As President-elect Donald Trump prepares to reenter the White House, California housing advocates are bracing for how a second term could impact the state’s notoriously high home prices, rents and rates of homelessness.
This time around, that’s changed, and Trump has recognized housing affordability is a problem, said Matthew Schwartz, executive director of the policy organization the California Housing Partnership.
— KQED
Democrats were also pushing a housing-heavy agenda during the campaign. Trump's return to the White House comes as the UCLA Lewis Center for Regional Policy Studies reports many cities across the Golden State are missing their marks where it comes to planning an adequate housing supply that matches the expanding crisis.
Trump has vocally supported the call for massive tent cities for unhoused citizens, vowing at the same time to issue tariffs, deport undocumented immigrants, open federal land to housing development, cut government assistance programs, and relax zoning restrictions, among several other countervailing ideas that could cancel out progress on what became one of the 2024 election's most significant issues.
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Make no mistake, this is how it translates...
Trump has vocally supported the call for massive tent cities (refugee camps) for unhoused citizens, vowing at the same time to issue tariffs, deport undocumented immigrants (less for the unfortunate and more for us), open federal land to housing development (massive land grabs for friendly developers who are loyal supporters, take what is public's and give it to friendly developers who are loyal supporters, repeat after me), cut government assistance programs (and provide massive tent cities short and free transportation to massive tent cities, see above), and relax zoning restrictions (massive negative gentrifications and even more profits for the preferred friendly developers who are loyal supporters), among several other countervailing ideas that could cancel out progress on what became one of the 2024 election's most significant issues.
Yup, this is really, really, bad.
Homebuyers in the USA have been conditioned to spend way more than they should on housing. The old rule of thumb was to spend no more than 25% of your monthly earnings on rent or house note. I think a lot of people are being forced to spend in the 35-50% range in order to buy into this bubble market fueled by realtor hype and seller greed. I'm not sure how the federal government can correct that.
It's still ridiculous how much banks approve loans for. In 2019 my wife and I bought a new home. Combined we make in the $200k range and have high 800 credit scores with no debt. We we approved for round $750k. WTF?!
Old rule of thumb was 1/3 your income. I'm not sure how people even manage that. I spend like 1/8th of my income on rent, and it's still pretty tight just because I have other ongoing costs that are largely out of my control at this point.
Regulation.
This is all fundamentally a supply-and-demand issue. On one hand, too many people are competing for too few housing units. On the other hand, too many credit dollars are competing for too few assets. Fix any of those things (preferably all of them), and the problem goes away quickly.
Instead, most "housing policy" seems calculated to make the problem worse, not better.
May work for a spreadsheet, but the physical space can't expand infinitely to balance out shit.
Lack of physical space is not a real problem the United States suffers from in any significant way. Even in major urban areas. Any constraints on availability of physical space are artificially contrived, therefore easy to change if we are serious about dealing with problems. The more fundamental problem, as with energy production, is that we are not serious.
On that we can agree!
the president cant change zoning so im not sure the impact on housing will be all that big.
California isn't the United States as a whole, but here it's not zoning: there is an awful lot of entitled multi-family housing that isn't being built. And nearly every single family parcel is allowed to add at least one (and sometimes two) additional units by right. The issues are high interest rates, the high cost of construction labor, high cost of materials, and bureaucratic complications. The incoming president has no control over the first, is threatening mass deportations which certainly are not going to reduce labor costs, and tariffs that will increase the cost of materials. And I see little chance that Elon and Vivek operating federally can make local building departments and utilities speed review times or change local ordinances...
That makes sense Janosh. I have heard that, bit didnt realize there was a lot of as-of-right multi-family housing allowed already. Is it everywhere or only in certain areas?
My reference is always to Japan where as-of-right housing regulations are powerful (no NIMBY) and the system is supported with third-party companies that do the legal checks on behalf of the government for most projects. It smooths things out a lot.
If we do pre-submission consultation the usual turn around on planning permission is usually a matter of weeks. That is for anything from a house to mid-rise buildings (say up to 12 stories or so). Parametric rules make it about the math and not too much interpretation room is left to slow the process down. How does California compare? Is that where the bureaucracy kicks in to slow things down?
There has been a housing surplus in Japan since the 1970s because the government decided to go this route, and it has become more streamlined over the years. More amazing, I can live in almost any neighborhood in Tokyo that I like and find a price point that works whether I am a student, a pensioner on a low fixed income, or a multi-millionaire.
The big caveat in all of the above is that planning in Japan is federal. There is a single building code for the entire country and the rules are at that level. Zoning is local, but the most exclusive zone allows clinics, offices, small businesses, restaurants, etc. Exclusionary zoning is hard to arrange as a result.
Adding ADUs to withing what were previously single family zoned parcels is by right, but it is true that there are real challenges getting new multi-family projects approved. Weirdly, while there is a supply shortage, the economics of financing and high construction costs still have prevented approved projects from getting built. And just to demonstrate the complexity of the issue here, high labor costs caused by high housing costs and a lack of migrant labor have been a huge barrier to new housing production. And tax factors like Prop 13 which disincentivizes high wealth individuals from selling real estate assets make it worse. California's housing problems are so complex I see no chance that they will be fixed in a political climate that is so adversarial and hostile to compromise.
There's a solution I just read on the Slate web site which I think involves zoning. That's to allow all those with too large a house to rent out bedrooms. This would in effect make them like the boarding houses that some of zoning was designed to protect good wholesome family neighborhoods from but given how elastic the definition of family is today, I think its a great solution. Basically, I would loosen zoning a lot while strengthening environmental laws by enacting strict no growth boundaries. The only problem with this idea is that most of these houses are built in anonymous car dependent suburbs so...
Zoning isn't the answer, at least not all by itself. The much deeper issues are connected to inflation and credit. As Janosh pointed out above, even if the codes allow construction it won't happen if the economics of construction don't pencil out.
I agree, but If we rely on short term economics to pencil out, we'll surrender our long term viability. In other words, we need a balanced approach that makes the market's short term view work for the greater good. That's the government's job. Unfortunately we are inundated with shiny objects that distract us from the boiling water we're swimming in.
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