Here we go again, folks. Today’s Los Angeles Times brings us what we like to call “sad but dependable news for the bald.” California housing is overly expensive, and the reason why that is so is that the supply of new homes is held down by local land use regulations. The Times illustrates the story with a prominently placed article, Andrew Khouri, New Home Shrinkage, LA Times, August 7, 2014, at p. B1.
“About 19,000 new homes will be sold this year in the six-county region — 53% less than the 25-year average average,. . .according to a spokesman for John Burns Real Estate Consultants in Irvine.
“The difficulty in winning construction approvals, . . . is a trend that long predates the housing meltdown and will probably continue long after. California has failed to build enough homes, relative to population growth, every year since 1989, according to a November 2003 report from a state senate committee.”
So what else is new? Reports like that, including two by Presidential Commissions on Housing, go back at least to the 1990s. So it boils down to what you were taught in Econ 101: When the supply is reduced while demand goes on, prices go up.
The handwriting on the wall was there for all to see as far back as August 30, 1998. That’s when the L.A. Times ran three — count ’em, three — articles that painted a grim picture of the housing calamity that was overtaking the California housing market.