Housing Policy

Californians Can Build Their Way Out of the Housing Shortage

Government rules and regulations on the local and state level have driven prices up.

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If there were 30 loaves of bread and 50 people who wanted them, you can guess what would happen. Prices for those loaves would rise, from, maybe, $2, to $3 or even $10, depending on how desperate people were to make sandwiches. Those prices wouldn't fall until some buyers switched to tortillas or bakers started baking more bread.

That concept is so simple it's almost embarrassing to point it out. Yet when policymakers talk about other products, they lose sight of these basics. The housing market jumps to mind. Prices throughout California are still going up. Affordability is down.

I know well-paid professionals in some coastal cities who have basically given up on the dream of homeownership given the typical $1-million-plus price tag for a tiny bungalow. A modest apartment in San Francisco can easily set you back $4,000 a month. Orange County isn't much better.

For years, people have retorted: "That's the price for living near the beach." Actually, it's the price we pay because those who already live in such lovely places lobby city councils, boards of supervisors and the state legislature to put the kibosh on new construction, supposedly to stop congestion. A few minutes' drive from the Golden Gate Bridge, one finds endless, lovely countryside—all tightly growth-controlled to keep out young families and other riff-raff.

In California, it's always fair game to blame politicians. Over the years, they've certainly passed a lot of laws that make it tough to build new houses. As they dream up far-reaching new programs on myriad subject matters (e.g., the Secure Choice retirement plan for the private sector), they steadfastly avoid dealing with major problems where they could effect change.

"The lack of housing supply fuels headlines that reveal the state's housing prices at their starkest," Liam Dillon wrote in the Los Angeles Times. "It could explain why doctors and others making as much as $250,000 a year are struggling to find homes in Palo Alto." Prices in California are double the national average, Dillon writes, yet "legislators have shied away from tackling broad efforts to increase housing supply."

Of course, state legislators aren't the only ones to blame. City councils and county boards of supervisors love to control housing growth. But often, they merely succumb to public pressure. The Register reported this past week that a judge ordered Huntington Beach to "immediately comply" with a previous ruling requiring it to permit more low-income units as part of a high-density housing project.

The city, which has vowed to appeal, has been at odds with housing advocates "since last May, when the council, reacting to public outcry, eliminated more than 2,400 units of potential high-density housing from plans along portions of Beach and Edinger," according to the report. Focus on the phrase, "reacting to public outcry." Try to find any development project that doesn't spark a backlash from neighbors, environmentalists and slow-growth activists.

Affordable-housing activists miss the big picture, of course. They believe the solution to the housing-affordability crisis is to subsidize (or mandate) the development of below-market-price "affordable" units. That's a drop in the bucket; traditionally, "affordable" housing is best found in the "used" housing market. There's no constitutional right to a subsidized new condo. They are right that localities need to permit more infill housing, but they need to green-light every type of new housing. If you feed supply into the system, it will help at every price point.

Vox.com's Matthew Yglesias reported that a San Francisco supervisor "is forcing the city's chief economist to conduct an unprecedented economic impact study of the city's various land-use and development rules." There's this from the Santa Rosa Press Democrat: "Healdsburg is likely to create more affordable housing if it repeals a voter-approved growth management ordinance that restricts the number of new homes to an average of 30 per year."

Maybe the local pendulum is swinging back in a more sensible direction, even if the state legislature hasn't gotten the memo. The problem isn't a secret.

A report last month by the state Legislative Analyst's Office came to this conclusion: "Community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. A shortage of housing along California's coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents."

It's simple stuff. The problem won't be fixed until people stop coming here, stop having children or the government finally just lets builders build more houses.

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65 responses to “Californians Can Build Their Way Out of the Housing Shortage

  1. If there were 30 loaves of bread and 50 people who wanted them, you can guess what would happen

    Much whinging and wailing about starving children and Big Flour and fairness and, inexplicably yet inevitably, racism. Someone will suggest single payer breadcare and someone else will suggest mandating that bread loaves be 60% of what they were so that everyone can have a loaf. A lone libertarian will quote Bastiat and eyes will be rolled as the grown-ups in the room dismiss the extremist and get back to allocating yeast reserves and discussing carbon offsets for toasters, all the while stuffing themselves on club sammiches and garlic croutons.

