SJ homeless crisis inflamed by overregulated housing market

Between 2019 and 2022, SJ’s homelessness population grew by a startling 11%. Alongside that, the City’s homelessness expenditures continue rising, prompting calls for bureaucratic transparency. The Hoover Institution’s Lee Ohanian discusses why onerous regulations/permit fees have led to less housing supply and, thus, higher unhoused numbers.

California’s homeless population rose rapidly last year despite substantially higher government spending on the problem. There are roughly 60,000 homeless people in LA County, and homelessness has increased as much as 43 percent over the last year in parts of the San Francisco Bay Area….

There are two aspects to this issue. One is the supply of housing. Relatively little new construction is being built, particularly in the very popular coastal areas that include Los Angeles, the San Francisco Bay Area, and San Diego. The current level of residential building permits in California is as much as 70 percent lower than it was during California’s building heyday of the 1950s and 1960s. And what does get built is very expensive, far beyond the budgets of most California households. Construction costs in California are roughly five times as high as the national average. The average cost for building an “affordable” two-bedroom unit is $425,000.

Substantial regulatory burdens and permit costs are key reasons why building costs are so high in California. Environmental lawsuits can be a nearly endless stream and derail development for 25 years or more. Cash-strapped local governments frequently require enormous buy-ins before granting development permits. Recently, the city of San Jose tried to force a $50,000 payment on an apartment owner to provide maintenance for a park in return for granting a permit to convert his apartment’s recreation room into two small studio units.

This article originally appeared in the Hoover Institution. Read the whole thing here.

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