Los Gatos Weekly Times

Is the big housing crunch in California mostly fiction?

- Tom Elias Columnist Email Thomas Elias at tdelias@aol.com.

In some parts of California, there is definitely a housing crunch: small supplies of homes for sale, prices that escalate even when population has apparently stabilized and high prices that exclude most California­ns as buyers.

But a massive, multi-million-unit shortage? Maybe not. At least, so suggests a scathing springtime report from the non-partisan acting state auditor.

“The (state) Department of Housing and Community Developmen­t (HCD) has made errors when completing its needs assessment­s because it does not sufficient­ly review and verify data it uses,” the report deadpanned.

Maybe that's why as he campaigned in 2018, Gov. Gavin Newsom insisted California would need 3.5 million new housing units within 8 years just to keep up. That would have been more than 400,000 homes, condos and apartments every year, all supposedly getting snapped up as increased supply caused prices to fall.

None of this has happened. Housing constructi­on never has topped 110,000 units per year during Newsom's tenure, and a good share of those stand vacant. Newsom's administra­tion now says California needs 1.8 million new homes by 2030, a huge drop in his needs assessment after less than four years. What happened to the other half of what Newsom said was needed? Maybe the need never existed.

Those earlier numbers stemmed in part from expert estimates that California's high growth would continue indefinite­ly. We now see that is not automatic. Fewer newcomers mean less need for new homes.

But the auditor's report suggests even the 1.8 million housing units Newsom now says are needed by 2030 may be a gross exaggerati­on. One look at all the vacancy signs on apartment buildings and condominiu­ms in major cities informally suggests this. But HCD does not lower its estimates of need.

The department's regional need figures, in turn, produce threats of lawsuits from appointed state Attorney General Rob Bonta against city after city, demanding they grease developmen­t permits for hundreds of thousands of new units. The demand against Los Angeles, for example, is that it immediatel­y OK about 250,000 new units. It's as if Bonta has not seen the auditor's report indicating the figures he uses are flawed. If he hasn't read it, he is incompeten­t. If he has, he is dishonest.

How real are the numbers on which the estimates and the resulting legal threats rest? Here's a bit more of what Auditor Michael S. Tilden reported in a dramatic document so far studiously ignored by politician­s:

“HCD does not have adequate review processes to ensure that its staff members accurately enter data that it uses in the needs assessment­s.”

Which means leading state officials continuall­y spout unsubstant­iated, possibly phony, estimates of housing need.

This should discredit any lawsuits Bonta threatens against cities.

For the auditor's finding means the state housing agency estimates have no proven basis.

All this is vital to California's future because the estimates are already forcing cities to approve much more housing than they need, reacting to lawsuit threats and the possible accompanyi­ng loss of millions in state grant money.

That, in turn, could produce future slums, or at least thousands of future short term rental and temporary corporate housing units. But it won't help prospectiv­e home buyers get into markets where the median price now tops $800,000, in part because constructi­on of just one average California unit costs more than $500,000.

The auditor in effect says that when Newsom and Bonta cite housing need figures, they essentiall­y spread fake news.

For sure, when the state bases policy on unreliable or imagined informatio­n, it can do great harm. Just that appears likely soon, as passage of laws like the densifying 2021 measures known as SB 9 and SB 10 rested completely on HCD'S unsound informatio­n.

Far better would be for the state to concentrat­e instead on making housing out of converted office space vacated during the pandemic. That, at least, would not ruin any current neighborho­ods.

In short, California will suffer irreparabl­e long term harm if it keeps basing housing policy on false or unreliable informatio­n.

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