California’s regulatory code for housing is too strict

The sponsors of SB 50 seem to recognize that the state’s housing problems are at least partially man-made. Indeed, California is a leader in regulating just about everything — including insurance carriers, public utilities and housing construction. If California’s regulatory code underwent some serious spring cleaning, it could help the state at least make a dent in its housing affordability crisis.

The California Code of Regulations — the compilation of the state’s administrative rules — contains more than 21 million words. If reading it was a 40-hour-a-week job, it would take more than six months to get through it, and understanding all that legalese is another matter entirely.

Included in the code are more than 395,000 restrictive terms such as “shall,” “must” and “required,” a good gauge of how many actual requirements exist. This is by far the most regulation of any state in the country, according to a new database maintained by the Mercatus Center, a research institute at George Mason University. The average state has about 137,000 restrictive terms in its code, or roughly one-third as many as California. Alaska and Montana are among the states with as few as 60,000.

That is from James Broughel and Emily Hamilton at Mercatus, in The Los Angeles Times.


Good timing. 6.6 earthquake.

If all buildings in CA had to meet today's earthquake standards the housing problem would be even worse.

Which housing problem? My mom's cracked brick chimney? They don't let them build them anymore, so new homes don't have that problem.

(Cracked from previous earthquakes. The inspector says it can be left as it for now .. but will probably have to be repaired for sale.)

If all old buildings had to be retrofitted to meet all current seismic requirements, what would that do to the prices/supply of housing? And it is absurd to suggest that the regulations are generally costless even on new construction.

For example, your home might need several high quality dryers
and dehumidifiers running at the same time and only an expert fire and
water restoration contractor can have the firepower to handle that sort of problem.
11) Electrical units should not be plugged in any area
that's still wet or which includes standing water. Self restoration work can be quite tricky and what may seem as being a affordable way to restore a house will quickly bring
about expenses and losses that will be significantly higher than the cost of hiring
a specialist fire and water restoration company.

I always am amused when this argument comes up. How many of the 395000 musts and shalls have to do with that specific aspect?

And more importantly, how much construction is compliant with the current regulations? I would guess about 20%. Or less. Even inspected buildings probably aren't because there is no way anyone could know all the applicable regulations in any given circumstance, it is too complex.

Good point-the regulations in California seem to induce developers to build high density and put tons of supply on the market.

The idea that the regulatory environment is inducing low density-ultra luxury product in LA and San Francisco seems false....

That might also be a market response to land availability. A single family home is rebuilt to move up market. A plot of any greater size is packed with units.

It's about three-fourths as fast as The Space Shuttle.
In other words, 216 miles per minute is 0.748180 times the speed of The Space Shuttle, and the speed of The Space Shuttle is 1.33660 times that amount.

One hopes that no is hurt, and will provide an excellent opportunity to see if California’s regulatory code for housing is too strict or not when it comes to earthquakes at least.

So we should basically just let everyone know in advance that the state is for rich people only who can afford to live in such a heavily regulated built environment.

Or public housing for the non rich-seems amicably dystopian enough....

'So we should basically just let everyone know in advance that the state is for rich people only who can afford to live in such a heavily regulated built environment.'

Well, in terms of earthquake protection, sure. Who would have thought that would be controversial - it isn't as if SF hasn't already been almost completely destroyed in the past.

But maybe the comment's actual focus was not obvious, so let me quote the relevant part again - 'provide an excellent opportunity to see if California’s regulatory code for housing is too strict or not when it comes to earthquakes at least.'

It can tell you if it is sufficient but will not tell you if it is necessary.

We need to reduce the excessive regulations that add little safety but too much cost.

'but will not tell you if it is necessary'

In the actual world, the one where SF was essentially destroyed by an earthquake and its aftermath, the necessity is not somehow merely theoretical, or something dismissed by those living in a place where disaster kits are considered necessary to help deal with the results of the next earthquake.

But then, you seem the type to tell people living in the Midwest that there is no necessity for having a storm cellar either.

If you are ever in SF, cross over into the Marin Headlands, and visit Kirby Cove. The way the rocks of the bluffs are folded is amazing - and do a fine job illustrating why in California, simply planning on an earthquake never occurring is truly idiotic.

Nobody has to hold a gun to the head of midwesterners to get them to build storm cellars.

That's a major difference between their regulatory regime and CA's.

Isn't there a difference? You know when you have a storm cellar. You don't know which houses are ready for a 7.0

Or their neighbors. I was annoyed that my water heater had to be (somewhat expensively) brought up to code to install a replacement. But when the whole neighborhood does it, the chance of post-7.0 fires does go down.

You missed my point entirely. Do you understand the difference between necessary and sufficient? I'll answer that. You don't. I think you just like to read your own pompous and dumb writing.

