This is just stupid...
http://www.utsandiego.com/news/2014/...?#article-copy
Cities pour gas on affordability fire
By Dan McSwain5 P.M.JAN. 24, 2014
City officials launch a new wave of fees, worsening the housing affordability crisis that decades of government policies have created in San Diego County.
As the cost of housing rebounds, California’s affordability crisis is roaring back with a vengeance.
Middle-class families, tired of spending half their paychecks on housing, are fleeing the state faster than others arrive.
Employers have trouble finding skilled workers. Income inequality is worsening as the economy “hollows out” into enclaves of wealthy homeowners and renters who serve them.
A chronic housing shortage is the underlying cause. It’s been manufactured over decades by state and local government policies that restrict the supply of homes while boosting costs.
“The biggest economic problem California has is that housing is too expensive,” said Christopher Thornberg, founding partner at Beacon Economics in Los Angeles. “This is a state that desperately needs to increase its supply of housing relative to its population and population growth.”
Zoning restrictions, which mandate open space and reduce housing units in new developments, are the biggest factor driving up prices, according to a landmark 2003 study by economists Edward Glaeser of Harvard and Joseph Gyourko of Wharton.
There’s plenty of land in San Diego County, not to mention California. But politically popular anti-growth policies place most of it off-limits. Californians don’t want more neighbors, even if it means lower incomes for themselves and their children will live in Victorville or Las Vegas.
Yet costs play a role, too. And here public officials seem more interested in tossing gasoline onto the economic blaze than in building fire breaks.
On Jan. 9 Carlsbad’s housing commission voted 3-2 to charge apartment developers $20 per square foot as an “affordable housing impact fee.”
For perspective, this would add $16,000 to the already considerable cost of building an 800 square-foot apartment.
Supporters say it’s only a one-time cost that will be absorbed by developers. But business doesn’t work that way.
Higher “one-time” costs require more capital. An investor seeking a modest, 10 percent annual return would need an extra $133 a month in rent just to cover this proposed fee. If landlords aren’t sure they can charge the higher rent, this fee kills a project.
One caveat: I’ll be surprised if the Carlsbad City Council enacts the fee. Carlsbad is arguably the region’s best-run city. Its council members will figure out that this fee would attract lawsuits and bring apartment construction to a grinding halt, particularly if other cities followed Carlsbad’s example.
Still, the commission vote illustrates the economic illiteracy behind the state’s affordable housing mandates — that it doesn’t matter if policies make projects ever more expensive, because government can raise money for enough subsidized units to ease the resulting crisis.
Predictably, such policies have failed utterly.
In the last 32 years, the San Diego Housing Commission has helped build just 15,208 subsidized rental units. The waiting list is 45,000 people long.
But officials are undeterred. In November San Diego’s City Council voted to quintuple a “linkage fee” on commercial buildings. Next month the Council is scheduled to consider an 86 percent hike to a fee on downtown housing.
The trend is evident all over the state. In San Francisco, a subsidized project recently set its qualifying income cutoff at $140,000 a year for a family of four.
So California’s affordability crisis, which long ago spread from the poor into the middle class, is well into the six figures.
Consider two details: In 2013, more homes were built in Houston, which has no formal zoning rules, than in all of California, which has thousands of restrictions. As for costs, the existing residential permit fees in Carlsbad could pay the entire construction cost of a new house in San Antonio.
Those astonishing facts come from John Burns, a consultant based in Irvine who advises builders around the nation.
Burns made those comparisons at an October conference for investors to help explain why soaring prices are doing so little to spur construction.
I didn’t ask him, but I suspect Burns picked on Carlsbad because the city was for years an active market for builders.
Examples of higher costs abound in the county. Building permits average $59,000 for a typical new house in San Diego, but in the Torrey Highlands neighborhood the “public facility” portion of the fees cost nearly $129,000.
Meanwhile, the market shortage is rapidly becoming more acute.
San Diego County needs to build an average 20,000 new houses, condos or apartments every year to keep up with household formation, according to government estimates. Last year, builders pulled permits for a paltry 8,000 or so, despite a 38 percent jump in the median home price since January 2012.
As history’s biggest real estate bubble was forming, production peaked in 2003 at 18,314 — still far from keeping up.
California’s governments have created a true economic crisis in housing. And the latest wave of policies is making it worse.