We are in the umpteenth year of a housing shortage. So let’s ask: Why are so few housing units being built?
Seriously. Think about neighborhoods you know throughout the Valley area. Now think of where housing units are being built or were recently opened in those neighborhoods. Chances are, you’re still counting on one hand.
Let’s see. There’s some good homebuilding activity in Porter Ranch, and a half dozen mixed-use buildings are going up in Warner Center. Of course, there’s that massive community planned for Newhall Ranch up north close to Valencia, but I’m not sure that counts. It’s been delayed for more than 20 years, hasn’t been built at all and now faces fresh challenges. Beyond that, there are one-off projects here and there, such as a plan to build a couple dozen units in a mixed-use complex in Panorama City that was reported on last week.
The point: We should see housing units being constructed by the thousands, not dozens.
This is an aberration. Just ask anyone who showed up for the first day of class at Econ 101. When demand outstrips supply, the price goes up. When prices go up – as they certainly have here – producers trip over each other dashing to fill the unmet demand. At least, that’s the way it’s supposed to work, but builders hereabouts aren’t exactly rushing to fill demand, and haven’t for years.
So why not? Why does this aberration exist?
If you ask developers, they often say it’s just too difficult and costly to build here. For example, take the California Environmental Quality Act, commonly called CEQA. It calls on developers of larger complexes to create a lengthy report that examines potential environmental impacts on everything from air quality to traffic to aesthetics and more. After the report is prepared, it is circulated to the public for review and comment. Only after all that is satisfied is a final report written, at more cost, and that faces the approval process by whatever agency is overseeing the project. And even if the agency eventually approves the plan, it doesn’t stop there. Under CEQA, the public then can sue to stop it. Governments are very powerful here, but so are NIMBYs.
Although CEQA is typically weaponized to frustrate commercial projects, it can seriously stall sizable residential plans, too. (The aforementioned Newhall Ranch project was first proposed 24 years ago.) It’s one reason why big housing complexes are rarely proposed here.