
One reason for the high cost of housing in California is overregulation - jseliger
https://www.latimes.com/opinion/op-ed/la-oe-broughel-hamilton-overregulation-housing-california-20190703-story.html
======
wahern
Using this database of regulation metadata,

[https://quantgov.org/state-regdata/](https://quantgov.org/state-regdata/)

the articles starts out saying that the California Code of Regulations
"contains more than 21 million words". Which made me curious: how many words
for Texas' code? Answer: 15 million.

    
    
      $ grep '^[[:digit:]]' admincode_california_metadata.csv | cut -d, -f5 | tr '\n' '+' | (cat; printf "0\n") | bc
      21172868
    
      $ grep '^[[:digit:]]' admincode_texas.csv | cut -d, -f7 | tr '\n' '+' | (cat; printf "0\n") | bc
      14929400
    

I'm not trying to make a political point, was just genuinely curious.

~~~
voldacar
I think the most important issue in modern governance that nobody ever talks
about is the tendency for the number of laws and the size of the legal code to
monotonically grow towards infinity

~~~
true_tuna
I’ve heard of the idea of baking expiation into any given law. Useful laws get
renewed, useless ones get expunged.

~~~
wahern
The article mentions that Rhode Island did that wholesale: "The Democratic-
dominated Rhode Island government recently eliminated more than 30% of its
rule volume by setting an expiration date for its entire regulatory code,
forcing state agencies to start fresh."

~~~
gumby
I just learned that they did that to their state constitution as well a few
years ago!

~~~
Fjolsvith
That's handy for frequent regime change!

~~~
wahern
Ah, good point. If you believe a particular regulation is useful and necessary
now, why wouldn't you also believe it would be so in the future? You may not
be in power to conditionally renew it. And from a pragmatic political
perspective, sunsetting smells like compromise; the political base and
interest groups generally frown on compromise. All of which may explain why
sunsetting isn't as common as one would think, even _if_ most legislators
share the sentiments expressed in this thread (and I would presume that they
do).

------
gumby
It's interesting that they zoom in on the energy requirements as driving the
$400K housing costs in LA. In the Central Valley developers put up completely
code compliant houses for about $150/f2 -- about $250K-$300K. $150/f2 is
really quite cheap by US standards. If the price in LA is more (which is
understandable) this one factor can hardly be it.

Other factors they mention (single family requirements, lot size, density)
have a lot more to do with it.

------
leguminous
The article references energy efficiency regulations specifically. Is the
energy code in California significantly stricter than the IECC?

There are nice aspects of energy codes. For one thing, potential renters and
buyers have little insight into how efficient a house or apartment really is.
Since landlords and builders aren't paying the utility bills they are
incentivized to reduce upfront construction costs at the cost of higher
utility bills (and environmental damage) going forward.

If these codes are effective then they might be worth the increased
construction costs. I'm not necessarily saying that they are (I don't know,
maybe California's code is filled with frivolous, ineffective details; the
article doesn't really give any examples) but I think just the fact that they
increase upfront costs doesn't actually mean they aren't a good idea.

~~~
realityman
California requires solar power on every new house. It's a huge cost. Most
local governments also require off-street parking, which is a huge cost. The
regulatory burden isn't just in planning and permitting.

~~~
dragonwriter
> California requires solar power on every new house.

No, it doesn't, though it will soon.

> It's a huge cost.

The estimates of $10-30k are under (to far under) 5% of the median home price
(for all sales, not just new homes, which would drive the median much higher).
It's obviously not a significant current cost driver, and it also won't be a
big cost driver when the mandate actually applies next year.

~~~
hackeraccount
They're going to _require_ solar power on all new houses? That's insane.

~~~
dragonwriter
> They're going to require solar power on all new houses?

Yes, as of Jan 1, 2020.

> That's insane.

It's $10-30k of upfront cost for $19-$60k of 30 years savings (and the same
sources estimating the higher cost figure estimate the higher savings figure),
and it greatly advances California's renewable share of generation, and solar
output peaks correlate well with aggregate demand peaks in CA.

As public policy solutions go, it is eminently sensible.

------
kevingadd
Regulations in California are generally tiresome but it's ridiculous to claim
that regulation could be responsible for things like startup stock offerings
making local rents double over the course of a few years. Those buildings are
already constructed and if you live in them you can observe that no major
remodelings or other updates happen during the time period where rents are
skyrocketing. The rent boosts when startups and startup employees come to a
new neighborhood are a consistent pattern and it kicks out local residents as
landlords find ways to evict them to raise prices.

