That is why today interest rates may be near an all-time low; but our inability to buy a new home is at an all-time high.
Bad Things Happen to Housing First
Everything wrong with California today happened to housing first.
Think taxes are too high? Local governments discovered post-Prop 13 that new housing in California could simultaneously be a whipping boy and a source of new money. Today, fees and regulations routinely add $100,000 to the cost of a new home. Yet overtaxing was seen as the answer, not the problem.
Over-regulation? Thy name is housing. Planning for a new home can take 10 years — and much longer. This morass of delay and bureaucratic gamesmanship goes by many different names: planning, environmentalism, NIMBYism, whatever. No business suffers more regulation than housing. More regulation means less housing, another problem disastrously disguised as a solution.
Insurance crisis? Twenty years ago, trial lawyers discovered that a loophole allowed them to sue builders if their homes did not stay perfect for 10 years. Almost every condo project in California was sued. Insurance companies stopped offering coverage, and the construction of condos plummeted 95%.
Going Out of Business Is Business as Usual
In California, construction defect litigation drove one of our most important insurance companies, Golden Eagle, to insolvency. And when it happened, many shrugged their shoulders as if it didn't really matter. People started believing that going out of business was business as usual.
Many of the people involved in regulating housing will be surprised to hear they bear some responsibility for our housing crisis. After all, they will tell you, they have been sponsoring government assistance for housing for as long as they can remember.
On a good day, what they accomplished helped fewer than 1% of the people in this state own their home, the most important investment they ever made.
But still, as long as they tried, they pretended that trying was the same as doing. We let them get away with it, and we are paying for that mistake today.
The media went along with it, too. Just check the Internet for news stories of major housing projects being shut down. Last year alone, tens of thousands of new homes were swept off the market because of opposition to new housing.
Now check these same stories and, after reading about great environmental victories, see how many of them include even a hint of a suggestion that stopping new homes from being built is contributing to the California housing crisis.
Or flip it around and check the news clips about the California housing crisis, and see how often a Sierra Club official is quoted talking about the damage their anti-housing policies will do to housing.
How to Solve the Housing Shortage
It's a sign of how deep this crisis has become that many people will deny that any such (self-evident) link even exists between crushing new homes today and creating a housing shortage tomorrow. They've been denying it for 30 years. But today it is harder than ever to deny the increasingly obvious.
Ironically, if you want to get all the facts, figures and rhetoric on housing, you can find it at the Web site of the governor's secretary of housing. They talk a great game. But if you want to get the actual policy, go the coastal commission's Web site, and there you will see how, in daily practice, the state of California shuts down new housing opportunities with stunning nonchalance.
If the housing crisis is California's oldest permanent emergency, the 134 people running for governor should know that it is also the easiest solved: We don't need $27 gajillion in government subsidies for new homes. We don't need new taxes, or anything like that.
We just need state and local government to get out of our way as we try and build what our customers are demanding so loudly: new homes for Californians. The resulting jobs and equity build-up for new home buyers would help our economy blossom like a neatly tended German garden.
This is something the new governor could do his very first day in office. Or the existing governor could do right now.
Mick Pattinson is president of Barratt American, Inc. and immediate past president of the California Building Industry Association.
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