Affordable Housing Crisis Case Study

Over the past two decades, California has been experiencing a shortage of affordable housing due to population growth, strict city planning, and zoning regulations. These factors contributed to a low market supply of available housing that resulted in an increase of housing prices in the state's major coastal communities, which have high population density.1 On average, housing prices are 2.5 times the median income, which forces many low-income families to spend more than half of their income on housing costs in the least expensive areas in the state.2 Housing affordability is a significant public policy issue because as housing costs rise, people experience higher levels of financial burdens that result in long-term economic instability and socially inequitable outcomes. There are three feasible alternatives to address the issue:
• Reducing the costs of building and land acquisition
• Changing state-wide uniform zoning, land use, and exclusionary regulations
• Expanding existing California low-income housing tax credit programs

The Political Context of California’s Affordable Housing Crisis: Equity vs. Efficiency

The majority of currently implemented housing affordability programs tend to emphasize the equity criterion to address the market problem of the affordable housing shortage.

However, the evaluation of these programs illustrates that while they do help some renters, programs are inaccessible for the majority of low-income households’ due to limited funding and long waiting periods.3 As a result, the state needs to focus on promoting efficiency in the construction of affordable housing by reducing the cost of building, passing inclusionary zoning laws, and providing tax incentives for private investment. In 2017, Gov. Brown signed a series of bills

that:
• Make it easier for developers to build
• Incentivize developers to build and allocate more low-income housing units
• Push cities to plan for more affordable housing.

Political Movement: What are the Feasible Alternatives?
Advocates of affordable housing argue that the governor’s legislation does not go far enough to address the ongoing problem and does little to reduce bureaucratic procedures to promote construction efficiency. Affordable housing advocacy groups argue that the state must focus on:
• Lowering the cost of the building by removing some of the fees charged to developers by local authorities and school districts for housing-related infrastructure. Developers pass on the fees onto consumers with as much as 13 percent increase in the construction cost of a home.
• Changing statewide zoning and land use regulations to focus on expanding inclusionary local zoning ordinances and integrating very-low and low-income households with communities with high economic developments and high-quality education.
• Expanding existing California low-income housing tax credit programs from 9 percent to 12-15 percent to incentivize private investment in affordable housing, which will provide additional financial resources the state needs to mitigate the ongoing problem.4