WSJ op-ed on California housing

Wall Street Journal:

The California Department of Housing and Community Development has set eight-year housing quotas for different demographics—very low, low, moderate and above-moderate income. Cities must formulate plans to ensure enough land is zoned to meet their quotas. These blueprints must also “promote infill development and equity” by rehabilitating existing structures, “protect environmental and agricultural resources,” and ensure that housing “is located in an area appropriately planned for growth,” not to mention reducing greenhouse gas emissions and encouraging “efficient” land use.

In other words, the state has been trying to cram more people into tightly packed urban spaces along the coasts—only about 1% of land in coastal urban areas is vacant and developable—where land costs are astronomical. And as demographers Joel Kotkin and Wendell Cox have pointed out, California has pushed policies that severely restrict or even prohibit construction of detached single-family homes on undeveloped land.

Liberal advocates of “smart growth” say high-density development is an economical use of scarce land. But multifamily developments cost up to 7.5 times as much a square foot to build than do detached single-family houses. Rehabilitating “infill” areas—vacant space in urban areas—is also more expensive than building on vacant land because environmental hazards like asbestos and lead must be remedied.

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California’s housing shortage is an indictment of central planning. Developers could build more low-income housing more cheaply in the exurbs if the state didn’t discourage sprawl. The state’s ability to project housing demand is also doubtful. Between 2011 and 2014, the population grew 4.5% in San Francisco and 3.8% in Riverside, which is east of Orange County. But between 2014 and 2017 as housing prices skyrocketed across the Bay Area, population increased by only 3.6% in San Francisco. In Riverside, by contrast, the population has grown by 4.5% since 2014 as people left coastal areas in search of less expensive housing. The median home price in Riverside is about $390,000. If cities build more housing and prices become more affordable, people and jobs will follow.