NCPA - National Center for Policy Analysis

Environmental Regulations Kill Affordable Housing for Many

February 26, 2004

Housing prices in California are soaring thanks to environmentalists. Restrictions and requirements on land and buildings have resulted in rents that are twice as high as they should be, as well as increased commute times and increased congestion, says Thomas Sowell (Hoover Institution).

For example:

  • San Franciscans who wish to purchase a small house on the peninsula need an income of at least $104,000 per year with a down payment of $100,000 (or 20 percent of the house price).
  • The average price of a "nondescript" house in San Francisco is $500,000.
  • In San Jose, a person making the minimum wage would have to work about 168 hours (or about 40 hours per week), per month to pay rent on a one-bedroom apartment, leaving virtually no income left for food.

One of the many obstacles to affordable housing in California is building height restrictions. In an effort to prevent the Manhattan-like appearance of towering skyscrapers, officials restrict the height of buildings to -- say -- five stories. Therefore, an originally planned ten-story building must take up more land in the form of two five-story buildings, resulting in higher prices. Moreover, the value of the land is often higher than the value of the structure being built.

Source: Thomas Sowell, "Environmentalists to Blame for Sky-High Housing Costs," Investor's Business Daily, February 4, 2004.


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