The Palisades and Eaton fires are not just isolated incidents of personal heartbreak; they’re part of a larger disaster that exacerbates California’s already dire housing shortage. This isn’t a catastrophe caused by nature, but rather a result of flawed human policies.
Interestingly, while Governor Gavin Newsom recently purchased a $9-million home in November, many Californians are left struggling to find affordable housing options, let alone purchase a home. Despite Newsom’s efforts at implementing reforms to spur construction and keep housing costs in check, progress has been disappointingly slow.
Housing prices in California’s coastal regions are staggering, averaging nearly 400% higher than the national figure. Statewide, the median home price stands at 2.5 times the national average, leading to the second-lowest homeownership rate in the country at 56%, trailing just behind New York at 54%.
Renting doesn’t offer much respite either. For instance, a two-bedroom apartment in Los Angeles typically costs just under $3,000 a month, which is about $1,000 more than the national average, according to apartments.com.
Not everyone finds these stats troubling. Many baby boomers in California, who invested in their properties years ago, have seen their home values soar, creating substantial wealth. California’s Gen Xers also have homeownership rates on par with national averages. However, for younger Californians under 35, the homeownership rate is merely half the national level, prompting many to leave for areas with lower living costs.
The roots of this housing crisis lie in overly restrictive construction regulations and litigation that has hampered development for years. The proposed solution from Sacramento, which leans heavily towards developing dense apartment complexes along major transit corridors, hasn’t produced the intended results.
High-density development, often referred to as YIMBY (“yes in my backyard”) construction, faces its own set of challenges. Building in urban areas incurs significant costs due to expensive land, high material prices, and labor wages, along with cumbersome permitting, zoning, and planning fees. While these projects can marginally increase housing inventory, the overall benefit, particularly to affordability, is minimal.
Michael Storper, a professor at UCLA and the London School of Economics, has illustrated that forced densification is an inefficient approach with limited cost-saving impact on housing.
Furthermore, high-rise living doesn’t align with most Californians’ preferences. A survey by the Public Policy Institute of California revealed that 70% of adults in the state favor single-family homes. Not surprisingly, many Californians opposed the 2021 legislation that effectively banned single-family zoning, a law that is still being contested in court.
Efforts to meet climate goals have heavily influenced California’s push for multi-story development in cities, under the assumption that such housing would be more energy-efficient and reduce emissions. However, studies are now challenging the assumption that larger buildings automatically equate to more sustainability. Many Californians opt for longer commutes just to afford a home, or choose to leave the state entirely. Recent findings by land use attorney Jennifer L. Hernandez highlight that these climate-focused housing policies have stifled construction and driven up costs.
What’s the solution for California?
While some might envision an expansion of public housing, like the revitalization of Jordan Downs in South L.A., financial constraints at both city and state levels make this challenging. Moreover, it doesn’t align with the desires of many residents.
A more viable path out of this quagmire involves streamlining permitting and regulatory processes, similar to what’s being done for fire reconstruction, while encouraging, rather than hindering, the development of single-family homes and townhomes. Instead of imposing high-density mandates, state policies should pivot towards market-driven projects that reflect consumer demand.
Expanding development to less expensive areas inland offers opportunities for first-time buyers. With the rise of remote work, dispersing the population could ease housing woes, and master-planned communities in the Central Valley or inland Southern California, complete with local jobs, could play a pivotal role.
To address its growing housing challenges, California must embrace a broader range of solutions, particularly those enabling more affordable rentals and homes. If the state aims to remain a hub of economic opportunity and social mobility, it must overhaul its housing policies to reflect the needs and aspirations of its residents.
Joel Kotkin contributes to Opinion, holds a presidential fellowship in urban futures at Chapman University, and serves as a senior research fellow at the Civitas Institute at the University of Texas, Austin.
