Comstock's magazine 0119 - January 2019 - Page 45

NEW HOUSING UNITS BY DECADE 1970 GOV. RONALD REAGAN SIGNS THE CALIFORNIA ENVIRONMENTAL QUALITY ACT Smog clings to Los Angeles. Citizens complain of water pollution. On the heels of the National Environmental Policy Act (signed by President Richard Nixon on Jan. 1, 1970), CEQA requires lo- cal agencies to conduct detailed, specific environmental reviews of new housing developments. If the project is deemed to have a material environmental impact, then the developer needs to complete an environmental impact report. Nearly 50 years later, CEQA continues to polarize. Critics say the law has led to higher construction costs, fewer new developments and frustrating de- lays of the projects that do move forward. A review from the non- partisan Legislative Analyst’s Office found that “local agencies took, on average, around two and a half years to approve housing projects that required an EIR.” 1970s RAPID EXPANSION, SOARING PRICES As the suburbs continued to sprawl outward — Roseville, Rancho Cordova, South Sacramento and Elk Grove — homes are built at a madcap pace. In 1970, Sacramento had a total of 212,000 hous- ing units. The decade cranked out over 110,000 new units (53 percent of them single-family homes), a larger expansion than the region would see in the ’80s (91,000), ’90s (60,000), 2000s (81,000) and especially this decade so far (a meager 14,000). They were also pricier. Between 1967 and 1980, the price of the average home had more than tripled, up 350 percent. 1972 NEW ‘POPULARLY PRICED’ HOMES Middle-class homes in the Larchmont Foothills sell for between $19,450 and $22,300, according to the North State Building Industry Association. 1978 PROPOSITION 13 “The most important thing in this country is not the school sys- tem, nor the police department nor the fire department,” said tax activist Howard Jarvis, after his Proposition 13 was amend- ed to the California Constitution. “The right to have property in this country, the right to have a home in this country, that’s important.” Jarvis’ initiative passed in a landslide, hauling in 65 percent of the vote. The law, technically called the People’s Ini- tiative to Limit Property Taxation, famously (or infamously) fixed property taxes at 1 percent of the home’s purchase price, and capped the annual increases at 2 percent. While popular, its long-term effects are complicated and endlessly debated. Some say that government officials are now incentivized to approve commercial development deals instead of residential — as commercial developments could rake in 120,000 100,000 80,000 60,000 40,000 20,000 1970s 1980s 1990s 2000s 2010s more tax revenue. Then again, looking back, the NSBIA recent- ly said that in the late ’70s, “with new mortgage programs and tax benefits of Prop. 13, the total amount needed to qualify for an ‘average-priced’ home is $1,800.” 1980 INTEREST RATES HIT HISTORIC HIGH, 20 PERCENT Stagflation chokes the economy. Construction plummets. In 1979, there were 13,900 new homes; in 1980, half that. “The plight of the real estate industry during 1980 has been well-docu- mented, with record high interest rates and rising housing prices eliminating more than half of all Americans from qualifying down payment and mortgage requirements,” explains an analysis from the Business Services Bureau, written in 1981. “Sacramento has been no haven for the suffering residential real-estate and construction industries.” 1982 GARN-ST GERMAIN DEPOSITORY INSTITUTIONS ACT Mike Gobbi has been a Sacramento real-estate broker for nearly four decades, with more than a thousand sales under his belt. He remembers that in the early ’80s, thanks to some lax loan regu- lations, it was cartoonishly easy to quality for a loan to purchase an existing home. “We called it the mirror test. If you could fog a mirror, you could buy a house,” Gobbi says. In 1982, the Garn Act tightened those restrictions, making it tougher to qualify for a pre-existing loan (of used houses), which nudged consumers toward new construction. January 2019 | comstocksmag.com 45