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Housing Crisis

We can’t spend our way out of this housing crisis.

If you’re one of the millions of Californians struggling to find an affordable place to live, don’t think for a second that the so-called affordable housing measures plodding through the Legislature will help you.

The majority party-backed bills, SB 2, SB 3 and SB 35, are well-intentioned, but overlook both data and reason. Predictably, the bills try to solve the problem by throwing money at it. But lawmakers need to look no further than the first page of any book on economics to learn the issue is one of supply and demand.

Simply put, housing costs are skyrocketing because there is not enough supply to keep up with demand. Experts say 180,000 new domiciles need to be built each year to keep up with the state’s rising population. Last year, only slightly more than half of that was built – and that was actually an improvement from previous years.

The problem is clear-cut: California has made it too expensive to build houses, which has led to a shortage of supply.  The solution is just as clear cut: We need to make it affordable to build homes. This is one problem we can’t spend our way out of.

To promote development, we need to cut red tape and reduce frivolous lawsuits. Even if state spending was a viable solution, regulations and endless legal action from opponents would still derail development.

Yet the majority party refuses to do anything to ease the burden, buckling under pressure from environmentalists and not-in-my-backyarders. Of course, when one of their pet projects is on the line, they move.

In 2013, when Sacramento was in danger of losing its professional basketball team, lawmakers eagerly sped up the approval and construction of a new arena, which opened only a few years later. Now, a similar measure is being considered for a sports franchise down in LA. But for average Californians – who don’t own professional sports teams and just want to afford a home – the state is nowhere to be found.

Every time one of those pet-project bills is passed, they are admitting the problem is regulatory. Governor Brown knows this. That’s why he proposed regulatory reform in last year’s budget. But the majority party killed the measure, supply didn’t keep up with demand, and housing costs continued to climb. And I have introduced numerous regulatory reform bills over my years in the legislature and each one of them has been quietly killed.

Instead of implementing meaningful reforms, the majority party wants to tax property owners and borrow billions from the public to pay for low-income housing (SB2 & SB3, respectively). But we already know the issue is regulatory and one of the bills’ authors even said these measures won’t solve the housing crisis.

SB 35 would actually cut some red tape. But it would also add costly regulations that will negate any benefits the bill could provide. Industry experts say the lowered regulations won’t be nearly enough to offset the increased building costs association with the bill.

The coastal elites love to talk about data and science, but they are closing their eyes and ears when it comes to housing. If they are serious about addressing runaway housing costs, they will turn their attention to cutting red tape.

We are facing a crisis which can’t be solved with spending. It’s time for the legislature to get to work on the policy changes which will make houses affordable to build, and, most importantly, to buy.

By Senator Tom Berryhill