The California housing crisis is built on Two Great Myths. Both cherished. Both false. And both are stopping hundreds of thousands of Californians from ever owning their own homes in the least affordable housing market in America.
The first great myth is that new housing does not pay for itself. We hear this chanted at every public hearing for every new home in California. New homes increase the demand for police, fire, parks, animal shelters, boat docks, public art, historical societies, schools, roads and everything else, the mantra goes. Thus it is only fair that new residents should pay for these extra services with extra taxes.
That is why government-related fees and expenses often exceed $100,000 per new home in California.
But these armchair economists forget new homeowners already pay new taxes , higher taxes , than existing residents. Their property taxes, for one, are often several times higher than their neighbors. That, of course, is a loophole from Proposition 13 that guarantees the longer you live in a house, the smaller share of property taxes you will pay.
New residents also pay more in sales, gas and other taxes because they buy more items for their new homes. Not because they use more services. They use fewer.
So much for fairness.
All over California, the latest numbers tell the story: Cities and counties such as San Francisco, Los Angeles, San Diego, Riverside, Carlsbad, Encinitas, Chula Vista, Temecula, Murrieta, and just about every other high-growth area in the state are experiencing record , and unanticipated , growth in tax revenues from what public officials call sizzling markets.
State government tax revenues are also up by $5 billion over projections, again largely due to growth in property taxes.
New housing is a cash cow for state and local government. But local government is piggish in spending it.
In high growth Riverside, property taxes to the county government increased by more than $300 million this year. Yet county officials have no answers when they are asked why less than 5 percent of that new money is going to build new roads to relieve the worst congestion in California.
But they definitely love imposing higher fees on new homes, as if there is no limit. As if record high fees have no effect on record high prices.
They actually say that. And this belief is turning the California housing crisis into a full blown disaster.
In San Diego, fewer than 9 percent of the families can afford the price of an average home. The rest of the state is equally bleak. High fees are pricing people out of the market. Out of the state.
But lots of public officials don’t really care about that because of the second great myth of housing: New homes cause growth. Not the other way around. New homes are for people who move here from out of state. And don’t forget its great corollary: Stop the new homes , and we can stop the growth.
But the facts ruin that story.
Last year in California, we had one of the lower population increases in years. Even so, most of last year’s increase came from the same place it has for the last decade: The maternity ward.
More than 65 percent of the new residents in California are from the increase in births over deaths. The remaining 35 percent are from foreign immigration, legal and otherwise.
Of the people who live in California, 29,000 more moved out than moved in from other states last year. In Southern California, 150,000 more residents moved out of state than moved here from other parts of the country; largely replaced with foreign immigration, legal and otherwise.
California residents are leaving in record numbers , mostly because they cannot afford the housing.
Yet the myth that new housing causes growth persists. A chair of the San Diego County Board of Supervisors recently insisted that higher fees and fewer new homes were necessary because so many people were moving here from the rest of the country.
Media repeat the myth; and no growth activists worship it like a holy relic to stop new housing wherever they can. And they often can. That is why a housing shortage is pushing prices to such record levels.
For promoting these myths, councilmen get promoted; planners get prizes; reporters get plaudits. And first time home buyers get a one-way ticket to Oklahoma, wondering why they cannot buy a home where they were born and raised. But no longer welcome. All because of two great myths, that once exposed as false, should be called by their real names: The two great lies.
Mick Pattinson is the president/chief executive officer of Barratt American Inc., a Carlsbad-based homebuilder.
