Tag: Housing
Environmental Lawsuits Tried To Block 50,000 Homes From Being Built in California in 1 Year
“California policy makers are seemingly getting serious about solving the state’s housing crisis by passing a bevy of laws that ease restrictions on new development. But the benefits of this deregulation are often undone by environmental lawsuits, and there’s evidence that the problem is getting worse.
In 2020, almost 48,000 new housing units were targeted with lawsuits, according to a new report from the law firm Holland & Knight. That’s roughly 50 percent of the 110,784 annual housing units the state has built on average over the past six years.
Two-thirds of these anti-housing lawsuits filed under the California Environmental Quality Act (CEQA) allege that new residential development violates state targets on reducing greenhouse gases and vehicle miles traveled.
“CEQA has indeed become a population control (aka reduction) statute,” writes the report’s author Jennifer Hernandez. “California is losing people, and the people being expelled are our families, our kids and grandkids, our favorite young teacher, our most compassionate nurse, our lifeline electricians and carpenters, our first responders, and our future caregivers.”
CEQA, passed in 1970, requires that governments study and mitigate the environmental impacts of new developments they have discretion over. The law also gives third parties the ability to sue governments for approving projects without allegedly studying them enough or requiring sufficient mitigation of their environmental effects.
That setup has made the law a go-to tool for anti-development Not in my Backyard (NIMBY) activists, who can hold up new projects for years with (often very flimsy) CEQA lawsuits. Despite its original purpose of protecting the environment, CEQA enables reams of litigations targeting everything from new apartments to new solar panels.”
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“The report notes that the impact of CEQA lawsuits on new housing is probably greater than the mere 47,999 that have been explicitly challenged. These legal challenges also target upzoning measures that would allow developers to propose more housing.
That’s helped to keep California’s housing production numbers flat over the past few years, despite the passage of nearly 80 laws aimed at boosting housing production or bringing housing costs down.”
Selling a Home? The D.C. Down Payment Assistance Program Will Give You Up to $202,000.
“the mayor urged residents to take advantage of the city’s newly expanded Home Purchase Assistance Program (HPAP). Starting October 1, the program will provide residents with up to $202,000 in interest-free loans to help cover the costs of a first-time home purchase, plus an additional $4,000 to help cover closing costs.
The decades-old program previously provided home purchasers with $80,000 in interest-free loans. The increase is justified, officials argue, by today’s hot housing market.
“We knew we had to do something to make the program more viable for potential home buyers,” Deputy Mayor John Falcicchio told The Washington Post last week. “We wanted our residents to be the most prepared as they go into this hot housing market.”
D.C. is certainly an expensive place to buy a home.
The real estate listing company Zillow says the typical D.C. home is worth $707,747—roughly twice the typical home cost nationally. Prices have increased 9 percent so far this year, according to the Case-Shiller home price index. That’s slightly more than the national increase in prices but far less than the 20-plus percent increases in such cities as Atlanta and Tampa.
These interest-free loans will probably increase those prices further. Indeed, the value of that subsidy is more likely to be captured by home sellers than by homebuyers.
The whole purpose of down payment assistance is to get more people to buy homes. That’s another way of saying that it is increasing the demand for home purchases. Economics 101 tells you that increasing demand, all else being equal, will increase prices. Homebuyers with more money can be less price-sensitive, and home sellers can be choosier about purchasers. All that encourages those sellers to increase prices.”
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“In a normal market, you’d expect price increases to induce a supply effect. More demand encourages suppliers to enter a market, which helps moderate price increases.
But don’t expect to see much of that in D.C.’s housing market. For starters, the city has only so many vacant or redevelopable plots of land where new housing could go. Redeveloping existing housing into more units is constrained by the city’s zoning laws and historic preservation rules. Meanwhile, rising inflation and persistent supply-chain issues have caused new home construction to plummet, as high material costs make builders less willing to take on new projects.”
