Too many regulations, along with NIMBYism, are stifling the state’s housing industry

By on April 22, 2019
Conference Calls for More Houses, Less Red Tape

That’s the conclusion of a UC report that tries to explain California’s housing shortage.  Some people have been saying that for a long time.

For years, homebuilders in California have decried the excessive regulations they must deal with, both locally and on the state level.

They point to that as a major reason why they can’t build enough single-family homes to keep up with demand, which may be the single most important issue facing the state today.

They also complain about “NIMBY” – Not In My Backyard – the practice of homeowners opposing any residential development near them out of fear it will hurt their property values and otherwise disrupt their lives.

Fix those issues and they’ll develop more houses, the homebuilders say.

At least one prominent institution agrees with them.

A report released this month by the UC Riverside School of Business Center for Economic Forecasting and Development takes a close look at how well Southern California has performed according to the guidelines of the state’s Regional Housing Needs Assessment.

That plan mandates how many,  and which types, of houses each submarket in California needs to plan for and build, at all price levels.

The 20-page UC Riverside study focuses on the jurisdictions within the Southern California Association of Governments that are impacted by the housing needs assessment, territories that include Los Angeles, Orange, Imperial, Ventura, Riverside and San Bernardino counties.

The report found that, compared with other state jurisdictions, Southern California has recorded an “average” performance regarding compliance with the housing needs assessment. In the aforementioned areas, less than 30 percent of the houses mandated have been built, in all price ranges.

That percentage is especially significant because more than 70 percent of California’s population live in Southern California, said Adam Fowler, director of research at the center for economic forecasting and a co-author of the report.

“There are some really fundamental obstacles facing Southern California, and jurisdictions across the state, in terms of developing smaller, denser less-expensive housing,” Fowler states in the introduction to the study.

And why are not enough homes being built in Southern California? Local land use and zoning laws, along with opposition to housing development by residents, are the major reasons. The report also states that the state’s housing shortage is more serious than it appears.

“Given the dominant share of residents who live in the region, and California’s acute housing shortage, it’s particularly problematic that [Southern California] is further behind in producing low and moderate-income housing,” the report states. “The only housing units that have seen significant progress and are close to meeting the housing needs assessment mandate are units with above-moderate income levels.”

The report recommends that local jurisdictions base their zoning laws on housing demand, and they also take into account demographic changes when planning housing development.

Broken down by numbers, in the six-county region 52 percent of the housing units intended for above-moderate income buyers have been permitted since the RHNA became law, compared with nine percent for low-income and very-low income buyers and 16 percent for moderate-income units.

All of this not surprising to John Husing, Inland Empire economist since the mid-1960s and vocal critic of the state’s business climate, which he believes has underperformed for years because it’s over-regulated, locally and on the state level.

“They left out one thing: the environmental lobby,” Husing said. “CEQA (the California Environmental Quality Act, a statewide policy which seeks to minimize the environmental impact of commercial and residential development, makes it too easy for anyone to file a lawsuit that blocks any development. It’s been going on for years. It gives the NIMBY’s too much power.”

Husing said he has not read the report but that he’s heard of its conclusions and recommendations from various sources.

“I agree with everything it says,” he said. “The Inland Empire has to step up its housing development if it’s going to get back to where it was in 2007, when it peaked before the recession hit.”

There’s no question that city councils and other local government entities can make things difficult for home builders, said Mike Dwight, former senior vice president of Frontier Homes in Ontario and a longtime homebuilder in the Inland Empire.

“Most of the time cities don’t want apartments and they don’t want high-density housing, so you can get a lot of battles over lot size,” said Dwight, who now operates a consulting business in Orange County. “The problem is there are a lot of people who live in one market and work in another. You have to build houses on the periphery if you’re going to solve the housing problem, and that’s hard to do.”

Dwight also called NIMBYism “a bigger problem” than it appears because it often doesn’t get reported on by the media.

“There’s a lot of it out there that you don’t read about,” Dwight said.