    1. That comment is a thing of beauty.

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  3. Voters love it: they keep the riff raff out and their homes appreciate massively due to the shortage.

    The people who lose out are those with unimproved land who might be making more money by building denser housing, but there aren’t many of them and so voters just trample over their property rights.

    1. Oliver wendal Holmes nods approvingly.

    2. Yup. I’m living this fucking California dream ^

      1. Me too.

        But I just got back from Texas. The state the Californios love to hate the most. And, I’ve got to say, even my spouse now says let’s sell the Cali RE, use half our cash proceeds to buy a McMansion on the lake in Texas, apply the other half to our retirement funding, and move there and retire.

        It sure beats the SF Bay Area rat race. The part I don’t understand is, why don’t more people do just that? Six figure salaries are meaningless when home prices are seven figures. And, that says nothing about the constant irritation of government intervention on everything.

  4. If there were 30 loaves of bread and 50 people who wanted them, you can guess what would happen. Prices for those loaves would rise, from, maybe, $2, to $3 or even $10, depending on how desperate people were to make sandwiches. Those prices wouldn’t fall until some buyers switched to tortillas or bakers started baking more bread

    In Berntopia, people qould queue for hours for half a loaf and the remaining 5 loaves would rot in a government storehouse.

    1. Most in San Francisco have already given up all 23 types of deodorant.

      1. They have given up on indoor plumbing as far as I can tell.

        1. How dare you bash those poor, unfortunate hobos. If it weren’t for the high cost of housing, they’d be getting off the street and pooping in their own bathrooms.

          It’s a crisis I tell you. The pols are all saying that now as they seek more government intervention into housing here.

  5. There’s no constitutional right to a subsidized new condo.

    Yet.

    1. It seems like a logical extension of the free shit agenda once they get their healthcare and college.

      1. Yet, people will ignore the fact that this was already tried in a number of different ways. (Though none were quite to the level of upscale accomodations being handed out)

        It has not turned out well.

    2. The ‘general welfare’ clause is plenty elastic enough to cover basic needs like food and shelter and healthcare – just because no court has yet held that government doesn’t have a constitutional duty to provide food stamps and subsidized housing and Medicare doesn’t mean it can’t be teased out of there at some point. That’s the point of entitlement programs – it’s not charity, it’s not a hand-out, it’s something you’re owed, something somebody has an obligation to provide. Once you accept the mindset that you’re not even responsible for your own basic needs, you’re not even a free human being any more, you might as well be a house pet.

      1. We just don’t get it. Slavery is bad; thus we all should be slaves.

        It’s the only way to be free!

      2. The ‘general welfare’ clause is plenty elastic enough to cover basic needs like food and shelter and healthcare

        The general welfare clause of the Constitution is not a grant of legislative power, it’s a qualification of taxing power.

    3. My ex-wife gets one. It’s called “section 8,” and allows her to live near the SoCal beaches for about 10% of what it costs me to rent in rural Illinois.

    4. Good freaking Christ. Who the fuck do you think is already being subsidized with this shit? It is EXISTING homeowners. Who have no problem at all ensuring that government does their bidding and gives them subsidies to keep their asset prices propped up. And then turns around and pretends that the real problem is all the people who aren’t getting subsidies but who somehow have the gall to think that if the rich/homeowners are getting subsidized by gummint then it is only right for the poor/renters to get subsidized too.

      Are you people really so fucking clueless?

      1. Well, there’s the Rapture, and to stand at Armageddon, fighting for the Lawerd. And what about prayer and abstinence? And doesn’t altruism, sacrificing for the poor, play into all these subsidies?

      2. Don’t tell me. You’re another millennial that hates baby boomers for all they have and you don’t. Right?

  6. The problem won’t be fixed until people stop coming here, stop having children or the government finally just lets builders build more houses.

