Fred Schnaubelt

Housing's Malign Neglect                        San Diego's Affordable Housing Policy                                                        November 12, 2002   Published in the San Diego Daily Transcript 11/15/02

"Barriers to entry" in San Diego's housing market are good for investors, according to a consensus of speakers at a recent real estate conference. The speakers represented several Real Estate Investment Trusts controlling hundreds of millions of dollars in real estate. A barrier to entry is an economic term meaning lack of competition due to government imposed regulations and restrictions.  The result of these restrictions in San Diego has been above average returns to investors in luxury apartments.

If San Diego's new homes were oil, local politicians could be accused of conspiring with suppliers to raise prices or of being bribed.

The housing policies of the San Diego City Council and County Board of Supervisors and most of the other cities within the county can be summed up as one of "malign neglect."  Malign Neglect begets barriers to entry, which begets reduced competition, which begets less affordability and concommitantly, higher apartment rents than otherwise could be obtained in competitive markets.

Just the fact that Carolyn Chase, David Kreitzer and Michael Beck sit on the city or county planning commissions, each of whom built their reputations on stopping growth - stopping homes and apartments from being built, tells you how politicians truly feel about affordable housing. To paraphrase Clark Gable, "Frankly dear, we don't give a damn!" Our elected officials give lip service to affordable housing and even throw out some crumbs in the name of public housing as a subterfuge to mask their malign neglect.  In reality however, it's our politicians who alone are responsible for median home prices in San Diego being more than double those across the rest of the country.

There is no physical shortage of land, labor, or capital.  San Diego is one of the 11 largest cities in the U.S. in square miles, labor is plentiful, and interest rates across the nation are pretty much the same.  Hard to believe, but in 1972 the median priced home in San Diego was actually less than the median nationally.

Professor Bernard Frieden's The Environmental Protection Hustle (1979) documented how new regulations and controls adopted in California since 1972 have directly led to skyrocketing prices. Professor William Fischel's Regulatory Takings (1995) written sixteen years later confirmed Frieden and documented additional reasons for the extraordinary high cost of housing and rents in 5 California cities including San Diego.  And no, it's not that we're running out of land or due to out of control population growth.

This is not to say regulations and restrictions cannot have merit.  In the list below the added cost to a new home can range from only $15.00 for a smoke detector to tens of thousands of dollars for any one of several land use regulations. Individually some may not even be noticed but when added together, the cost is astronomical.

It is indefensible that the median price home in San Diego (September) is $339,000, when nationally it's only $157,700. The $181,300 difference can be explained by the following:


Barriers to Affordable Housing - The Chain of Exclusions:
             (Perhaps all "good things," if only they were free)

(Collectively these regs add an estimated $181,300 to the cost of new homes)

Proposed Inclusionary zoning (discourages investors)
Inclusionary zoning in-lieu fees
Inclusionary zoning in jurisdictions where already adopted
Zoning regulations
Down zonings by previous city councils in N.P., ESD, P.B.
Limits on number of units per acre
Excessive earthquake standards
Environmental Impact Statements
New UV window glass requirements
New Storm Water runoff requirements
Housing Trust Fund contributions
Condo Conversion restrictions
Excessive off street parking requirements
Elimination of tandem parking
Elimination of flop houses in redevelopment areas
Horse trails
Bicycle paths
Walking paths
Managed, Controlled, Planned Growth Policies
Smart Growth
EPA
California Environmental Quality Act (CEQA)
National Environmental Protection Act (NEPA)
California Natural Communities Conservation Plan (CNCCP)
California Coastal Act
California Coastal Commission
Community Planning Groups
City Planning Commission
County Planning Commission
Community Height Limitations
Large lot zoning (Black Mountain Ranch)
Interim Development Ordinance (IDO)
Proposition S City of Escondido
Smoke Detectors
Low-flow Toilet retrofits
RESPA
Hillside Review Ordinance
California Gnatcatcher Mitigation
Vernal Pool protection
Open space requirements
MSCP (172,000 acres off-limits)
MHCP
Resource Protection Ordinance
Habitat Mitigation Fees
Absurd time frames to process subdivision maps and issue building permits
ADA - American Disabilities Act requirements (ramps, hardware, rails)
Title 24 - Energy efficiency (mechanical systems, lighting, insulation)
School fees
Park Fees
Library fees
Rental Unit Tax
Letters of School Availability

Interestingly, the median priced home in Houston,
Texas, a city larger than San Diego with few land
use restrictions and no zoning, is only $135,000.

Permission granted to forward to others and quote with or without credit
Fred Schnaubelt

 

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