This week Gary and I sat down with two amazing housing wonks: Muhammad Alameldin, Senior Policy Advisor at California YIMBY, and Eduardo Mendoza, Policy Director at the Livable Communities Initiative. I rent a condo in LA, and if I opened Zillow tomorrow I could not find anything close to my square footage at my price. There’s a reason for that. California builds about 3,000 condos a year, out of roughly 100,000 multifamily units. As Muhammad put it, more babies are born in two days than we build condos in a year. Zoning is usually where the housing conversation starts and stops. This episode is about everything after that: why American elevators cost two to four times what the rest of the world pays (Muhammad sits on the board of a senior housing nonprofit that got quoted $380,000 to fix one). Why the windowless bedroom became a standard American housing product. Why a modular home that installs in a day still waits 18 months for permits in San Diego, while Texas approves plans in 24 hours. It’s a wonky one in the best way. Listen, read, and send it to the person in your life who still blames BlackRock for their rent. Tahra Hoops: Hi everyone. My name is Tahra Hoops and I am here with my co-host Gary Winslett. Today we have two very special guests with us, both from the great California YIMBY. We have Eduardo Mendoza. Eduardo is the policy director at the Livable Communities Initiative and a Los Angeles-based urban planner. He sits on the board of Abundant Housing LA, previously chaired Inclusive Santa Monica, and has worked with Santa Monica Forward, the Parking Reform Network, and the Palms Neighborhood Council. He has a master’s in planning from USC, and he is also a demographer whose work has appeared in Cityscape and Slate. Joining us as well, we have Muhammad Alameldin, who is a senior advisor at California YIMBY, where he leads research and shapes the organization’s five-year legislative agenda, focused on the barriers, the how of production, that go way beyond zoning. He was previously a policy associate at UC Berkeley’s Terner Center for Housing Innovation, has advised BuildCasa, and worked at the Greenlining Institute, and his work has been cited everywhere from the Atlantic to the White House. Thank you both for being here with us. Eduardo Mendoza: Thank you. Muhammad Alameldin: Thank you for having us. Previous White House, not this one. Tahra Hoops: Back to the good old days. Why We Don’t Build Condos Anymore Tahra Hoops: So today I would love for us to start off talking about a very real problem that we have in California that also gets pretty localized in Los Angeles. It’s the fact that we don’t build condos anymore. I rent out of a condo, and if I opened up Zillow for my local area, I would not be able to find anything of this square footage for a similar price at all. So I am stuck with golden handcuffs, and there’s a very real policy reason why we do not build condos here. I know there are a couple bills that you guys have championed, so I would love to start off with an overview, for whoever would like to take that, and some of the bills you guys have championed to combat this issue. Muhammad Alameldin: So California YIMBY’s legislative agenda this year is, wow, it’s a lot. We’re tackling a few key issues. Number one, we’re gonna make it easier for people to pre-buy units. AB 1406 is a presales bill. Basically, everywhere else in the world, if you have 12 people bidding on a home and the home price goes from $1.1 million to $1.7 million, a developer would find those other 11 people and be like, hey, gimme your down deposit, I’ll build you 11 new units and you guys could live in those in two years. We basically made that impossible in California. The reason why is because developers used to run off with the money, right? Then we invented this thing called computers, and we have this thing called bonding and insurance, and anywhere from Egypt to Guatemala to Germany to Singapore, they all presale units. We don’t have that in California. We’re trying to fix that with 1406. Oh yeah, my bad. The other issue for condos is construction defect liability, sometimes wrongly called condo defect liability, but it’s construction defect. So what happens is that if there might be defects in your building, a lawyer comes to your HOA, and your HOA has to sue the developer, and then the insurance and the HOA fight it out for five years, and then there’s a big settlement. It’s this long litigious process, and no developer wants to sit in a courtroom for three to five years. And let’s say you did have a leaky window, and then you gotta wait three to five years to get money to fix it. Okay, you fix the window, but now everything around the window is moldy. And it increases the costs, and condos always have to compete with rental housing units. Like, what am I going to build? I wanna build one with less headache, and it’s rentals, because they have a