In other words, the backlog increases during a recession due to market power and persists in good time due to government-imposed construction restrictions.
“This is a chronic problem,” said Khater. “We have both market failure and government failure.”
Both of these failures were exhibited decades ago in San Francisco, where housing is scarce. When interest rates were low and demand was strong, developers desperately wanted to build, but had to spend years getting the necessary approvals and permits. Now that the market has changed, some of the projects that survived the process have been discontinued because developers couldn’t afford to build them.
Michael Covarrubias, Chief Executive Officer of TMG Partners, is a developer of residential and commercial real estate in the Bay Area. Covarrubias said there are two projects that can be legally started to build, with about 800 condominiums in between. However, they are frustrated by rising material and funding costs.
“Core real estate is a simple business,” Covarrubias said. “You have to pay for your money, and getting math to work is getting harder and harder.”
Nationally, due to the persistent shortage of housing, many lawmakers have revisited old ideas. Public housing..of California, Hawaii, Rhode Island, Maryland, When ColoradoLegislators have introduced or passed proposals that allow state and local governments to develop housing for a variety of incomes.
Alex Lee, a Democrat of San Jose and a member of the California State Legislature, said: This year, Lee introduced steps that would create a new state agency to build mixed-income homes throughout California. Despite a failure on the committee, Lee vowed to continue pursuing government-built housing.
