the articles starts out saying that the California Code of Regulations "contains more than 21 million words". Which made me curious: how many words for Texas' code? Answer: 15 million.
I think the most important issue in modern governance that nobody ever talks about is the tendency for the number of laws and the size of the legal code to monotonically grow towards infinity
I think that's mostly just cynicism. If you actually chart document lengths, you are far more likely to see logarithmic growth or something asymptotically approaching a (finite) value.
More importantly: this is both to be expected and rather benign. It's expected because regulation simply grows with the complexity of society, which is increasing at a similar or even larger pace. Most of our wealth is due to specialisation and research. And with the benefits of, say, flying cars, comes the need to establish rules.
It's also benign because almost nothing of it will ever concern you, or any other specific individual. You can fly your car without knowing the crash test procedures for it. They are relevant only if you are building flying cars. In that case, you do have to familiarise yourself with the rules, but that is a task of the same magnitude as it was with existing regulation for (regular) cars, which no longer concern you.
Logarithmic growth monotonically increases to infinity, no?
And I would be highly skeptical that it would ever approach a finite value, I mean, why would it? What is the incentive for politicians to just stop making laws once they reach a certain threshold?
The article mentions that Rhode Island did that wholesale: "The Democratic-dominated Rhode Island government recently eliminated more than 30% of its rule volume by setting an expiration date for its entire regulatory code, forcing state agencies to start fresh."
Ah, good point. If you believe a particular regulation is useful and necessary now, why wouldn't you also believe it would be so in the future? You may not be in power to conditionally renew it. And from a pragmatic political perspective, sunsetting smells like compromise; the political base and interest groups generally frown on compromise. All of which may explain why sunsetting isn't as common as one would think, even if most legislators share the sentiments expressed in this thread (and I would presume that they do).
It's historically been hard to do because there's a tendency to just automatically extend the sunsets when they arrive. Though a couple of other replies to your comment have a couple of nice examples.
That suggests a more general downside from sunsetting--it increases opportunities for lobbying. Worse, it benefits long-term preparation and strategy, which will favor monied interest groups and lobbyists especially. Which is similar to the downsides of term limits, which effectively shifts power to those behind the scenes--e.g. political operators, party bosses--rather than to the electorate. If you make serving in an office a literal revolving door, you empower those positioned to line people up at the door. Likewise, if you make lawmaking a process of continually rehashing old compromises, you empower those playing the long game.
It's interesting that they zoom in on the energy requirements as driving the $400K housing costs in LA. In the Central Valley developers put up completely code compliant houses for about $150/f2 -- about $250K-$300K. $150/f2 is really quite cheap by US standards. If the price in LA is more (which is understandable) this one factor can hardly be it.
Other factors they mention (single family requirements, lot size, density) have a lot more to do with it.
The article references energy efficiency regulations specifically. Is the energy code in California significantly stricter than the IECC?
There are nice aspects of energy codes. For one thing, potential renters and buyers have little insight into how efficient a house or apartment really is. Since landlords and builders aren't paying the utility bills they are incentivized to reduce upfront construction costs at the cost of higher utility bills (and environmental damage) going forward.
If these codes are effective then they might be worth the increased construction costs. I'm not necessarily saying that they are (I don't know, maybe California's code is filled with frivolous, ineffective details; the article doesn't really give any examples) but I think just the fact that they increase upfront costs doesn't actually mean they aren't a good idea.
California requires solar power on every new house. It's a huge cost. Most local governments also require off-street parking, which is a huge cost. The regulatory burden isn't just in planning and permitting.
> California requires solar power on every new house.
No, it doesn't, though it will soon.
> It's a huge cost.
The estimates of $10-30k are under (to far under) 5% of the median home price (for all sales, not just new homes, which would drive the median much higher). It's obviously not a significant current cost driver, and it also won't be a big cost driver when the mandate actually applies next year.
Mandatory solar panels might be a small fraction of housing costs but the cost of regulations isn’t from one big regulation. It’s from adding regulations over and over until the cost is twice what it needs to be.
