It’s time to grasp that California’s housing crisis could be permanent. Our system is out of whack. November’s statewide median home price was $699,000 — 18.5 percent higher than in November 2019. November’s average rent for a one-bedroom apartment in the Golden State was $1,670 — up 19.8 percent from November 2020. Many economists thought the pandemic would reduce housing demand, and thus housing costs, because of lost jobs and a weakened economy. Instead, the housing crisis got worse in some ways during the pandemic.
This crisis has huge implications for parents who see their kids move to places where the possibility of home ownership is more than a fantasy — or whose kids never move out. It also is a huge challenge for tech businesses that struggle to recruit workers from out of state because of housing costs, for retail stores and restaurants that find it difficult to retain workers in low-paying jobs — and basically for all middle- and low-income families who don’t have mortgages from before California’s housing bubble began inflating in the late 1990s.
It’s been 10 years since the Census Bureau began issuing a poverty rate adjusted for cost of living, and found California had the highest percentage of impoverished residents of any state — almost entirely due to the cost of housing.
It’s been six years since Gov. Jerry Brown declared an urgent need to bring down or at least stabilize the cost of housing by building far more new units. It’s been four years since Brown’s successor, Gavin Newsom, began running for governor on a platform that staked out the urgent need to build 500,000 new homes a year. It’s been three years since a pro-housing coalition began flexing its muscle in the Legislature, passing a series of measures that were touted as game changers.
Yet in 2019, the last “normal” pre-pandemic year for construction, only about 110,000 new housing starts were reported statewide, down 7 percent from 2018. This reflects the fact that the measures adopted before 2019 really weren’t game changers. Between NIMBY-allied local government and planning groups, costly environmental regulations, building trade unions forcing the use of costlier union labor in construction, and the power of inertia in preserving the local status quo, progress was minimal.
Yes, in September, two bold measures were signed into law by Newsom. Senate Bill 9 makes it much easier for owners of an existing single-family residential lot to add up to four new housing units. Senate Bill 10 lets local governments upzone urban areas close to transit — allowing up to 10 units per parcel without adhering to many provisions in the California Environmental Quality Act.
But do many families have the ability to borrow hundreds of thousands of dollars or more to pay for new construction when they often struggle to pay their existing mortgages? Nope.
Who does have the money? The real estate speculators who have transformed California’s real-estate market this century because of their recognition that Golden State property has high and durable value. Last month, a report came out showing that 51 percent of all home purchases in the counties of Los Angeles, Orange, San Bernardino and Riverside were by investors — nearly triple the national average.
Yes, Senate Bill 9 was modified to try to limit speculation by requiring applicants for new units on previously single-family-zone lots to declare their “intent” to live in one of the units for at least three years. But that’s a pretty weak provision. And even if it does have teeth and is strictly enforced, what’s to prevent a homeowner from teaming with an investor to add the units? Where is the evidence that such speculators have any interest in promoting the social good by making housing more affordable? After more than 20 years of surging home prices, why assume that a “modest” increase in home building — that’s the prediction of a UC Berkeley analysis — will yield lower prices instead of more speculation?
I am for the new laws as gambles worth trying. But it’s not just NIMBYs who should worry about speculator-driven gentrification transforming neighborhoods, often to the detriment of renters from less affluent communities of color. An October story in The New York Times about a San Diego real estate speculator on the prowl “for homes on abnormally large lots with a flat, neglected yard that is primed to start building on” had this as a header: “A single-family home from the 1950s is now a rental complex and a vision of California’s future.”
But there’s also another distinct possibility: That next November, voters wipe out state laws meant to end local governments’ ability to block new housing projects, with a few exceptions.
Some local government officials have formed Our Neighborhood Voices to promote such a state initiative with financial backing from Los Angeles-based AIDS Healthcare Foundation, a deep-pockets group that has waded into land-use fights of late. Advocates say polling shows wide support for local control of housing decisions.
Instead of buying a new “vision of California’s future,” voters may opt for the past.
Reed is deputy editor of the editorial and opinion section. Column archive: sdut.us/chrisreed. Twitter: @calwhine. Email: email@example.com.