We Know We Need Housing and How to Get It. Unfortunately, That’s Where We Stop

Chuck Reed

Chuck Reed

The United States has a housing shortage. That’s why home prices are rising faster than what many people can afford. But in California, the housing shortage is a crisis. Many people want to live and work in the state, but developers have little incentive to build housing the average person can afford, especially in the hot areas like San Francisco and Silicon Valley. And government hasn’t found the will to be the solution. As former San Jose Mayor Chuck Reed says, “California cares about housing—just not enough to do anything significant about it.”

Reed, who was term-limited in 2014 so couldn’t run again after eight years as mayor and almost 30 years in local government, is an attorney who specializes in land use issues. He was one of the featured speakers at a housing conference NAR hosted earlier this summer in Berkeley, Calif., and his remarks to REALTORS® make it clear he has no shortage of ideas to help get affordable housing built. Of course, his ideas focus mainly on California but they also provide a roadmap the rest of the country can follow.

Take the battle to the Supreme Court

For starters, we should take aim at all the hoops local governments put developers through to get building plans approved—occupancy limits, profit limits, eviction rules—by litigating these restrictions all the way up to the U.S. Supreme Court. As he puts to, “That is the only court where the 5th Amendment seems to be taken seriously.”

Next, change states’ fiscal restrictions to favor housing. He’s speaking about California, but there are lessons here for all states when he talks about modifying property tax allocations so that housing permits generate enough money for cities to pay for increased service demand. He also says states should share sales taxes based on where people live rather than where they buy things. And state and federal transportation money should be allocated to support high-density housing rather than the single-family house on the large lot in the suburbs.

He also wants to see environmental and other reviews streamlined so they’re not used to block developments just because people don’t want them in their backyard.

Long-term, people who care about housing, like REALTORS®, should continue to elect legislators who understand you can’t have job growth without also having places for workers to live.

Reed says California is organized  to make it hard to build housing of any kind, but as the housing crisis makes clear, economic development is only half the equation. The other half is having homes for the people who take new jobs. That’s a lesson that we benefit from no matter what state we’re in, as the continued housing storage throughout the country shows. Click on the PDFs below to read Reed’s full remarks.



Other coverage from the conference.

Conference coverage in the June 12 Voice for Real Estate video:

VRE 69 still

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at rfreedman@realtors.org.

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  1. Solving housing issues in California or other high-population and expensive markets won’t be simple. Of course regulations need to be streamlined; these were likely added one layer at a time, all with good intentions, or to address a specific item or grievance, and may need to be peeled back, layer by layer just to get to a manageable core set.

    It might also help if towns and builders look for ways to avoid working at odds with one another or at various ends of the extreme. Every new development project doesn’t need to be either high-end “”luxury”” or low-end “”high-density.”” Where are the neighborhoods of two-to-four family homes that used to be built?

    Assuming a builder’s business motive is to maximize return on a project, then avoiding legal battles is imperative. Instead, review a proposed project, compare it against projects that are acceptable to the town/neighbors/region and consider ways to “”fill in”” this profit gap for the builder using public and private funds. The builder gets to build and achieves maximum return, the area gets the kind of development that is desirable for it, and monies are spent not on lengthy legal battles but on getting the right project for the area completed as quickly as possible.

  2. We are seeing many new single family residential subdivisions come on market in Albuquerque and Rio Rancho New Mexico. We have not seen any new subdivision lots come on the market since 2007. The home builders have been absorbing the subdivision lots left over from those developed prior to the crash. Most of the pre-crash lots have been absorbed. With all the new lots comes the much higher prices. There are many challenges since this industry all but dried up for the past ten years. We are going to see significant price increases for homes as a result of this scenario. Prices in New Mexico are still relatively low compared other states on the west coast or other southwest states.