$30,000 here, $30,000 there, pretty soon you’re talking real money.
> They're going to require solar power on all new houses?
Yes, as of Jan 1, 2020.
> That's insane.
It's $10-30k of upfront cost for $19-$60k of 30 years savings (and the same sources estimating the higher cost figure estimate the higher savings figure), and it greatly advances California's renewable share of generation, and solar output peaks correlate well with aggregate demand peaks in CA.
As public policy solutions go, it is eminently sensible.
Regulations in California are generally tiresome but it's ridiculous to claim that regulation could be responsible for things like startup stock offerings making local rents double over the course of a few years. Those buildings are already constructed and if you live in them you can observe that no major remodelings or other updates happen during the time period where rents are skyrocketing. The rent boosts when startups and startup employees come to a new neighborhood are a consistent pattern and it kicks out local residents as landlords find ways to evict them to raise prices.
Meanwhile new construction is way more expensive than the existing boosted rent. You can claim regulation is responsible for part of that, but why wouldn't the vendor charge less than the nearby boosted rents to compete? Did regulations somehow literally eat $1500/mo worth of margin? It defies plausibility.
When I moved to the SF south bay area about 10 years ago, my rent was $700/mo. The equivalent is now upwards of $2000. It's hard to imagine policies that could possibly make it go up that high. Imagine if we had rent control...
Yes, San Francisco has rent control. However, the SF South Bay Area does not contain SF. It is usually considered to contain around twenty cities and towns, only four of which currently have rent control: East Palo Alto, Los Gatos, Mountain View, and San Jose.
Counting words and claiming there are too many isn't very convincing, especially since they admit that "some" of the regulations make sense. Could they maybe identify one regulation that imposes a significant cost burden but doesn't have a clear benefit?
I personally feel regulation slows down new construction, but doesn't necessarily increase costs. Dilapidated houses still go for large sums, so I suspect land costs to be a major reason as well. Additionally, lack of contractors is becoming an issue(demand increases, costs increases) with many of them working indefinitely over in fire-ravaged areas like Paradise or Santa Rosa.
If construction takes longer, costs increase. This is indisputable.
Imagine you buy a piece of land for $100,000 with the intention of developing it. Until the property is developed and sold, you have numerous carrying costs (taxes, insurance, debt payments, etc.). In California, your annual carrying costs may easily be $8,000-$10,000 per $100,000.
If it takes you one year to develop the property, you need to sell the property for $108,000 just to cover the carrying costs (i.e. this doesn't account for the actual construction costs or selling costs). If it takes you two years to develop the property, you need to sell the property for $116,000 just to cover the carrying costs.
Keep in mind, the time to develop isn't idle time where the developer incurs only carrying costs. It's endless drafts, consultations, and meetings. It requires actual money to be paid not only to the city, county, and state, but to architects and planners and contractors to comply with increasingly byzantine and mercurial requirements. The longer this goes on, the more money a developer has to spend.
The longer a developer is forced to carry the property, the more they need to charge to recoup their investment. Since no one is going to develop property without anticipated profit, this means prices necessarily rise.
That's probably true, but it also limits the number of available contractors to the ones who know a particular city's processes. It would be harder for a smaller contractor to operate across multiple jurisdictions. So it limits competition, which drives up prices.
That may be true. But that means it makes much less sense to build “affordable homes”. Even though the home we had built (through a builder) 3 years ago was very reasonably price (Metro Atlanta) at less than 350K, we chose the smallest, cheapest floor plan available and still ended up getting 3100 square feet.
Regulation most certainly increases construction costs. Safety features will definitely increase cost. So does environmental compliance. I don't necessarily think those are bad things, but they definitely increase costs.
From the article:
"These energy rules reflect an important priority for Californians, but they contribute to staggering construction costs and, in turn, higher house prices. Affordable housing builders spend $400,000 per unit, on average, for new housing in Los Angeles, more than any other city in the country. State energy standards contribute to this cost."
