The Multi-Headed Monster of Rising Housing Costs

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Ever wonder why the cost of housing is so high and what the Sacramento Region is doing about it? According to two housing developers—one market-rate and one non-profit—we simply aren’t building enough housing. From 2009-2014, California added 544,000 households, but only 467,000 housing units. Katherine Bardis of Bardis Homes and Doug Shoemaker of Mercy Housing California lead a healthy discussion on challenges to building housing at a recent SACOG Board of Directors meeting.

Both cited a variety of reasons why costs are so high and continue to rise. Development fees levied on new development to help pay for planning, infrastructure, and services were cited as a challenge to making new projects feasible. In addition, many of the region’s construction workers either left the Sacramento region during the Great Recession or left the profession altogether for other fields. The guest speakers also cited other challenges like lengthy and expensive approval processes, opposition from upset neighbors, and restrictive zoning, which often favors single family homes and does not allow developers to build more compact and affordable housing types.

And they’re not just talking about for-sale housing either. Demand for rentals is as high as ever and supply has not kept pace. Most of our existing housing is made up of single family homes built for families with children because that used to be the largest demographic when the housing was built. However, this vision of the American household is inaccurate and outdated. Now, almost half our households are either adults living alone or adults sharing with other adults. This mismatch between the diversity of our households and our actual housing has contributed to rapidly rising rental costs.

The housing crisis in California will not be solved overnight, but governments are taking steps to reign in high prices. New policies at the State and local level are helping to streamline approvals and cut fees. The California legislature passed a landmark housing package in 2017 and is currently debating some innovative legislation to help us build more housing for all income levels across the state. What has become clear is that we need to make drastic changes to the way we plan for and approve housing. Building more will not solve the housing crisis on its own, but there is no way to solve this problem without communities everywhere building a lot more housing.