Nov 25, 2024
OC Leader Board: Truly Solving California's "Housing Crisis"
Editor’s Note: Richard Douglass has served as Trumark Homes’ Southern California Division president since 2015. A San Clemente native, his multi-faceted real estate career spans more than 30 years in award-winning development, planning and managing of billions of dollars in complex infrastructure and the construction of more than 15,000 homes, with many industry awards.
California’s “housing crisis” is cloaked in acronyms. Regional Housing Needs Allocation (RHNA). Transit-oriented development (TOD). Accessory dwelling units (ADUs). Legislative solutions appear as “AB” this or “SB” that.
The acronym that occurs to me? B.S.
California’s housing shortage seems simple: not enough housing is being built. More accurately, much housing is hamstrung or blocked. Low inventory and high demand means potential homeowners are priced out.
The “housing crisis” is really a “crisis” rooted in the shocking ignorance about housing feasibility. Bad political decisions amplify this, and the result is acute social distortion.
Housing affordability is at a 40-year low. Homebuyers spend about 44% of their income on housing. Prices continue to greatly outpace inflation. Most of our children will be priced out of California. So will tradespeople who build the housing and essential service providers, including first responders and service workers. Caretakers for aging baby boomers? Forget it.
Social distortion is coming – fast.
The answer? Simple but not easy. Start with relaxing several antiquated policies. Press the originators of housing policy to understand its economics. These solutions could bring a sea change for new housing.
Change the dialogue. We’re inundated with unending rules of laws and policies. Most current housing bills are window dressing that allow politicians to claim that they are “addressing the housing crisis.” Virtually none of it results in housing growth.
Call all this out for what it is. B.S.
Every economic study agrees: California faces a massive shortage of housing, across all sectors.
We need to build anywhere from 180,000 to 300,000 homes annually. Yet, since 2017, housing production has consistently provided about 110,000 new housing units per year.
Despite hundreds of new laws introduced “to increase supply” during the same period, the state’s needs have grown to between 1 and 3 million more homes. That’s a colossal gap.
The View from Ground Zero
I have been at the center of our housing crisis for decades, and it’s simply getting more difficult. Legislators and bureaucrats simultaneously drag their feet and hamstring ours. We need a quantum leap forward, starting with enlightening dialogue.
We have a great industry. Our products are better than ever. But we’re often stopped dead in our tracks. Worst of all, most city “planners” and policy wonks have no idea about the math, finance and construction that determines housing project feasibility.
Sadly, based on my experience, few are willing to learn. Yet these same sectors have massive influence on setting policy, enacting regulations and educating elected officials. But most have no clue on what really happens to get things built.
At any given time, developers may have tens, even hundreds, of millions of dollars invested, at risk and ready to deploy, to house our fellow citizens.
The public wants and desperately needs housing. According to the Public Policy Institute, six in 10 favor changing environmental regulations and permitting to make housing more affordable.
Additionally, a study by UC Berkeley’s Goldman School of Public Policy found that 70 percent of Californian’s favor government incentives for affordable housing.
Solutions?
Let’s start with elevated dialogue, workshops, education and a willingness to understand private sector housing feasibility. After all, those of us on the private side are compelled to understand public policy, laws and regulations. But that’s not all.
Reform CEQA: The California Environmental Quality Act (CEQA) is probably the greatest impediment to development, particularly when wielded by anti-growth proponents. It is a sacred cow that politicians and housing advocates approach only with extreme caution. That has to change.
Now, I am not opposed to environmental protection or quality. Far from it. I’m more environmentalist than you might realize. I am a fifth-generation Californian, born in San Clemente when it was “country,” and I grew up in the ocean. I’m a surfer and water man.
I would never consider polluting the environment that I grew up in and continue to enjoy. We have made massive environmental progress and must remain ever vigilant. But it’s time to get real about CEQA.
It has been twisted and distorted until it has completely lost its original meaning and intent. Instead of being an important bulwark against environmental and ecological damage, it has become the favored tool of all who oppose building.
A study in the Chapman Law Review noted that “In 2020 alone, CEQA lawsuits sought to block approximately 48,000 approved housing units statewide – just under half of the state’s total housing production.”
Even when a project does everything right – approvals though myriad regulatory agencies, examination by public hearings and reviews by elected officials, and is supported by the community – if one private citizen or interest group doesn’t like it, a suit can be filed and an injunction sought to stop everything. This is done regularly and without any consequence to the litigant.
This needs to change. Parties who file CEQA lawsuits should be required to identify who they are and show that they are suing whatever project to protect the environment, just as it is required under federal environmental lawsuits.
If a group loses a CEQA lawsuit, they should be liable for damages. A simple look at the numbers of new housing being approved validates the fact that it is damaging to our society.
Only time will tell if the latest legislators and their laws, unlike the legions of their predecessors, are real and sustainable. How is success proven? Show me the numbers!
All I know is that until we elevate the dialogue on true development feasibility and CEQA is really on the table for rational discussion, there is no hope for California’s housing crisis.
Until we sit down and provide true solutions, I’m calling it out.
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