California Takes on the High Cost of Mandated Parking
“Minneapolis is one test case. It eliminated parking minimums citywide as part of an update to its general plan in 2018. Crucially, the city also increased the maximum allowable size of apartments near transit and along commercial corridors at the same time. (The city also imposed some very unlibertarian parking maximums in some areas.)
The combination of those two reforms has kicked off a small boom in the construction of smaller apartment buildings, with most of those projects being built with less parking than had been typically required under the old rules.”
Why does the WeWork guy get to fail up?
“The housing shortage is certainly a big deal. The US was short nearly 4 million housing units as of late 2020, and the problem is spreading across the country. The inability to buy a home has huge repercussions on everything from Americans’ quality of life to their ability to create wealth. The problem is big enough that venture capital firm Andreessen Horowitz (a16z) is writing its biggest check to date — $350 million, valuing the company at $1 billion — to invest in Flow with the hope that the company can disrupt residential real estate through technology.”
Latest Inflation Numbers Show That Rent Is Too Damn High
“The latest Consumer Price Index (CPI) by the Bureau of Labor Statistics (BLS) shows that prices ticked up by 0.1 percent for urban consumers in August, for an annualized increase of 8.3 percent for the year. The marginal increase in inflation comes in spite of fuel costs falling 10.3 percent last month.
“Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase,” said the BLS in its news release today. The latest CPI numbers show a 0.7 percent increase in shelter costs in August and 6.2 percent over the past year.
The BLS measures both cash rents paid by tenants and something called Owners’ Equivalent Rent—a measurement of how much an owner-occupied home could be rented for. The bureau doesn’t include home prices in the CPI.
Spot rents reported by listing companies are growing at an even faster rate. Apartment List reports a 7.2 percent increase in rental prices so far this year. That’s moderate compared to the 17.6 percent increase in rents the company reported in 2021. It’s still well above pre-pandemic increases from 3.4 percent and 2.3 percent in 2018 and 2019 respectively.
Rents plunged during 2020, driven by an urban exodus from high-cost coastal metros like New York City, San Francisco, Los Angeles, and Seattle. Many of those same cities are where rents are growing the fastest—alongside many of the Sun Belt metros where people fled to during the pandemic.
That suggests at least a partial reset of migration patterns during the pandemic. People are returning to the city (although not necessarily to the office).
The upshot is that the country’s housing affordability struggles aren’t going anywhere. Some analysts warn that they’re likely to get worse.”
Rising rent prices are keeping inflation high
“Housing keeps getting more expensive — and even though new data shows that overall price increases are slowing down, surging rent prices underscore how difficult it could be to bring inflation under control.
Prices were 8.3 percent higher in August compared to a year before, according to the Consumer Price Index report released on Tuesday. That’s slower than it was the month before, when inflation climbed 8.5 percent, but it’s still uncomfortably high for consumers and policymakers. Prices picked up 0.1 percent from July to August.
One of the biggest drivers of inflation has been higher rent prices. According to data from Zillow, the typical US monthly rent was $2,090 in August, up 12.3 percent from a year before. That is much higher than it was before the pandemic — in February 2020, the nation’s average rent was $1,660.
According to the CPI report, shelter prices — which include rent, lodging away from home, and household insurance — rose 0.7 percent in August from the month before, the biggest monthly jump since 1991. The rent index by itself also increased 0.7 percent from July, and was up 6.7 percent from a year ago.”
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“Sarah House, a senior economist at Wells Fargo, said that rent prices could be decelerating as supply improves and landlords start to “get a little bit more realistic” about how much they can charge before they see more pushback from renters. But she said that rent prices in the CPI measure tend to move slowly, so it could take time for the government data to reflect the price deceleration that private-sector data may already be picking up.
That’s largely because the government data also takes into account existing rentals, while many private data sources only examine prices for new leases to capture current market conditions. Since rents typically change when leases expire, which tends to happen annually, this can lead to a lag in government data.
