Elias: California housing policy based on state’s bad forecasting

Despite no recent population growth, legislators have chosen to encourage more crowded living conditions

Ballyhooed state forecasts on issues like California’s housing and population can be counted on to be incompetent and inconsistent. They are usually out of date even before they are issued.

For years, this state has plagued its cities and counties with inaccurate, widely disparate estimates of housing demand. California’s Department of Housing and Community Development (HCD) predicted in 2018 that the state would need to build 3.5 million new housing units by 2025.

Four years of unexpected population loss ensued. The HCD never mentioned this as a reason, but by 2021, the need had decreased to 1.8 million living spaces. Despite more net out-migration from California this year, the projected housing need rose again, this time to 2.5 million. The state provided no explanation for its inconsistency, apparently assuming that no one would recall the previous estimates, none of which developers came anywhere close to meeting.

Now it’s the turn of the state’s finance department’s population forecasters. They predicted tremendous California growth ten years ago, apparently not realizing that most cities were already pretty well built out and that massive population growth would either require massive new swaths of urban sprawl or require tearing down and rebuilding in existing neighborhoods to make them far denser.

Despite the fact that there has been no population growth, policymakers in the Legislature have chosen to pursue density, with nearly all of their new housing laws aiming to encourage more crowded living conditions and assuming that those in the new buildings will own few cars and use public transportation. Of course, despite new construction near light rail stops, mass transit ridership has not increased significantly. So much for that prediction.

The Finance Department predicted in 2013 that California would have 52.7 million residents by 2060, but now estimates that number will be 39.51 million, or roughly the same as today. But wait: this forecast was not worth the many sheets of paper it was printed on.

There is now widespread buyers’ remorse among California emigrants in places like Dallas and Austin, Texas; Tucson and Glendale, Arizona; and several parts of Florida. Californians flocked to those locations in droves before and during the COVID-19 pandemic.

Initially enchanted by Austin, where many high-tech workers relocated after the virus freed them from office work, they are now finding it difficult to move from gig to gig as easily as they could in places like Silicon Valley and Orange County’s Irvine area.

Because, while Austin has a fair amount of technological innovation, the California technology hubs remain dominant in their industries, providing far more options for changing jobs without risking long-term unemployment. Some emigrants also complain about the weather in central Texas, which has many more 100-degree summer days and far colder winters than they did in California.

Moving back to California after selling a California home and converting your equity into a larger Texas mansion can be difficult without a significant drop in living standards. As a result, emigrants who abandoned their previous options have less potential mobility.

According to a recent survey of Austin newcomers, many want to return to California. It’s similar in cities like Orlando, Florida, and Tucson, which drew many Californians with lower-priced, more opulent housing than they could afford in coastal California.

There’s a good chance that many of the recent California emigrants will return, even if it means settling for a slightly lower standard of living for a while. The reports indicating this likelihood, however, came after the release of the state Finance Department’s forecast, so it was likely out of date before being printed.

California’s economy will most likely recover, but not to the levels seen from 1950 to 2010. This is partly because the state has become denser than before, making it less appealing to many people who prefer green spaces.

All of this should reassure property owners who want to get rid of the many vacancy signs on new apartment buildings opening in California every week, and it demonstrates the mistake of assuming that current trends will continue indefinitely.