“California is the national poster child for expensive housing and homelessness,” Independent Institute Senior Fellow Lawrence J. McQuillan, Ph.D. said in a new report on California’s housing crisis. “The average home price in the state is about 250 percent above the national average, while average monthly housing rents are about 50 percent above national levels.”
McQuillan is also the founder and director of the California Fleece® Awards, to expose waste, fraud, and abuse in California government. “To receive this ignoble designation, a spending program, tax, or regulation must violate common-sense principles of responsible government, be considered wasteful by people of varying political philosophies, and must be well documented,” McQuillan explains.
California Housing Regulations
For the ninth time, California’s politicians and NIMBY activists were awarded the Golden Fleece Award for “preventing housing development, which would alleviate sky-high housing prices and growing homelessness.
Despite California’s low unemployment and health economy, the state has a record housing shortage, and particularly affordable housing.
“According to the most recent data available from the California Department of Finance, the median price for a home in the Golden State was $611,420 in June 2019, a new record price.”
“Transactions monitored by online real estate database Zillow show that, over the past 10 years, median home sale prices in California have increased by 72 percent, from $291,000, adjusted for inflation, to about $501,000. They estimate that the median home listing price is currently $549,000. And the median monthly rent has increased, too.”
This is notable because the average household income cannot match the rise in housing cost. According to McQuillan, median household annual income only increased about 6.5 percent, to $75,000 (adjusted), while home prices increased 72 percent.
Mayors are Trying to Address the Housing Crisis
“In San Francisco, where homelessness has reached record levels, Mayor London Breed led the fight for passage of a $600 million affordable housing bond measure—the largest housing bond in city history—which could potentially fund 2,800 units,” McQuillan says. “Voters approved the bond measure, Proposition A, in November 2019. City officials have also advanced plans to build new housing to shelter a portion of its homeless population. But once again opposition from local groups has delayed or blocked new construction plans through expensive litigation. In response, Breed noted, ‘Our city is in the midst of a homelessness crisis, and we can’t keep delaying projects like this one that will help fix the problem.’”
McQuillan offers plenty of solutions in the report including deregulating zoning and land-use restrictions, streamlining building-permit approvals, the abolishment of the California Environmental Quality Act, eliminating expensive development impact fees, rent controls, project labor agreements and “prevailing wage” legislation, and many more feasible solutions.
The California Fleece® Award
This Golden Fleece report dares to state an unavoidable truth: housing prices and accessibility are determined by the interaction of supply and demand, and government regulations have constrained the supply side of the equation, exacerbating California’s housing and homelessness crises. Bureaucratic red tape impacts every stage of the development process, and there is no shortage of actors trying to maintain the status quo because they benefit from it financially or in other ways. Despite much hand-wringing and pronouncements by politicians to “fix the problem,” state and local governments have made the problem worse, especially for lower-income residents.
McQuillan’s report is available here, and findings are summarized in the Executive Summary, Solving California’s Housing Affordability Crisis: Summary of Findings and Recommendations from the California Golden Fleece® Award.
The late U.S. Sen. William Proxmire used to famously issue Golden Fleece Awards to public officials he believed were squandering public money.