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Does California Have The Political Will To Fix The Housing Crisis? Probably Not.

San Diego County will need 171,000 new residential units by 2029, or 17,000/year until then, to keep up with projected demand. Unless there is unexpected, radical change in the political and regulatory environment locally and at the state level, that isn't going to happen, Building Industry Association of San Diego County President and CEO Borre Winckel said.

Building Industry Association of San Diego President and CEO Borre Winckel

"It will take bold action by bold politicians to turn the ship around," Winckel said. "It has to come locally, because Sacramento cannot be expected to lead us out of this mess. So far, the best helpful action has been by the city of San Diego, but it's not nearly enough to make any difference."

Recently Bisnow asked Winckel, whose organization represents the interests of developers in San Diego County, about the local and statewide housing crisis. On the whole, he isn't optimistic.

Bisnow: In retrospect, has the California housing crisis been a long time in coming?

Winckel: It has, but if you'd asked me 15, even 10, years ago if I thought it could ever get so bad, I wouldn't have believed it. Circumstances have come together in the worst possible way in recent years to create the crisis we have now.

Bisnow: What's at the heart of the crisis?

Winckel: California has stopped producing residential properties for the middle-income market. In the current regulatory environment, there's no way to produce housing that the majority of the middle class can afford. For one thing, regulations add 40 cents to the dollar to new housing, maybe more. A "midlevel" house is now in the $300K to $700K range. That's insane. 

That goes for rental housing as well. It costs too much to produce Class-B apartments, so none are being developed. Rents for existing apartments are so much that many people in San Diego are spending, say, 40% of their income for rent, and they still need to have roommates.

Bisnow: There's no political will to increase the housing stock?

Winckel: Just two years ago, the state was all about amping up housing supply. It was widely agreed that that would bring overall housing costs down. The governor's By Right proposal traded entitlement certainty for TOD-zoned projects against a 20% setaside for affordable housing.

But the plan went nowhere. Too many Sacramento power brokers wanted to maintain their leverage over the housing approval process. 

No one has since succeeded in making housing production a high-priority public policy. Instead, most of the subsequent housing talk takes us backwards. The current focus is on preserving old housing stock, rent control, more affordable housing subsidies, local hire and skills requirements, wage mandates, climate change — and lots of slow-growth ballot measures. 

San Diego-Tijuana from space

Bisnow: What are some of the obstacles to changing this situation?

Winckel: First, no political appetite exists to tackle the California Environmental Quality Act. Abuse of CEQA is a key reason why projects are massively delayed, get litigated — often anonymously — and either blocked or made so expensive that housing affordability is the first casualty. Also, the unionized building trades are gearing up to demand higher mandated construction wages and local hire and skills requirements.

Bisnow: What about local affordable housing initiatives?

Winckel: Many cities, including San Diego, are planning to substantially increase affordable housing production by carving out 15-20% of market-rate units for subsidized units. So the market-rate buyer or renter will pick up the tab if the project still pencils out. 

Overall, the net benefit of such policies never comes about, as it keeps adding new higher-costing regulations and builder fees. No San Diego region city or county has ever committed to achieving any housing goal and to an accountability process if it failed to achieve the goal.

Bisnow: Have anti-growth initiatives also gained traction in recent years?

Winckel: Yes. A rash of slow-growth initiatives are circulating for signatures, most notably the “Safeguard our San Diego Countryside” proposal. That's a strange name, because 95% of the county is already off limits to any development. If it qualifies, it will require a countywide vote on the housing densification of any project in the unincorporated area.  

Oceanside, San Marcos, Poway and Santee are all poised to do the same. The result is that unmet housing demand will be pushed into Riverside County. 

The initiatives are symptomatic of larger NIMBYism, and division into the housing haves and have-nots. People who own houses often come out strongly against more development, in alignment, oddly enough, with environmentalists who want development to stop, except maybe for transit-oriented infill.

The media covers our homelessness crisis and the burgeoning net outmigration of citizens fed up with not being able to affordable to live here. Yet far too many housing haves are perfectly happy to shut new housing down through the ballot box.

Ultimately, that isn't in the homeowners' interest. They find that out when they retire or otherwise want to trade down. There's no housing ladder in California any more, and so they find it hard to sell their existing home, and hard to find another property.

Bisnow: Do you hold out any hope for improvement?

Winckel: What I see happening is the volume of construction dwindling down over time, as fewer people can afford developments at the upper end. People who can leave the state will leave. This is the world we live in. I don't see anything coming down the path to give us relief.