In practice, we’re trying for perfect over good. Let’s say I’m a low income family and I’m trying to buy a house. Adding 10% might price me out of the new market and into an older house. Yes, the goal was to give people more insight into recurring costs, but now you’ve pushed them into older stock that may have maintenance costs that are an order of magnitude higher than the electric bill.
Slowing down a project increases cost. Also if your total construction per year can’t keep up with incoming migration the net difference will be demand growth which necessarily raises housing costs.
...if there is significant demand. Additionally faster construction can also imply higher costs (more workers needed for single projects to meet deadline, etc).
Yeah, the question isn't whether stricter building regulations increase costs but by how much. And in the context of the housing crisis, how much does it increase the price of pre-existing housing. The costs are attenuated down market. And the benefits are shifted across time--the expensive single-family home sprinkler system today that seems like overkill is intended to prevent deaths when it becomes a multi-generational, multi-family home 20 years from now. Just like anti-lock breaks and crumple zones increased the price of cars but substantially increased the safety of used cars years later, and much if not most of the premium in costs was borne by the first buyer.
As you say, labor seems like a much more significant factor. And restrictive zoning and NIMBYism even more so. But restrictive zoning is a sensitive topic for conservatives. Conservatives seem to be against regulation except when it's used to preserve the "character" of existing neighborhoods--not to be confused with historic preservation, which is bad restrictive zoning. Direct regulation is a more convenient target, ideologically. Likewise, I often hear conservatives lament the cost of labor but they're walking on glass by suggesting that working-class voters should be paid less.
To be fair, progressives make the same mistake of assuming new housing should be built for the poor and working class. And NIMBYism knows no bounds. Indeed, it was progressive efforts to "empower" communities that opened the doors for NIMBY obstructionism. It's difficult to devise a political mechanism that won't ultimately benefit the rich and powerful more than the poor.
My key take-away from these authors is this tidbit:
> Researchers at the Mercatus Center at George Mason University developed State RegData, a platform for analyzing and quantifying state regulatory text.
This might bite a little harder if you could look in any direction in Los Angeles and not see new construction. The current amount of space occupied by low density housing is something we could improve on but its just that. Occupied!
Hopefully all this commercial space rezoned for multi-purpose use (shops on the ground floor, apartments or offices above) will free up some of the low density real-estate but its not over-regulation keeping those houses high priced and full.
The number of housing starts in Los Angeles right now is basically zero[1]. 30 years ago the pace of home building in LA was three times higher with a population 20% smaller.
Makes sense. There was far more space then. When I was a kid the Hollywood hills looked very empty, now you see more housing than mountain. We're building up instead of out from now on and that's a lot harder.
Of course not. Why shouldn’t the people who live there be able to decide the character of their city? If the cost of living gets too high either people will move to lower cost of living and companies will follow or the opposite will happen. The United States is a big country with lots of land.
Besides, the federal government is the least representative of people in larger cities. Your vote counts s lot more in rural America and in smaller states partially because of the electoral college and partially because Rhode Island has the same number of Senators as California.
For deep and persistent reasons, a society’s highest-value economic activity and growth will tend to be in cities. The stakes are much higher than architectural taste, and decisions about access to those economies affect everyone. People getting locked out of an economy have a stronger claim to a seat at the table than people worried about shadows.
An abundance of land suited to agriculture or resource extraction is irrelevant in a dispute about access to the 21st century economy, which is essentially urban.
Even if that’s the case, those cities don’t all have to be on the west coast. You could have more smaller “big cities”.
But with the imbalance of power where rural America’s vote is worth more per capita than big cities/big states, do you really want to give that power to the federal government?
There is nothing stopping tech companies from “rural sourcing” - opening smaller satellite offices in less populous areas. A benefit of that would be that the tech industry wouldn’t be so myopic.
Do you know how often people on HN wonder how could any software developer live off of only $120K-$150K?
