A PPIC (Public Policy Institute of California) study authored by Marisol Cuellar Mejia and Mary Severance, which came out on July 31, found that the first half of the data from 2019 in California “saw a substantial decline in the number of new housing units authorized by building permits.”
They write: “This has heightened concern about the state’s housing crisis and cast doubt on whether Governor Newsom’s goal of adding 3.5 million new housing units by 2025 can be met. More importantly, it underlines the need for a deeper understanding of housing markets and what if any action can be taken at state and local levels to move the needle.”
One of the biggest problems: new construction has been falling well short of demand for many years. An estimate from Beacon Economics puts the backlog figure at around 2.3 million units in 2017. That was followed by a 2018 year when only 104,000 residential permits were used.
As Ms. Mejia and Ms. Severance put it, this “left the state far below the number of new homes needed.”
This is especially true given that most state housing officials believe California needs roughly 180,000 new homes every year on average to make up for current deficits as well as to accommodate future population growth.
“This number is not attainable,” they argue. While on average 200,000 units were permitted back in 2003 to 2005, “today the statewide numbers are moving in the wrong direction. In June 2019, residential permits were down 38% compared to June 2018. On an annualized basis, permits were down 16%, totaling about 93,000. Permits for multi-family units decreased even more sharply, by 23%; only 44,400 were issued.”
Contrary to the claims of some, across the board in the Bay Area and the Sacramento Region, counts of homeless populations are on the increase. From 2017 to 2019, homelessness in Yolo County rose 43 percent in point-in-time counts taken in January.
The population grew from 459 homeless people to 655.
Sacramento’s count found a 19 percent increase since 2017 – although that rate was slower than in previous years. The report by Sacramento State Institute for Social Research “also indicates rates of chronic homelessness has declined.” The rate of unsheltered chronic homelessness has declined as well.
But that means, “The 2019 rise in homelessness reflects the continued challenges with housing affordability locally and across the state with the majority of individuals surveyed indicating access to affordable housing would help to resolve their homelessness.”
A San Francisco Chronicle Editorial from last week showed, “This year’s counts of homeless populations across the Bay Area and California yielded a trove of distressing data on the depth and persistence of the housing shortage as well as the inadequacy of state and local officials’ response — to the extent that they have responded.”
They noted, citing the PPIC report, “At a time when California should be building homes at more than twice the current pace, the number of houses and apartments likely to be built is falling.”
The Chronicle notes: “While housing production across the region and state has been anemic for more than a decade, this is the first such sustained statewide decline in residential construction permits since the Great Recession ended in 2009.”
Both the Chronicle and PPIC are critical of legislative efforts thus far.
The Chronicle, for example, notes: “Despite the 2017 enactment of a housing package described by its champions as a down payment on addressing the crisis, the Legislature has since struggled to advance major legislation on the issue.”
In one case, SB 50, authored by Senator Scott Wiener of San Francisco, which would override local barriers to multi-family housing near transit sites and jobs, “has been repeatedly blocked by Democratic legislative leaders.”
The PPIC finds that the proposal has “unleashed a great deal of controversy and is now on hold until next year.”
They write: “Zoning reform is one step toward the goal of increasing housing production, but it is probably not sufficient. “
Instead, they add, “Tying financial incentives directly to housing production is a potentially effective state strategy. Moving forward, sustained cooperation among state and local governments and also private developers is critical to addressing California’s housing challenges.”
The Chronicle is even more critical of the paralysis: “Like the closely related rise of homelessness, the prospect of a plunge in housing production reflects the state’s failure to do any of the above.”
But neither the PPIC nor the Chronicle looks at another factor here that is likely to be on the near term horizon – changes to the RHNA (Regional Housing Need Allocation) policies for compelling local communities to put forth their share of housing.
The next planning period is still a year-plus away, running from 2021 to 2028. But this fall we will get the new housing numbers, which are not only expected to raise targets but also to have more teeth.
Will that be enough to reduce homeless problems and increase the number of building starts? That remains to be seen.
—David M. Greenwald reporting