California Housing Crisis

In a recent article by Fox News and video titled, “California housing crisis reaches boiling point.” Fox News highlights what so many of us in California already know, overbearing regulations imposed by Sacramento has stalled new home development by years. As well as, overburdensome environmental regulations which open the floodgates to environmental lawsuits which in turn delay projects typically up to five years.

The overall consequence of our broken system is very few new homes are built in The Golden State. According to Fox News, “In 2016, the cities of Houston and Dallas built more homes, 63,000, than the entire Golden State, which built 50,000, according to US Census Bureau figures.”

This politically induced crisis has resulted in not enough homes to meet supply and high-cost regulations and litigation costs skyrocket the prices of homes to unaffordable levels for the average Californian.

The Numbers

According to Fox’s reporting, the housing crisis numbers paint a bleak picture:

* 75 percent of Southern Californians can’t afford to buy a home, according to the state realtors association.

* 16 of the 25 least affordable communities in the US are in California, according to 24/7 Wall Street.

* Officials this year declared a homeless emergency in San Francisco, Los Angeles, San Diego and Orange counties.

* 56 percent of state voters say they may have to move because of a lack of affordable housing. One in four say they will relocate out of state, according to University of California Berkeley’s Institute of Governmental Studies.

* A median price home in the Golden State is $561,000, according to the realtors association. A household would need to earn $115,000 a year to reasonably afford a home at that price, assuming a 20 percent down payment. Yet, two thirds of Californians earns less $80,000, according to the U.S. Census Bureau.

* The household income needed to afford a median-priced home in the Silicon Valley town of Palo Alto is $450,000.

* In San Francisco, a median priced home is $1.5 million, according to the Paragon Real Estate Group.

* Home prices in California are twice the national average, and 70 percent can’t afford to buy a home, according to state figures.

* Median household income in L.A. is $64,000. That’s half what is necessary to buy a home.

*1 in 10 residents are considering leaving because they can’t afford a place to live, according to a state legislative study, while US Census figures show 2 million residents, 25 and older, have already left the state since 2010.

* In 2016, 30 percent of California tenants put more than 50 percent of their income toward rent and utilities, according to the California Budget & Policy Center. Economists consider 30 percent the limit.

* California needs to double the number of homes built each year to keep prices from rising faster than the national average, according to the Legislative Analyst’s Office.

The Solution

As a candidate for California State Controller, I will not have any legislative ability to address this issue but my plan is to introduce Trickle-up-Taxation to voters with a ballot initiative in 2020. Trickle-up-Taxation will indirectly help address our housing crisis because with Trickle-up-Taxation, regulatory reform and realigning of regulatory agencies will be necessary, and those reforms will not only help with the housing crisis but a myriad of other failed state governmental policies and structures.

Trickle-up-Taxation isn’t just about bringing much-needed tax dollars into your community to address the needs of your community. Trickle-up-Taxation will give greater flexibility to your local elected officials to streamline new development and cut down costs. Your elected officials live in your community and it is to their benefit to create a sustainable building model that meets the needs of their community.

Remember, your elected officials most likely owns a home in your community. They understand that if too many homes are built that exceed supply then home prices including their home will dramatically decreasing, thus causing a backlash from current homeowners. If they don’t provide enough homes then a backlash from voters that want to buy a home but can’t afford it will occur as well. Long-term planning and sustainable building can meet demand, as well as, work as a political solution to keep homeowner and future homeowners happy.

That is why planning and the vast majority of regulatory authority should be controlled by your county and city governments, not the state. Also, tort reform to prevent frivolous environmental lawsuits that almost never succeed needs to occur to speed up development and cut down cost. These lawsuits are not about protecting the environment. I am all for protecting our environment. But if the fact that even with California’s stringent environmental regulations allow for the building of these projects and these lawsuits continually fail then we must address this issue so that we can provide affordable housing to California residents. We shouldn’t be held hostage to special interest groups that want to prevent environmentally friendly housing development.

Housing is a local issue and should be addressed locally. Your elected officials and groups like the Building Industry Association and their local chapters commissioned a study and found that up to 40 percent of the cost of a new home is attributable to the 45 regulatory agencies that govern home building in California. Our local elected officials should work with groups like BIA, realtor groups, planning commissions, community groups, and residents to create a local plan and model to address our housing crisis.

Until we do this, we will continue to see an ever-growing housing crisis that will continue to drive businesses and residents out of the state.

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