A new report authored by Joel Kotkin, Ali Modarres, and Wendell Cox examines how California’s planning policies are contributing to the affordable housing crisis. An excerpt follows and a link to read/download the entire report.
California’s leaders speak much about housing affordability, but their policy agenda seems designed to prolong and worsen the crisis. As it has done for almost a generation, the state has placed ever increasing burdens on housing developers, and now seems determined to “solve” the crisis by adding more challenges to anyone seeking to expand housing.
The failure of this approach should be manifest. Governor Newsom has called for building 3.5 million new homes by 2025. Yet housing construction continues to be muted, with the 2019 building permit number of 119,000 below the last two years and far below the 315,000 permits issued in 1986, when California had one-third fewer residents. At the current rate it would require more than 30 years to build 3.5 million houses.
Much of the political leadership sees the housing crisis as the result of a shortage in housing supply. However, supply alone cannot resolve the housing affordability crisis. The supply of housing has to be affordable to middle and low income households.
Clearly, the state’s principal housing strategy, Regional Housing Needs Assessment (RHNA), has not restored housing affordability. RHNA requires metropolitan planning agencies, counties and cities to zone sufficient land for housing production targets. But land and regulatory costs in the state are so high that builders can earn a competitive return on investment only on houses that are too expensive for nearly all middle-income households to afford.
Read or download the full report here.