The will and the means to build
Legislature must break down barriers to housing construction
For a complicated policy problem, the California housing crisis can be explained simply: People want to live in California, and Californians don’t want them to.
A powerhouse economy, along with a forgiving climate and other less tangible attractions, has sustained high demand for California housing across the decades. But the state’s residents and their elected representatives have collectively engineered an equally impressive suppression of the housing supply that, particularly in the Bay Area and coastal Southern California, has only deepened in recent years.
For every 1,000 residents California has gained since the 1970s, it has produced only 325 homes, a report by McKinsey & Co. noted, which is less than a third of New York’s pace and half of New Jersey’s. To match the number of homes available per person in those states, both of which have relatively limited housing supplies for their populations, California would need another 2 million. To match the national average, it would need 2.5 million. The most widely felt consequence is that, as the state Legislature’s nonpartisan research arm put it, “Housing is more expensive in California than just about anywhere else”: The median home price of more than half a million dollars is twice the national average, and rents are at a similar premium. The state’s homeownership rate ranks last in the nation, and, when housing and other costs of living are considered, its poverty rate ranks first. Nearly half the country’s unsheltered homeless live here.
Having long ignored or enabled the forces that created the housing shortage, the Legislature will try to confront them when it reconvenes Monday. The most important and controversial legislation under consideration, Senate Bill 35, would require cities that haven’t met housing needs to expedite approval of multiunit residential developments that meet zoning and other conditions. Authored by state Sen. Scott Wiener, D-San Francisco, the bill aims to eliminate some of the myriad opportunities for the state’s cities and towns to prevent homes from being built. As such it would represent the Legislature’s first serious attempt to address the housing crisis where it lives.
Even when new housing doesn’t face the kind of fierce local opposition that greeted large-scale development proposals in Bay Area communities such as Brisbane and Los Gatos, residential construction proceeds haltingly in California, if it proceeds at all. While one survey found that the average U.S. building permit is issued in 4½ months, the Legislative Analyst’s Office reported the typical wait is seven months in the Bay Area and more than a year in San Francisco.
“Even within the group of highly regulated cities, the Bay Area stands out,” said UC Berkeley economist Enrico Moretti, who has studied and written extensively about housing supply restrictions.
Opposing development makes sense for incumbent homeowners, whose property grows more valuable as the shortage worsens. They have often been joined, in what Moretti called a “bizarre alliance,” by renters and activists who attribute rising rents in poorer neighborhoods to development — even though it’s the overall lack of new construction that drives gentrification. By excluding people from the Bay Area and other regions where jobs and income are plentiful, local restrictions lead to a loss of income on a statewide and national scale while shifting wealth from workers to landowners. “That’s why it makes sense for us as a state to step in,” Moretti said.
SB35 has come closer to doing so than a comparable proposal by Gov. Jerry Brown last year partly because legislative leaders and the governor are coupling it with bills enabling billions in government spending on affordablehousing programs, a more popular approach among the Legislature’s ruling Democrats. But as the Legislature’s own researchers have noted, “the scale of these programs — even if greatly increased — could not meet the magnitude of new housing required.” Based on past results, for example, a $3 billion bond measure under consideration wouldn’t produce enough homes to close a year’s worth of the continuing gap between the demand for and construction of new housing.
The bill has also won support through a number of concessions that make it more difficult to predict its impact. It could slow the projects it means to expedite, for instance, by requiring builders to pay union-set wages. And it leaves local governments with too many options for stalling the sort of developments it’s supposed to enable.
“It’s difficult to project which places this will be a useful tool and how easy it will be for cities to get in the way of it,” said Kristy Wang, community planning policy director for SPUR, a San Francisco urban planning think tank that supports the measure. “In some ways, it’s circumscribed so tightly that a lot of cities don’t have a lot to worry about.”
The bill’s reliance on existing local zoning and the state’s assessment of regional housing needs could also limit its ability to dramatically increase development, said Nicholas Marantz, an assistant professor of urban planning and public policy at UC Irvine. Still, Wang said, it could make a significant impact by giving more local officials a sort of excuse to approve housing under state duress.
It will probably take this reform and more to change a local political calculus that treats housing largely as a burden to be resisted. While it goes without saying elsewhere, much of California has to be convinced that, as Wang put it, “Housing is a good thing.”