Housing shortage goes from dire to desperate after wildfires

Housing shortage goes from dire to desperate after wildfires

A few months ago, Tim Anaya and I interviewed for PRI’s podcast Farhad Zabihi, a math professor at the College of Marin, who had been house hunting for nearly a year in Marin County.  Marin is just south of Napa and Sonoma — two of the hardest hit counties in the October wildfires.

For the counties affected by the wildfires, the housing crisis has gone from dire to desperate.  Jim Carlton and Alejandro Lazo of the Wall Street Journal report that around 10,000 residents of Santa Rosa are now homeless, among them 78 schoolteachers and 134 staff members and physicians of the city’s hospital.  The wildfires have now destroyed more than 5,000 homes.  Santa Rosa alone lost 3,000 homes or 5 percent of its housing stock.

According to Carlton and Lazo, “Housing experts estimate it could take two to three years to rebuild lost homes.  The housing market was already so tight here that a 1 percent vacancy rate prompted city officials a year ago to declare a housing emergency and ask for the state to help.”

In an analysis, Zillow.com chief economist Svenja Gudell, writes, “People displaced by the wildfires are likely to find it challenging to find another home for sale nearby.  In many areas, inventory was already down more than 10 percent – in some areas more than 20 percent – year over year in August.”

As we’ve asserted for some time now, the state’s housing crisis is a problem of supply.  PRI California fellow Kerry Jackson, author of Unaffordable writes: The [housing] shortage was caused by decades of public policy that has diminished the incentives to build and has led to dizzyingly high prices.”  But the legislature’s response, Jackson believes, won’t make a dent: a $4 billion housing bond; a $75 fee on real estate transaction documents; and a bill to streamline building regulations, which at first glance sounds reasonable, but any good it would do will be offset by its requirement that builders pay the prevailing wage, which is sure to increase construction costs and therefore, housing prices.

The California Environmental Quality Act (CEQA), the biggest culprit preventing more housing construction, remains largely intact. CEQA’s regulatory hurdles have sharply increased the cost of building and are often so onerous that they can delay construction by a year or more. Until CEQA is reformed, California’s housing crisis will go on unabated.  And in the aftermath of the wildfires, the lack of affordable housing has added to the anguish and distress of the many Californians who have lost their homes.

By the way, for those who listened to our housing podcast with Farhad Zabihi (it holds the record for downloads since we launched our podcast this past summer), he’s still looking…

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.