George Boardman: We keep digging a deeper hole as we try to solve the state’s housing crisis
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It’s generally a good idea to quit digging when you find yourself in a hole, but that’s a lesson California progressives haven’t learned when it comes to the state’s burgeoning housing crisis.
The hole got deeper during the recent session of the state Legislature when the people who helped created the crisis passed a law imposing a cap on rent increases throughout the state, portrayed as “an important new tool to combat our state’s broader housing and affordability crisis,” in the words of Gov. Gavin Newsom.
The measure, AB 1482, limits annual rent increases to 5% plus the regional cost of living increase, a maximum of 10% a year. Tenants who have lived in a unit for a year can’t be evicted without a legitimate reason, like failure to pay the rent or criminal activity. If they are evicted through no fault of their own, they are entitled to relocation assistance equivalent to one month of rent.
The new law doesn’t cover everybody: Exempt are apartment buildings constructed in the prior 15 years (an effort to spur more construction), duplexes where the owner lives in one of the units, and single-family homes that aren’t owned by corporations.
But the bill’s sponsor, Assemblyman David Chiu, said the measure will extend protection to eight million renters in the state. “There’s millions of tenants who are struggling with the worst housing crisis in our state’s history,” Chiu said. “We need to stand up.”
Assembly Republicans pointed out that the measure ignores the will of the people, who overwhelmingly rejected a 2018 rent control ballot measure. “This is rent control. You can change the wording all you want, but this is rent control,” said Republican Assemblywoman Melissa Melendez.
She also pointed out the hypocrisy of Democrats for acting like saviors after embracing policies that make California so expensive in the first place. “And then you have the audacity to act surprised that people can’t afford to live here,” she said.
Melendez was referring to the fact that California has the most expensive housing in the country, primarily because of the burdens placed on people who want to build it. That in turn increases the value of the properties that do exist because they are so rare.
As a result, the state has added about half as many of the housing units needed to accommodate population growth, and more than half of Californians spend at least 30% of their income on rent. Housing costs are swelled by restrictive building codes, zoning, environmental mandates, rent control, cumbersome permitting and labor regulations.
Solar panels have been mandated for new homes built in the state. Cities are prohibiting natural gas hookups as they try to block fossil fuels. Berkeley has banned natural gas in any new houses built there, and San Luis Obispo has voted to charge developers a $6,000 fee for every new housing unit that isn’t electric.
As a result, an “affordable” housing unit in the state costs $332,000 to build and nearly $600,000 in San Francisco, according to state budget figures. Developers can’t turn a profit on low- and middle-income homes without selling them at prices only high tech yuppies can afford, or charging rents that price out the low- and middle-income people they were built for.
The new rent control law won’t help the situation. The rent cap could encourage landlords to increase rents up to the limit each year rather than respond to the market. Landowners might also decide it’s more profitable to convert buildings to condos, which would further limit the stock of rentals.
What we do know is that the legislation has increased uncertainty for developers. Building permits in the first seven months this year have fallen 17% compared to 2018 despite an increase in state subsidies.
The high cost of housing in California has also exacerbated the homeless crisis, a disgrace that should be an embarrassment to anybody who’s proud to call himself a Californian. The state’s poverty rate is near a record low, yet its homeless population has jumped more than 20% in three years compared to 5% in the other 49 states, according to the Department of Housing and Urban Development. We account for half of those living on the streets.
A White House Council of Economic Advisers study concluded that homelessness would fall by 54% in San Francisco and 40% in Los Angeles if housing costs approximated production costs found in Texas, Florida and Arizona. Among other things, that would require neutralizing the NIMBYism that keeps multi-family dwellings from being built in the liberal suburban enclaves of the Bay Area.
We would also have to dial back the Utopian goal of building a state full of zero energy housing that could operate without fossil or nuclear fuels. Among other things, that might mean foregoing such luxuries as extra insulation, high-quality windows, LED lighting, low-flow water fixtures, heat-reflecting roof tiles and energy-efficient appliances.
Those who can afford it are free to live such virtuous life styles. But for those Californians who are priced out of the home market or can’t afford the rent, housing without those virtues that they can actually afford to live in would have a lot of appeal. Gov. Newsom should keep that in mind as he launches his plan to get 3.5 million new housing units built in the state by 2025.
George Boardman lives at Lake of the Pines. His column is published Mondays by The Union. Write to him at email@example.com.
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