Meanwhile new construction is way more expensive than the existing boosted
rent. You can claim regulation is responsible for part of that, but why
wouldn't the vendor charge less than the nearby boosted rents to compete? Did
regulations somehow literally eat $1500/mo worth of margin? It defies
plausibility.

When I moved to the SF south bay area about 10 years ago, my rent was $700/mo.
The equivalent is now upwards of $2000. It's hard to imagine policies that
could possibly make it go up that high. Imagine if we had rent control...

~~~
hackeraccount
Wait. Doesn't San Francisco _have_ rent control?

~~~
jcl
Yes, San Francisco has rent control. However, the _SF South Bay Area_ does not
contain SF. It is usually considered to contain around twenty cities and
towns, only four of which currently have rent control: East Palo Alto, Los
Gatos, Mountain View, and San Jose.

[https://en.wikipedia.org/wiki/Santa_Clara_Valley#Cities_and_...](https://en.wikipedia.org/wiki/Santa_Clara_Valley#Cities_and_towns)

[https://www.tenantlawgroupsf.com/blog/2018/november/which-
ci...](https://www.tenantlawgroupsf.com/blog/2018/november/which-cities-in-
the-bay-area-have-rent-control-a/)

------
joelhoffman
Counting words and claiming there are too many isn't very convincing,
especially since they admit that "some" of the regulations make sense. Could
they maybe identify one regulation that imposes a significant cost burden but
doesn't have a clear benefit?

~~~
adamredwoods
It does seem like a thin op-ed piece for economists from Mercatus Center at
GMU.

------
adamredwoods
I personally feel regulation slows down new construction, but doesn't
necessarily increase costs. Dilapidated houses still go for large sums, so I
suspect land costs to be a major reason as well. Additionally, lack of
contractors is becoming an issue(demand increases, costs increases) with many
of them working indefinitely over in fire-ravaged areas like Paradise or Santa
Rosa.

~~~
liber8
If construction takes longer, costs increase. This is indisputable.

Imagine you buy a piece of land for $100,000 with the intention of developing
it. Until the property is developed and sold, you have numerous carrying costs
(taxes, insurance, debt payments, etc.). In California, your annual carrying
costs may easily be $8,000-$10,000 per $100,000.

If it takes you one year to develop the property, you need to sell the
property for $108,000 just to cover the carrying costs (i.e. this doesn't
account for the actual construction costs or selling costs). If it takes you
two years to develop the property, you need to sell the property for $116,000
just to cover the carrying costs.

Keep in mind, the _time_ to develop isn't idle time where the developer incurs
only carrying costs. It's endless drafts, consultations, and meetings. It
requires actual money to be paid not only to the city, county, and state, but
to architects and planners and contractors to comply with increasingly
byzantine and mercurial requirements. The longer this goes on, the more money
a developer has to spend.

The longer a developer is forced to carry the property, the more they need to
charge to recoup their investment. Since no one is going to develop property
without anticipated profit, this means prices necessarily rise.

~~~
adamredwoods
Regulations are known upfront. Good contractors and architects know each
city's processes and how to navigate through them.

~~~
analog31
That's probably true, but it also limits the number of available contractors
to the ones who know a particular city's processes. It would be harder for a
smaller contractor to operate across multiple jurisdictions. So it limits
competition, which drives up prices.

------
adamredwoods
Here is one of the authors having a go at Washington State, although here in
Seattle, we seemingly have a healthy construction market(footnote 1).

[https://www.mercatus.org/publications/regulation/snapshot-
wa...](https://www.mercatus.org/publications/regulation/snapshot-washington-
state-regulation-2019)

My key take-away from these authors is this tidbit:

> Researchers at the Mercatus Center at George Mason University developed
> State RegData, a platform for analyzing and quantifying state regulatory
> text.

(1) More data:

Building permits by state, April 2019:
[https://www.nahb.org/en/research/housing-
economics/construct...](https://www.nahb.org/en/research/housing-
economics/construction-statistics/state-and-local/building-permits-states-and-
msas)

------
jayd16
This might bite a little harder if you could look in any direction in Los
Angeles and not see new construction. The current amount of space occupied by
low density housing is something we could improve on but its just that.
Occupied!

