Yes, It’s True. California Must Build A Lot More Housing to Close Gap

Finally, a state ranking where California isn’t last. In per capita housing supply, California is 49th. Only Utah has fewer housing units per 1,000 population, with 347. The Golden State: 358.

The data are from McKinsey Global Institute’s 2016 report “A Tool Kit to Close California’s Housing Gap: 3.5 Million Homes by 2025.” This not-well-known but still-important ranking was brought up earlier this month by Lt. Gov. Gavin Newsom, then fact checked by Politifact California, which rated his statement as “True.”

According the McKinsey report, “benchmarked against other states on a housing units per capita basis, California is short about 2 million units. To satisfy pent-up demand and meet the needs of a growing population, California needs to build 3.5 million homes by 2025.” Given that the U.S. Census Bureau says there about 13.9 million units in the state, that’s quite a job. Developers need to add the equivalent of another Los Angeles County, which has a little more than 3.4 million units.

The only surprise in the McKinsey ranking is that there is one state that has fewer per capita units than California. This state has by far the worst housing market in the country. In fact, conditions are so dire that it can hardly be called a market at all. A swamp of public policy has so skewed housing in California that it’s in deep crisis.

Blame goes primarily to the California Environmental Quality Act. Timothy Coyle, at one time the director of the California Department of Housing and Community Development, has seen the problem from the inside. He says CEQA is “the mother of all government-sponsored obstacles to development.” Both environmental groups and business rivals use it to delay and whenever possible shut down development.

There are, of course, many other factors. Affordable housing mandates. Rent control. Runaway NIMBYism. Meddling BANANAs. Exorbitant permit fees. But CEQA is the highest barrier of all.

Lawmakers say they’re working on the problem. They even had a “Housing Day” last year when they passed more than a dozen bills they said would accelerate home building. But not only have their efforts been weak and too often counterproductive, they’ve done nothing to reel in the abusive effects of CEQA. Until they’re serious about that, California’s housing crisis will continue to roll on.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.


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.

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