four-year liability instead of a 10-year liability. What we’re trying to do with AB 1903 is just take the lawyers a little bit out of the process. It’s like a car: if I have an issue with my new car, I take it to the dealership and they fix it. If I have an issue with my condo, I could go to the builder and they fix it. That’s our first step in actually making condos a little bit more popular in California. Gary Winslett: So that makes a lot of sense, ‘cause it got me thinking about a few years ago, I visited some friends of mine in Minneapolis, and they own a condo, and it was nice. We were pretty close to downtown. We could be in the urban center, but they didn’t want to have their own house in the suburbs. They wanted to live in the city, and so a condo was just a way to do that. So I’m always a little stunned that California doesn’t do that, because as great as Minneapolis is, with all of its bike trails and light rail and urbanism, you could do that in California. And I like winter, but most people would prefer the California weather to the Minneapolis weather. So I’m always just surprised. To me it feels very self-sabotaging that California doesn’t do more to just make condos the real starter home. Muhammad Alameldin: Yeah, everywhere else it’s the real starter home. What we did is that we passed a bunch of random laws in the 1970s and early 2000s that weren’t well thought out, and now we’re dealing with the consequences. Condominium construction, we only build 3,000 condos in California per year. So out of a hundred thousand multifamily units, all of them are apartments except for 3,000 of them. And it’s like, we make more babies in two days than we build condos in a year. It’s not working. Gary Winslett: Yeah. Well, it also creates this weird two-tier market. You have really wealthy people who can own a whole house, and then you got renters who can’t own, and they’re in apartments. For a place that is fairly left-leaning and rhetorically cares about equality, it’s got this very odd sort of, you know, the aristocrats and the sans-culottes down below. It’s just not a great social setup. Muhammad Alameldin: Oh dude, yeah. We destroyed the homeownership ladder, right? We’re creating a more economically segregated society, ‘cause we’ve outlawed condos a hundred percent. And you are more likely to own a home because your parent died than you are to buy a condo in California right now. Like, it’s messed up. Tahra Hoops: It’s an inheritance economy. If you are a boomer, or you know that you’re going to inherit something later in life, you are set. But for everyone else, the economy used to feel like a waiting room. I just need to get a little older, I just need to get a good job, and then the market will have also caught up to me and my financial needs. And that’s just not the case anymore. We’ve kind of lost the plot on what people can agree to be a starter home and what people feel like they should be, to the point where everyone is only ever going to be a renter forever. Which is fine if you are going to be in that financial stability ladder, but we’re forgetting a large bottom rung of people due to that. Eduardo Mendoza: Absolutely, especially in really high-market areas. For a really long time we kind of stretched the starter homeownership ladder to include townhomes. Townhomes are really valuable in a lot of areas, but in places like San Diego or Los Angeles or San Francisco, they just won’t cut it. You need the density of a condo in order to make a building pencil out for ownership. And just creating those opportunities is very valuable. Starter Homes on Small Lots: SB 1123 Tahra Hoops: I wanted to ask about one of your more recent bills, I guess this has been just over a year now: SB 1123, which unlocks a lot of the small-lot starter homes. Tell me the mechanics behind that, how it was getting that passed, and what we have seen now a year later. Muhammad Alameldin: Yeah, definitely. So SB 1123 is an expansion of SB 684. This year we have SB 1116. So each year we’re trying to make the bill better. But SB 1123, we were like, okay, on any multifamily lot, you could split it up to 10 times, or build up to 10 units of condos or apartments on the lot, basically. So what we’re doing is we’re saying, okay, existing land, you could build more housing here. SB 1123 also allows that in single-family zones. We already allow ADUs in single-family zones, but the benefit of SB 1123 is that if you allow for lot splits, these are units that are going to be for sale. So more homeownership opportunity. The average size of those 10 units has to be, like, 1,750 square feet. So you’ll have a lot smaller units, a lot larger units, or somewhere in the middle, but it’s a lot smaller than the 2,500-square-foot single-family home we see everywhere. And, you know, each year we’re trying to make it better. This year we’re trying to make it so HOAs and CC&Rs don’t restric