Nearly everyone today recognizes that housing costs are too high in California. With a median home price over one million dollars in Orange County, even upper-middle-class families face the reality of their kids and grandkids moving on mass to states where housing costs don’t eclipse every other need. The past few years of price increases have put poorer residents in crisis.
However, this program is premised on an upside-down view of the problem, which is counterproductive. Homes cost too much in California not because buyers can’t afford them but because there is a profound lack of supply and that shortage is almost entirely a function of regulation. Environmental regulations, such as the Endangered Species Act , Clean Water Act , and California Environmental Quality Act , take vast amounts of land off the table for development. Even where the regulations allow permits, litigation in the name of the environment often makes development impossible without meaningful public health benefits. Exclusionary zoning policies at the local level outlaw building homes except on “large lots” that drive prices higher.
The program may give the buyers it aims to assist a step up but pulls the first rung of the property ladder up a little higher for tens of millions of Californians not granted the state’s help. The program’s biggest beneficiaries are likely to be existing homeowners who can now add state cash to the list of regulations that have artificially increased their home values for years.
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