California needs more housing — especially in the suburbs

By Nolan Gray

We know that California has a housing shortage. Back in 2017, a team of UCLA economists estimated that the state would need to build at least three million new homes to close the gap — a gap that has widened over the past half-decade. Notwithstanding Governor Gavin Newsom’s campaign promise to produce 3.5 million new homes by 2025, permitting data suggests that housing construction in the Golden State has flatlined.

We also know that not every part of California is underbuilding at the same rate. In a new report, “Housing Underproduction in California 2023,” California YIMBY teamed up with MapCraft Labs to understand what parts of California are building their fair share — and what parts of the state are blocking housing.

Imagine California didn’t have the current thicket of regulations blocking housing. Toss out arbitrary zoning restrictions and onerous environmental review mandates — where would we expect housing to be built, based on market indicators? To put it another way, how much housing would we expect developers to build in any given city and county if we got the regulations driving the shortage out of the way?

After calculating market-feasible housing capacity for every city and county in the state, we compared it to permitting rates over the past five years to calculate a “conversion rate.” A high conversion rate means that a jurisdiction is letting the market work, while low conversion rate suggests that the jurisdiction is throwing up artificial barriers to new housing construction — potentially through restrictive land-use rules, high impact fees, or unreliable permitting.

What did we find? The data suggests that suburbs across Southern California and the Bay Area — especially in affluent coastal areas — are vastly underbuilding. For all the focus on high profile housing fights in cities like Los Angeles and San Francisco, suburbs across California deserve more of the blame for the state’s housing shortage.

Up in the Bay Area, it’s the usual suspects: as you might expect, places like Napa County and Marin County build little housing, despite explosive demand. Pricey suburbs like Larkspur, Hillsborough, and Orinda likewise rank among the worst offenders, in terms of not allowing housing that might otherwise have been built.

Here in metropolitan Los Angeles, it isn’t so much the counties that are driving the shortage, but the suburbs.

This is especially true of cities along the Los Angeles County-Orange County border, including Cerritos, Hawaiian Gardens, and La Palma. While they rarely make national headlines, these cities combine high demand for housing with large residential lots and underbuilt commercial corridors well-suited to infill redevelopment — and yet, these communities, like so many other California suburbs, build virtually no new housing.

Further down the coast, newer suburbs like Laguna Hills, Mission Viejo, and Rancho Santa Margarita likewise had some of the worst conversion rates in the state. It isn’t hard to see why: Rancho Santa Margarita, for example, hasn’t permitted a single apartment to be built in over a decade. Many of these jurisdictions also permit few accessory dwelling units (ADUs) relative to peers across the region.

This coastal housing crunch has forced hundreds of thousands of California families to move in search of affordable housing — if not out of the state altogether, at least to places like the Central Valley. If there’s a silver lining to our findings, it’s that these receiving jurisdictions are rising to the occasion: Bakersfield, Modesto, and Stockton are building housing at over 100 times the statewide rate, picking up the slack where coastal cities have failed.

But they can’t do it alone. There is simply no way California is going to create the next generation of homeowners or roll back our mounting homelessness crisis unless every part of the state builds its fair share — especially our high-cost coastal areas. As our research shows, developers are ready and willing to build housing, if only the government would let them.

This isn’t just research for the sake of research: At the local level, elected officials and regulators in cities with the largest housing gaps must make a serious effort to clear barriers to new construction. And at state level, decisions about which cities to designate as “prohousing” jurisdictions, or which cities to subject to stricter scrutiny, should be driven by data, rather than political factors.

Click here to read the full article in the Press Enterprise