Too much of a good thing? Not possible, when it comes to housing

Drive around any residential neighborhood in California and the housing shortage is palpable. Overcrowding and overpaying have diminished the quality of life for residents of all types — but the solution is clear to almost everyone.

Across the U.S., 82% of residents support allowing at least one other type of housing in their neighborhood, with renters more likely to support  additional housing options than homeowners, according to Zillow.

Residents tend to be most supportive of small changes to their neighborhoods’ housing stock, like allowing accessory dwelling units (ADUs), with support declining for larger multi-family buildings. However, support is still overwhelming to build all types of residential units, with support ranging from 85% for ADUs to 76% for multi-family buildings with 50+ units.

Here in California, where the ongoing housing shortage is a permanent fixture in everyday life, the share of residents who support allowing additional housing options in their neighborhood ranges from:

• in Los Angeles, 89% for ADUs to 83% for large multi-family buildings;
• in Riverside, 87% for ADUs to 80% for large multi-family buildings;
• in Sacramento, 80% for ADUs to 69% for large multi-family buildings;
• in San Diego, 84% for ADUs to 73% for large multi-family buildings;
• in San Francisco, 90% for ADUs to 83% for large multi-family buildings; and
• in San Jose, 91% for ADUs to 78% for large multi-family buildings.

The most support for additional housing options is found in California’s major coastal metros. Further, while support tapers in more suburban areas, the majority continue to recognize the need for more housing — and the means to that end is to loosen zoning controls, allowing builders to meet demand organically.

Related article:

New laws mitigate the stress of the ADU permit process

 

The supply-demand imbalance continues

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 might seem small, it translates to hundreds of thousands of missing units needed to meet demand from homeowners and renters.

The main reason comes down to overly strict zoning regulations that limit the amount and type of construction. These zoning restrictions result in:

• reduced residential construction;
• the failure to meet our state’s ever-growing demand for housing;
• inflated prices of new and resale homes;
• a diminished quality of life as a majority of household income is directed towards excessive housing costs;
• an unstable housing market created by the imbalance between home prices and incomes; and
• stunted homeownership and home sales volume.

Even in 2023, when homes sales volume and prices are in the midst of a recessionary decline, the supply of homes remains inadequate to meet demand from homeowners and renters.

For example, across California’s largest metros, the for-sale inventory is down 14% from a year earlier as of March 2023.

California is a total contrast to the rest of the nation — which has experienced a rise in inventory during 2022-2023 — with not-in-my-backyard advocates (NIMBYs) interfering with price adjustments by preventing new construction starts.  Here, residential construction has decreased alongside inventory over the past year, with multi-family construction down 5% in the first half of 2023 and SFR construction down a whopping 31%.

Related article:

California’s low housing inventory boosts homeowner support for ADUs

NIMBYs face opposition

California legislators recognize the major harm created by the state’s housing shortage, and are working towards solutions.

Some recent legislation which loosens zoning at the state level — thus preventing NIMBYs from involvement — include the recent passage of:

• AB 2221 and SB 897, which limits the powers of local agencies to deny a permit application for an ADU;
• SB 9, which enables any SFR owner to add an ADU to their property;
• AB 1584, which prohibits unreasonable restrictions on ADUs; and
• SB 10, which authorizes local governments to zone any parcel for up to 10 units of residential density when the parcel is located in a transit-rich area, a jobs-rich area or an urban infill site.

Zoning remains a contentious issue among homeowners — and even among real estate agents who make their living in the mist of housing market dynamics. Still, it must be said: a continuous supply of new housing is needed to maintain a healthy, growing real estate market. An agent’s income — or lack thereof — depends on it.

Related article:

Change the law: amend zoning laws to promote multi-family construction