Over the past 6 years, I’ve read a number of news articles pointing to California legislation aimed at making it easier to build housing. But have these bills actually been effective?
California recently enacted two new housing bills, one of which makes it easier to build on church owned land and the other reduces barriers to construction in certain coastal areas. According to Reason magazine, the bill relating to church owned land comes with a number of restrictions:
Any new housing made legal by the bill would have to be offered at below-market rates to lower- and moderate-income residents. Developers would generally have to pay prevailing wages to construction workers. The new housing would also have to come with at least one parking space per unit unless other state or local laws dictated a lesser minimum standard. S.B. 4 projects also couldn’t be built in industrial zones or near active oil wells. (There are a lot of those in Los Angeles.) The list goes on.
Nonetheless, Reason suggests that these initiatives will have a big impact:
The state will build more housing with S.B. 4 and S.B. 423 in effect. At a minimum, they’ll provide evidence that removing regulatory barriers can unleash a lot of badly needed housing.
I hope they are correct, but I have my doubts. I worry that if you go from a situation why there are 12 reasons why it’s not feasible to build housing in California, to a situation where there are only 7 reasons why housing construction is not feasible, you still end up not building housing.
Did previous bills have an impact on housing construction in California? If so, it’s hard to see any impact in the data for housing starts:
At first glance, it seems as though the YIMBY forces are having a surprisingly easy time rolling over their opposition, as one reform after another is making it through the California legislature, beginning with SB 35 back in 2017. But I wonder if the surprisingly weak NIMBY opposition reflects the fact that they understand these reforms will have little effect—that there will continue to be enough regulatory barriers to prevent any meaningful surge in California homebuilding. I hope I’m wrong about this and certainly believe the reforms are better than nothing. But at the moment I don’t see much evidence that anything meaningful has changed in California. Home building here is currently so weak that even a 10% or 20% increase would not significantly move the needle—the state needs a dramatic rise in housing construction.
Meanwhile, in other areas the California legislature seems determined to ruin the business climate. (This and this both occurred in just the past week.)
PS. Chris Elmendorf has a good twitter thread discussing another California housing reform bill.
