Unscrambling the Housing Crisis

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

California’s housing crisis is the biggest issue for the business community, low-income residents and middle class workers according to a disparate group of panelists taking part in a session sponsored by the California Association of Realtors’ Center for California Real Estate on Tuesday.

The Los Angeles event included Rob Lapsley, president of the California Business Roundtable, Los Angeles City Controller Ron Galperin, and Chris Hoene, Executive Director of the California Budget & Policy Center. The panel moderator was Leslie Appleton-Young, Senior Vice-President and Chief Economist for the realtors’ association.

The panel agreed on one reason for the problem: regulations are harming the housing market.

For business, Lapsley said, “housing has now become, literally, the number one issue.” He said you hear boardroom discussions about taxes, litigation and regulations as obstacles to business, but that housing has outstripped them all in importance. Housing cost and housing availability serves as a barrier for attracting talent from other states or simply keeping California workers close to their jobs.

Hoene said for lower-income residents, housing cost was the biggest problem in “making ends meet” in their budgets.

Because of the costs of housing, all four panel members noted middle class workers were leaving the state or moving inland to find more affordable areas to live.

Galperin was concerned that teachers, first responders and other middle class workers could no longer afford to buy homes in Los Angeles.

Housing regulations often come wrapped in a cloak of environmentalism. While the panelists all acknowledged the need to deal faithfully with the environment, they challenged the grip state and local laws have on cracking the housing predicament.

Lapsely criticized the California Environmental Quality Act (CEQA) because it offered an unlimited opportunity to litigate and delay housing projects. He suggested capping the litigation period so developers can resolve any problems and get on with building homes.

Galperin argued that impediments and fees larded on by governments interfered with the laws of supply and demand in the housing market adding to the cost of building. He said that mom and pop builders and building owners built up Los Angeles. However, the city’s difficult regulatory process means only well-healed developers can succeed now. Galperin made it clear he was an environmentalist but also pulled no punches in declaring “massive abuses” involving CEQA.

Hoene said conquering the crisis would require overriding NIMBY (not in my back yard) objections to increased housing development and changing the old mindset that the California Dream consists of a single family home. The new California Dream may be a two-bedroom, two-bath in a six story, aesthetically pleasing apartment building, he said.

With so much agreement you would think changes can be made to improve the housing situation, what Lapsley called, the issue on the forefront in dealing with California’s economy. Politics get in the way. The term “political will” was offered up many times. There are interests that object to many proposed reforms leading so far to a stalemate over housing solutions.

A major issue creating political clashes is taxation, in particular, Proposition 13. There was less agreement from the panelists on that front. We’ll save that part of the discussion for another column.

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