California finally gets serious about housing
California took some major steps this week to resolve its decades-long housing crisis. Governor Gavin Newsom signed multiple bills dealing with the housing shortage during the legislative session, but a few in particular stand to do the most good. The most significant bill allows virtually all commercially zoned land to be converted to residential units. That includes vacant shopping centers and retail spaces as well as parking lots. Giving the measure teeth, the law specifically exempts projects carried out under its authority from being subject to local government permitting rules and exempts them from the California Environmental Quality Act (CEQA). For some perspective on how much land is now available for residential unit development, in Los Angeles alone the amount of land occupied by parking spaces is bigger than Manhattan.
Another major bill signed eliminates parking requirements imposed by cities. Beginning on January 1 next year, cities can no longer require parking spaces to be built for projects that happen near public transit. Given how common public transit is in many cities, for all intents and purposes it eliminates parking requirements for a large majority of future projects.
A third bill signed exempts all public colleges and universities from CEQA. Going forward, public colleges and universities are free to build as much housing for students, faculty and staff as they please without having to go through years of litigation and environmental reviews. The bill itself was spawned by an incident earlier this year. UC-Berkeley had expanded its enrollment, but was initially forced to stop it after NIMBYs sued. The blowback was fast and the legislature unanimously passed a bill allowing those students to be enrolled, but it only applied to that specific situation. This new bill now applies to every public college and university in the state.
The pre-emption of local authorities is arguably the most important part of these measures. California has passed laws before allowing for more housing to be built only for local governments to ignore them or find ways around them. Last year, California enacted a law allowing up to four units to be built on land previously zoned for single-family homes. In response, many cities went to obscene lengths to avoid having to comply with it. The city of Woodside, for example, tried to declare itself a mountain lion sanctuary to avoid allowing new housing to be built. The gambit did not work, but it illustrates very well how deeply entrenched NIMBYism is in California.
That the legislature was able to overcome local authority opposition was amazing by itself. It really goes to show that the housing problem is finally being seriously addressed. It has been decades in the making and should have been addressed long ago, but the problem is now so bad and the solution so obvious that it cannot be ignored anymore. Whatever it takes to get more housing built needs to be done. The NIMBYs cannot be negotiated with because they do not care. They want to keep what they have and will fight to the death to do so, everything and everyone else be damned. Since there is no reasoning with them, they have to be ignored and stripped of their authority, which means cutting local governments out of the approval process altogether.
All these bills are great news. As regular readers know, I write about housing frequently with a particular emphasis on California. Why focus so much on California when I don’t live there? There are several reasons for that.
First, unlike Vegas, what happens in California does not stay there. For example, people priced out of California are forced to move to other states, which, in turn, raises housing costs in those places. Just ask people in Nashville, Boise or Austin about incoming Californians causing housing prices to skyrocket. California is a very economically productive place where lots of people want to live. It offers so much potential for so many people, which can have large effects on the economy as a whole. When people are unable to live in a productive place like California, they are forced to live somewhere that is less productive and we are all worse off for it.
While California has long had a problem with high housing costs, the phenomenon of large numbers of people being priced out of previously affordable places is no longer unique to the west coast or the northeast. Since the pandemic, the problem of expensive housing has exploded in places long thought to be cheap, including smaller cities and towns that are far from either coast. As more people move to places that previously were cheap, NIMBYism is likely to gain a footing. That will only make high housing costs worse. At the rate things are going in Austin, it would not surprise me if 10-20 years from now it is as unaffordable as San Francisco is today.
Second, I am very concerned about climate change, as I write about regularly. Housing has plenty to do with reducing or increasing carbon emissions. If California expands its housing supply that will likely mean denser living for many people. Denser living means smaller units, which use less energy. Denser living usually means shorter work commutes and/or greater use of public transportation, which means fewer cars on the road and for less time. Given California’s temperate climate, household energy use there is likely much less intensive than it is in most other places. More people living there means more people living in less energy intensive homes.
California recently enacted a regulation that will prohibit gas-fired furnaces and water heaters in new housing starting in 2030. That is nice and well, but without an adequate housing supply that measure is going to amount to very little. Expanding the housing supply means more people will live in houses or apartments that use cleaner appliances. If housing is not expanded and remains prohibitively expensive, people will live in places that use dirtier appliances and carbon and other emissions will be higher because of it.
Third, I care about inequality. Cities like San Francisco and San Jose are very economically productive, much more so than most other cities. Being economically productive means that there are a lot of job opportunities at all levels. Cities that are attractive to large numbers of white-collar professionals, for example, means that those who work in jobs catering to them also have opportunities. That includes dentists, doctors, nurses, teachers, construction workers, mechanics, retail workers, etc. The problem in California is that while most white-collar professionals can afford to live there, most others cannot.
By prohibiting new housing from being built, property values of already well-off homeowners are artificially increased. I have no problem with home values increasing per se. If they are increasing because the owners made improvements to them or they are fortunate enough to live in an area that is thriving that is perfectly fine. What is not fine is using the power of government to prohibit anyone else from building. Laws that prohibit new housing simultaneously boost the wealth of well-off homeowners and decrease the wealth and incomes of those who cannot afford to live in California because of housing costs.
