Why Does California Have a Housing Crisis?

Well answered in this New Geography article.

An excerpt.

The homeownership rate in California equaled the national rate from 1950 well into the 1960s. Yet, by 2005, California’s homeownership rate was 13.3 percent below the national average and the 49th lowest in the nation. In the second quarter of 2018, the homeownership rate in California was 54.3 percent, the third lowest in the nation, and 10 percent below the national average of 64.3 percent.

Yet, 86 percent of California families want to live in a single-family home, according to a 2006 poll.

Housing Affordability

Median single-family home prices in California equaled the national average as late as 1970. The median price is the point where half the homes sell for more and half for less. As more constraints were placed on development in California, median homes prices began to increasingly exceed the national average. In October 2018, the median home price in California was $535,000, compared to the national average of $275,000.

A home is deemed affordable if rent or house payments are 30 percent or less of a household’s gross income.

Only 26 percent of California households earning the statewide median income could afford to buy California’s median-priced single-family home, in the second quarter of 2018, a 10-year low, and down from 29 percent a year earlier.

California remains among the nation’s least affordable markets for housing. California homeowners spent an average of 21.9 percent of their household income on housing costs, the 49th worst in the nation in 2016, while renters spent 32.8 percent, the 48th worst.

Housing affordability is decreasing. Families with a median income of $61,200 needed to allocate 22.7 percent to pay for principal, interest, and taxes on a median-priced, $293,2000 home in 2016, compared to 12.7 percent in 2009.

Progressivism in Land Use Policies

The widening disparity between California and national homeownership rates and home prices originates from Progressive legislation and court rulings in the 1970s that placed increasing numbers of constraints on new home development in California.

For example, the California Environmental Quality Act (CEQA), was enacted in 1970. The Friends of Mammoth decision by the California Supreme Court in 1972 mandates environmental review of private projects. CEQA was applied to housing developments. This decision compels state and local agencies to consider the possible adverse effects of housing projects on the environment. The decision does not consider the benefits of housing.

CEQA increases the time, cost, and uncertainty involved in getting housing projects approved. California’s 10 largest cities averaged 2 ½ years to approve housing projects that required a CEQA Environmental Impact Report, according to a March 2015 report by the state’s nonpartisan Legislative Analyst’s Office. Only four other states have comparable requirements.

CEQA encourages litigation against homebuilders and developers. Growth opponents, often called NIMBYs, an acronym for Not In My Backyard, often use CEQA lawsuits to derail projects. As a result of CEQA lawsuits, many proposed housing projects are abandoned or scaled back, resulting in fewer new homes being built, and higher costs for the homes that are built.

The federal Endangered Species Act, enacted in 1973, has resulted in millions of acres nationwide being removed from the available developable land of growing metropolitan areas, thus restricting home development, and substantially driving up land prices.

Government, beholden to environmental activists, has taken ownership of vast areas, reducing the supply of developable land. California protected areas administered by public agencies and non-profits have a total area of 49,253,020 acres, or 47 percent of the total area of California. More than 3.7 million acres in California have been covered by regional Habitat Conservation Plans, resulting in more than 1.5 million acres of conserved and managed habitats. An additional 29 million acres are in the process of being regulated through regional HCP/NCCPs.

Retrieved November 2, 2018 from http://www.newgeography.com/content/006128-the-causes-californias-housing-crisis


About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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