It is absolutely appropriate to have special building codes for earthquake safety in CA.

Consider the 7.0 Loma Prieta earthquake in 1989. Not one person was killed in a single family dwelling in that quake. The vast majority of homes - hundreds of thousands, maybe millions - had little or no damage beyond a crack in some drywall. Those homes were built in the 50s and 60s using standard stick frame methods which are very strong and safe - due to it's inherent redundancy. Assuming the method is followed correctly. That is an inspection and enforcement issue that did not require the draconian rewrite of the code.

The code DID NEED some tweaks - requirements regarding securing the home to the foundation and using metal connectors for the post and beam style popular, because of its flexibility on steep slopes, in the mountains in the area near the epicenter. Even so, there were no fatalities and few failures in those tens of thousands of post and beam homes on the steep slopes. And yet, the codes were changed to make building more difficult and expensive. Post and beam was effectively banned, making construction rediculously expensive. Only rich people can afford to build a house in the mountains now, in an area that was once a community of lower middle class homeowners.

So there is a bug difference between necessary and sufficient. We should do what is NECESSARY to make buildings safe, and not more. Otherwise, the cost explodes and low and middle class people are priced out of the market.

Good example.

"Estimated costs of the earthquake, in terms of damage to physical structures, was almost $6 billion."

So, how much up front cost is justified for a $6 billion risk? Or is it better to build worse houses and buy better insurance? A real question for economists.

Are the hundreds of tent cities' thousands of tents up to code?

Trumpvilles have been sprouting up all over the country since he took office.

Good. Maybe those well constructed homes will replace the shanty-towns that have grown in cities like San Francisco over the last 30+ years.

The Trumpvilles are just swaths of red tents that say 'MAGA' on them. So many more tent cities in the past 2 years, it's disgraceful.

"Make America Grate Again"

(But seriously for a moment, I haven't noticed any increase in the number of tents in DC in the last two years...)

Exactly how will the earthquake show if the codes are too strict?

Exactly zero people were killed in stick frame houses after the '89 Loma Prieta quake, but our local building codes ratcheted up to an even more draconian level.

Old time stick frame construction - plywood sheathing, 2x4 framing, etc done properly and according to the uniform building code was sufficient to survive that quake with minimal damage. Some homes slid off their foundations, so bolting regulations were implemented, and those are mostly ok. Post and beam construction is subject to catastrophic failure which can be avoided by using simple, inexpensive connectors.

There was no need to panic and impose the draconian rules they chose to implement.

And so it goes ...

I am actually in favor of building code simplification, but this shows why the ultimate in that regard, a single national code, would be impossible .. or itself wasteful. We don't need to worry about snow load here, or tornadoes, but we worry about earthquakes.

This one was out in the Mojave apparently, but close enough to make the 6th floor at USC sway quite a lot, and not come down. (A report from a relative who is there visiting a friend.)

This article seems pretty superficial. It would have been more interesting if they talked to some builders to get some specific examples about how California regulations increase costs. Word counts are easy but aren't much use.

You are not from California.

I can fill your list of required examples a hundred times over from just y little town of Fresno, CA.

A good indication is the level of compliance. I don't know what that would be in California, but in a large jurisdiction in Canada a few years ago it was 20%. Yes, 20% compliant.

I doubt that even contractors working with local authorities are compliant. And no one would ever know, or frankly care.

Agreed. And given that so many are aggressively building big chipboard buildings, I'd say regulators have allowed a way to provide earthquake safe buildings at low cost.

Chipboard does not provide the shear strength of plywood, but chipboard plus properly installed steel connectors can make up the difference.

Personally, I prefer 5/8" 5-ply plywood for shear strength. It's more expensive but you can skip most of the connectors. I used that to strengthen my house after the '89 quake.

Los Angeles/Ventura County Builders:

(see appendix A on the amenities that a local government demanded for a proposed "affordable" apartment building: "the City requested parking in excess of the zoning, and robust services for all residents, including car sharing service, child care, retail office space set aside for a nonprofit office, and ground lease for City land. Additionally, the City proposed minimal local jurisdiction investment, and asked for 85% of developer cash flow generated from income after debt."

A similar view from those less self-interested:

Parking is an interesting question, and something that may not register to someone who has not lived in an impacted area. I divide my time between Orange County and the Valley. OC is much more pleasant, because roads are wide and parking plentiful .. excess even.

I've heard this: I can't leave home right now because if I do I can't park when I come back.

I'm sure parking is plentiful in upscale OC locales like Irvine, Newport Beach, etc., but the upper-middle class can more easily afford those amenities on top of all the other housing regulations and fees that drive up the cost of housing.

Perhaps a Democrat can run on a platform of "car elevators for all!":

I think it's more that Irvine, Mission Viejo, Laguna Niguel, and so on were built out when land was cheap and 2+ car households had become the norm. Cheap well into the 1990s.