Availability of talent in those markets is what’s stopping then. One of several agglomeration effects that push economies towards cities, and explain why an even coverage of the landmass is not happening and not desirable.
After the most expensive US cities, we find the cost-benefit for new engineering sites points invariably to other countries.
The federal government gave us the interstate highway system and FHA subsidies that enabled sprawl, it owes it to us all to clean up the abomination of suburbia. The most important thing would be a similar scale investment in urban rail, but it should probably be contingent on upzoning around stations, yes.
I live in Metro Atlanta, we are still building and growing like crazy, and there is no shortage of tech jobs that pay well considering the cost of living. There are plenty of other relatively affordable cities. If LA doesn’t want to grow. So be it.
That was a for instance. There are a number of other large and economically significant cities in the US that aren't on the West Coast, many of which also have relatively high existing (absolute, not just relative to local CoL) tech salaries. Washington, D.C., metro is just behind New York, for another example, but the list is long.
OT, but Rhode Island is far more populous than many other states (double that of Wyoming, which is the least populous state); they have 2 house seats whereas there are 7 states with only 1. They are the least populous state with 2 house seats though, and some counts put Montana (1 house seat) as more populous.
Another fun fact: there are about 10 cities in the US with a higher population than Rhode Island, and San Jose, CA has a similar population to Rhode Island with one-eighth the land.
California's property tax is less than half of that of Texas, New York, Illinois, New Jersey, Pennsylvania, and Ohio. Combine that with the fact that CA has prop 13, and one of the highest GDP per capita, and... Does anyone really think it's the regulation that's making prices high??
Sure, they're not helping. But high incomes and low taxes are a recipe for high prices. The only other state with high incomes and this low of property tax is D.C.
And D.C. and California both have average home prices roughly double everywhere else in the country. I wonder why. Maybe because incomes are 33% higher and taxes are 50% lower.
I think you're missing the causal pathway. High property taxes curb NIMBY behavior by making people want to keep property values from rising, resulting in low housing construction and high functional regulation of housing.
In contrast, low property taxes (and especially Prop 13 which decouples taxes from property values) causes homeowners to focus on building wealth through the appreciation of home values, which encourages NIMBY behavior.
If you lived in California through Prop 13 and were honestly paying attention one thing that becomes fairly clear. Property tax revenue is lower than the cost of government services. So there is zero incentive for built up cities to encourage more housing.
Point I'll make. If 'regulation' is what's causing high prices by restricting supply why isn't commercial construction effected? Explain that?
I'm glad that you agree that CA taxes and regulates real estate. The consensus is pretty much its the regulation that's doing it. Given the regulatory environment in CA, I would certainly never attempt to build a house there. I personally know people that have and the regulatory costs and delays are just ridiculous.
The next step is obvious. The government must come to the rescue and subsidize housing.
> I'm glad that you agree that CA taxes and regulates real estate.
What kind of manipulative garbage is this? onlyrealcuzzo isn't agreeing with the point you made; you aren't agreeing with the point onlyrealcuzzo made; and the point that you're making is only very slightly and tangentially supported by the thing that you're pointing out that onlyrealcuzzo tangentially said. This looks much more like you're trying to play gotcha games with onlyrealcuzzo's post, rather than dealing with it in good faith.
Full quote by Ronald Reagan: "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
Yes, some guy who was governer 45 years ago is responsible for all of California's problems and not the 40+ years of bad left wing policies that followed it.
Left wing politics has had marginal effect on California relative to the huge destructive power of Prop 13. Its passage immediately led to the local governments needing to be subsidized by the state government and a massive transfer of wealth in the ensuing years from renters to landowners. That Prop 13 also tied the hands of the legislature in changing tax code led to most subsequent programs being funded by ballot initiatives that earmarked all funds for specific programs, even if those programs later became lower priority, and those ballot initiatives that were funded by bonds tied up the general fund to leave very little left over for your Boogeyman left wing politicians to affect.
