Commentary: Housing crisis - fits and starts
https://www.elkgrovenews.net/2019/11/housing-crisis-fits-and-starts-California.html
By Dan Walters | CalMatters Columnist |
The latest
developments in California’s housing crisis are, as usual, mixed.
In
September, according to the Legislature’s budget
analyst, permits for 10,580 new housing units were issued, a 13% increase
from August and a 40% boost from September 2018.
However,
overall housing starts are still running below 2018’s level, meaning the net
gain for the year, including housing that’s burned or been demolished, will
likely be well below 100,000 units, or about half of what the state says we
need to build each year.
There was
better news in an announcement from Apple, Inc., that it is committing $2.5
billion to housing construction and mortgage assistance in the San Francisco
Bay Area. That would more than double the two $1 billion housing investments
previously announced by Silicon Valley behemoths Alphabet, parent company of
Google, and Facebook.
It calls
to mind the observation attributed to the late Sen. Everett Dirksen: “A billion
here, a billion there, pretty soon you’re talking real money.”
Yes, $4.5
billion is real money in anyone’s language, as is the $6 billion state housing
bond that voters approved last year.
But as
large as these amounts appear, they pale when placed in context.
Housing
production in California is running at least 80,000 units a year below what the
state says is necessary to keep up with population growth and make a dent in a
very large backlog that has sent housing costs skyrocketing.
The state
also calculates that building one unit of so-called “affordable” housing —
available to low- and moderate-income families — costs about $350,000
statewide, and twice that much in the Bay Area.
So even
using the average cost, increasing production by 80,000 units a year would
require another $30 billion investment every year, not just the one-time
injections from state bonds or high-tech employers.
Moreover,
even if developers (and their bankers) are willing to put that kind of money
into housing, they must clear several other hurdles, such as having land zoned,
specific projects approved and, finally, recruiting enough carpenters,
plumbers, electricians and other workers to build.
All of
those hurdles are becoming higher, particularly those controlled by local
governments whose constituents tend to oppose anything that will bring more
traffic congestion and other downside factors to their neighborhoods.
The
not-in-my-backyard sentiment is powerful. It explains, for instance, why cities
successfully opposed legislation, Senate
Bill 50, that would have overridden their much-cherished control over land
use issues for some kinds of housing.
Gov. Gavin
Newsom had called on the high-tech community to help solve the housing crisis
its explosive prosperity helped create and, therefore, was quoted in Apple’s announcement
as praising the company’s commitment.
“The
sky-high cost of housing — both for homeowners and renters — is the defining
quality-of-life concern for millions of families across this state, one that
can only be fixed by building more housing,” Newsom said in the announcement.
True
enough, and the high-tech industry’s commitment will help, but only a tiny bit
at the margins — and assuming it can overcome other impediments to
construction. SB 50 would have been a serious step toward ramping up construction,
albeit only one of many needed, but Newsom was noticeably quiet when the state
Senate killed the bill without even a vote, and he signed a rent control bill
that sends the wrong signal to housing developers.
During his
campaign for governor, Newsom set a goal of building 3.5 million new housing
units by 2025, or 500,000 a year. Housing production is a fraction of that
level and is, if anything, declining.
\
CalMatters
is a public interest journalism venture committed to explaining how
California’s state Capitol works and why it matters. For more stories by Dan
Walters, go to calmatters.org/commentary
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