    Isn’t there an exodus in California? I think I found your answer.

  7. Why do these progressives hate the poors so much?

    1. Thye love the poor – they make so many of them. But more as an abstract thing to be “saved” by their force benevolence, not something to exist near them.

      1. They should be forced to house them.

        1. I don’t think anyone should “forced” to do anything, but it would be poetic justice if THEIR neighborhood was perfect for low income housing.

          But we all know that once you’re in Government, you have a bigger voice to oppose that happening than the rest of us.

  8. The only winners here will be the cronies who get the contracts to build the housing which will no doubt go WAY over budget.

    1. One of the problems I’ve seen in my tiny slice of this is that in order for the ‘affordable housing’ problem to even exist, the zoning and building codes have to be so restrictive that it makes no economic sense for a developer to build anything but high-end housing. And then when the gov starts mandating a certain percentage of units in developments be ‘affordable’, well, that’s comparatively speaking. We had a mixed-use development go in where the ‘affordable’ units were half the price of the regular ones and somebody like me still couldn’t afford them.

      1. Same thing around here. Building codes basically make it a crime to be poor, since it drives the cost of new housing up so high only a doctor or lawyer could afford it. Then when the state pays for it, the contractors make out like bandits. After all, it’s not like the government idiots give a shit about how much it costs. It’s not their money.

        1. “Building codes basically make it a crime to be poor, since it drives the cost of new housing up so high only a doctor or lawyer could afford it.”

          ^ This.

  9. subsidize (or mandate) the development of below-market-price “affordable” units

    In NYC builders tried to comply by putting the poor people on lower floors with separate entrances (the “poor door”). The response from our communist city council was to mandate that poor people be spread throughout the building and get the same amenities as the rich people.

      1. Thanks. Now I want to put my fist through something in response to:

        (a) ungrateful layabouts having the goddamn nerve to complain they don’t get the shit they’re not paying for, and

        (b) the comically hypocritical leadership – if they’re so keen to be amongst the poors why don’t they move to the ghetto themselves instead of enforcing it their subjects?

    1. Same thing is going on in Oakland – there’s a new development with a market-rate tower and an “affordable” tower, and the activists are screaming about segregation and making the poor “second-class citizens” by not giving them the exact same accommodations in the exact same building on the exact same floors as the market rate.

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  12. San Francisco will now require a CITYWIDE referendum every time somebody wants to build something taller than 7 stories on the bayside waterfront district, an area which can charitably-described as a rundown industrial warehouse shithole which has been in desperate need of investment since most of the shipping companies moved to Oakland ages ago. It’s absolutely retarded.

    San Francisco should be built up like Manhattan. It is beyond belief that it isn’t.

    1. To be fair, they do have a minor earthquake issue there. I would assume building too tall would be dangerous (I don’t really know enough about the subject to be certain though).

      1. PS: Yes, I do know the main reason is prog assholes keeping the unwashed middle-class types out of their bohemian tech-fueled utopia.

  13. Affordable housing bullshit drives me crazy for two reasons:

    1) it raises the rates for people who don’t qualify for the affordable housing because the developers have to make up for it, thereby fucking with the market for the rest of us even more.

    2) Since market rate housing will be the vast majority of the new units, the businesses that sprout up around the new development will most likely set their price points to cater to the more affluent residents (because… duh!), forcing the affordable housing residents to transport themselves to areas where they can afford to shop/eat/etc and likely making them feel like they’re not economically welcome in their own neighborhood (which is, well, true).

  14. Suppose 5% of a hundred thousand subprime mortgage homes were suddenly confiscated in bipartisan federal & state asset-forfeiture “sharing” in 2006 and 2007 because of real and unfounded allegations of hemp on the premises. That and bank account forfeitures for alleged taxes combine to frighten folks into withdrawing their cash and dumping or walking away from the cheap teaser mortgages before the interest rates reset, the economy collapses, anti-choice cronies lie about and cover up the collapse… and housing goes from glut to shortage during the ensuing depression. Would the solution be to again vote for those same two parties that again (1929, 1933, 1987, 2007) wrecked the economy through looter prohibitionism?

