In his latest CALmatters column, Dan Walters discusses the recent gubernatorial debate focused on that state’s “most serious policy issue:” housing.
Walters notes the predictable deviation between the Democratic and Republican candidates. Whereas the Republicans focused on regulation and barriers to development, Democrats highlighted plans for improving affordability through bonds and tax credits.
Walters writes that only Republican John Cox touched on what he identifies as the most significant issue: construction costs.
Is $350,000 a Unit Really ‘Affordable’ Housing?
Referencing his experience in real estate from his days as an Illinois resident, Cox described financing two-bedroom apartments in Indiana for about $80,000 per unit. According to Walters, “the current state budget says the average cost of building an ‘affordable’ housing unit in California is $350,000.”
Walters then does some rough math and finds that, given the state estimate of 180,000 units required per year, the California construction industry should be spending about $63 billion per year on new housing.
Walters points out that both Lt. Gov. Gavin Newsom and former Los Angeles Mayor Antonio Villaraigosa have set more ambitious goals than the state’s estimates. Both have discussed building 500,000 new units a year.
According to Walters, this would bring the annual cost to $200 billion.
Walters writes that this growth must come from the private sector with state aid in reducing construction costs.
How Will Next Governor View Rent Control?
He then turns his attention to the fervor of rent control in the state’s Democratic Party. He explains that, given the divisive nature of the issue within the party, it exemplifies the sort of tough housing decisions with which the next governor, assuming he or she is a Democrat, will be faced.
To read Walters’ full analysis of the housing debate, click here: How would California’s next governor face the housing crisis?
GV Wire Video: Why is Affordable Housing So Expensive?