February 24, 2020

YES. NEXT QUESTION? Do Californians hate deregulation more than homelessness?

Homelessness has many causes, and few of them are easy to work through. Addiction and mental illness are two. Family and community breakdown are two more. Drawing the homeless population to Santa Monica specifically are laws that explicitly permit sleeping on sidewalks.

But one cause of homelessness is a simple lack of homes. And Santa Monica, like much of California, has fewer homes than it should — thanks to regulation.

Land-use regulations make housing more expensive. The Los Angeles metro area ranks as the 15th most restrictive in land-use regulation.

People who own houses in housing-restricted places often don’t want to deregulate. They like the space. They fear the traffic. And they know that adding more housing could harm their home values. Of course, preserving scarcity in housing to keep your housing investments valuable is not really something most people want to admit to, so they make other arguments. They suggest that the regulations drive up home values not by curbing supply but by giving people what they want: green buildings, safe buildings, adequate parking, and uncrowded neighborhoods.

But the one study that has looked into this finds that more than 90% of the price effect of regulation comes not from making the homes more desirable but from limiting supply. So regulation is affecting the market mostly by preventing homes from being built.

It’s “the housing price of liberalism,” as Thomas Sowell dubbed it – and it doesn’t come cheap.

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