If your son/daughter and their mate have a couple of kids and they have a joint income of say $85,000 a year, why can’t they find an affordable home to rent/buy?
Well, there are lots of reasons why it will be hard for them, and most are associated with government policies that have dramatically increased the cost of housing. Sacramento politicians, they are the ones making the rules, and local elected officials like to blame developers for profiteering, but there is ample evidence that they themselves and their predecessors have their footprints on the backs of prospective homeowners.
A recent report in Noozhawk led off with, “The phrase ‘Santa Barbara needs more affordable housing’ gets thrown around a lot, but what does it mean for housing to actually be affordable?” It then reported that “in order for housing to be considered affordable, a renter should only have to spend 30 percent of their monthly income on housing expenses, otherwise the renter is considered burdened by the cost of housing.”
So that means that the happy couple, earning $85K has about $25,500 a year or $2,125 a month in their budget for housing. When I was younger that was a lot of money; today in Lompoc a modest three-bedroom home rents for well over $3,000 a month—and then you still must pay for utilities, and taxes if you own the home.
But why have housing costs escalated to current levels? One example is a four-bedroom house in the development I live in that was built 40 years ago and sold for around $120K new. It sold last week for $710,000 and the monthly payment is estimated to be more than $4,500 a month.
At the start of this commentary, I said that government policies are the primary reason for these huge increases in cost. Politicians like to be elected, and while most of their donations come from wealthy donors, the votes come from everyday working people like you and me. To get these votes, they must deliver something to their constituents, and in this case it’s low-cost housing.
There are several federal and state programs that incentivize developers to build housing specifically for low-income families. In return for building these projects, they get a substantial tax break, and in many cases these projects don’t pay for their fair share of general fund services, such as police and fire protection, because they are exempt from property taxes.
The cost of construction is higher than market rate projects because they must be built to last for 55 years and be “energy efficient and environment friendly.” Another factor is that if government money is involved, the builder must work to a “project labor agreement,” which specifies that only union contractors can be used on the project.
So, what does this mean when these policies are applied to low-cost/affordable housing projects? A recent project on the infamous skid row in downtown Los Angeles for unemployed and unhoused persons came in at $593,525 per unit for a one-bedroom apartment. And in Lompoc, the Housing Authority renovated several existing homes a few years ago for approximately $400,000 per house.
When the government creates situations like these, it’s no wonder that the cost of market rate housing is so high.
So, the next time you hear politicians and/or local activists complaining about the high cost of housing, remind them that it was elected people “trying to help” that contributed to this problem.
Ron Fink writes to the Sun from Lompoc. Send a letter for publication to [email protected].
