yes, we do need housing for “the people who are teaching our kids, it’s the cops who are patrolling our streets, it’s the nurses that are taking care of us, the County workers, the City workers — it is our community that we need this plan for.” That is precisely why we need housing designs that are not just a big building of only studio or one-bedroom apartments. Arcata needs housing for all Arcatans. All this is true — and David Loya has not remotely told us how this plan will accommodate the need for home ownership, as the question asked.
It’s true that it there’s a lot more housing that could be built if the total maximum housing was built out, based on what’s in the plan, but the reality is that we’re not planning for all of that housing to be built out now. It’s not be built out within even the 20-year planning period, it’s just a theoretical maximum.
So how does that relate to housing affordability? Well, it’s a supply and demand equation.
You know, you, the Chair, you’re in the real estate market, you understand that, you know, the prices for housing goes up when there are fewer houses on the market, those become a hotter commodity. Forbes has recently identified our area as a white-hot market for housing — their words, white-hot market. The houses — from what I’m hearing from our real estate professionals — the houses are selling now, you know, within days of being listed for over asking price, significantly over asking price, for cash offers.
And so what that means, what that translates into, is that the housing market currently as it stands, you’re not affected by it as long as you don’t step outside, need to get into that housing market personally, maybe. But if you do, and I encourage everyone to take this exercise, you know, get a sense for what your house is worth. Assume that you have five percent of that as a down payment, that you’re a new community member that’s looking for a home in Arcata. And then figure out how much your monthly housing cost would be as a result of that. I would guess that many of the people who are owners in Arcata right now, in particular if you bought five, ten years ago, you wouldn’t be able to afford your house right now.
Note: This is all true. “I would guess that many of the people who are owners in Arcata right now, in particular if you bought five, ten years ago [or twenty or thirty years ago], you wouldn’t be able to afford your house right now.”
And so we are the community members. It’s us — it’s the type of people like us that we’re talking about here. It’s not necessarily some future, amorphous “them” — it’s us.
How we tie that to housing affordability is by producing enough supply so that we can disrupt that market factor.
See what’s written on this above. This is an impossible task, and represents seriously misguided thinking and a lack of understanding about the housing market and development costs.
David Loya:
Many of these people who are buying our houses are coming from out of the area.
They’re cashing out of their homes in, you know, San Francisco, L.A., and moving here because they can tele-commute, or moving here because they’re close to retirement age and are deciding, you know, “I’m just cashing out.” The average home price, the median home price in California right now is 680,000 dollars. The median home price in Humboldt County right now is like 425- 450. And so you can imagine that someone leveraging a 680,000 home to move into our 450,000 home market has significant more leverage than, you know, the community that would be serving us in these middle-income, moderate-income jobs
So the way that we add equity into our community — and building equity in your community is a good thing, it’s a positive thing for those who choose to go that route — is by increasing the demand.
Please, reader: Think about the meaning of that statement. See what is written on this, above. A very puzzling statement.
And the contradiction of: “So the way that we add equity into our community…is by increasing the demand.”
As opposed to this statement, just two paragraphs above:
“How we tie that to housing affordability is by producing enough supply so that we can disrupt that market factor.”
David Loya:
Now you mentioned the first-time homebuyer program. There are definitely some things we do to restructure that and we’re looking at that. That’s not really the purview of this this plan and I can talk to you about that offline if you’re interested. But I do I think we’ve restructured our first-time homebuyer program so that it works right now in terms of those equity issues.
The problem is that there’s nothing on the market that meets our first-time homebuyer program ratios, because the housing market is quite hot and so the housing costs are too high for anyone who qualifies for our program to also qualify for a loan to be able to purchase one of these.
And so that’s another signal that there’s something really wrong with our housing market right now.
And here we can agree. There is something really wrong with our housing market right now. The question is: What do we want to do about it? Do we want to add to this troubling situation or do we want to work to lessen it?
[Completion of the transcription]
Wrap-up
That housing is unaffordable to working Americans is a national problem. We didn’t start this situation or cause it here in Arcata. But we do have conditions locally that greatly magnify the issue.
Building above-market-rate apartments adds to the problem. Constructing housing with prices that are based on the very high current costs of construction adds to the problem.
As was written earlier in this article: Factors such as higher prices in the cities, climate change and “climate change refugees” (escaping from the heat and fires), working from home, fear of Covid in an urban environment, crime in the cities, decreased lack of livability in cities, etc etc will all tie in to make Arcata an even more desirable place to live.
Plus we have the possibly thousands of unmet housing needs from the expansion of Cal Poly Humboldt University.
Cal Poly Humboldt is putting up 430 students in local motels. By 2025 there will be University-owned housing for 4,100 students – and that’s after the 964 bed Craftsman Mall dorm is complete. But by then there’s projected to be over 9,100 students.
All of this means that we are required to do something different here in Arcata. Doing things in standard ways will guarantee that we have standard results: Purchase and rental prices growing higher, housing becoming more and more unaffordable for workforce “missing middle” Arcatans, and a continuing housing shortage.
We have to come with new ideas, new ways of creating housing for people.
As I’ve written:
If the Gateway Plan is not going to provide truly affordable housing for the people who need it, then what’s the point? If working people can’t buy a home and can’t afford the rent, then we need to think this through more.
Further Reading
Complete Nonsense: David Loya’s May 23 Staff Report on Ownership Opportunities
David Loya on Home Ownership – May 9, 2023
Cal Poly Humboldt – Expansion May, 2022
Cal Poly Humboldt’s figures show an increase of more than 6,000 students over the next 8 years, and they’re only building 2,300 dorm beds. This is an increase of over 3,500 students without any known housing.