Solving California’s Homeless Crisis

A homeless man stands near a housing construction project in San Francisco, Calif., in 2015. (Robert Galbraith/Reuters)
The common-sense solution to this human tragedy is to build more housing.

The White House has discovered homelessness or, at least, homelessness in California. Driven in part by long-standing animosity toward the state’s liberal political leaders and, according to reports, concern over the impact on real estate values, the administration has jumped into the Golden State’s homeless crisis. Administration officials have suggested that the EPA sue California since homeless people represent an environmental hazard. In addition, there have been talks of conducting massive police sweeps to round up the homeless and hold them in detention centers. The Trump administration tends to see every problem as having a law-enforcement solution, but somehow arresting the homeless seems like neither a humane nor practical answer to the crisis. Are we really going to start separating more families?

Meanwhile, Democrats seem determined to export California’s problems to the rest of the nation. Bernie Sanders has recently endorsed nationwide rent control, and, while Elizabeth Warren has not called for nationwide controls, she has endorsed local rent-control efforts. Other Democratic candidates have so far been content to call for more subsidies. Having encountered a problem of too much demand and too little supply, Democrats have settled on proposals to increase demand and decrease supply. One does wonder if any of them have had even a passing acquaintance with an economics textbook.

None of this is to diminish the very real problems that California is experiencing. There are an estimated 130,000 homeless people in the state, around 28,000 in the San Francisco Bay Area and 60,000 in Los Angeles County alone. But even smaller cities such as San Diego have homeless populations in excess of 8,000. By some calculations, more than 47 percent of all unhoused homeless people in America reside in California. The crisis has become a major human tragedy.

It is a tragedy brought on, in large part, by bad public policy. About one-third of California’s homeless population falls into traditional categories, such as the mentally ill or those with substance-abuse problems. But the vast majority are simply people who cannot find affordable housing.

As noted above, the high cost of housing is largely a function of high demand and low supply. Estimates show that California needs 3.5 million housing units by 2025 to meet needs. Governor Gavin Newsom came to office promising to meet that goal, but housing permits actually have fallen by 12.2 percent so far this year.

The state is a cornucopia of policies designed to prevent the building of more housing. Two-thirds of available residential property is estimated to be zoned exclusively for single-family homes, severely limiting multifamily housing. Additional zoning regulations can add enormously to the cost of rents, as much as 50 percent in San Francisco, according to Harvard’s Ed Glaeser.

Construction fees and licenses can often cost more than land itself. Most communities use a complicated “secondary review” process that can be expensive, time-consuming, and give NIMBY (Not in My Back Yard) activists power to block new housing or drag the approval process out for years. The California Environmental Quality Act (CEQA) has become weaponized, allowing unions, environmental activists, NIMBYs, and even individual citizens to challenge virtually any new construction in the state.

The Trump administration’s estimates that California’s anti-building regulations are responsible for as much as 40 percent of L.A.’s homeless population may turn out to be too high. However, there is no doubt that the answer to too little housing is more housing. And more housing will require big changes in the state’s zoning, housing, labor, and environmental policies.

The fight over these changes does not fall neatly into the Left-Right divide. NIMBYism stretches from the most liberal communities of San Francisco to conservative enclaves in Orange County. Everyone wants more housing, as long as it keeps “those people” out of their neighborhood.

But there is hope. There is also a growing grassroots movement in favor of more housing, supported by liberals, conservatives, and libertarians across the state. They are beginning to force the state’s political leadership to pay attention.

If the Trump administration or Democratic presidential candidates want to help, they should forget about lawsuits, police sweeps, or Soviet-style price controls, and embrace the common-sense solution to California’s homeless crisis: Build, Baby, Build.

Michael TannerMr. Tanner is the director of the Cato Institute’s Project on Poverty and Inequality in California and the author of The Inclusive Economy: How to Bring Wealth to America’s Poor.


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