On Day 1 of his administration, President Joe Biden took a quantum leap toward reversing his predecessor’s efforts to reduce the role of government in the business of private enterprise. In doing so he put the expansion of the nation’s housing supply squarely in Washington, DC’s political gun sights.
This is trouble for California, and the nation.
“Homebuilder concerns about a changing regulatory landscape” may have already altered their plans for next year, says National Association of Home Builders (NAHB) Chairman Chuck Fowke. Indeed, the latest sentiments of homebuilders “suggests somewhat softer numbers are ahead due to rising building costs and an uncertain regulatory climate.”
California is currently suffering from several calamities but none is bigger or more pernicious than the state’s chronic housing supply shortage. Despite faltering demand, due to COVID-19, prices and rents remain sky-high. And, while plenty of state and local constraints still exist, markets here nonetheless welcomed what former President Trump was doing in Washington.
Biden acted quickly to change Trump policies. In addition to curtailing action on over a dozen domestic rules, he cancelled the Keystone Excel pipeline, he doubled the federal minimum wage and he rejoined the Paris Climate accord.
When he was done President Biden had frozen Trump’s ongoing deregulation initiatives, which were aimed at diminishing the province of federal bureaucrats in calling the shots for businesses in America. It should be said that Trump’s deregulatory efforts were an unheralded, major achievement of his.
Most of Trump’s work took place at the Environmental Protection Agency (EPA). The agency is home to the federal employees doing the most damage to private markets, including housing. Moreover, that’s the place where many federal regulations impacting state and local land-use policies were being written.
Swept up by President Biden’s initiative were two environmental regulations awaiting approval – one dealing with wetlands and the other involving reduced “take” requirements under the Endangered Species Act (ESA). Those rules are now officially suspended. Worse, Biden’s renewal of the U.S. pact with the world’s climate-change enthusiasts is deadly to state and national homebuilders.
As an encore, incoming Administration officials reportedly have set their sights on many of the 100 or so existing revisions already undertaken and completed by Trump – over half of which directly or indirectly impact homebuilding. (With Democrats controlling both houses of Congress, any adjustments to underlying legislation shouldn’t be a hurdle no-growthers on Capitol Hill find hard to cure.) Expect those reforms to come under greater scrutiny and to likely be changed.
That’s not good for California or the rest of the country. California and the nation can ill-afford a rise in housing costs but should instead be, like Trump did, working to reduce them.
To illustrate how bad things have gotten, consider that the median price of a home in California reached $700,000 last year – that’s a record and is more than twice what it is in the nation. Rents in the state are just as unaffordable: nearing $3,000 per month in San Francisco for a single-bedroom apartment. That rent, by the way, is down from the previous year by nearly 20 percent.
Nothing is going to stop the steady, upward march of housing costs until someone steps into the public square and declares enough is enough. Politicians need to stop turning to housing to solve myriad social problems – beyond providing basic shelter – they themselves are incapable of solving.
Energy savings can be realized without putting them on the shoulders of new homebuyers or renters. Same with protecting endangered critters and the state’s precious resources. And, the state should be funding the provision of housing for poor people as well as critical infrastructure – and should not be paying union-scale wages for either, except in high-cost areas.
Government must stop over-regulating housing. Period.
Ironically, when Trump began his deregulatory effort some federal bureaucrats admitted that “previous administrations had overstepped their legal authority, imposing unnecessary and burdensome regulations that hurt business.”
Let’s hope Biden takes at least that truism into account.