It is a cultural inheritance from Spanish rule. We do not have real separation of powers, we fundamentally adopted monarchy aspects.

man is this a dead on comment. I live on a former piece of land grant in Malibu. Southern California IS Mexico, in its rich/poor ratio, in its powerful church and state, in its seignurial bureaucracy, it's corrupt cops, and its apportionment of land (peasant (the Valley) artistocrats (Brentwood, Malibu). Dead on comment. We inherited our culture from south...there was a time you could do well as a middle class Californian -- 1900's to 1960's - when the NEbraskan white values were in vogue but those times are gone and the region has reverted to its Mexican roots...I am not complaining as I have several acres of land in Malibu that can NEVER be built on -- the the road to procuring it was a long, and legendarily winding one and it is not one that any middle class person could ever afford to do...BUT...that person can move north to the middle of the state and still find bargains (but not jobs, probably).

8.46. And obey God and His Messenger, and do not dispute with one another, or else you may lose heart and your power and energy desert you; and remain steadfast. Surely, God is with those who remain steadfast.

If Spanish rule gave CA its famed sectors like Silicon Valley, America's biggest ports, Hollywood, huge farmlands, San Diego's biotech, and LA's manufacturing, then I for one welcome the King of Spain to my small corner of the USA. Separation of powers gets you what exactly? Kansas? China doesn't believe in SOP and they are beating us on trade.

"they are beating us on trade."

You don't understand how trade works. Or why Kansas is the way it is.

Do enlighten us readers at MR.

Some 60x gdp isn't supposed to have any more regulation than the least? How dumb.

No. Why would it?

So what you're saying is that it's the fault of brown people, right?

"California’s regulatory code for housing is too strict"

--- What then is the proper level of Housing Regulatory Code according to Mercatus expert economists?

--- What causes Housing Regulatory Codes to become too strict?

--- What specific aspect of California society causes it to stand out as uniques in this regulatory metric?

A year ago assessment of 40 years of prop 13:

"Perhaps most perversely, Proposition 13 has made it harder, not easier, to become a homeowner. California has one of the lowest rates of homeownership (55%) in the nation, second only to New York and nine percentage points below the national average."

"Today, Californians remain among the most highly taxed people in the nation; low property taxes have been more than offset by increased income and sales taxes."

"The pernicious incentives that led to these outcomes are obvious in hindsight. With property taxes near frozen, local governments began to see residential development as a liability and commercial development as an income stream. For 40 years, that perspective shaped which new projects cities approved. Homeowners, meanwhile, had a disincentive to move if they had a low property tax bill locked in. Finally, these relatively low property taxes made California an attractive place to undertake speculative real estate investments and leave valuable parcels of land undeveloped."

"The consequences of Proposition 13 have hit every generation following the baby boomers particularly hard. California is left with a housing shortage and not enough turnover in the real estate market. New homeowners face a much bigger property tax burden than their older, often wealthier neighbors. And the overall tax burden has been shifted to more heavily burden nonproperty owners — increasingly Gen-Xers and millennials who can’t afford to buy a house."

If you sell your single family home and buy any newly constructed home, single family or multifamily condo, your property taxes will skyrocket, as will the taxes paid on the property you just sold, and those higher taxes wil persist for decades, destroying the "value" of the likely miillion dollar price for a house bought for $50,000 in the 60s.

Why isn't Mercatus calling for repeal of Prop 13.

Which I argue would be disasterous because it would "destroy a trillion in wealth". Imagine a ten year phase out of Prop 13. Immediately, the prospect of property bought 30-50 years ago and held onto because of the huge tax giveaway of capped tax bills as long as never sold coming on the market within a decade would drive down prices of real estate bought in the past 20 years. And that would mean the property would be worth less than the debt on the property. Lenders would now refuse to lend without much larger down payments, even at lower market prices.

But this is something MR knows:

"Tyler Cowen April 1, 2018 at 2:46 am
In 1978 California passed Proposition 13, which lowered property tax rates and restricted future property tax increases. We find that the introduction of Proposition 13 leads to a 15 percent increase in house prices and a 3.3 percent decrease in the moving rates. The elimination of Proposition 13, however, leads to modest changes in house prices and mobility but sizable welfare gains."

Nonsense. The average home in CA is turned over so often that it has negligible effect. It protects older homeowners ability to remain in their houses and neighborhoods.

Politicians always bitch about it because they can never have emoug money to buy influence and votes. Prior to prop 23 he evil bastards regularly reassessed the homes of old people and taxed them right out of the community. The people responded in a perfectly logical way, and it worked.

Ok, lets test your handwaving.

California has about 13 million housing units.