I don't think that's fair. Reagan was simply following a national trend, a trend advocated by both civil rights activists and psychiatrists. The best succinct history I've found is this 1984 New York Times article, "How Release of Mental Patients Began", https://www.nytimes.com/1984/10/30/science/how-release-of-me....
TL;DR: Reagan was trying to cut the budget and closing mental health hospitals was considered a win-win by everybody. That it happened under his governorship makes your statement literally true, but nonetheless very misleading.
It's important to recognize the history because when trying to address the problem now we hear the same retort--pills and freedom. But we got here precisely because we miscalculated the benefit of pills and the costs of an overly simplistic conception of freedom.
I have always wanted to design and build my own house from scratch. Now I know there is no way I would ever consider doing this in CA.
Why?
When we decided to go solar we opted to build a 13 kW array mounted on a custom designed pergola built in the backyard. We didn’t want it on the roof and we needed more shade.
The project was going to cost in the range of $50K to $75K. I did all the engineering and construction. By the time we were done the project cost us $125K.
I’ll spare you the details on the six months of agony the regulators put us through. They turned a super simple project into the worst nightmare I have ever experienced.
They have all the power. There is nothing —zero— you can do about it. And you better hold a smile any time you deal with them or they will deliver vindictive rulings from which you might never escape. CA needs a reset button. This is a mess. And it will get worse before it gets better.
Most of the analysis of regulation in both the article and this discussion thread focuses on what is controlled and where the lines are drawn, but this is actually a small part of the experience of regulation. Because of the structure of environmental impact reports and reviews proposals for development are open ended with all manner of input being considered for a period of time that is difficult to even estimate. Changing the process to be more reasonable and have expected time frames for resolution of conflicts one way or the other would greatly improve the experience of development. As it is estimating the time, cost, and risk of failure for development projects is nearly impossible. This unbounded process is a huge barrier no matter what lines get drawn along the way.
Within my neighborhood in California, there has been a steady pace of remodels which go through a vacant lot phase, rather than just adding on and renovating. How are such projects economic if regulations are having costly effects? I had to remove and replace a wall and also restucco the remaining walls. With the restuccoing, it was opportune to replace the windows. All this stuff had to comply with the latest codes rather than the code from the time the house was originally built. So it seems to me that the tear-downs have to comply with even more regulations so they would cost the same as any green-field house construction, without the benefits of scale.
The vacant lot stage, I assume, is due to the lengthy process of permitting. If you're referring to the same sort of "vacant lot" as I am, there is often a foundation and a single wall or so left so that it qualifies as a remodel as opposed to new construction (though in reality is effectively new construction). Presumably there is some regulatory and/or tax advantage to doing this.
In a lot of places in California, "how are such projects economic" goes beyond regulatory delays and their associated financial impacts. When you are spending $1M on a 1/4 acre property that you tear down and spend an additional $400k redeveloping, its certainly more than just regulatory costs making that so much more expensive than the vast majority of the US and the world.
In the article it says that one reason may surprise. Come on, really? It doesn't surprise no one but people who think the almight state should be everywhere and is the answer to everything.
If you search on-line you may find both opinions for and against housing regulation. I am totally against regulation but reading that the topic is a surprise is either a blant lie or the opinion of someone who doesn't live in this world and age.
The ceo of Zillow did an interview with npr and he said the reason prices are high is because the recession caused new construction to stop for a while which resulted in a shortage. A shortage combined with very high wages would result in what we see now. Admittedly, regulation has probably exacerbated the problem by making it more difficult to build, but that didn’t matter until we were behind. I would definitely believe him before any of the armchair real estate experts in these comments I must say.
As such these things are regressive against the poor, for which a electric car would be an extraordinary luxury, yet are required to implement it, else government thugs come to arrest you with guns in hand.
https://quantgov.org/state-regdata/
the articles starts out saying that the California Code of Regulations "contains more than 21 million words". Which made me curious: how many words for Texas' code? Answer: 15 million.
I'm not trying to make a political point, was just genuinely curious.