As the sun sets over the golden coast of California, it illuminates breathtaking landscapes, with a vibrant tapestry of cultures, innovation, and opportunity that define the essence of this iconic state. From the glitz and glamor of Hollywood to the technological marvels of Silicon Valley, California has long been a beacon of progress and prosperity, drawing dreamers and visionaries from every corner of the globe.
Yet, amidst the allure of palm-lined streets and endless possibilities for many, a pressing challenge looms large: the affordability crisis gripping the state's housing market. In recent years, escalating costs and limited inventory have threatened to erode the very fabric of the Golden State's identity, pushing many residents to the brink of displacement and despair. Despite this, James Suhr, owner of James Suhr and Associates LLC, contends that California, particularly Southern California, remains unparalleled in its quality of life and opportunities. However, to sustain this appeal, transformative solutions are imperative.
James Suhr acknowledges that to preserve California's legacy as a place where dreams come true, developers must embrace a paradigm shift in their approach to housing. He advocates for a departure from the status quo, urging developers to think outside the box and embrace creative solutions that marry affordability with sustainability and livability.
A significant challenge facing California's real estate sector is the fiscalization of land use, exacerbated by Proposition 13. This 1978 legislation imposes limitations on property taxes, driving local jurisdictions to prioritize revenue-generating endeavors over denser residential development. The result? A sprawl-driven landscape, dictated by the pursuit of sales tax-generating uses, notably automobile dealerships, at the expense of community-centric living spaces.
"Our task is to update the imagery of the California dream, in which everyone has their own castle, with their own garden," says Suhr. "Today's version should be: everyone has their own walkable community, composed of elegant density and supported by neighborhood retail. This in turn could allow a reduced reliance on automotive transportation. When we reach this promised land, then we can modify our tax structure to reflect the new paradigm."
Moreover, media narratives often attribute California's affordability issues to its taxation policies, fostering a misguided belief that relocation to tax-favorable states like Texas is the solution. However, Mr. Suhr debunks this notion, asserting that the total household tax burden, comprising income, sales, and property taxes, often balances out between California and its counterparts. Instead, the focus must shift towards holistic assessments of affordability, encompassing all fiscal aspects.
The American public struggles to comprehend the intricate relationship between income tax, sales tax, and property tax. In California, property tax limitations benefit households with property ownership beyond 10 years. These taxes are expensive but provide a shield against inflation, with a maximum increase of 2% per year. By contrast, other states that rely less on income taxes have to make up the deficit, usually leading to higher property taxes. The public needs to be aware of these differences, and focus on their total tax burden rather than cherry-picking a low-income tax regime.
"It's a misconception that taxes are cheaper outside of California," Mr. Suhr explains. "While high-profile individuals may seek refuge in tax-friendly states, the average Californian stands to lose more than they gain by abandoning their home. When we consider total household tax rates, the scales often tip in favor of California, where the benefits far outweigh the costs."
Central to addressing California's affordability crisis is the reimagination of housing design and density. James advocates for the revitalization of higher-density living models, drawing inspiration from California's historical architectural heritage. By championing community-centric designs, such as modernized courtyard buildings, while maintaining high levels of privacy, developers can create spaces that foster social cohesion and enhance quality of life.
"It's a vicious cycle," James laments. "Cities prioritize revenue-generating activities at the expense of housing affordability, leading to a landscape dominated by sprawling developments and exorbitant housing costs. We need to break free from this cycle and embrace a more holistic approach to urban planning."
One such example is Mr. Suhr's collaboration with an architect to develop a rental building in Culver City. By organizing residences around a courtyard, the building's access and circulation form creates privacy for units on one side, with walkways only along the opposite side of the courtyard on upper levels. Bridges that go diagonally across to the units create visual interest, enlivening the architectural form, while providing privacy for the bedrooms on the opposite side units that face the courtyard space. The team's design approach is a unique combination of developer and architect collaboration.
Innovation can be achieved by combining California's rich architectural heritage with modern design principles that improve livability and affordability while striking a balance between the old and new. And with James and his company at the forefront, it seems that this state will continue to be a place where people not only want to live but truly call it home.