“I think we’re close to beginning to see a slowdown in the monthly rate of the price gain,” House said. “But it’s still likely to remain pretty strong in a historical sense for some time.”
Omair Sharif, the founder and president of research firm Inflation Insights, also said rent price gains could slow in the coming months as the CPI measure eventually catches up to private-sector data.
“Around the end of this year into the first quarter of next year, we should probably start to see the CPI data start to mimic more closely what we’re seeing in terms of that deceleration,” Sharif said.
A deceleration in rental price growth could help bring down overall inflation closer to the Fed’s goal of 2 percent annual inflation. Although prices for rent, food, and medical care climbed in August, prices for gasoline, used cars, and airline fares dropped.
Still, mortgage rates have skyrocketed to their highest levels since 2008 and home prices remain much higher than they were before the pandemic. That has made it harder for people to afford monthly payments, leading to some potential homebuyers being priced out of the market. If people continue renting rather than buying, that could drive up demand for rentals and keep prices high.”
How state governments are reimagining American public housing
“Governments have successfully addressed past housing shortages through publicly developed housing in places like Vienna, Finland, and Singapore, but citing these examples often leads to glazed eyes and weary skepticism that such models could ever work in the US, with our more meager welfare systems and our strong cultural attitudes toward private homeownership. America’s 958,000 units of federal public housing have also long suffered from reputation problems both real and exaggerated, with many seen as ugly, dirty, or unsafe. Few understand that many of the woes of American-style public housing have had to do with rules Congress passed nearly 100 years ago that predictably crippled its success and popularity, rules like restricting the housing to only the very poor.”
How Demands for ‘Local Control’ Become an Excuse for NIMBYism
“These “get off my lawn” conservatives claim to be upholding the principle of local control by arguing that local government officials rather than bureaucrats in far-off Sacramento get to make development decisions. It sounds good in theory given the Jeffersonian concept that the government closest to the people governs best.
The better quotation (actually used by Henry David Thoreau but often misattributed to Thomas Jefferson) is “that government is best which governs the least.” The goal—for those of us who value freedom—isn’t to allow the right government functionary to control us, but to have less government control overall.
Local officials are easier to kick out of office than officials in Sacramento or Washington, D.C., but the locals can be extremely abusive. They know where we live, after all. I’ve reported extensively on California’s defunct redevelopment agencies, and local tyrants would routinely abuse eminent domain under the guise of local control.
“Under S.B. 9, cities are required to approve these lot splits ‘ministerially,’ without any reviews, hearings, conditions, fees or environmental impact reports,” complains my Southern California News Group colleague, Susan Shelley.
Oh, please.
Conservatives have for decades complained about the subjective nature of bureaucratic and public reviews, the evils of the California Environmental Quality Act (CEQA), and excessive fees. Now there’s a law that fixes that, albeit in a limited manner, and they are grabbing their pitchforks.
S.B. 9 and S.B. 10 do not put Sacramento bureaucrats in charge of the locals. Instead, they deregulate certain development decisions, by requiring officials to approve a project “by right” provided it meets all the normal regulations. It eliminates subjectivity and defangs CEQA. Yet this greatly upsets them.”
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“If conservatives seriously believe local control is the trump card, then they should lobby for the repeal of Proposition 13, which is a state-imposed restriction on local governments’ authority to raise property taxes. I find Prop. 13 to be one of the best laws ever passed in this state. They should also oppose Republican efforts at the federal level to limit the ability of blue states to regulate the heck out of us.”
San Francisco Legalizes ‘Missing Middle’ Housing in the Worst Way Possible
“There’s a clear lesson emerging from the first cities that have legalized “missing middle” housing. The more rules you lift on the construction of these two-, three-, and four-unit homes, the more you’ll actually see built.
San Francisco politicians have absorbed this information and are now using it for evil. On Tuesday, the San Francisco Board of Supervisors passed an ordinance theoretically legalizing fourplexes in the city’s lowest density neighborhoods, but only under conditions that will ensure almost none of this housing actually gets built.”