Does California Even Know How to Fix Its Housing Problem?

Housing apartmentNew Gov. Gavin Newsom’s budget asks for $500 million to boost construction of housing for “moderate income” Californians. Housing, he said while introducing his first budget, “is the issue.”

Thank you for reading this post, don't forget to subscribe!

He is correct. Everyone is aware of the grim state of housing in California. But no one, at least those with enough political influence to shift policy, seems capable of putting forth changes that will make a bit of difference.

It would help if policymakers stopped targeting segments of the housing market for special attention, as Newsom did with his $1.75 billion request for housing initiatives that includes $500 million for middle-income housing and $300 million for a low-income home-building program.

Though a focus on “affordable housing” might seem a good starting place, it’s a distraction.

Yes, those at the lowest income wealth levels are hurt the most in an environment in which even the middle class is increasingly priced out of the market. But a preoccupation on expanding “affordable housing,” defined by the federal government as housing costing less than 24 percent of an area’s median income, will not end the suffering.

What California needs are homes of all types: large, single-family houses on big lots, medium-sized houses on modest lots, small homes on small lots, McMansions, suburban tract homes, high-rise apartments, townhomes, condominiums, duplexes, triplexes, quadplexes and granny flats.

The fixation on “affordable housing” misses an important trickle-down effect. Though it’s typically assumed building new homes for higher-income households does nothing to increase the supply of lower–end housing, documented evidence refutes that claim. According to the non-partisan Legislative Analyst’s Office, “facilitating more private housing development in the state’s coastal urban communities” — where the practice of NIMBYism is a most vicious art — “would help make housing more affordable for low–income Californians.”

“Building new market-rate housing,” the LAO continues, “indirectly increases the supply of housing available to low–income households in multiple ways.”

New housing causes existing housing to become less desirable, and therefore drives down prices. It also “eases competition between middle- and low-income households.” As more affluent households that had decided to stay in low-income neighborhoods due to limited housing choices are able to move up, their homes become available for lower-income households.

Focusing on affordable-housing programs has only a limited effect, says the LAO, as it is “extremely challenging and prohibitively expensive.” The annual funding commitment would be “roughly the magnitude of the state’s largest General Fund expenditure outside of education (Medi-Cal),” which spends roughly $20 billion a year in General Fund dollars.

California policymakers truly have odd ideas about how to relieve the housing crunch. More than a dozen cities have rent-control laws, which make the problem worse by taking out the incentive to build.

A few politicians think that price-gouging laws applied to rental housing will be helpful, while others call for more public housing funds, convinced the state can spend its way out of the crisis.

Some lawmakers believe raising the cost of real-estate transactions is the answer. Yet, hiking residential and commercial property taxes, and forcing contractors to include below-market rate housing in their developments are two more ideas that are incorrectly considered to be correct pieces to the housing puzzle.

Meanwhile, Oakland’s city hall operates under the delusion that forcing landlords who want to move into their own home to pay their tenants as much as $9,875 for the privilege of doing so is a reasonable solution. The city’s Uniform Relocation Ordinance clearly an illegal seizure of private property by the government.

It’s no surprise that a few other cities have similar ordinances. The penalty in San Francisco can be as steep as $19,897.15 per unit, and it would have been much higher — $50,000 — had not the First District Court of Appeal ruled against the higher fee in 2017, rightly blaming the city’s rent-control laws, not homeowners, for the city’s housing shortage.

What’s particularly galling about California’s housing misery is that lawmakers in both parties know the only remedy is to remove government hurdles to building. Yet those holding the political power to make corrections move in the opposite direction. Until they sharply change course California will continue to be a hard place to live.

This article was originally published by the Pacific Research Institute


  1. Ca probably has one of the highest illegal alien populations. Stop with the sanctuary cities and now sanctuary state craziness, take away the candy and it will go a long way to solving our financial and housing issues.

  2. You can’t keep letting in millions of illegals who have 5-6 children per couple and not have a housing problem, as well as every other downstream problem like schools and traffic. How did we lose the state population battle and what do we do about that first?

    Read the list of worst cities in America for crime and poverty, and they are all in the lower Central Valley – Fresno county. Fresno powers that be need to clean up their housing problems.- both cause and effect.

  3. Tax dollars used to support subsidized housing for those with little to no discretionary income, nor skill sets to live in California is just one more train to nowhere.

    Time to stop using the term “affordable” because all housing is affordable to those who purchase it. Call if price-fixed, subsidiized and/or hand-out housing. But “affordable” is totally bogus nomenclature.

    Put the emphasis on housing for those who can already afford it. Those are the people we need to attract to California.

    If we become a state primarily for wealthy pensioners (and we should) instead of being the current vagrancy/poverty magnet, it will finally be a step in the right direction.

    • ARMYMedic91b says

      What about those in the middle? I am not wealthy, and I am not poor. I make enough money to pay my bills, but not enough to buy a home. With the median house price in the bay area at $935,000. people who earn 130K annually cannot afford that. Yet, we freely give away housing, food and medical care to illegal aliens, those who don’t speak English,(and are unwilling to learn), people who are illiterate in their own language and in English. They don’t bring any skills or education to our “Sanctuary” state. And this in the Bay Area. NOT RIGHT!

  4. CA’s political class has only one skill set: The ability to get elected.
    They are the most ill informed, incapable, grouping of hive-think “know-it-all’s” this side of Congress.
    Please, please, please – keep them on your side of the border.

  5. Henry Batsel says

    “What’s particularly galling about California’s housing misery is that lawmakers in both parties know the only remedy is to remove government hurdles to building.” MAYBE NOT – Leaving California seems to be the solution at hand. Raise taxes and they will go. And so have I.
    North Carolina has half the tax burden, great roads, and beauty unspeakable. Finalizing my move I called an auto transport company only to find out that from Oct – Dec more cars than ever were transported out of California. Plenty of affordable housing here and good jobs. What I see is many young families coming to NC. Also, great medical and educational opportunities. Properties are appreciating here in NC.
    No wonder school enrollments are down in Ca. Texas has seen unprecedented growth in families and now has 25% of the nations children.
    But not only families are leaving Ca. Big corporations and high net worth individuals are also leaving- many to Texas. So, what happens to property values when employers, families, and high net worth individuals leave CA? Affordable housing – like Detroit.

  6. Gov Newsom and the X gov. made it their goal to screw the California Citizen with rules and regulations, taxes and fees. And, now they want to fix a problem they created by the Citizens tax revenue. More taxes and regulations to offset the rules and regulations! California needs to continue its decline into waste, fraud, and abuse by its legislators, it deserves it. The morons who voted for these people need to live under their incompetence.
    Sadly, the other 49 states will have to bail California out! States can’t file bankruptcy, it’s against the rules. “Stupid is and stupid does!”
    Even today Newsom is showing his preference over illegals and other criminals by with drawing the National Guard from the border. A border by the way, that already has a wall protecting Newsom and his family, but not yours!

Speak Your Mind