Unpacking the lies behind California’s new housing mandates

Wall Street capitalists and Silicon Valley tech bros are calling the shots in the Golden State — Hard working Californians don’t stand a chance

It’s a strange time in the history of California politics. Our state’s dominant Democratic Party, once a bastion of the working class and low income, immigrant, and marginalized people, has gone capitalist. Full on, Weyland-Yutani Corporation capitalist, willing to sacrifice anything and anyone in the name of profit and power. And it’s not just any old capitalism: Over the last five years the erstwhile progressive party has embraced trickle down economics to a degree that would make Ronald Reagan himself blush. Wall Street hedge fund managers, global real estate speculators, and Silicon Valley tech bros win, hard working Californians lose, and lose big. The Golden State is on the cusp of arguably the largest single transfer of wealth and property from individuals and families to institutional investors, enabled by those who preach progressivism the loudest.

Over the last five years, justified by – oh, let’s call it “research” – from no less than McKinsey & Company California state lawmakers have passed a massive package of laws, some 75 and counting, that have effectively deregulated the state’s housing market, especially at the local level. They’ve stripped cities and counties, not to mention individuals and families, of nearly every protection that once stood between their homes and the whims of the political and investor classes. They’ve even gutted the state’s signature environmental law, the California Environmental Quality Act (CEQA), once the California Democrats’ pride and joy.

It all amounts to a new gold rush that will make the original one look like a yard sale by comparison. The scary and sad thing is, it’s already well underway.

Want to spread a (very profitable) lie? McKinsey & Company is at your service

In 2018 McKinsey released a report that concluded California needs to build 3.5 million new units of housing by 2025, a number that is patently absurd on its face. Yet it has become the origin story for the assault on average Californians, 3.5 million McKinsey’s report was the beginning of trickle down housing policy in California. McKinsey argued that the state should build as much market rate and luxury housing as possible, on the theory that the results would push down housing costs for everyone. It was voodoo economics on steroids: Multiplied by the U.S. Census Bureau’s estimate of an average of 2.95 people per household that’s enough housing for 10,325,000 people, or more than a quarter of the state’s current population, almost none of it affordable. Sliced another way McKinsey would have had people believe less than three years from now we’d be a state of some 51 million people, all living in densely constructed, side-by-side “stack and packs” rather than detached homes. By their estimate the process needs to be completed less than three years from now (subsequent state policies pushed the deadline out to 2028 in most places, which of course ought to do the trick).

Actual experience proves how hopelessly wrong the experts’ estimate was. In 2018 California’s population was 39,460,000. Today it’s 39,238,000. At a time when McKinsey concluded we’d be adding more than a million residents every single year, we’ve lost nearly a quarter of a million and counting. Coupled with the still unfolding impacts of the COVID-19 crisis and the coming shocks from the war in Eastern Europe we simply live in a different world today than we did half a decade ago. You would think that would give policymakers pause. It’s hard to imagine a worse prognostication, and yet the state’s political class is doubling, tripling, and quadrupling down on it. Over the last two legislative sessions they cynically exploited the COVID crisis, particularly the suspension of in-person proceedings in the Capitol which is one of the only remaining sources of sunlight in the state’s legislative process. They used this cover of political darkness to advance their radical, and radically unpopular, agenda to destroy California’s middle and working class neighborhoods and replace them with dense urban “15 minute cities.”

Mind you, these allegedly progressive politicians are using a study from the consulting firm that previously was better known for advising Immigration and Customs Enforcement (ICE) how to run more efficient detention centers during the Trump administration, helping Saudi Arabia’s autocrats identify and detain dissidents, advising Turkish strongman Recep Tayyip Erdoğan how to run his repressive regime more efficiently, working closely with state-run businesses and banks in Vladimir Putin’s Russia and Xi Jinping’s China, and even advising Beijing in building islands in the South China Sea, part of its expansionist agenda.

Most recently and notoriously, the firm beloved by California Democrats paid a record $573 million to settle an investigation by 49 state attorneys general into its sales advice to pharmaceutical companies including Purdue Pharma, the manufacturer of OxyContin. The firm’s starring role in the opioid crisis that has killed nearly a million Americans in the last 15 years was front page news, with the New York Times reporting:

McKinsey’s extensive work with Purdue Pharma included advising it to focus on selling lucrative high-dose pills, the records show, even after the drugmaker pleaded guilty in 2007 to federal criminal charges that it had misled doctors and regulators about OxyContin’s risks. The firm also told [a drugmaker] that it could “band together” with other opioid makers to head off “strict treatment” by the Food and Drug Administration ….

McKinsey worked with Purdue executives in finding ways “to counter the emotional messages from mothers with teenagers that overdosed” on the drug.

