Select Page

California’s Housing Crisis

California’s Housing Crisis

by William H. Benson

February 7, 2019

     Last time in these pages, I discussed Michael Greenberg’s recent article in the New York Review on the plight of migrant workers in California’s central valley, Indians from Mexico hired to pick fruits and vegetables. In a second article published also last month in the New York Review, Greenberg discusses California’s lack of affordable housing.

     The statistics are disheartening. California now ranks 49th in housing affordability. Only Hawaii is more expensive. Zillow placed the median price on a California home last July at $597,000, whereas the national median price is $218,000.

     Certain well-paid employees in Silicon Valley have given up on the thought of ever buying a house there and have opted to commute from two hours away, driving up housing prices “in Oakland to the north, Salinas to the south, and across the Coast Ranges as far east as Sacramento and Fresno.”

     It is sad but true, that only 30% of California households can afford the state’s median priced home, but in San Francisco only about 15% can afford the median priced home there. In Palo Alto, a suburb south of San Francisco, the median price on a home is $3,155,700.

     Yet, California, for all its wealth and high-priced homes, is one of the poorest states. Greenberg writes, “California has the highest poverty rate in the US.”

     Homelessness is rampant. Greenberg says that “the homeless colonize almost every public space: under freeways, in parks, in private lots whose chain-link fences have been cut and bent open. Pup tents and ripped plastic tarps are everywhere. Thousands more live out of cars or RV’s parked on the street.”

     A professor at the University of California at Irvine told Greenberg that “at least 10 percent of his students, at one time or another, sleep in their cars.”

     How did California get into this position, where employees and students lack affordable housing.

     The acronym NIMBY explains in part the underlying reason. “Not in my backyard” contains within it the drawbridge attitude, the idea that once someone moves into an unspoilt neighborhood, he or she should work hard to prevent others from entering after them.

     Greenberg writes, “In most localities homeowners have tight control over their neighborhoods and reject proposals for moderately priced multi-unit buildings.”

     People who subscribe to Nimbyism may want affordable development—apartments, townhouses, and condominiums—but elsewhere, not in their backyard.

     Then, there are others who fear the model of urban sprawl, the ugly type of development that gave California a bad reputation decades ago. Instead, they preach conservation, and then they point to laws that they use as a pretext to limit construction of housing for people of modest means.

     For example, in 1970, then Governor Ronald Reagan signed into law the California Environmental Quality Act, an act that promotes land use that protects the environment, but in recent years, Nimbyists have used “arcane provisions in that act to block high-density development that would reduce pollution and help alleviate the housing crisis.”

     Those who want to delay or block development file a series of costly CEQA lawsuits, but not because they wish to protect the environment.

     Then, in June of 1978, California voters approved Proposition 13, an amendment that froze property taxes, and allowed only a maximum 2% annual increase. If the property is ever sold, then officials can increase the property tax, but they are limited to just 1% of the sales price.

     As a result, owners of homes or commercial property are hesitant to sell, shorting the supply of real estate in the face of accelerating demand. This drives prices up.

     Because of Nimbyism and zoning laws, California cannot build enough affordable housing units.

     California state’s Senate Bill 827 “would have legalized apartment construction in area’s well served by transit,” including trains, buses, or subways, but California’s congressmen voted it down.

     In 2016, Governor Brown proposed to exempt affordable housing construction from the state’s crippling CEQA review process, but the congressman voted his proposal down as well.    

     Greenberg sees a little hope. He says that “At the very least, voters are likely to support an end to the tax freeze on commercial real estate.” He also suggests that California’s cities should look to Minneapolis, “which has eliminated single-family zoning in every neighborhood, and now allows for three units on plots of land where only one was permitted before.”

     Until the zoning laws change though, housing prices in California will continue to spike up.