Too many Californians are spending too much on housing. Let’s do something about it.

California has a housing crisis that demands our attention. As the legislature reconvenes this week, the Governor and leaders in both the Senate and Assembly have signaled that tackling the issue of housing is among their top priorities. Unfortunately, their proposals to fix housing are hardly game changers, and the biggest impact they make is likely to be their use as “legislative accomplishments” in campaign paraphernalia.
It’s difficult to overstate the extent of this crisis. The California Association of Realtors reports that the median sold price for a single-family home in California is more than $550,000. In Kern County, the median sold price is $229,450. While this is significantly less than the state average, our region also experiences significantly lower average wages compared to the state.
With the average Californian making approximately $62,000 per year, homeownership as a fundamental component of the California Dream is all but impossible. In our own backyard, where average non-government wages hover around $40,000, homeownership is increasingly unattainable.
According to Governor Jerry Brown’s budget summary, “Approximately half of all California households are spending more than 30 percent of their income on housing costs, and nearly one‑third of all California households are spending more than 50 percent of income on housing costs.” Too many Californians are spending too much on housing.
“Approximately half of all California households are spending more than 30 percent of their income on housing costs, and nearly one‑third of all California households are spending more than 50 percent of income on housing costs.”
Fortunately, the primary cause of our housing crisis is well-known: a supply shortage caused by excessive regulations and bureaucratic red tape that inflate the cost of construction and, therefore, the cost of housing. It’s simply too expensive to build homes for average Californians.
The state estimates that we need to build 180,000 new housing units per year to keep pace with demand. To put this in perspective, there are only 120,000 housing units in the entire City of Bakersfield. California needs to build a Bakersfield-and-a-half each year just to meet current demand. However, construction has remained below 100,000 units per year for nearly a decade.
If we could roll-back our state’s byzantine regulations and red tape, we could, literally, build the solution to our housing crisis. To overcome supply constraints, housing advocates have zeroed in on two primary goals: increasing taxpayer and homeowner funding to subsidize construction of affordable housing, and streamlining project approvals.
Of the several housing bills making their way through the legislature, three are attracting significant attention. SB 2 (Atkins) increases real estate transaction fees to help fund affordable housing projects. SB 3 (Beall) is the Affordable Housing Bond Act of 2018, a bond that would appear before voters in June 2018. SB 35 (Wiener) is an attempt to streamline permitting.
SB 2 is expected to generate between $200 million and $300 million annually for affordable housing. The bond amount in SB 3 is currently in negotiation, as Capitol sources report that Governor Brown has agreed to $7 billion in bonds split between housing and water infrastructure and parks. Let’s assume SB 3 ends up at $3.5 billion.
The Legislative Analyst’s Office estimates that more than $250 billion is needed to subsidize the construction of affordable housing for the 1.7 million low-income Californians who spend more than half their income on housing. Taking into account SB 2 and SB 3, it would take between 822 and 1233 years to meet current needs for low-income Californians, let alone moderate-income Californians facing unaffordable housing. We cannot subsidize our way out of this crisis.
SB 35 is an attempt to expedite approvals for certain housing projects. Unfortunately, SB 35 includes provisions like a prevailing wage mandate that, while providing political cover from the building trades, would increase the cost of construction up to 46 percent. What good is one step forward if it’s followed by three steps backwards? We will not address housing unaffordability by making housing construction more expensive.
California is an increasingly bifurcated society, and housing affordability is a major factor. We will not be a state of opportunity if we are unaffordable to all but the privileged few. We need commonsense solutions that target the forces that have choked our housing supply and caused this present crisis. The question is, will Sacramento see them?
