Monday, March 27, 2017
Housing is so expensive across California that Joel Singer, CEO of the California Association of Realtors, said last fall that “only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.”
...Californians who own their homes spend more than a quarter of their total income on housing, the highest ratio in the nation. In 2014, Golden State renters paid 33.6 percent of their income on housing — third-highest in the nation. Despite rent-control laws — actually, in part due to those laws — San Francisco has the most unaffordable rental costs in the world, according to Nested, an international real estate service. Los Angeles is tenth on the list. Three of the five costliest housing markets in North America are found in California: San Francisco, San Jose and Los Angeles.
The housing crisis isn’t confined to the state’s elite coastal enclaves. In Riverside County, part of a region east of Los Angeles known as the Inland Empire, only 39 percent of households “are able to purchase a median-priced home, which in February was $334,440 for a single-family home,” the Desert Sun reported last March. The national average is 58 percent.
The California housing crunch is the product of a dire shortage of homes. Over the last decade, developers have built an average of 80,000 homes each year. But that number is about 100,000 units short of what’s needed to keep up with demand. According to the California Department of Housing and Community Development, the state will need to build roughly 1.8 million units between 2015 and 2025 “to meet projected population and household growth.” That would be like building more than 10 new Oaklands or nearly six new San Joses over that time.
Developers aren’t fools. They know that there is a great demand for housing in California. The profit motive would make them happy to build all those additional Oaklands. But California’s regulatory climate and development policies have eaten away at that incentive. The hurdles to building homes are high and solidly rooted: the most imposing is the California Environmental Quality Act (CEQA), which allows opponents of development to shut down projects in the courts, often with no environmental basis. But because the lawsuits can disrupt and suppress projects, the law has become, as the Hoover Institution’s Loren Kaye says, a “tool for abuse.”...