Housing costs in California continue to soar close to record highs as officials struggle to deal with the prevalence of homelessness in the state. Meanwhile, 42 percent of all Los Angeles millennials live with their parents and empty lots in the Bay Area are listed for $9 million.
With fewer roadblocks, builders say they will have more incentives to erect a greater number of apartment buildings and other multi-unit housing developments, providing low- and middle-income households with more affordable housing options. After two competing bills looking into these efforts were brought to the California Senate for discussion, state Sen. Scott Wiener of San Francisco combined them into one, SB50.
“The lack of housing, including emergency shelters, is a critical problem that threatens the economic, environmental, and social quality of life in California,” according to the bill.
One of the bills, which was introduced by Democratic state Sen. Mike McGuire of Healdsburg, in Marin County, was criticized for sparing the region he represents from the building boom.
By merging the two measures, lawmakers hope to eliminate housing-density restrictions in “jobs-rich areas” in California. But counties with more than 600,000 people, such as Marin, would be given an exemption, and local housing prices would continue to soar if denser residential buildings aren’t built in the region.
While legislators may show support for homeowners who want to see the value of their homes go up over time, California’s housing crisis is forcing the working and middle classes out of the state.
Policies Have Long-Term Consequences
“In an unhampered market,” Ludwig von Mises Institute economist Ryan McMaken wrote, housing developers respond to consumers’ demands. So as rents rise, they build more housing.
“Rents will then fall in those areas and developers will stop building housing—or build in other places—until rents rise again,” he explained, in an article on the institute’s website.
As Center of the American Experiment economist John Phelan noted, San Francisco has the “highest rent per square foot of any municipality in the nation.”
In his article for Reason magazine, Phelan argued that the California housing crisis is worsened by the ever-growing regulatory burden on developers. This is a product of years of mismanagement, as legislators kept passing new zoning laws and building restrictions, creating a massive regulatory body that made California a toxic place for both businesses and the poor.
“Policymakers need to wake up,” he wrote. “They need to acknowledge that they cannot have these regulations and low-cost housing.”
According to the state’s Legislative Analyst’s Office (LAO), “building less housing than people demand drives high housing costs.” And while it explains that housing in the Golden State had long been more expensive than in other parts of the country, things grew worse in 1970, when California’s home prices went from 30 percent above the U.S. average to more than 80 percent higher in 1980.
In an interview for The Sacramento Bee, Brian Uhler, LAO’s main housing researcher, said that coastal communities in the state opposed new housing, pushing Sacramento to implement more legislation that would keep the value of their homes high.
“California communities are vested with significant authority over land-use decisions, about how much can be built, and when and where. They have used that authority to create significant barriers for the construction of new housing,” he said. “Shrinking Rust Belt cities are the only kinds of places that are building as little housing as our coastal areas did in recent decades.”
At the same time, many poor people see any change to their neighborhoods as a sign they are going to be displaced. Indeed, the main movement against SB50 uses “gentrification” as a reason to oppose the bill.
Meanwhile, many California residents bemoan the government for “not doing enough” for the homeless and often push for new taxpayer-funded programs, instead of simply asking officials to cut the red tape.