What Will a Post-Virus Housing World Look Like?

Timothy L. Coyle
Consultant specializing in housing issues

The COVID-19 (Corona virus) pandemic sweeping the globe will go down in history as the single-most compelling incident of our time.  It ranks up there with the devastation – to both property and the human psyche – of World War II.  It’s kept us cooped up in our homes and wrecked the economy.  It’s touched us all.

Indeed, like the planet’s Second World War, the virus has changed and will forever change lives – in California and worldwide.  In one month it’s killed tens of thousands of Americans – more than were lost in the Vietnam War, which took over 15 years to prosecute.  At 2,628, California ranks high in the number of Corona virus deaths but well below the state with the highest death count – as of May 9, New York had the most deaths of any state (the latest report:  26,584).

Unbelievably, those are considered good numbers.  Early in the outbreak death predictions were a lot higher.  At first, the United States alone was, according to the modeling, expected to experience virus-caused deaths in the millions.  But, thanks to the promptness and discipline of the American people those prophesies proved to be excessive and were substantially revised downward.

What the aftermath of the virus will mean for housing is unclear but it promises to be bumpy.  Although President Trump and his advisors are expecting a robust recovery next year for the broader economy, it probably won’t be the “V-shaped” type that was forecast earlier.  Moreover, it’s uncertain how a likely increased demand for new housing accompanying any recovery will manifest itself but while California homebuilders will figure it out they are in for a rough ride.  

The industry already knows how to deal with the problems that come from the current slowdown – the most difficult being how to gauge and plan for a resumption of demand.  However, while those problems are mostly manageable it’s the consumer’s post-virus, newly adopted behavior – and the issues they produce – that may vex both builders and housing governance for a long time.  

Among the new issues are:

Densities.  Allegedly, the virus spread easily the closer people were to one another.  This caused some residents of high-density New York City to flee the urban area, fearing their living arrangements were not healthy.  Will this fear reduce the popularity of higher-density, downtown housing in California?

Jobs.  One clear thing the virus-prevention tactics revealed was, thanks to technology, jobs were discovered to be quite portable.  “Shelter in place” showed us how easy it is to work from home.  Will the trend survive the pandemic and, if so, what does that mean for new housing types and project location in the state?

Elderly housing.  With so many deaths occurring in nursing homes politicians will surely urge further regulation and monitoring of these facilities.  That will put pressure on existing, purportedly taxed state and local bureaucracies and will likely make the development of elderly housing more difficult and less desirable.

Government.  In the midst of the virus outbreak, state officials, mainly the Governor, have assumed new powers which they are wielding broadly, freely and, in many cases, absurdly – from beach closures to civilian arrests.  Recently, local officials joined private citizens in actively protesting them.  Will the exercise of new powers prevail even after the virus danger has dissipated?  Will they disrupt the housing-approval process?  Will state officials continue to assert their newfound authority by writing new, tougher laws or enforcing ever-strict new regulations?  Will the conflicts between state and local officials interfere with project permitting, regulation?  Will those officials finally begin to take California’s housing crisis seriously and correspondingly enact reasonable laws and policies? 

In addition to wrestling with the foregoing issues, builders still face those that  linger, which will only worsen under the new world order.  Those issues include:

CEQA lawsuits.  The California Environmental Quality Act (CEQA) is the preferred legal basis for countless neighborhood lawsuits – which served to stifle new housing projects throughout the state even before the Corona virus struck. With suburban housing demand likely to exceed infill, is CEQA now obsolete?  Are all the law’s numerous mitigation prescriptions still valid?  Can we try something new or will we let litigation against urban infill development further test the patience of housing providers and chase them from downtown housing markets?

Growth.  There is already a broad and deeply ingrained bias against growth in California that pervades development throughout the state and makes a recovery-spawned demand for housing very tough to meet.  And first, the state has to dig itself out an already gaping housing hole.  Elected officials must know housing development is essential to economic growth.  Will they stand by and let the politics of growth succeed in California and derail the anticipated recovery? 

Cost.  Likewise, state and local electeds know too well how steep housing prices are in California, along with sky-high rents, and the damage it’s doing to markets.  What’s more – housing costs are trending higher as these officials are expecting housing to all their social (and long-neglected) ills.  How high can prices and rents go before the state sees a serious exodus of people and jobs?

These are just a few of the obstacles, old and new, facing housing providers – and particularly those who decide whether projects go forward or not – in a post-virus Golden State.  Question is:  what are we going to do about them?

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