Tobias Peter and Edward J. Pinto at AEI:
In the 1970s, California had normal home prices—about on par with the rest of the nation. But since then, a toxic mix of ever-tightening environmental regulations, arcane zoning laws, and relentless NIMBY (Not in My Backyard) opposition to new housing has created an environment where it’s virtually impossible for the market to build where new housing is most needed. The result is astronomical home prices that make even well-paid professionals struggle to buy or rent.
California’s failure to build hasn’t stayed within its borders. The state has been exporting its housing crisis across the West. Over the past 30 years, IRS data show California has suffered a net loss of more than three million taxpayers and their dependents to the blast zone states. Small states like Nevada and Idaho, along with Oregon and Arizona, have been especially affected—absorbing massive inflows of Californians that amount to 15 percent (in the case of Oregon and Arizona) to a staggering 37 percent (in the case of Nevada) of their total populations. These migrations have driven up home prices and rents in receiving states, spreading California’s affordability problems far beyond its own making.
For policymakers and housing advocates, the takeaway is clear: Fixing America’s housing crisis demands boosting supply in the places with the most severe shortages. This can happen by unleashing the private sector through what we call the Housing Abundance Success Sequence: allowing smaller lot sizes in new subdivisions, enabling single-family-to-townhome conversions in expensive neighborhoods, and adding mixed-use zoning in underutilized commercial corridors—done by right, and kept short simple without micromanaging. By our estimates, these steps could close the West’s housing shortage within a decade.