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California Enacts New Measures To Handle Housing Shortage


The housing shortage in the U.S. is at a crisis point. We're talking about a deficit of 5.5 million homes. And when it comes to affordable housing for low-income renters, it's even worse. The country is short 6.8 million units, according to the National Low Income Housing Coalition. In California, state leadership hopes to address these issues with new housing laws signed by Governor Gavin Newsom this past week. Conor Dougherty is an economics reporter at The New York Times and the author of "Golden Gates: The Housing Crisis And A Reckoning For The American Dream." And he joins us now. Hello.

CONOR DOUGHERTY: Hello. Thank you for having me.

GARCIA-NAVARRO: I want to talk first about these new laws and what they do. There's one, SB 9, which would allow homeowners to convert single single-family homes into duplexes. And then there's SB 10, which would relax environmental rules on multifamily housing and make it easier for cities to build high-density homes, which is what a lot of advocates say is needed. How significant are these reforms?

DOUGHERTY: Well, first off, they're very significant just on their face. Report from the Terner Center estimates that this SB 9 would add about 700,000 new units. Now, that's not enough to solve the housing crisis, but it's about seven years' worth of housing. And I think when you add these laws to the dozens of other laws the California Legislature has passed over the past five years, we've seen probably the biggest shift in California housing policy, certainly at a statewide level, in, let's say, 50 years. And you are starting to see more construction. But that hasn't really played out yet. And so that will be the next question. Do we actually start to see this?

GARCIA-NAVARRO: That is the question that everyone is asking. But there has already been pushback to these measures. That's been one of the big problems to do with housing. There are a lot of different constituencies that maybe don't want to see housing constructed in certain areas. Do you think that they'll be challenged? Or are they already sort of, you know, on the books, and so therefore, it's full steam ahead?

DOUGHERTY: Well, they are already on the books. You know, it's almost like a sociological question. If you pass a bunch of laws that make it easier to build housing but people really, really don't want it, I think that there are enough ways to sort of stop them, that it will kind of become difficult no matter what the state does. That said, homeowners, which, you know, a majority in California people are, have a lot of new options. I think when people discover that all this equity they're sitting on, all this dirt that's so valuable that they can now monetize that either through building a rental unit or selling off some of the land or subdividing it for their child or solving a problem that they were paying for some other way. I think that as people start to adopt this, it will be a more profound shift than you might think.

GARCIA-NAVARRO: Let me ask you this, Conor, though. I mean, some argue that these changes will drive up prices because they would increase land value because, as you say, it's going to be monetizable, perhaps in a way that it wasn't before. Your thoughts on that?

DOUGHERTY: In certain instances, that will definitely happen. Right now home values are really inflated because we don't have enough of them. First off, California's median home price is in excess of $800,000, which is more than double the national median.


DOUGHERTY: There are zany stories about the home that sold for a million and a half over asking. So I suppose we have to ask the question, is the status quo even, like, remotely OK? And if so, where do we go? So this is the direction we're going. And it feels like it is a step towards helping to alleviate the shortage. It's not the only step. It's not maybe even the best step, but it's part of this kind of suite of things that have happened over the past few years - you know, more homeless funding, more affordable housing funding, bonus programs for developers who build below-market-rate units in their developments. I mean, there's all these different tools, and this is one of them.

GARCIA-NAVARRO: How long do you think, if these measures act as they're intended, we'll start to see sort of relief in the market?

DOUGHERTY: I think that's sort of hard to say, and it won't feel particularly satisfying because it's probably going to manifest in rental prices that go up slightly less fast. So I think it will definitely be on the order of years before you start to see a perceptible effect.

GARCIA-NAVARRO: That's New York Times economics reporter Conor Dougherty. Thank you so much.

DOUGHERTY: Thank you for having me. Transcript provided by NPR, Copyright NPR.