California’s housing crisis is hurting middle-class families and low-income families alike, and it’s putting people out of their apartments and into the streets.
The numbers are shocking.
The New York Times reported earlier this year that California’s median home price had risen to $500,000 — twice the national median. One-third of California renters shell out more than half of their income on rent. Homelessness increased 3% in California from 2015 to 2016 even while it was dropping 3% elsewhere in the country.
And this crisis is accelerating, with no end in sight, in a robust economy that has seen California recover from the Great Recession and its leaders brag about having the world’s sixth-largest economy.
But if you dig deeper into that world ranking, as the California Legislative Analyst’s Office did last year , and adjust for our state’s high cost of living, California’s GDP ranking dips to 11th in the world, sandwiched between France and Mexico.
Finally, the Legislature is getting into the act. One hundred and thirty housing measures have been introduced — three of which have stimulated widespread media attention.
Senate Bill 2 would add impose a fee of up to $225 on real estate transactions other than the selling of a home or a commercial property. These fees would deliver an estimated $200 million to $300 million annually for affordable housing projects.
Senate Bill 3 would ask voters to approve a $3 billion affordable housing bond.
That brings us to Senate Bill 35, which on the surface looks like a great idea. The bill authored by Sen. Scott Wiener, D-San Francisco, proposes to streamline and speed up environmental review of housing projects in cities and counties where there are housing shortages.
These shortages, it should be noted, have been created in part by “Not in My Back Yard” residents and even public officials opposed to having low-income residents and multi-unit construction in their neighborhoods or cities. These obstructionists wield the California Environmental Quality Act like a hammer, either blocking new projects or sending costs soaring with long delays.
As a result, California has met its target goal of building 180,000 units a year only three times since 1989. No wonder housing costs so much. The state is adding jobs right and left and its population continues to climb. But housing growth is artificially kept at a snail’s pace. State officials admit that home ownership rates in California are at their lowest since the 1940s.
Cities, naturally, oppose SB 35. They don’t want to surrender local control to the state. But there’s another reason to be concerned with this legislation. To take advantage of its streamlining, even builders of privately funded, market-rate housing must pay “prevailing wage” to construction workers.
Net result: The bill that proposes to make housing more affordable contains a provision that will sabotage the goal. According to the California Homebuilding Foundation, a prevailing wage mandate on private residential construction would add up to $84,000 to the cost of building a new home.
If state leaders want more Californians to realize the dream of home ownership — or even an apartment rental that doesn’t break their budgets — they should do this:
- Don’t require prevailing wage on any new homes and new apartments that are partially funded by government.
- Allow or even require cities to grow.
- Pass legislation that will protect reputable home builders from frivolous lawsuits by bottom-feeding lawyers.
We like the intent of SB 35, but the devil is in the details. The prevailing wage requirement must be amended for this legislation to help Californians squeezed in the vise of housing costs.
As state Sen. Tom Berryhill, R-Twain Harte, wrote in a commentary for The Modesto Bee, “We’re facing a crisis that can’t be solved with spending. It’s time for the Legislature to get to work on the policy changes which will make houses affordable to build, and, more importantly, to buy.”
— Written by Bill McEwen