Abundance and California's High Cost of Housing
Excerpts From Klein and Thompson's Book
I’m reading
and ’s book Abundance (*).
I’m really enjoying it because, for a long time, I’ve been trying to understand why affordability is such a challenge in California. I have my own priors, and as a center-right person, I wonder if they are leading me astray. Seeing what progressives like Thompson and Klein have documented is a real eye-opener.
Below are some interesting insights I pulled from the book regarding California’s housing costs. These are just excerpts, without any analysis on my part, but they do track with a recent CalMatters deep dive on the topic.
The authors attribute the high cost of housing in California, generally, and in Los Angeles specifically, to a “supply problem” driven by anti-growth regulations, restrictive zoning, environmental litigation, and a bureaucratic culture that prioritizes process over outcomes.
1. California Generally:
There Is A Severe Supply Side Shortage Caused By Policy Choices:
The authors argue that housing prices are high simply because there are not enough homes to meet demand, a condition they describe as “chosen scarcity.”
“First and foremost, far less housing has been built in California’s coastal areas than people demand.” (Citing the California Legislative Analyst’s Office).
“In the 1950s and 1960s, California routinely built more than 200,000 homes each year. Since 2007, California has never once permitted more than 150,000 new homes.”
“Zoning regulations in liberal states and cities that restrict housing supply have increased costs far more than the recent influx of immigrants.”
The Shift from Growth to Anti-Growth (The “Petaluma” Model):
The authors trace a historical shift where California moved from welcoming development (the “Lakewood” model) to restricting it through growth caps and boundaries (the “Petaluma” model).
“Today, California is more Petaluma than Lakewood... the city became famous for stopping growth rather than for welcoming it.”
“Anti-growth politics could, and often did, tip into a kind of misanthropy aimed at newcomers.”
Weaponization of Environmental Laws (CEQA):
The authors argue that well-intentioned environmental laws, specifically the California Environmental Quality Act (CEQA), have been repurposed to stop housing construction.
“CEQA became a potent weapon against the construction of new homes. ‘Between 1972 and 1975, twenty-nine thousand proposed homes in the Bay Area... were subject to environmental litigation.’”
“A lobbyist for the Sierra Club put it, CEQA now covered ‘anybody engaged commercially in putting two sticks of wood together.’”
Excessive Regulations and “Everything-Bagel Liberalism”:
The authors describe a regulatory environment where too many requirements are piled onto projects, making them prohibitively expensive.
“The standards in California are higher than anywhere else in the country. And you’re not just required to build to the standard, you also need to hire a consultant to confirm you’ve built to the standard. That adds costs.”
2. Los Angeles Specifically
Anemic Permitting Rates:
The authors highlight Los Angeles’s failure to permit enough housing relative to its population compared to other cities.
“Los Angeles’s and San Francisco’s metro areas permitted only 2.5 units per 1,000 residents.” (Page 33, contrasting with Austin’s 18 units).
“’In Los Angeles, fewer homes were built in the seventies than in the sixties, fewer in the eighties than in the seventies, and fewer in the nineties than in the eighties, even as the city’s overall population grew.’” (Page 37)
Bureaucracy and Funding Complexity (Prop HHH):
Using the Prop HHH bond measure as a case study, the authors attribute high costs to a “beast” of regulations and complex funding structures that delay projects.
“A 2022 audit found the units cost, on average, around $600,000, almost twice the cost of the median sale price for a home in Houston.”
Ron Galperin, former LA City Controller, states: “’If you look at the inflated cost that comes along with all of the regulations and rules and restrictions... basically all of this money is going to feed the beast of covering the cost of the regulations.’”
“We had thirty-eight unique funding sources coming in when I was there... and each of those had annual or biannual audits.”(quoting Heidi Marston)
Local Opposition (NIMBYism):
Specific examples in Los Angeles, such as the Venice Dell Community project, illustrate how local homeowners use lawsuits and parking complaints to stall affordable housing.
“The development is being fought and even sued by a collection of local homeowners who complain that ‘Venice desperately needs this parcel to address our chronic parking shortage’...”
Surviving local opposition often means agreeing to a range of demands that send costs ballooning... developers hire pricey architects, redo plans repeatedly... hire extra lawyers and auditors.”
These are brief excerpts that I organized for quick reference and easy sharing. They do not reflect the full depth of the book. I am finding the book valuable and recommend it to anyone interested in government reform.
* above means that’s an affiliate link; buy their book and make me rich, a few pennies at a time. 😂