Developers are now adding homes, relative to population growth, at a far higher pace than in recent years. But it’s still below what experts believe would be enough to keep up with California’s growing population, which topped 39.5 million last year.
A measure that would allow local governments to force developers to include more low-income housing within their projects passed the Assembly Thursday.
Assemblyman Matthew Harper (R-Huntington Beach) argued that the bill would raise costs for developers and therefore reduce their ability to produce the broad housing stock the state needs to control prices.
In the span of a few decades, Los Angeles area construction went from an industry that was two-thirds white, and largely unionized, to one that is overwhelmingly Latino, mostly nonunion and heavily reliant on immigrants, according to a Los Angeles Times review of federal data.
At the same time, the job got less lucrative. American construction workers today make $5 an hour less than they did in the early 1970s, after adjusting for inflation.
The decline in homeownership rates to near 50-year lows is partly to blame for the U.S. economy’s sluggish recovery from the last recession, new data suggest.
If the home-building industry had returned to the long-term average level of construction, it would have added more than $300 billion to the economy last year, or a 1.8% boost to gross domestic product, according to a study expected to be released Monday by the Rosen Consulting Group, a real-estate consultant.
The possibility of a tax-code overhaul is casting a shadow over the $10 billion affordable-housing industry, which receives tax credits so valuable they often determine whether or not projects get off the ground. . . Developers said investors are valuing the credit 10% to 20% lower since Election Day. In some cases, investors have walked away, opening up funding gaps in projects already in motion. Because developers already walk a financial tightrope to build low-income housing, some projects are simply failing.
“There are many ways governments can support the construction of affordable housing. One is to pare back some of the byzantine regulations that control housing development at the state and local level—NIMBY land use and zoning restrictions, unrealistic regulations regarding construction and labor procurement methods—that drive the cost of new housing through the roof. And when that doesn’t work, city and state governments can subsidize rents. But to create an elaborate investment tax code workaround to problems that blue model governance has created through overregulation, cost inflation, and bureaucratic micromanagement only builds new layers of cost and complexity over the old ones. And of course there is the problem of moral hazard created when it becomes impossible to build housing for the average person with an average income in a given area without getting ‘help’ from insiders who can help you navigate the bureaucratic morass.
Assembly Bill 199 was introduced in late January and authored by Kansen Chu (D-San Jose) and the California Building and Construction Trades Council, a labor union group. The bill requires workers to be paid “prevailing wage” on residential projects that have any agreement with “the state or a political subdivision” — a provision that extends the requirement beyond the redevelopment agencies, public agencies and low income housing projects covered under existing state law.
A one-two punch of unwavering fees and unavailable labor is leading many homebuilders to seek extensions of entitlements for projects across the region.
The study notes that the 313,700 workers who were employed in 2015 fell 23.7 percent, or nearly 98,000, below the number who were employed at the industry’s peak in 2006.
Robert Tillman owns a coin-operated laundromat in San Francisco’s Mission District, a neighborhood at the epicenter of California’s housing crisis. Over the last 2½ years, he’s spent nearly $500,000 on plans to tear down the business to build apartments. But although the city has zoned the property for apartments, Tillman hasn’t gotten very far.
Perennial attempts to tweak the California Environmental Quality Act, which many developers blame for the slow pace of building, have collapsed. A bill to fund a dedicated housing fund introduced by former Assembly Speaker Toni Atkins, D-San Diego, a longtime housing advocate, went nowhere. A $100 million annual housing tax credit expansion was vetoed.
The School Facilities Program has little new money to hand out – especially for the more costly new construction and modernization projects – but the board has been reluctant to declare it depleted. To do so would trigger a provision in state law that places the burden of school construction costs fully on the backs of housing developers by allowing districts who meet the criteria to charge them 100 percent of building costs.
Major renovations on existing homes will have to be undertaken with energy efficiency in mind, using products and systems that meet an updated state building code. California’s code is already among the strictest in the nation. . . New homes will also be required to meet higher energy standards. By 2020, each home built in California should produce as much power as it consumes. At least one builder estimates that advanced energy systems will add $50,000 to the cost of a new, super-efficient home. What will that mean in a state where low-cost housing is in short supply?
Rent control can have a negative impact on low-income households not living in rent-controlled units through higher growth in citywide median rents. Rents are too high because multi-family housing and the state’s housing stock have failed to expand
commensurately with the ever-growing population. The solution to this affordability problem is to expand the apartment stock in these cities, not introduce price ceilings.
A new rule designed to promote urban development and curb both car usage and greenhouse gas emissions may end up making cities less affordable and more congested, critics say.