Hopefully all this commercial space rezoned for multi-purpose use (shops on
the ground floor, apartments or offices above) will free up some of the low
density real-estate but its not over-regulation keeping those houses high
priced and full.

~~~
realityman
The number of housing starts in Los Angeles right now is basically zero[1]. 30
years ago the pace of home building in LA was three times higher with a
population 20% smaller.

1:
[https://fred.stlouisfed.org/series/LOSA106BPPRIVSA](https://fred.stlouisfed.org/series/LOSA106BPPRIVSA)

~~~
jseliger
LA also has some peculiar problems around parking:
[http://seliger.com/2017/08/30/l-digs-hole-slowly-
economics-f...](http://seliger.com/2017/08/30/l-digs-hole-slowly-economics-
fills-back-proposition-hhh-facilities-program).

LA is basically doing everything it can to NOT build housing, of almost any
kind, anywhere. And that's reflected in prices.

------
bwb
I am curious, would you be supportive of a federal law that takes over zoning
if housing prices are more than x above the median income in that area?

IE, take control away from NIMBAs?

~~~
scarface74
Of course not. Why shouldn’t the people who live there be able to decide the
character of their city? If the cost of living gets too high either people
will move to lower cost of living and companies will follow or the opposite
will happen. The United States is a big country with lots of land.

Besides, the federal government is the least representative of people in
larger cities. Your vote counts s lot more in rural America and in smaller
states partially because of the electoral college and partially because Rhode
Island has the same number of Senators as California.

~~~
closeparen
For deep and persistent reasons, a society’s highest-value economic activity
and growth will tend to be in cities. The stakes are much higher than
architectural taste, and decisions about access to those economies affect
everyone. People getting locked out of an economy have a stronger claim to a
seat at the table than people worried about shadows.

An abundance of land suited to agriculture or resource extraction is
irrelevant in a dispute about access to the 21st century economy, which is
essentially urban.

~~~
scarface74
Even if that’s the case, those cities don’t all have to be on the west coast.
You could have more smaller “big cities”.

But with the imbalance of power where rural America’s vote is worth more per
capita than big cities/big states, do you really want to give that power to
the federal government?

There is nothing stopping tech companies from “rural sourcing” - opening
smaller satellite offices in less populous areas. A benefit of that would be
that the tech industry wouldn’t be so myopic.

Do you know how often people on HN wonder how could any software developer
live off of _only_ $120K-$150K?

~~~
dragonwriter
> Even if that’s the case, those cities don’t all have to be on the west
> coast.

And they aren't.

I mean, New York City exists, for instance.

~~~
scarface74
Okay one city.

I live in Metro Atlanta, we are still building and growing like crazy, and
there is no shortage of tech jobs that pay well considering the cost of
living. There are plenty of other relatively affordable cities. If LA doesn’t
want to grow. So be it.

~~~
dragonwriter
> Okay one city.

That was a for instance. There are a number of other large and economically
significant cities in the US that aren't on the West Coast, many of which also
have relatively high existing (absolute, not just relative to local CoL) tech
salaries. Washington, D.C., metro is just behind New York, for another
example, but the list is long.

------
tomohawk
"If it moves, tax it. If it keeps on moving, regulate it. If it stops moving,
subsidize it." \- Ronald Reagan

Looks like we're well along that curve for housing in CA.

~~~
onlyrealcuzzo
California's property tax is less than half of that of Texas, New York,
Illinois, New Jersey, Pennsylvania, and Ohio. Combine that with the fact that
CA has prop 13, and one of the highest GDP per capita, and... Does anyone
really think it's the regulation that's making prices high??

Sure, they're not helping. But high incomes and low taxes are a recipe for
high prices. The only other state with high incomes and this low of property
tax is D.C.

And D.C. and California both have average home prices roughly double
everywhere else in the country. I wonder why. Maybe because incomes are 33%
higher and taxes are 50% lower.

~~~
tomohawk
I'm glad that you agree that CA taxes and regulates real estate. The consensus
is pretty much its the regulation that's doing it. Given the regulatory
environment in CA, I would certainly never attempt to build a house there. I
personally know people that have and the regulatory costs and delays are just
ridiculous.

