California’s Reactionary Housing Policy Burns Millennials

This article appeared in The American Interest.

The Golden State’s soaring home prices—exacerbated by NIMBY zoning restrictions, development plans that prioritize “density,” and arbitrary environmental rules—are exacting a catastrophic social and economic toll on the rising generation of young people looking to start families and lay down roots. So argues a bracing recent report from Joel Kotkin’s Center for Demographics and Policy at Chapman University. An excerpt:

Often cast as ‘progressive’, California’s land use policy is anything but reflective of historically liberal values, which traditionally favored the dispersion of property ownership. President Franklin D. Roosevelt said, “A nation of homeowners, of people who own a real share in their land, is unconquerable.”75 Homeownership is not only critical to the economy, it provides key elements to our fraying civic society. Homeowners tend to vote more than renters, volunteer more, and as Habitat for Humanity suggests, provide a better environment for raising children.

Today’s assault on single-family housing essentially dooms much of the California middle class.

Kotkin and his colleagues note the high number of California millennials who are “failing to launch” due to prohibitive housing costs. While older California residents own homes at average rates, millennials own homes at lower rates than their peers in any other states except New York and Hawaii. More than half live with parents or other relatives. If home prices in California continue to rise at several times the rate of those in the rest of the country, “failure to launch” could turn into “crash and burn,” as an entire generation is denied the California dream their parents enjoyed.

This isn’t just an ordinary public policy dilemma; it is a crisis that cuts to the heart of the bargain that holds communities together. The absence exodus of young people, especially those who are working and middle class, has caused inequality to soar, making inland areas virtually unrecognizable compared to wealthy areas along the Pacific Coast. Because most people want to own a home before they start a family, the population of children in the state is shrinking, “with the lowest crude birth rate since 1907 occurring in 2016.” And as the authors suggest, the concentration of property ownership within a shrinking portion of the state’s ultra-talented elite threatens the ideal of democracy itself.

California is so firmly in the grips of cosmopolitan progressive ideology that it may be difficult to roll back the housing policies that are turning the state into Brazil. (Land-use policies reinforce this ideology by driving out more populist-minded voters). But in order to prevent these destructive dynamics to spread to the rest of the country, state policymakers and the federal government should prioritize that keep middle-class homeownership affordable and accessible. Building regulations should be rolled back, at the state and local level; city planning policies should favor suburbanization, rather than density; and the public funds should be allocated to build new infrastructure stretching further outside of city centers to facilitate a Third Ring of Suburbs.

If American society is going to hold together for a new generation already deeply divided and facing unusual economic strain, we need to get this issue right. Broadly-shared property ownership is a key to America’s social and economic success. Millennials need, as we’ve said before, need “a seat at the table and a slice of the pie.”