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California Elite Regulates to Reduce Affordable Housing

(p. A11) In Silicon Valley the median home costs $1.2 million, about 2.5 times as much as in Seattle. Houses are less expensive inland--about $350,000 in Riverside and Sacramento--but living there often means a long commute. The weather also isn't much better than in Phoenix or Dallas, so why not move to another state? A net 800,000 people did just that between 2005 and 2015, and many of them earned less than $30,000.

. . .

The state Legislative Analyst Office notes that in California's coastal metros more than two-thirds of cities and counties have policies explicitly aimed at restricting housing growth, such as limits on density. When a developer wants to break ground, local governments impose multilayered reviews that can mean getting approval from the municipal building department, health department, fire department and planning commission as well as elected officials.

Neighbors can delay or block projects using the state's 1970 Environmental Quality Act. It isn't coincidental that California's housing prices soared during the 1970s. Getting a building permit in San Francisco takes about three times as long as in the typical American metro.

There are more-direct costs, too: Local governments tack on hefty development fees, which run about three to four times as high in California as in the rest of the country. Politicians often attach conditions to projects requiring developers to pay workers "prevailing wages," determined by local unions. This is one reason the cost of construction labor in California is about 20% higher than nationwide. Stringent building codes and energy-efficiency standards can add tens of thousands to the price of a house--even though low-flow appliances often cause people to use more water.

All told, it costs between $50,000 and $75,000 more to build a home in California than in the rest of the country. Building a low-income housing unit costs $332,000--about $80,000 more than the median home in Dallas or Phoenix.

. . .

Zoning is generally the biggest obstacle to development in coastal areas.

. . .

California's housing policies are intrinsically regressive. Limiting the supply drives up home values in well-to-do coastal communities, while pricing everyone else out of the market.

For the full commentary, see:

Allysia Finley. "Why Housing Is Unaffordable in California; What could really help is deregulation, but residents aren't likely to get it from Democratic lawmakers." The Wall Street Journal (Sat., Sept. 30, 2017): A11.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Sept. 29, 2017.)

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