California’s median home price set a new record of $849,080 in March, according to the latest figures from the California Association of Realtors. In 35 of California’s 58 counties, 50 percent or more of the homes sold above the asking price in March.
Given these continued troubling statistics, encouraging desperately needed new housing supply by reforming the California Environmental Quality Act should be at the top of the agenda at the State Capitol. Think again. In typical Sacramento fashion, the response from some lawmakers is to just throw more money at the problem.
The Wall Street Journal reports that “a top California lawmaker is proposing to spend $10 billion to help families buy homes in the state.”
Senate President Pro Tem Toni Atkins has proposed a “California Dream for All” program, which “would assist first-time homebuyers by providing 17 percent toward the purchase price of their first home, thus eliminating the need for a large down payment.” Homebuyers would be required to reimburse the state if they sell the home or refinance. The program would eventually help about 8,000 families annually, according to the Journal.
A taxpayer-funded report conducted by the group California Forward estimates that 35.5 percent of homes were purchased by first-time home buyers in 2021.
A better way to help Californians struggling to afford new homes – especially the mere 17 percent of Black and Latino households identified in the report as able to afford a down payment on a median-priced home – would be to remove barriers to new home construction like CEQA.
A prime reason housing costs are out of reach for so many is lack of construction. According to a California Department of Housing and Community Development report, state housing construction averaged less than 80,000 homes per year between 2008 and 2018, far less than the 180,000 new homes needed to be built each year to meet demand.
As the Pacific Research Institute report “The CEQA Gauntlet” has documented, the law adds expense and delay to – and in some cases halts – critical California projects including housing.
Consider the case of a 495-unit apartment development in San Francisco located near public transportation, which was blocked by the Board of Supervisors until further analysis was added to a CEQA document that had already been prepared for the project that numbered over 1100 pages. Even affordable housing projects built by Habitat for Humanity have been subject to CEQA abuse.
Though minor reforms have won approval in recent years, special interests aided by their legislative allies have fought comprehensive reforms required to break the housing logjam.
Even as lawmakers passed quick-fix legislation in response to a court ruling that would have blocked more than 3,000 prospective students from admission into UC Berkeley due to a CEQA lawsuit, legislative leaders signaled their strong resistance to any comprehensive CEQA reform.
“I am not at all a supporter of creating CEQA exemptions,” said Assembly Speaker Anthony Rendon in March. “I am not a proponent of gutting an act that has made California a leader in environmental protections and environmental innovation. We act because we have seen recently the misguided application of an environmental law to student enrollment.”
Until Atkins, Rendon, and other lawmakers realize that the misguided application of CEQA is also holding up new housing construction of all stripes including affordable, California will never build anywhere near the 180,000 new homes need each year. Without CEQA reform, housing costs will remain out of reach for too many, no matter how many taxpayer dollars lawmakers throw at them from Sacramento.
Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.