Biggest Cause of Housing Shortage? Your Neighbor!

houses-on-hill-with-fogI am typing this blog from my home office and watching our two Corgis play and hunt in our backyard.

Kevin (our male Corgi) in fact just caught a lizard and he is proudly strutting around the yard with the poor thing hanging out of his mouth.

(And yes, it is as disgusting as it sounds; Corgis are gross. 😊)

There is also a 90,000 acre mountain reserve next to our house with gorgeous views and fantastic hikes on which we take our Corgis every weekend.

I don’t want to ever give up our yard, our Corgis, our views, or our 90,000 acre playground.

And this is the biggest reason why we have a housing shortage – neighborhood associations block efforts to build high-density or multi-family homes.

Planet Money Indicator recently had a really interesting 8-minute podcast addressing this issue.

They illuminated five reasons why people might not want high-density housing in their neighborhoods:

1. They don’t want high density housing adversely bringing down their home values;
2. They don’t want all the new construction disrupting their neighborhood;
3. They don’t want the additional traffic and congestion;
4. They don’t like developers (they hate it when developers make money); and
5. Some people are concerned about shifting the demographics of the neighborhood.

There are other reasons behind the affordable housing crisis too that include:

1. Excessive levels of regulations and fees that significantly drive up costs, by as much as 40% according to one industry trade group.
2. Environment restrictions. Environmentalists often block development in the open space outside of cities.

The housing shortage is of course exacerbated in California by a lack of resale inventory for several reasons:

1. Proposition 13 creates a disincentive to move b/c doing so often significantly increases property taxes
2. Many people have fixed rate mortgages in the low 3% range that they do not want to give up.
3. Many people have a “grandfathered” mortgage interest tax deduction (for loans over $750,000) that they will lose if they sell.

What is the solution? Maybe move to Texas, where more new homes were built in Dallas and Houston alone last year than in the entire state of California.

Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646