  15. For SoCal we are already probably pushing the limits of housing without some infrastructure investments. Roads are pretty congested and blackouts + drought is real. Im suspicious that central planners relaxing height limits and/or allowing more high rises is the answer.

    For me selling my house with a large profit and walking away is the answer. I’m intellectually interested to what $15 minimum wages is going to do to pricing and glad I’m being stationed elsewhere to observe it.

  16. I used to live in the Bay Area and something I always said when people yapped about “affordable housing”: if they REALLY wanted to build” affordable housing “, they’d make it affordable to build housing. Why should a developer WANT to build anything less than luxury when it costs so freaking much to build out their? The EIR is such a scam — you’ll shell out a pretty fair sum of sumullions for one, and the it all the same: the least impactful thing is to build nothing. They act as if there is a land shortage out there: to begin with, 52.1% of the state PUBLICLY owned already, PLUS, they have WAAAAAAY to many “open space” laws and ordinances that grab even more land. (Marin has this 1/3-1/3-1/3 nonsense: 1/3 open space, 1/3 agriculture, which is a laugh, and 1/3 developed. But when you try to DEVELOP in that last third, they make to jump through unbelievable hoops.)

    1. “Progressives” never understand or accept that most of political economy is deciding which trade-off you would like to make.

      They want “affordable housing”, but they also want open space laws and draconian building codes.

      They love the amount and variety of food that people can afford these days, but they have burning hatred for the technologically advanced agricultural corporations that make it possible.

      They enjoy free speech for themselves, but hastily shut down their opponents’ speech whenever possible.

  17. “If there were 30 loaves of bread and 50 people who wanted them, you can guess what would happen. Prices for those loaves would rise, from, maybe, $2, to $3 or even $10, depending on how desperate people were to make sandwiches. Those prices wouldn’t fall until some buyers switched to tortillas or bakers started baking more bread.

    That concept is so simple it’s almost embarrassing to point it out.”

    You didn’t mean “simple.”

    You meant “moronic.”

    You’re so blinded by capitalist fantasy you can’t even imagine those 50 people sharing 3/5ths of a loaf each.

    1. )Poooooooor widdle Chavista Jack, fuck off slaver.

    2. That would be the same “capitalist fantasy” that enables poor people in America to have cars, flat screens, cell phones and AC?? The same fantasy that would allow everyone to be able to have a *whole loaf* and bakers to become prosperous??

      But you don’t like that solution because…uhhm…why? Is it because the loaves would be some kind of cursed MacLoaves instead of artisanal*, hand-crafted, gluten-free, non-GMO, fair trade, limited batch, “authentic” non-white breads consciously curated by a fedora-wearing neckbeard “ally” and his fluid gender-identifying partner?? That’s why, isn’t it? And of course the government agency in charge of doling out the rations of bread in your non-fantasy scenario (full of well-paid employees housed in relatively luxurious quarters) will have to take a 10th, to recover their costs…but at least they’re not doing it for evil PROFIT amirite?

      You tit.

      *-couldn’t remember how to spell this buzzword, but before looking it up, it occurred to me to try spelling it with “anal” in it. Scoreboard.

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  19. The headline is clearly in error. Rational people might be able to build their way out of a housing shortage. There is, however, no evidence that Californians are rational.

  20. California has a housing shortage and wants to build their way out of that shortage. California has a water shortage and their aquifers are nearly as dry as their reservoirs, and they want to pipe in more water from other states to build their way out of that problem. It looks to me like California has more people than the land can support and they are issuing building permits hand over fist. They should have restricted building permits a long time ago to keep their water shortage problem in check. But governance does not plan to avoid problems in the long run so they have to fix the results of their folly. All of the expense to fix the water problem should be kept in California as they made it and they own it. Maybe being stuck with a huge problem with water stop their hand over fist spending sans planing.

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