Type “California housing crisis” into a web search engine and the results come gushing out. Dozens of stories from just the past year highlight a crunch that’s “way past a problem,” a “middle-class” disaster, “drowning renters” and “California’s most pressing challenge.” We’re living through a complete turnaround from the 1970s boom, when one new housing unit was built for less than every two newcomers.
For many, the impossibility of affording a home in California produces desperation.
“The housing crisis has caused all kinds of problems, but some people are getting creative to survive it,” Eugene Kim wrote in April in the Business Insider. “From wooden pods to trailer trucks,” Bay Area residents are doing “crazy things” so they can “survive the area’s ridiculous housing prices.”
One of those “crazy things” is a Google engineer’s decision “to move into a 128-square-foot truck — in the company’s parking lot.” His lodgings appear to have all the comforts and charm of a lean-to.
According to Census Bureau data, California households in owner-occupied homes spent an average of 25.4 percent of their income on housing in 2014. That’s up from 23.8 percent in 2000. In both years, California ranked last in the nation in this category. This is why, as California Association of Realtors CEO Joel Singer has noted, “only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.”
Almost half of California households don’t own the homes they live in, and the data show that the housing crisis is even more cruel for them. In 2014, renters across the state spent an average of 36 percent of their incomes on housing, 48th in the nation. That’s up from 28.1 percent in 2000.
Housing has become such absurd theater in California that Palo Alto officials have debated providing housing subsidies for people earning up to $250,000 a year. So how did we arrive at this point, where government considers subsidizing quite well-off professionals and business executives so they can afford to live where they work? We got here because there is not enough housing in the state. The deficit is so severe that the Legislative Analyst’s Office says 100,000 new housing units need to be built in the state each year to catch up. The state needs to add roughly the equivalent of a new Marin County every year.
One reason it’s going to be so hard to catch up is due to the prolonged sclerosis in construction. The San Gabriel Valley News has reported that across the 2005-2015 period, 21.5 home-building permits were filed for every 100 new California residents. Compare that to Michigan, where over that same time, 166 permits were filed for every 100 new residents.
Our housing jam is another of California’s man-made disasters. The regulatory regime assembled in Sacramento, and in the halls of local government, has created a virtually impossible environment to build. Building codes, construction requirements, inspection schedules, environmental land use and impact statements, extortionate permit fees, anti-growth policies, zoning restrictions, affordable housing commandments and rent-control laws have all contributed to the state’s housing shortage. It’s a wreck created entirely by politics.
Two proposals could make a difference in increasing housing supply and affordability in California. One proposal authored last session by Assembly Republican Leader Chad Mayes would streamline the environmental review process for new housing projects. Assembly Bill 53, introduced in December by Assemblyman Marc Steinorth, R-Rancho Cucamonga, would allow new homebuyers to save money in a tax-free account to cover down payment and closing costs for their first homes.
If California is to become livable again for the average family, and even the above-average, policymakers have to become leaders and not let the anti-growth mob dictate housing policy. The government crusade against building needs to end. A million dollars will never buy a mansion again in California, but it should buy more than just a modest home.
Kerry Jackson is a fellow at the Center for California Reform at the Pacific Research Institute.