Our proposal: Reform zoning regulations to allow for more mixed-use and multifamily housing developments.
Why: California is home to 12% of the U.S. population but only 10% of the U.S. housing stock, according to the U.S. Census. Though the disparity seems relatively small, it translates to hundreds of thousands of missing units needed to meet demand from homeowners and renters.
Strict zoning regulations that limit the amount and type of construction are a significant hindrance to resolving this housing shortage. In California, zoning restrictions result in:
- reduced construction, especially residential;
- failure to meet high demand for housing;
- inflated prices of new and resale homes;
- a diminished quality of life for households as a majority of their income is directed towards excessive housing costs;
- an unstable housing market as home prices rise and incomes are unable to support the housing needs of a growing population; and
- stunted homeownership and home sales.
California now has the second-highest home sale prices in the nation, exceeded only by the District of Columbia, according to Trulia. Further, California’s homeownership rate averaged a low 54.4% in 2017, well below the U.S. average homeownership rate of 64%.
Allowing for more residential construction will help meet excess demand and organically keep rents from escalating beyond the reach of long-term neighborhood residents. Additionally, more residents moving to the area is a boon to local businesses, local tax revenues and commercial startups.
The solution to the inventory shortage is progressive zoning reform to pave the way for increased construction. Zoning amendments need to include:
- higher density and height parameters to allow for larger multi-unit properties;
- more residential zones in urban areas; and
- expansion of mixed-use zoning to promote residential development in close proximity to commercial and retail properties.
Changing zoning ordinances to allow for the construction of high-rise residential properties in city centers will bring both rents and prices down. These changes will further facilitate economic growth as residents are able to live where they work, and gain access to a wide array of services and amenities.
What you can do: Though the solution requires a combined effort from builders and government, one significant factor is the support and opposition from community members. Local efforts to enact zoning changes are often met with vocal not-in-my-backyard (NIMBY) advocates who seek to preserve their neighborhood’s “character” by limiting density and building height.
NIMBYs tend to be the only ones who let their voices be heard by attending city council meetings and opposing proposed developments.
Yet, as a real estate professional, you also have a stake in zoning regulations and development in your local community. It is imperative to get involved in making sure NIMBYs are not the only ones heard by:
- attending council meetings;
- discussing the need for zoning changes with other professionals in the industry; and
- showing support for progressive zoning reform.
New housing development is needed to revive and sustain California’s housing market — and your success as a real estate licensee. Make sure it doesn’t get blocked by neighborhood residents who have not seen the full picture.