Opinion: Overregulation and Market Manipulation Are the Roots of California’s Affordability Crisis

When California Democrats recently proclaimed their intention to “Make California Affordable Again,” it echoed a familiar refrain that has been heard time and again in the annals of political promises. However, a deeper examination reveals that this pledge may be more about optics than about sincere economic reform. Even more troubling is the historical context that shows a consistent pattern of policy failures rooted in overregulation and market manipulation — a pattern that risks repeating itself.

By Craig J. DeLuz, Special to California Black Media Partners 

When California Democrats recently proclaimed their intention to “Make California Affordable Again,” it echoed a familiar refrain that has been heard time and again in the annals of political promises. However, a deeper examination reveals that this pledge may be more about optics than about sincere economic reform. Even more troubling is the historical context that shows a consistent pattern of policy failures rooted in overregulation and market manipulation — a pattern that risks repeating itself.

The notion of affordability in California has been stifled not by external factors but by the very policies enacted by the state’s leaders. Over the years, we have seen an alarming trend: excessive regulations that stifle job creation and create barriers to entry for housing development, driving up costs at every turn. These regulations have restricted the supply of jobs and housing. The idea that a few tweaks can remedy the situation overlooks the entrenched nature of the problem, which is a product of policies intended to protect certain interests rather than serve the broader population.

Consider the California Environmental Quality Act (CEQA), enacted in 1970, it aimed to safeguard the environment, yet its implementation has inadvertently morphed into a formidable barrier to affordable housing. Critics argue that it has been subverted by NIMBY factions, who wield the law as a bludgeon to obstruct new developments, particularly in affluent neighborhoods. For instance, a 495-unit housing project in San Francisco, which promised to include affordable options, languished in legal purgatory for years due to CEQA litigation and community pushback. Such protracted delays not only inflate development costs but also constrict the housing supply, exacerbating a crisis that leaves countless individuals and families priced out of the very urban centers they aspire to inhabit. The intended protections against environmental degradation have morphed into a tool of exclusion, revealing the paradox wherein efforts to protect the environment can simultaneously deepen the affordability crisis.

California’s requirement for developers of subsidized or public projects to pay “prevailing wages” serves as a prime example of well-intentioned policies leading to adverse outcomes. These wage mandates, which are frequently higher than market rates, inflate construction costs significantly — up to 40%, according to a 2020 study by the California Center for Jobs and the Economy. As a result, the very goal of creating affordable housing becomes increasingly elusive, with developers confronted by skyrocketing expenses that necessitate additional subsidies and, in many cases, project delays. This paradox highlights a broader truth: sometimes, policies that aim to protect workers can inadvertently hinder the very access to housing that those workers need.

Furthermore, financial giveaways, such as the recent proposal for housing subsidies, are not the panacea they are billed to be. While they may offer temporary relief to some, they do little to address the fundamental issues at play. Such measures have often resulted in inflationary effects that counteract any benefits. Essentially, the state rewards poor policy with more of the same, rather than confronting the underlying causes of the crisis.

Price controls also loom large in this discussion. California has flirted with the idea of implementing rent control measures that, while well-intentioned, have historically led to unintended consequences. Rather than stabilizing the market, price controls tend to deter investment in housing. Landlords, facing limitations on how much they can charge, often opt to sell, convert, or simply neglect their properties, further shrinking the available housing stock. 

The past actions of California Democrats have shown that tinkering around the edges — whether through subsidies, price controls, or draconian regulations — will not yield lasting solutions. The proposed reforms bear a striking resemblance to failed strategies of yore. For example, the $20/hr. fast food minimum wage. It was heralded as a savior for fast food workers, by guaranteeing them a “living wage”. In the end, even SEIU (one of the measures lead proponents) had to admit that the end result was lost jobs, fewer work hours and higher prices. 

Until there is a genuine shift towards market-oriented solutions that empower rather than restrict, the promise to “Make California Affordable Again” will remain nothing more than a hollow slogan. 

Deceptive slogans hide a reality that is too often ignored: that affordability is intrinsically tied to free market principles. Genuine affordability cannot be achieved through coercive policies; it must arise organically from an environment that encourages growth, competition, and innovation. The road ahead for California is fraught with challenges — but the initial step towards authenticity in addressing the affordability crisis is to acknowledge and rectify the mistakes of the past. Anything less will only serve to perpetuate the cycle of failure.

About the Author

Craig J. DeLuz has almost 30 years of experience in public policy and advocacy. He currently hosts a daily news and commentary show called “The RUNDOWN.” You can follow him on X at @CraigDeLuz.