The California Legislature passed many bills this past session that
were signed into law which gave the government greater control of the
housing market. This is a perfect example of invasive government
creating a problem, blaming others for the problem and then creating
even more rules to destroy the market even further.
The cost of
housing in California is certainly a problem. The Business Insider
identified that 18 of the top 25 most-costly housing markets in the U.S.
are in California, with all of the top 10 being in the state. In a
recent study by UC Berkeley, 56% of residents are looking at relocating
due to the costs of housing, many moving to another state. Today just
28% of California households can afford a new home versus 56% in 2012
per a study by the California Association of Realtors.
Brown signed 15 bills related to housing that were passed through the
Legislature. These included a bill which would put a $4 billion bond
initiative on the 2018 ballot. There is also a new fee of up to $225 on
the sale of a property that would drive up the cost of housing, but be
used to lower the cost of housing. One bill signed by Gov. Brown would
revise the Housing Accountability Act and subject local governments to a
$10,000 fine per housing unit if they do not meet the new rules and
build affordable housing.
State Senate President Pro Tem Kevin
De Leon (a candidate for the U.S. Senate) stated he was privately
informed by members of the Los Angeles City Council that “We have been strangled, we have been handcuffed by NIMBYism and the threats from Neighborhood Councils.”
This started a firestorm of outcry from the 2,000 members of local
neighborhood councils who themselves are elected officials. This is all
part of the fight over the interests wanting further housing
development and others wanting preservation of neighborhoods. De Leon
was characterized as bigoted and anti-diversity by some.
the bills countered the mission of lower cost for housing. One bill
signed requires that any private housing project that receives any
public funding and is under agreement with a government agency pay union
wages. The legislature got so detailed they passed another law which
required union wages be paid to remove a tree – yes, a tree. Now
the people who cannot afford housing in the first place cannot work on
many of the projects that would enable them to live in that housing.
spoke to Roger Davila, an Orange County housing developer, who told me
that after 20 years he has gotten out of the low-income market. He said
between the requirements placed on low-income housing by California and
the local governments, together with the negative attitude of local
residents toward the housing, it became impossible to build anything
affordable. Davila said the bill to have the prevailing wage on private
projects will drive the cost of development out of sight. He stated
“They may be well intentioned, but they really don’t understand the
effects of their legislation.”
The National Association of Home
Builders (NAHB) study showed the regulations add just shy of $85,000 per
unit of housing nationally. You can be assured those costs are even
higher in California. But none of these bills addressed those costs.The
bills just created more invasive government involvement in the housing
This is a patented process by the Left to take over an
area of the economy. First, they see a problem; then they express
outrage at the problem and suggest governmental solutions to the
problem. When the governmental solutions fail, they suggest more
governmental solutions and then more governmental solutions until they
have nearly completely destroyed the free market. When that happens
they completely take over that area of the economy and point fingers at
the free market and say it is their fault.
Two prime examples of
this are in California (and many other states’ legislatures) which
loaded up health insurance -- adding minimum requirements like covering
pre-natal care and chiropractors -- that the cost of health insurance
became unaffordable to most. They then declare a crisis and further
interceded in the market by passing Obamacare. Now that market is
falling apart because their solutions have driven costs out of sight.
The other example was when the federal government took over the housing
loan market through Fannie Mae and Freddie Mac. They kept on layering
the program with requirements for ridiculous loans. The market
collapsed and they pointed fingers at the bankers instead of the laws.
Kotkin, the Presidential Fellow in Urban Futures at Chapman University
in Orange, CA, stated in a recent column “At the heart of the problem
lie ‘urban containment’ policies that impose ‘urban growth boundaries’
to restrict — or even prohibit — new suburban detached housing tracts
from being built on greenfield land. Given the strong demand for
single-family homes, it is no surprise that prices have soared.”
can believe that these 15 laws will further destroy the free market for
housing and do next to nothing to resolve the homeless crisis in
California which has to do with the cost of housing and other factors
such as mental illness.
In five years, they will be back
addressing the newly-branded crisis that these 15 laws did nothing to
resolve with 15 new laws further taking over the housing market until
there is no affordable housing in California. And then we will become