The next step is obvious. The government must come to the rescue and subsidize
housing.

~~~
AnimalMuppet
> I'm glad that you agree that CA taxes and regulates real estate.

What kind of manipulative garbage is this? onlyrealcuzzo isn't agreeing with
the point you made; you aren't agreeing with the point onlyrealcuzzo made; and
the point that you're making is only very slightly and tangentially supported
by the thing that you're pointing out that onlyrealcuzzo tangentially said.
This looks much more like you're trying to play gotcha games with
onlyrealcuzzo's post, rather than dealing with it in good faith.

Edited to fix the user name.

------
robomartin
I have always wanted to design and build my own house from scratch. Now I know
there is no way I would ever consider doing this in CA.

Why?

When we decided to go solar we opted to build a 13 kW array mounted on a
custom designed pergola built in the backyard. We didn’t want it on the roof
and we needed more shade.

The project was going to cost in the range of $50K to $75K. I did all the
engineering and construction. By the time we were done the project cost us
$125K.

I’ll spare you the details on the six months of agony the regulators put us
through. They turned a super simple project into the worst nightmare I have
ever experienced.

They have all the power. There is nothing —zero— you can do about it. And you
better hold a smile any time you deal with them or they will deliver
vindictive rulings from which you might never escape. CA needs a reset button.
This is a mess. And it will get worse before it gets better.

------
m0llusk
Most of the analysis of regulation in both the article and this discussion
thread focuses on what is controlled and where the lines are drawn, but this
is actually a small part of the experience of regulation. Because of the
structure of environmental impact reports and reviews proposals for
development are open ended with all manner of input being considered for a
period of time that is difficult to even estimate. Changing the process to be
more reasonable and have expected time frames for resolution of conflicts one
way or the other would greatly improve the experience of development. As it is
estimating the time, cost, and risk of failure for development projects is
nearly impossible. This unbounded process is a huge barrier no matter what
lines get drawn along the way.

------
cardiffspaceman
Within my neighborhood in California, there has been a steady pace of remodels
which go through a vacant lot phase, rather than just adding on and
renovating. How are such projects economic if regulations are having costly
effects? I had to remove and replace a wall and also restucco the remaining
walls. With the restuccoing, it was opportune to replace the windows. All this
stuff had to comply with the latest codes rather than the code from the time
the house was originally built. So it seems to me that the tear-downs have to
comply with even more regulations so they would cost the same as any green-
field house construction, without the benefits of scale.

~~~
ac29
The vacant lot stage, I assume, is due to the lengthy process of permitting.
If you're referring to the same sort of "vacant lot" as I am, there is often a
foundation and a single wall or so left so that it qualifies as a remodel as
opposed to new construction (though in reality is effectively new
construction). Presumably there is some regulatory and/or tax advantage to
doing this.

In a lot of places in California, "how are such projects economic" goes beyond
regulatory delays and their associated financial impacts. When you are
spending $1M on a 1/4 acre property that you tear down and spend an additional
$400k redeveloping, its certainly more than just regulatory costs making that
so much more expensive than the vast majority of the US and the world.

------
henvic
In the article it says that one reason may surprise. Come on, really? It
doesn't surprise no one but people who think the almight state should be
everywhere and is the answer to everything.

If you search on-line you may find both opinions for and against housing
regulation. I am totally against regulation but reading that the topic is a
surprise is either a blant lie or the opinion of someone who doesn't live in
this world and age.

[https://reason.com/video/san-francisco-mission-housing-
crisi...](https://reason.com/video/san-francisco-mission-housing-crisis/)

------
spermboy
The ceo of Zillow did an interview with npr and he said the reason prices are
high is because the recession caused new construction to stop for a while
which resulted in a shortage. A shortage combined with very high wages would
result in what we see now. Admittedly, regulation has probably exacerbated the
problem by making it more difficult to build, but that didn’t matter until we
were behind. I would definitely believe him before any of the armchair real
estate experts in these comments I must say.

------
exabrial
Perfect example: [https://www.greencarreports.com/news/1095076_ca-to-
require-n...](https://www.greencarreports.com/news/1095076_ca-to-require-new-
buildings-to-be-wired-for-electric-car-charging-stations)

As such these things are regressive against the poor, for which a electric car
would be an extraordinary luxury, yet are required to implement it, else
government thugs come to arrest you with guns in hand.

------
blacksqr
Title assertion stated without evidence in article.

------
point78
Over or under? Pretty simple to make one law that caps rents like they do in
many cities in Europe.

------
abalone
Full disclosure: This is an op ed piece from a right-wing "free market" think
tank funded by the Koch brothers.[1]

[1]
[https://www.sourcewatch.org/index.php/Mercatus_Center](https://www.sourcewatch.org/index.php/Mercatus_Center)

------
ashtonian
Who knew ?

