Monday Morning Thoughts: Columnist Cherry Picks Arguments to Attempt to Argue There Is No Housing Crisis

By David M. Greenwald
Executive Editor

In his recent column, Tom Elias takes shots at Sacramento Democrats who have been attempting to alleviate the housing crisis through housing density laws like SB 9 and SB 10.

He noted, “The two earlier laws – which may face a referendum to cancel them in the 2024 election — have so far had little effect.”

He writes, “But it’s not happening on a large scale, very possibly because the state housing shortage estimates they were designed to mitigate probably are nowhere near accurate. The actual housing shortage appears to be far smaller than levels claimed by the state Department of Housing and Community Development (HCD).”

Elias takes advantage of the moving target as well, noting that in 2018 Governor Newsom campaigned hard for 3.5 million new units by 2025—noting “fewer than half a million have actually been built on his four-year watch.”

He continues, “Newsom now says just 1.8 million new units are needed, half what he claimed four years ago. And a springtime report from the non-partisan state auditor found HCD figures lack solid documentation, suggesting the real need may be far lower than even Newsom’s latest numbers, which he proffered without any documentation.”

Elias of course makes no allowance for what has taken place over the last four years or the fact that housing estimates were always just that—estimates, and that we are trying to hit a moving target during perhaps one of the most volatile times in our history.

Elias apparently did not read the reports out of the Terner Center at Berkeley that predicted that SB 9 would only have a modest impact—not because the demand was not there, but because of construction costs.

“Yet, the likelihood of creating new housing and homeownership opportunities as a result of SB 9 largely depends on local context,” the 2021 report out of Terner wrote.  “While Senate Bill 9 does not apply to single-family parcels in historic districts, fire hazard zones, and rural areas, local market prices and development costs play a large role in determining where there is financial viability for the addition of new homes.”

This analysis on the impact of SB 9 “finds that SB 9’s primary impact will be to unlock incrementally more units on parcels that are already financially feasible under existing law, typically through the simple subdivision of an existing structure.”

However, in contrast to fears by many homeowners: “Relatively few new single-family parcels are expected to become financially feasible for added units as a direct consequence of this bill.”

Thus they conclude: “While this analysis does not attempt to measure the actual rate of uptake for adding new units to single-family parcels, it is reasonable to assume that SB 9 will modestly accelerate the addition of new units relative to the status quo by facilitating access to conventional mortgage products for multiple households able to purchase homes on newly subdivided single-family parcels.”

The study found that “the vast amount of single-family parcels across the state would not see any new development,” said David Garcia, policy director at the Terner Center, which supports the bill.

This analysis was a huge reason why I never bought into the idea that SB 9 would solve the housing problem and it is also why I always believed the alarm about the death of single-family neighborhoods was overstated from the start.  I supported it because it makes sense to allow for more dense neighborhoods going forward.

Last week, we covered a new study from Berkeley which showed that, while housing advocates have embraced density as a means to alleviate housing demand, current zoning, the report shows, suggests that the region is not ready to go that direction.  At this point, more than three-quarters of all land zoned for housing is zoned only for single-family housing.

One of the findings of the report is the correlation between higher levels of single-family zoning and higher levels of segregation in a municipality.  In another study that Elias apparently either did not read or does not understand, one reason why SB 9 has not had much impact is that only five percent of the state’s parcels fall under SB 9.

“What we really need to be able to do is take two single-family home parcels and allow a two-story, 12-unit building on them,” said Stephen Menedian, one of the report’s authors told the Business Journal this week.  “We’re not talking about towers.”

Instead, Elias takes aim at the current proposal, AB 2011, which purports to build Affordable Housing.

He quips, “This proposed law, titled the Affordable Housing and High Road Jobs Act of 2022, offers no explanation of what a High Road job might be, except that any building under its auspices would require that all labor be paid union wages — in short, the highest in the construction industry.

“No wonder several under-construction affordable housing projects are coming in right now at more than $1 million in building costs per unit.”

As the Vanguard has attempted to explain, the law has attempted to streamline the building of affordable housing and doing it with the support rather than the opposition of labor.

The cost of building one unit of affordable housing has little to do with the cost of labor, which generally avoids such agreements and everything to do with the high cost of construction, the supply chain problems, the land costs, and of course the restrictive zoning and potential road bumps in the planning process.

Elias concludes this piece: “The flaws in SB 9, SB 10 and other densifying measures that did pass were just as evident as those afflicting the newest proposal, yet they passed handily and Newsom signed them into law. So what’s to stop this one, too?”

The problem, of course, is Elias has no solution for housing problems other than to suggest that one might not exist.