While I think zoning has its place, it has been abused way beyond recognition in California. Zoning that keeps loud and dirty factories separate from residential areas is fine. Zoning designed to keep property values high and to keep things exactly as they are in perpetuity is not fine. If cities will not get rid of those laws on their own, then states should take away their authority to write zoning laws in the first place or exempt projects from their oversight. The laws just signed in California do the latter, which is great and will be critical to ensuring that more housing gets built.
As of today, California is an extremely unequal state and may be the most unequal state in the country. It also has a serious problem with homelessness. For all the talk from leaders there about how much they care about inequality, they are failing miserably at it. Expanding the supply of housing is absolutely necessary to make any progress on that front. Without more housing, no other measure is going to make any real difference.
Fourth, California is a blue state and the biggest one by far. Democrats control all statewide offices and have a huge majority in the legislature. Republicans are all but irrelevant. California presents a golden opportunity for Democrats to prove that they can govern and enact policies that make peoples’ lives better. By most measures, California’s current governance is proving the opposite. In general, blue states have failed miserably when it comes to housing policy, but California takes the gold.
Say what you will about Texas, god knows I have plenty to say about what is wrong here. While Texas does plenty of things wrong, one thing that is done right is housing. Texas makes it easy to build housing, which is why people are moving here. The same is true in Florida. Greg Abbott and Ron DeSantis are terrible governors and I have basically nothing nice to say about either of them. That said, I cannot blame people for moving to Texas or Florida because housing is affordable. There is nothing magical about Abbott or DeSantis. They just happen to be governors of states where housing is easy to build and so is affordable to large numbers of people. Until substantially more housing gets built, the trend of people leaving California and moving to Texas and Florida will continue.
As of now, California’s governance validates every single caricature of Democrats and the left. They talk a great game, but that is it. California is showing that Democrats are not really concerned about inequality or climate change if it interferes with their lives in any way. They are more than happy to decry inequality, climate change, racism, mistreatment of immigrants, bigotry of all sorts, etc. But when it comes to walking the walk, they are nowhere to be found. Put up a “refugees are welcome” yard sign? Hell yes. Allow more housing to be built so they can live there? Hell no. Decry bigotry against transgender and gay people? Absolutely. Allow more housing to be built so they can move to California? Absolutely not. I could go on forever with this, but I think the point is clear.
California is run by people who love to claim that they are tolerant and inclusive. Gavin Newsom has even been running ads in Florida encouraging people upset by DeSantis’ jackassery to move to California. That is chutzpah if there was ever such a thing. Sorry, but you do not get to talk about how tolerant and inclusive your state is when your state makes it illegal to build housing. “In California, we are tolerant and inclusive. Just don’t build anything near where I live!” Prohibitively expensive housing costs fly in the face of everything California’s leaders claim to believe in. I am glad that they are finally taking real steps to address that problem, but until serious progress is made, nobody there has any right to talk about how tolerant and inclusive they are.
My simple philosophy on housing
Like Ronnie Van Zant, I’m a simple man. I also have simple tastes. When it comes to housing, my disposition can be summed up very easily: as a general rule, people should be able to do with their property as they please. Notice I said as a general rule, not an absolute rule. I do not think someone should be allowed to build a building that is going to fall over nor do I think they should be allowed to use materials that are toxic or highly flammable.
That said, property owners should have broad leeway to do with their property as they please. If someone owns land and they wish to build an apartment complex, that is fine with me. If someone owns land and wishes to build a single-family home, that is also fine with me. Ditto if they want to build a duplex or triplex. It seems that many homeowners have gotten it in their heads that because they own a home in a neighborhood that means they own the neighborhood. Let me dispel that notion: you do not. You own your land and property and nothing else.
Am I saying that your neighbor can build any kind of housing they want on their property and you have no say in it? Yes! That is exactly what I am saying. The reverse is also true. You get to build on your property what you want and your neighbor cannot stop you from doing it. Again, this right is not absolute. You cannot build something that is going to poison the water and/or soil in your neighborhood nor can you build something that is going to make the air unbreathable. You cannot blast loud music from your house that wakes up the whole neighborhood nor can you cover your property in neon lights that light up the neighborhood. Beyond those outlandish situations, what your neighbor builds on their property is up to them and what you build on your property is up to you.
Please do not mistake me for a libertarian, let alone a Republican. I am not a believer in laissez-faire economics by any stretch of the imagination. I support regulations of all kinds and see markets as a means to an end, not as an end. Markets are institutions created by people, not deities demanding sacrifices. You do not have to be a libertarian to think people should, by and large, be able to live their lives as they wish. Democrats believe that on almost every social issue. I tend to believe that, too. I am much less enthusiastic about it on some economic matters. Those two orientations are what make me a Democrat.
Funny enough, you would think that the housing crisis in California caused by excessive regulation would be a field day for Republicans and right-wingers. It really is tailor-made for them. “Big government regulations pushed for by Democrats and liberals are making housing unaffordable for everyone. We need to get government out of the way and let the market do its job.” But you would be wrong. In California, it has been Democrats who have led the push to cut back on housing regulations. To the extent there has been opposition to it, it has come mostly from Republicans.
Republicans in California, as it turns out, are also NIMBYs. The same is true in New York, where a proposal to allow denser building on Long Island was killed by opposition from local officials there, most of whom are Republicans. There are also people on the right like Trump and Tucker Carlson who rail against efforts to build more housing as trying to destroy suburbs.