California’s Housing Fight Can Give You Whiplash

Here’s the conversation between California cities and the state government:

California (Housing and Community Development Dept. – HCD): Hey cities, you need to build more housing. We’re short.

Cities: Oh, um, hey, we don’t actually build housing. Developers do that. You guys stuck CEQA on us, code regulations, and housing elements. Where do we build, if we’re mostly built out?

California HCD: Now we’re going to require you to build housing. We estimate we’re 3.5 million units short. Get busy. Speed up your permitting process. Here’s your share, the Regional Housing Needs Allowance. And no, you don’t get to argue this.

Cities: WHAT!?!?! That’s TOO many homes to build! This is crazy! Who came up with 3.5 million units????

California HCD: I guess you weren’t listening. We think you’re being too NIMBY (Not In My Backyard). So we’re going to sue a couple of you and make an example of you.

Cities: WHAT??!?! This is crazy. We’ll never hit those targets. We don’t BUILD housing. What about some tools, like our Redevelopment funds that you took away? That’s how we used to get some low-income housing built. And where’s help from you to deal with homelessness?

California Legislature: Let’s pass bills that remove local controls. THAT will get the housing built! 

Cities: Why are California Realtors, California Building and Development Industry and YIMBY (Yes In My Backyard, funded by Big Tech), behind these bills to take away our local controls? Why aren’t you legislators listening to us, your cities? 

Housing Justice Groups: There’s nothing affordable in these bills! They’ll gentrify us out of our own communities. Don’t do this! 

California Legislature: Done. How do you like that? (Wicked laugh.)

Cities: You bastards! The craziness you’ve unleashed, where anyone can throw up an apartment building in their backyard, is going to ruin our communities. We’re now scrambling to pass ordinances to deal with your crappy bills. ENOUGH. We’re going to fire up a ballot initiative for the November election to return local controls to us! 

California: While we’re at it, we’ll give HCD Death Star powers to enforce on cities who don’t build enough housing.

Cities: What about the water, the drought, parking, and FIRE? We shouldn’t be pushing more people up into high fire zones!

California Insurance Commissioner and California Attorney General: Stop all development in the High Fire zones! 

Cities: See! You guys at the state can’t even agree on a strategy. We’re getting whiplash here….

California HCD and Legislature: OK fine. Just… fine. Tell you what… we’ll just densify cities! Take away parking! More supply! Pack ‘em in like Queens! Call it Green so it will sell.

Cities: If density worked, why isn’t New York City affordable? You guys are morons.

That’s where we’re at, and it’s a bit of a wild west. 

The Biden Administration purports that we are 3.9 million units short of housing for the US. Compare that to California HCD’s assertion that we need an additional 3.5 million units in California alone. Someone is clearly wrong. California’s HCD number has been thoroughly debunked, yet California legislators and YIMBY groups routinely throw “3.5 million units” around, as has the governor. It was used to justify the passage of Senate Bills 9 and 10.

California housing is also being profitized by Airbnb, VRBO, and the new insidious use, Pacaso, where people pool to buy a second vacation home as a timeshare in a nice neighborhood. Northern California has been experiencing the problems of Pacaso for a while now, with loud parties, too many people staying in a home, and zero accountability, because a corporation owns it. These businesses remove housing stock from the market that actual people used to live in. Wonder why the state doesn’t look there first to get some supply back. 

Los Angeles has an estimated 90,000 vacant units, and 50,000 people living without shelter. 39% of the unsheltered live in their cars. The vacant units, were they returned to the market, wouldn’t necessarily provide housing for those presently living without shelter, but you’ve gotta wonder if it wouldn’t move some supply into play that could ease the rush for housing at the bottom of the economic scale. And that is exactly where California is falling short: affordable housing. Developers want to build for profit, so a lot of luxury housing is getting built. Unfortunately, we don’t have a luxury housing crisis. We have an affordability problem.

For a progressive state, we’re not doing much to create opportunities for equity or affordability in housing. In 2021, California only permitted 1,040 housing units that would be for sale to the very low / low income categories, comprising 5.3 million Californians. In contrast, the state permitted 560,000 housing units for the moderate / above-moderate income groups, comprising 5.6 million Californians. Home prices in that category did not go down with this additional supply. They went UP. So much for supply and demand…

Something else is at work in our housing markets, and until the state starts addressing the problem of corporate ownership of homes, speculation, and vacancies, exhorting “build more supply” isn’t going to fix our problems, no matter what Big Tech says, and they’re driving housing policy in California at present. 

The Montecito Association is considering endorsing Our Neighborhood Voices, the ballot initiative targeted for the November General Election, that would amend the California constitution to reserve local land use policies for local jurisdictions. If it passes, it will put the power of control over land use back in the hands of cities, and prevent the state from overriding it in future. We’ve been gathering signatures, and people are enthusiastic about it.

In the meantime, strap in. It’s pretty wild out here. And watch out for whiplash.  

Sharon is the Executive Director of the Montecito Association