Rebuilding Los Angeles Is California’s Economic Moment of Truth

Wildfires that destroyed two neighborhoods made the state’s housing shortage even worse. Now, opposition is growing to creating more

By Konrad Putzier of The WSJ. Excerpts:

"California’s housing shortage is at the root of its economic problems. Residents are leaving for other states at a rapid clip. Economic expansion lags behind states like Texas and Florida. California’s unemployment rate, recently 5.5%, is the second highest in the country and has risen much faster than the national rate. Inflation, driven in large part by housing costs, is eating into renters’ living standards.

“California is absolutely strangling itself with this housing shortage,” said Scott Wiener, a San Francisco Democratic state senator who is a proponent of development.

 

California’s housing construction is well below levels seen in the 1980s and 2000s, when the state’s population was smaller. The typical home in California costs more than twice as much as the national average, according to Zillow data. The extreme costs contribute to California’s homelessness crisis as housing prices grow faster than wages. 

State and local red tape can drag housing construction projects out for years, if they get approved at all. Gov. Gavin Newsom and state lawmakers have in recent years worked to loosen some restrictions that slow housing construction. 

Businesses struggle to hire when workers can’t afford to live nearby. Soaring housing costs have made it hard for Los Angeles to find municipal workers, said Nithya Raman, a city council member.

Shortages push housing development to the fringes, where homes sit uneasily next to forests and brushland. That makes them vulnerable to fires"