The housing crisis will only get worse

January 27, 2026

The original of this editorial can be found on the Appeal Democrat's website. The original text submited to the Appeal Democrat is located below the editorial. It contains links that support many of the claims in editorial.

Here is the text of the editorial originally submitted to the Appeal Democrat;

The Housing Crisis Will Get Worse

California’s housing affordability crisis is driven by a lack of supply and will get worse. Does that make now the time to buy? The short answer is yes if you are considering a home that meets your long-term needs and is one you can afford. Be cautioned. Don’t expect that prices will appreciate rapidly.

Here is the long answer.

California has had a housing shortage since 2011. The shortage was obvious by 2015 when the California Legislative Analyst’s (LAO’s) office issued its “California’s High Housing Costs; Causes and Consequences” report. The LAO’s report concluded that California was on track to build “100,000 to 140,000 housing units” but needed to “build as many as 100,000” more housing units each year.

The California legislature didn’t respond to the LAO’s report and the problem grew steadily worse. By 2018, Candidate Newsom said California would build 500,000 new housing units per year through 2025 if he was elected. We have seen lots of window dressing in the form of housing legislation since then but little of any real substance. California has only averaged 110,000 units per year in the seven years since he took office.

The consequence of the legislature’s inaction is measurable. The Housing Affordability Index (HAI) measures the percentage of households that can afford to purchase the median priced home. According to the California Association of Realtors, the HAI was 57% when Governor Newsom took office in 2019. It now stands at 17%.

Reports by LAO, the Federal Reserve Bank of New York and others go back decades. They have consistently identified that the highest housing costs, where they exist, are the result of restrictive zoning codes, tortuous planning processes, high government fees, other government regulations and the states and communities that impose them. The governor and legislature have dodged dealing seriously with these issues and communities.

Among other things, that same 2015 LAO report noted that "over two-thirds of cities and counties in California’s coastal metros have adopted growth control policies explicitly aimed at limiting housing growth." A 2009 report by the CATO Institute revealed that "The eight counties in the San Francisco Bay Area … have collectively drawn urban-growth boundaries that exclude 63 percent of the region from development. Regional and local park districts have purchased more than half of the land inside the boundaries for open space purposes. Virtually all of the remaining 17 percent has been urbanized, making it nearly impossible for developers to assemble more than a few small parcels of land for new housing or other purposes."

The Governor and other politicians, including President Trump, have a new scapegoat. They propose banning large investment groups from purchasing blocks of homes from developers. This will compound the problem by further reducing the housing supply. Bulk sales allow some projects to be built that that would not otherwise be economically viable. Bulk sales lower developers’ costs, promote faster project completion and protect developers from the risk of changing market conditions. Bulk sales wouldn’t even be an issue if politicians had done their job of ensuring a free market in which developers could easily obtain project approvals and building permits to meet market needs.

There are actions the governor and legislature should take to improve housing affordability. Stop driving multi-family housing developers out of state with onerous rent caps and the other regulations. Stop dictating expensive and unnecessary features such fire sprinkler systems and solar panels on single family homes. Buyers should be free to choose those items if they wish. Streamline the planning and permitting process imposed on local governments and developers. Deal with those local communities the LAO identified as having adopted growth control measures intended to deny adequate housing in their jurisdictions. Finally, respect property rights. Projects consistent with a property’s zoning should not face roadblock after roadblock because neighbors show up at planning commission and city council meetings repeating the same tired refrain, “I’m all for more housing, just not this project.”

Time is running out. High housing costs contribute to seniors being the fastest growing segment of the homeless population. Unaffordable home prices contribute to poverty. Forbes reported that “renters possess less than 3 percent of the wealth of homeowners, with a median net worth of $10,400 compared to $400,000 for homeowners.”

Demand that our politicians get serious in dealing with housing affordability.

 

Lloyd Leighton
Realtor for Interwest Homes Corp.
Former National Association of Realtors Federal Political Contact to Congressman Doug LaMalfa