California’s Regulatory Hostility Prevents More New Homes

The median home price in Los Angeles County is $618,000. In Santa Clara County it’s $1.2 million. In the entire state of California, including the somewhat more “affordable” inland counties, the median home price is $548,000.

The national median home price? $227,000.

There’s a reason for this. For decades, California’s state and local governments have made it harder and more expensive for any builder to construct new housing. In most other states, the governing agencies want more housing and they try to make it easier for builders. In California, the exact opposite is the case.

The consequences of this hostile shake-down of builders by California’s state and local governments are a housing shortage, unaffordable homes, an exacerbated homeless crisis, and increased calls for rent control (which will create even more disincentives for home builders).

The response of California’s policymakers to the housing shortage they created is not to address the punitive fees and permitting delays, but to try to cram high density housing projects down the throats of local communities, accusing them of nimbyism – the “not in my backyard” syndrome. The problem with this accusation is that no sane person wants an apartment building plopped next door to them in a neighborhood that used to be single family dwellings. If “nimbyism” means stop destroying well established and tranquil low density neighborhoods with mandated high density projects, then California needs more nimbyism, not less.

Along with punitive fees and permitting delays is a bias against any […] Read More

Too Few Homes, Too Many Homeless: Part One, How it Happened

Apart from the fine weather unique to California, there is little stopping the homeless crisis that grips that state from infecting the rest of America. California’s other even bigger problem, unaffordable housing, is also coming to America. All the elements are in place.

The problem of increasing homelessness boils down to three fundamental policy failures. Massive immigration, overpriced housing, and an inability of state and local governments to properly deal with homeless people.

Volumes could be written about each of these problems, because each of them are symptomatic of deeper challenges. Immigration is fundamentally transforming our culture. Overpriced housing is just one element of the economic asset bubble that offers an illusory, unsustainable substitute for genuine economic growth. And our inability to deal with the homeless is just one example of a stultified society, mired in legal disputes, bureaucratic inertia, and corruption.

Before exploring the specific synergy these three problems have with respect with homelessness, it’s important to declare their larger significance. Because how each of these problems affect homelessness, and how each of them might be solved in order to resolve the problem of homelessness, point the way to larger, more general solutions.

Mass Immigration Raises Demand for Housing

The easiest of these three to understand is mass immigration. It is also the easiest to solve, which unfortunately is only to say the other problems are even tougher. Since 1965, over 60 million people have immigrated to the United States. During that time, the total population has […] Read More

Defining Appropriate Housing Development in California

One of the most frustrating contradictions inherent in the policies being enacted by California’s one-party state goes something like this: We are inviting the welfare cases of America and the expatriates of the world to move here, while simultaneously enacting environmental policies that make it extremely time consuming and expensive to build anything.

No wonder there’s a “housing crisis.” Until demand decreases, or supply increases, housing in California will remain unaffordable for most of its residents. But don’t expect demand to slacken any time soon. The political consensus in favor of increasing California’s population has a strong moral justification – why shouldn’t the wealthy, innovative, compassionate people of California be willing to share their wealth with millions more people who are less fortunate? But there are other less high-minded upsides to population growth and obstacles to new housing.

Currently, real estate prices and rents are on the rise, favoring investors and landlords. Banks enjoy higher lending volumes, while borrowers enjoy greater liquidity, however precarious, as the property bubble offers them more collateral as security. The government agencies profit from higher property tax assessments and higher capital gains collections on sales of real estate. Large land developers that have the political clout and financial heft to build housing despite the many obstacles, enjoy unusually high margins that they could never achieve in a normal competitive market. Finally, as an expanding population increases demand for housing, at the same time public school districts can increase attendance-based revenue – which […] Read More