Another California Housing Quandary: the Coast, is it Safe to Build or Not?

A potential new housing law authored by the Chair of the Senate Housing Committee, Senator Weiner, is making its way through the halls in Sacramento. The bill at play is SB 423 Land use: streamlined housing approval: multifamily housing developments and it aims to make it easier (and cheaper) to build housing in California by simplifying and accelerating housing permits in areas that are underperforming in their state housing targets.

San Clemente, CA

SB 423 is leaving no stone unturned to help tackle California's housing affordability issues. It even includes development timesaving efforts to bypass approval from the Coastal Commission for future multifamily projects like condominiums and apartments in beach communities. Adding an interesting angle to the housing solutions discourse.

It all sounds fine and dandy until we consider the viability and safety concerns of building along some coastal areas, or how this law will dilute coastal environmental protections and set a precedent to weaken the Coastal Commission's ability to protect and enhance California's coast and ocean for future generations. For years, rising sea levels have been a hot topic and so has the structural integrity of many coastal bluffs. Recently there have been several issues with bluffs near the Amtrak train tracks in Del Mar and San Clemente causing train service to pause that should not be ignored even with the urgency to build more housing equity across the state.

A recent CalMatters article: My house or my beach? How California’s housing crisis could weaken its coastal protections, does a good job of summarizing key concerns from all sides: housing advocates, environmental activists, coastal advocates, pro-housing legislators and the Coastal Commission. I see all points of view, and it's quite a quandary.

In my opinion part of the solution needs to provide more transparency and certainty for cities, developers and residents alike by giving California cities a deadline (in the near future) to complete a Local Coastal Plan (LCP) that includes a housing feasibility analysis. There are 126 coastal area segments and only 73% have an LCP on file with the Coastal Commission. The incentive for cities and counties to do an LCP is a good one. Once they have an LCP, the Coastal Commission's permitting authority over most new development is transferred back to that city or county and will shorten project review times.

Across California various factors have contributed to high housing prices, it's not simply a supply issue. For instance, home prices in San Diego County have skyrocketed not just because of lack of homes for sale, but also because of increased competition and speculation. Often many San Diegan's are competing with very wealthy foreigners, private investment companies or flippers looking to make profit. Also, during the pandemic many tech companies in Silicon Valley started to let employees live anywhere in California and many of them chose to leave their once sought-after homes in San Francisco for San Diego because they were fed up with paying high prices for small spaces in neighborhoods that had started to lose their sparkle. These Silicon Valley tech workers moved to San Diego and drove housing costs even higher than pre-covid prices. In fact, San Diego now tops San Francisco as the most expensive city to live in the country, and before the pandemic rents in San Diego were 28% lower than in San Francisco.

Even while prices are beginning to level out, first-time home buyers throughout California are still struggling to buy their first home. It's a mystery how average people in California can buy a house. If you’re wondering “how do I know if I can afford a median priced house in California” you’re not alone, I’m curious as well. After a quick problem solving introspection, I decided to follow the general rule of thumb that says housing costs should stay below 30% of your income after putting 20% down, along with the median California home sale price this May of $836,110. I plugged the numbers into the calculator, and it turns out you need to make around $215,650 per year to buy a house in California. That’s a hard pill to swallow, $215,650 is 2.5 times higher than the $84,097 median household income.

Without a doubt, California cities on the coast and inland areas need to think creatively to build more housing for current residents at various price points. We also need to think about more than just building more homes to solve the housing affordability crisis in the Golden State. We need more creative buying or renting incentives as well, if not more people will get priced out by others willing and able to push prices up even higher. Until it gets easier, cheaper, and faster to build more homes in California here are two other ideas to consider:

1. During the pandemic employee retention bonuses became a thing for essential workers and many loyal workers around the globe that didn't jump ship to another job paying more, and maybe California needs to consider homebuying incentives for middle and low income first-time home buyers that have lived in the same county for X amount of years. This bonus can be a flat number or a sliding scale number that rewards the longer someone has lived in a local area with a higher incentive.

2. Currently a combination of 10 states and cities in Alaska, Vermont, West Virginia, Arkansas, Oklahoma, Kansas, Iowa, Alabama, and Ohio are also paying people to move to their states. Many of these state resident attraction incentive campaigns are targeting Californians to move to their states or cities, and perhaps California should double-down with resident retention incentives as well. These retention incentives can consider various factors like income, occupation, industry, etc.
   

To save the California Dream and ensure it stays alive and kickin’ for generations to come we need to continue to think outside the box to increase housing affordability for more Californians.