Well, then. These are the same people providing cover for California’s push to build millions of units of housing the state doesn’t need, a push that already is creating the biggest housing bubble in history. All of this is to the great and abiding delight of Wall Street and Sand Hill Road, enabled by Democrats who call themselves progressives. This is what happens when the true believers and the calculating capitalists align. In this epoch the newly woke petit bourgeoisie play the role of chivalric useful idiots, educated in failed public primary and secondary schools then finished at universities that are not so unlike the religious academae of medieval Europe, emerging from their academic chrysalises deep in student debt for degrees barely worth the proverbial paper they’re printed on. Only these days we call some of them senators, assemblymembers, and governors — not to mention the permanent class of staffers, lobbyists, lawyers, and consultants who do most of the actual policymaking.

With great ease and nary a twitch of the conscious leading acolytes of the movement, like state senator Scott Wiener (D-San Francisco), collectively continue to hoover up millions in campaign contributions from Wall Street, Big Tech, Silicon Valley hedge funds, pro-growth law firms, and, of course, developers, secure in the knowledge that history will vindicate their ideological (not to mention moral) transgressions. Especially if they keep talking woke. The only thing progressive about these people is their progressively more brazen hypocrisy.

Lies, and the (elected) lying liars who tell them

Armed with McKinsey’s hopelessly manipulated numbers Sacramento lawmakers used the disruptions of the COVID crisis to ram through their final wish list of attacks on homeownership, private property, and local democracy (in particular, California “progressives” really hate local democracy, the sheer audacity of the people expecting to have a say in what their communities look and feel like).

With the Capitol shut down elected officials used every dirty political and procedural trick in their extensive repertoire, from changing votes after the fact to literally doctoring an email from pro-affordable housing grassroots group Livable California to make it appear they took anti-affordable housing positions they did not (disclosure: I provide legislative analysis for Livable on a volunteer basis). Votes on key bills were scheduled late at night in the last days of the session to guarantee minimal media attention. Even still, some legislators who publicly sided with their constituents and their communities switched their votes after the fact to hide their true intentions.

Consider: Even with veto-proof majorities in both legislative chambers and a pliable Democrat in the governor’s mansion, and even in the midst of a historic health crisis in which most people who normally would be engaged in the legislative session were busy trying to keep roofs over their heads and food on their tables, state lawmakers still had to resort to dirty tricks, illegality, and subterfuge to pass their radical, anti-neighborhood agenda. That’s how deeply unpopular it is. They know they have to obfuscate and hide as much from the public as possible, and the pandemic proved just the ticket. It’s positively Nixonian if not downright Trumpian, their relentless assaults on reality and truth.

So much for representative democracy. Welcome to life in a one party state. Who’s woke now?

2+2=5

Here in Los Angeles County the numbers are particularly divested from anything resembling the real world. According to Census data, L.A.’s 10,014,009 residents live in 3,579,329 total households (defined as a separate occupied space, be it a detached house, apartment, mobile home, etc.) with an average household size of 2.99 people. That’s actually enough existing housing for 10,702,194 people, at least theoretically. Put another way, without building a single new unit we already appear to have enough existing stock for nearly 700,000 more people than live here. And that doesn’t include 20,000 new units permitted as of 2021, good for another 60,000, nor the tens of thousands of beds in temporary and long-term homeless housing.

Staggeringly, the state housing authority has ordered the county to add 812,060 new units by 2028, enough housing for 2,428,059 new residents. This mandate, in a county that like the state has begun losing population. As shown in the chart below, the housing numbers are equally delusional elsewehere in Southern California:

County	2020 population	RHNA new housing stock by 2028	RHNA forecast population growth 2020-2028	RHNA forecast population growth 2020-2028 (%)	Actual population growth 2010-2020 (%)
Imperial	179,702	15,993	60,933	34%	9.7%
Los Angeles	10,014,009	812,060	2,428,059	24%	9.8%
Orange	3,186,989	183,861	553,422	17%	9.4%
Riverside	2,418,185	167,351	548,911	23%	9.0%
San Bernardino	2,181,654	138,110	454,382	21%	9.3%
Ventura	843,843	24,452	75,312	9%	9.8%
TOTAL	18,824,382	1,341,827	4,121,019	22%	9.5%

Where are these millions of new Californians going to be coming from? Consider: According to estimates prepared by the state’s housing authority Los Angeles County will grow by 24% in eight years, an expansion that previously took four decades. Between 1980 and 2020 L.A. grew from 7,477,239 people to its current population of 10,014,009, good for a 25.4% growth rate, as close as makes no difference to the current state demands. Again, this is at a historical moment when people are leaving the state by the hundreds of thousands. It’s lunacy.

Meanwhile, new multifamily developments around the state are desperate for warm bodies. In Santa Monica it’s difficult to find a luxury building not offering months of free rent, gym and wine club memberships and other perks, even straight up cash. In downtown Los Angeles new high rise developments are rife with so-called “NBO’s,” which stands for never been occupied. These units generally are owned by institutional or foreign investors who are holding them as long-term positions with no expectation of using them or even renting them out.

That’s the kind of housing McKinsey and the California Democrats get you.

As for the millions of working Angelenos struggling to make the mortgage or rent? They’re on their own.