California’s ongoing housing affordability crisis could be solved with less red tape and more construction, according to Nolan Gray, a policy expert with pro-housing group California YIMBY (Yes In My Backyard), and Jim Righeimer, former Costa Mesa mayor and developer.

Righeimer said the main solution to California’s housing affordability crisis is increased construction.

“We just need more roofs, meaning more units,” Righeimer told Siyamak Khorrami on EpochTV’s “California Insider.”

“The question is, how do you do that?” he said, noting that requiring developers to subsidize new construction tends to be more difficult in locations with less housing demand and lower cost of living, because the profit margin is much lower. In contrast, on the coast, there is a lot of demand for new construction, and developers can easily afford the extra cost. Those areas, however, generally don’t end up being affordable for low-income residents.

“We do get to a point of saying, ‘Just because you want to be here, doesn’t mean we should find some way to subsidize [housing] to have you here,’” said Righeimer, suggesting plenty of people, especially families, sacrifice prime locations in favor of moving inland to find an affordable home.

Certain parts of Southern California and the Bay Area are the “one percent of the one percent of the one percent,” Righeimer said. He mentioned the Inland Empire as an example of a more affordable area.

Local Solutions

When it comes to solving California’s housing affordability crisis, Gray said his first preference is for local governments to develop a plan to allow a reasonable amount of housing to be built along with the infrastructure to support it.

“The problem is the local politics often don’t line up around that, and we’re in a bit of a ‘prisoner’s dilemma,’” he said.

For example, if Costa Mesa were to allow construction of a considerable amount of housing, but other jurisdictions in Orange County do not permit more housing, the overall affordability would be negatively impacted, he said.

“One thing that the state can come in and do that’s a little bit positive is to say, ‘Everybody needs to come up with a plan to allow at least a little bit more housing,’” Gray said.

However, when local government officials do step in with a plan, he said, such as rezoning an area to allow more housing construction, they often face resistance from constituents.

“The folks who show up at the public hearing, in many cases, are not representative of the broader community,” he said. “They’re not factoring in the regional impacts. And so, you have to have some sort of regional or state coordination.”

Red Tape

In general, California needs local zoning rules that allow for housing to be built, said Gray.

“If it takes two years to get entitlements and permits to actually start building, you’re not going to have a lot of projects,” he said, noting this is especially true when it comes to smaller construction firms which lack the staff attorneys needed to navigate state laws.

“And then we have to get the cost down,” said Gray. “California is one of the most expensive states to build in.”

According to Gray, one of the most successful interventions in the past ten years has been the statewide legalization of Accessory Dwelling Units (ADUs).

In 2017, Senate Bill 229 was signed into law and made it easier for homeowners in the state of California to add this kind of additional home to their property, such as converting their garage or carport into a housing unit.

According to the Brookings Institution, in 2018, approximately 9,000 permits for ADUs were granted in the state of California. In 2023, more than 45,000 ADU permits were issued in Los Angeles County alone, providing a significant amount of new housing.

“This was an intervention that didn’t cost the government any money,” Gray said.

However, while it was an important first step, it doesn’t solve the problem, he said.

Starter Homes Needed

Gray said a lack of starter homes also exacerbates California’s housing affordability crisis. Townhouses, condos, and small lot homes would fit the bill, he said, as well as infill, which refers to the reuse of previously developed or vacant land within an urban area, and generally has the result of increasing housing density.

“And those are precisely the types of housing that are illegal to build, in the case of L.A., in about 75 percent of the city, [and] in your typical suburb, probably about 100 percent of residential areas,” Gray said.

“As long as it’s illegal to build those in the vast majority of coastal California, we’re never going to get on the track to affordability, and hundreds of thousands of people are going to have to keep moving to places like Nevada and Arizona, and, essentially, exporting the California housing crisis.”

Retail Properties

Righeimer believes the changing retail landscape, which is increasingly e-commerce driven, provides a unique opportunity to build new housing.

“You don’t need actual retail space,” he said, suggesting vacant properties in busy areas could potentially be converted from retail to housing.

Priced Out

As people from all over the world continue to move to California, many people are priced out, said Gray and Righeimer. Those leaving come from all sectors of society, including young people who realize they don’t have a path to home ownership in the state, and also retirees who realize the cost of living is out of control.

“All of my peers—all their kids, feel like losers,” said Righeimer. “They got college degrees and everything else. They can’t buy a house.”

To address the crisis, Governor Gavin Newsom signed in September a bipartisan legislative package to help quickly convert existing buildings into housing and streamline construction, as well as increase enforcement and penalties for local governments.