These are interesting times for homebuilders. California has found itself mired in a statewide housing crisis that has become so dire that a survey conducted earlier this year by the Public Policy Institute of California found that 37% of Californians said they have seriously considered moving out of the state because of the high cost of housing.
Despite a cooling market, home prices remain near all-time highs, while mortgage rates are at their highest point since 2008. As a result, many hopeful homebuyers continue to find themselves priced out of the market. In Orange County, the California Association of Realtors housing affordability index found that a paltry 12% of prospective buyers can afford an existing single-family home, making it the least affordable county in Southern California.
While California’s burdensome regulatory environment has played a significant role in suppressing new home construction, local governments must also shoulder their fair share of the blame. Builders are frequently confronted with drawn-out and unpredictable processing times, excessive development fees, and restrictive zoning ordinances. Whether individually or collectively, each of these obstacles impede or, in many instances, outright stop the construction of new housing.
NIMBY’s Growing Influence
Perhaps the most troubling trend the homebuilding industry has seen is the rising political influence of anti-housing activists often known as NIMBYs ala Not In My Backyard.
Orange County is no exception.
While NIMBYs have always been around in one form or another, we are seeing much more highly organized and well-funded efforts to stop the construction of new housing.
A prime example occurred in the Orange County city of La Habra, where a concerted effort by a small group of wealthy and politically connected homeowners pressured the city council into denying a proposal to build 450 new homes for residents across different income levels.
This particular group applied substantial political pressure on the city while also spending tens of thousands of dollars on political ads to deprive the community of new housing. The city’s misguided decision also effectively caused the forfeiture of millions of dollars in new funding for city services and local schools while also denying the community of a new park and public open space.
NIMBYs have also been effective in curtailing new home construction by placing “slow growth” or “no growth” measures on the ballot. Orange County cities including Costa Mesa, La Habra, Newport Beach, and Yorba Linda, have all passed voter-approved initiatives that limit new housing creation.
So what will turn the tide?
To start, the state has assigned new housing requirements to local cities and counties as part of the Regional Housing Needs Assessment allocation. Specifically in Orange County, municipalities must collectively zone for over 183,000 new homes by the end of the decade. Cities that fail to update their general plans to ensure that there’s enough zoned land to build their assigned share of new homes could potentially face financial penalties, state intervention into local land use authority, or both.
It’s also critical that homebuilders and the greater business community continue to work together to support new housing. Whether speaking to the CEO of a large company, or a small business owner, I consistently hear how high housing costs is a major concern when trying to attract and retain employees. That’s why it’s critical that our elected leaders hear from the business community when new housing developments are up for approval. Sending a letter of support, testifying in person, or participating in BIASC’s digital advocacy program are a few simple but effective ways to ensure that the business community’s voice is heard.
We also recognize that one of the tactics NIMBYs use to stop new home construction is stereotyping homebuilders as nameless, faceless developers who simply want to build and move on to the next project. It’s a dishonest, tired, and lazy argument that could not be further from the truth. Frustratingly, in some cases, this tactic has proven effective in influencing local elected officials and the public in defeating new housing proposals.
Rose Bowl Parade
As we prepare to celebrate BIASC’s 100th anniversary in 2023, one of our top priorities will be highlighting the homebuilding industry’s positive impacts on our local communities.
Look for our float in the Jan. 2 Rose Bowl Parade.
Last July, children ages 10 to 15 in our Junior Builders’ program came together at the Brookfield Residential Design Center in Costa Mesa to design a float that focuses on the future of sustainable communities. It also features a first-of-its-kind hydrogen-powered demonstration home by SoCalGas.
BIASC also recently announced the formation of the Builders for Better Communities Foundation, a new charitable nonprofit that will serve as our primary philanthropic arm. The foundation’s activities will include partnering with homebuilding industry members who support education and awareness programs that provide positive social, environmental, and economic impacts that help shape current and future communities.
Part of the foundation’s strategic focus will coincide with BIASC’s new Diversity, Equity, and Inclusion initiative, which is rooted in the continuing need to embrace change and leverage diversity by celebrating differences such as race, gender, disability, religion, and age.
The housing crisis is a result of decades of policy decisions at both the state and local levels that have ultimately led to the current housing shortage. While there are no quick fixes when it comes to alleviating our housing woes, we must collectively decide to commit to a future of full and fair housing development and construction. Otherwise, there will be no way forward for our economy or community.
Editor’s Note: Jeff Montejano serves as CEO of the Irvine-based Building Industry Association of Southern California.