Government Regulations Boost Housing Costs And Poverty

 The rent is too damn high ,” but, not to worry, your government is on the case, seeking to remedy problems largely of its own making with more market distorting rules that will drive housing costs even higher.

But expecting government to make housing affordable is akin to expecting government to make college affordable—how’d that turn out?

A pending U.S. Supreme Court decision on the federal Fair Housing Act of 1968 (Texas Dept. of Housing and Community Affairs v. The Inclusive Communities Project) may collide with a vigorous new push from Pres. Obama’s Department of Housing and Urban Development (HUD) to increase its central planning powers over America’s housing market. Specifically, HUD is compelling wealthy neighborhoods to build subsidized housing for poor minorities and then ensure the poor move in, whether they want to or not.

Marin County, California is of the communities targeted by HUD for its lack of minority housing. Marin, a wealthy, largely liberal county just north and across the Golden Gate Bridge from San Francisco, is known for its rolling hills and green space. But, much of this green space exists because political power prevents property owners from developing their own land. This is textbook NIMBYism (Not In My Back Yard) where residents who already have their slice of heaven engage government power to infringe on the property rights of their neighbors who own land and would like to develop it.

HUD isn’t the only party clashing with Marin—Darth Vader’s father, George Lucas, is as well. In 1987, Lucas wanted to expand his studios adjacent to his Marin ranch (walking to work beats flying 400 miles down to Hollywood). But, for 25 years, Marin County elected officials blocked Lucas’ construction plans at the behest of outraged community activists who somehow thought that they had a right to tell Lucas what to do with his land. But Lucas wasn’t done. In 2012, he lined up a developer who wanted the land to build affordable housing. But, this project has stalled as well. Now Lucas has decided to finance the 224-unit affordable housing development himself, saying, “We’ve got enough millionaires here.” If Lucas wins the right to build on his land, the affordable housing could be in place by 2019, some 32 years after Lucas’ original development plans were launched.

California employs a wide arsenal to fight development: fees, taxes, environmental restrictions, water permits, restrictive zoning, carbon dioxide emission considerations, union pressure, and property owners who use political connections to restrict the supply of new product for the market so as to drive up the value of their own property.

Developers who do business in both states said that getting permission to build a strip mall in Texas takes about four to five months while permission to build a similarly-sized development in California takes four to five years.

This red tape comes at a cost: California’s housing market is inelastic, as developers can’t build supply as quickly nor as responsively to meet demand. This is reflected in the latest first quarter 2015 cost of living index from theCouncil for Community and Economic Research which shows California’s housing index at 203 percent of the national average, a big jump from 176 in 2014