Home prices in Southern California have been on the rise for decades because of meddling local governments.
Steven Greenhut writes:
We all know how supply and demand works. But Southern California governments have made it costly and cumbersome to build new homes, which should be obvious to the many people who remain perplexed as to why there’s an affordability crisis.
The Southern California Association of Governments, the planning agency for most of the Southland, just released a new report (and hosted a summit) addressing this “challenge.” SCAG does a fabulous job identifying the core issues, even though some of its policy prescriptions would make things worse.
“The SCAG region median home price is $507,886, an increase of over 58 percent over the past 20 years,” according to the executive summary. “The median rental price in the SCAG region is $1,321, an increase of over 20 percent over the past 20 years.” Over the same period, the report explains, “the median household income has actually decreased over 5 percent.”
“In comparison to the last few decades, housing building has significantly decreased,” the report added. “There are several factors contributing to the high cost of housing. The costs from the entitlement and permit approval process can represent up to 19 percent and government regulatory costs can add up to 7 percent.” The report calls on local officials to say “yes” to housing. That’s exactly right.