California’s median home price is the 2nd highest in the nation and our rents are nearly the highest. Restrictive zoning codes, a tortuous planning process, high government fees and other government regulations are the problem according to reports from the Federal Reserve Bank of New York, the California Legislative Analyst and others. Housing policies for more than 60 years have been dominated by politicians and bureaucrats that have micro managed the development process. They pick winners and losers with targeted rules that favor special interest groups over housing creators and consumers.

Less affluent Californians are forced to make tradeoffs including paying a larger share of their income for housing, commuting farther to work and living in neighborhoods that are less safe. Most can’t afford to purchase and face ever increasing rents. They can’t afford to live in the best school districts.

Home ownership allows the more affluent to enjoy the benefit of home prices that appreciate at artificially high rates while insulating themselves from rising rents. The rich get richer and the poor get poorer under the housing policies of California’s ruling class.

California desperately needs more housing of every type, especially rental housing. The solution is to reduce government red tape and fees so we can build more homes and apartments. California’s poor and nearly poor need leaders that will enact policies that allow builders to build the housing we need.

Fact Check

CALIFORNIA HOME PRICES AND RENTS ARE NEALRY THE HIGHEST IN THE NATION

• Our home prices are 2nd highest in the nation: World Population Review
• Our rents range from the 2nd to the 4th highest depending on the number of bedrooms: RentData

RESTRICTIVE GOVERNMENT ZONING CODES, TORTUOUSE PLANNING PROCESS, HIGH FEES & OTHER REGULATIONS ARE THE PROBLEM

• Federal Reserve Bank of New York (FRBNY): “zoning, and other land-use controls, are more responsible for high prices where we see them.”
• The State of California’s Legislative Analyst’s Office (LAO): “over two-thirds of cities and counties in California’s coastal metros have adopted growth control policies explicitly aimed at limiting housing growth.”
• The CATO Institute: “The eight counties in the San Francisco Bay Area, for example, have collectively drawn urban-growth boundaries that exclude 63 percent of the region from development. Regional and local park districts have purchased more than half of the land inside the boundaries for open space purposes. Virtually all of the remaining 17 percent has been urbanized, making it nearly impossible for developers to assemble more than a few small parcels of land for new housing or other purposes.”
• The State of California’s Legislative Analyst’s Office (LAO): “development fees—charges levied on builders as a condition of development—are higher in California than the rest of the country.”
• The Independent Institute: “cities that impose a below-market housing mandate actually end up with 10 percent fewer homes and 20 percent higher prices.”

THE STATE PICKS WINNERS AND LOSERS WITH TARGETED RULES: Politicians recognized the problems the planning process presents. They could have streamlined the process for everyone. Instead, they passed SB35 in 2017. It set out a streamlined process that only applied “if at least certain percentages of the units are available at affordable housing costs to very low income, lower income, and moderate-income households for at least 30 years.” That’s one example of the targeted approach politicians use to pick winners and losers.

Labor unions were another of SB35’s winners. They used their influence to insert a requirement that projects must meet prevailing wage requirements in order to qualify for the streamlined process. Those prevailing wage requirements require employers to open up their books to prove the prevailing wage requirements are being met.

LESS AFFLUENT CALIFORNIANS ARE FORCED TO MAKE TRADEOFFS: The California Legislative Analyst identified several tradeoffs the less affluent make. These include;

• Spending a larger share of income on housing
• Commuting further to work each day
• Postponing or foregoing home ownership
• Living in more crowded housing
• Living in substandard housing
• Living near sources of pollution
• Choosing to work and live elsewhere

The Brookings Institute identified an additional issue. “…housing costs an average of 2.4 times as much … near a high-scoring public school than near a low-scoring public school.”

AFFLUENT FAMILIES ENJOY THE BENEFIT OF HOME PRICES THAT APPRECIATE AT ARTIFICIALLY HIGH RATES: Cities like San Jose, San Francisco and Santa Monica have among the most restrictive housing policies in the state. Their policies have priced most low and middle income families out of the market. Use this chart from Zillow to compare housing appreciation rates in those cities to cities with less restrictive policies like Stockton or Modesto.