“One of the biggest is the ballot measure to provide over $3,000,000,000 for subsidized housing.”
California lawmakers furiously passed a series of bills over the weekend designed to address the housing crisis there. Among the over 130 bills introduced in the legislative session, the ones passed included over three billion in funds for subsidized housing, and stream-lined regulations for building houses. It is widely known that California, particularly the Bay Area, has some of the highest housing costs in the nation. But what is not discussed is how liberal policies have created those prices. The new bills addressing high housing costs are little more than insufficient band aids because they fail to address the root causes of the problem.
Basic economics describes how restricted and limited supply and increasing demand means that prices rise. Every parent that tries to get the hot new toy for Christmas understands how the last coveted Cabbage Patch Kid or Classic Nintendo will sell for much more than its market price. Politicians and environmentalists combined with “not in my backyard” sentiments end up creating open air laws and excessive regulations that severely constrict the supply of houses in California.
Thomas Sowell points out, for example, that over half of the land in San Mateo county is off limits to development. With the supply artificially restricted it is not surprising then that housing is over 4 times the national average there, with the average small house priced at $700,000 and rents over $3,500 a month. One tech sector employee who was featured in the news lives in a walk-in closet dubbed a “private room” for $1,400 a month.
The solution to the problem would be to let the free market regulate supply and demand. When allowed to function, entrepreneurs and developers will quickly move to cash in on high prices. As supply starts to outstrip demand the prices will drop back down to normal levels. While that sounds simple, the entrenched interests and unchallenged prevailing wisdom of voters and politicians in California will not change open space laws.
Instead, they will produce various commissions to study the “complex” problem and provide rather ridiculous solutions. One of the biggest is the ballot measure to provide over $3,000,000,000 (yes billion) dollars for subsidized housing. This is sold by politicians to the public as a way to appear compassionate. But it isn’t very compassionate to the many hard-working Americans who will pay for it. Nor is there ever enough subsidized housing to truly help all of those priced out of the housing market.
Even when bills are passed that appear to ease regulations that artificially limit supply, they still contain provisions that will likely erase whatever help the bill might have offered. In this case the sped up regulations only apply to certain kinds of housing near public transportation. But insufficient government investment in sound transit policies will mean that many of areas that most need the housing will likely face the same turgid regulations that prevent timely construction.
Maybe someday Californians will wake up to the nightmare that they have supported and promoted. But living in their idyllic enclaves on the coast they can largely afford these destructive policies while the rest of the state’s roads, dams, and housing face crisis.