Of those, 6 million are owner occupied.

According to most recent Census community survey, 2017, estimates, about 3 million occupants have lived in their current housing units since before 2000, 1.5 million since before 1990. My guess is 2-2.5 million units have been occupied for a quarter century or more, and my guess is those are owner occupied.

Ie, a quarter of housing has not been on the market for decades.

A different cut. Annual housing sales are about 450,000 per year. Ignoring rental units that also get bought and sold, to sell every housing unit once would require 9 million/ 450,000, or 20 years. I and my boomer peers held onto our first home forr less than a decade, and as were were in the ibm era (I've been moved), I knew many who owned 2-3 homes for less than 5-7 years before buying a home they stayed in for a couple of decades. After renting for 15 years I bought, then sold after 6 years and bought my current home 33 years ago. Similar to half my peers of professionals.

If I lived in California instead of New Hampshire, not trading houses with all those costs PLUS the higher property taxes, would keep me from moving even more. My estimate is moving costs 10% of the house price, money lost to friction. Until the 80%, those costs were paid by employers to get workers to move to new positions for most people I knew, again, professionals. But also senior manufacturing workers. Tax code changes in the 80s killed off moving workers for business purposes as a common practice of employee development.

Bottom line, a huge amount of housing is off the market for decades due to tax policies since circa the 70s-80s.

And just as only 10%-20% of tech stocks being tradeable inflates tech stock prices, reducing the tradeable housing units inflates housing prices.

This may be conflating zoning code with building code. They are very different. Zoning tells you what you can build where, and building code tells you how to build it safely.
California uses a version of the 2015 international building code (IBC), shared with many states. It has some extra language around earthquake stability, which is completely justified. Unless this is your goal:

Do you actually think people won't take earthquakes into account when building?

Yes. Some people won't take earthquakes into account when building homes for other people... if it is cheaper and faster.

Within a ten minute walk of where I live in the San Fernando Valley, about 20 apartment buildings collapsed into their basements during the 1994 earthquake, so evidently their builders hadn't taken earthquakes adequately into account when building them in the Postwar era.

Fortunately, not too many died near me because the earthquake struck at 4:18 am and most residents of the pancaking apartment buildings just fell 10 feet in their beds for a cushioned landing.

Sounds like those regulations sure did...not much?

Ever heard of the Gosnell effect? When there's so much regulation that compliance is futile, those who don't care are what's left. They will flout every regulation and then some because in for a penny in for a dollar. That's why these regulations should be wiped out. Choose your building wisely, or the consequences will be on your head-literally. This is true regardless of regulatory environment!

California has the problem in spades.

Those were the older buildings that gave the lessons for future regulations.

I remember that so cal quake. Multistorey buildings pancaked because idiots eliminated shear walls on the bottom floor(s) to accommodate parking under the building. Totally stupid!

For some reason, property zoning is always a taboo topic. It is a criminal act to build dense housing almost anywhere in LA County.

It's not taboo anymore. Oregon just took a hatchet to single-family only zoning across the state. Some other smaller jurisdictions are making changes. Cali passed some law allowing density upgrades at transit hubs.

I think this is missing the point. The excessive rules (zoning & building) for high density housing are a feature, not a bug. If builders have to include services for the "disadvantaged", plus parking spaces, security, etc. then high density will not get built. Then "those people" will not move in, but no one can blame that on "racism". The municipalities don't want to be responsible for "those people", don't want them around; "It's the builders fault. No one will build for normal people. But we are not racist or elitist. It's "them". Make it easy and "the wrong kind" will destroy the view.

"Oh, get offa my lawn."

"At least 67 people have been killed and 40 injured after a fire tore through apartment buildings and chemical warehouses in a historic part of the Bangladesh capital .."

Maybe they need less regulation?

You did not complete the math. It is:

How many extra people lived due to overcrowding and no regs vs how many burnt up due to overcrowding and no regs. If I pack an extra 1,000 for a life time then burn a few hundred, I am still ahead in evolution's eyes.

Like living under bridges, you can regulate it illegal, but mother nature be sad that one less person is around.

To put it bluntly, people under bridges are not the voters. Middle-class people who don't want their houses to fall down are the voters.

Should regulations be specific and long or general and short? In the latter case, the regulatory body is given broad discretion to approve or reject proposed development, which invites both discriminatory enforcement and graft; thus, the preference for specific and long.

>the state’s housing problems are at least partially man-made.

At least partially, huh? So definitely not 100% made by bears? We can rule that right out?

California is hilariously under-developed. Outside the cities it's pretty much a white hippie playground thanks to scrupulously crafted statutes and regulations.

Outside of the cities, isn't every state an under-developed white playground?

If it really costs $750,000 to make a unit of affordable housing safe from earthquakes then we need to build elsewhere.

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