by Edward Ring
As Kamala Harris campaigns to become the most powerful person in the world, her detractors claim, among other things, that she has no idea how to manage the economy. She has certainly demonstrated that with her recent pronouncements. Even her usual supporters have been critical of her economic policy suggestions. Price controls on groceries. $25,000 grants for first-time homebuyers. A tax on unrealized capital gains. But while Harris backpedals from some of her most economically illiterate schemes, it’s only to attract more votes. Don’t be fooled. She hasn’t changed.
To demonstrate Harris’s long-standing record of waging economic war on productive citizens, consider her actions while serving as California’s Attorney General. She used that office to support policies that made homes unaffordable. Those policies roll out from California and infect the rest of the country.
In January 2021, the median home price in the United States was $303,600. Today that has gone up to $422,600, a 40 percent increase in under four years. Homes cost nearly half again as much as they did in 2021. If home price inflation wasn’t bad enough, mortgage rates made things much worse. The 30-year fixed mortgage had an interest rate of 2.79 percent in January 2021, and payments on a $303,600 house would be $1,246 per month. Today, the rate on a 30-year fixed mortgage is 6.35 percent, and monthly payments on a $422,600 house are $2,630, twice as much.
There are several reasons for this. Part of the reason is what drove prices for everything up: the Federal Reserve printed too much money. To curb inflation and preserve the value of the dollar against foreign currencies, they raised interest rates. But all else being equal, raising interest rates will raise monthly payments on homes but drive actual home prices down since fewer people can afford to buy them. Another reason home prices are up is because we increased our population beyond its normal internal growth, increasing housing demand. When counting legal and illegal entrants, at least 10 million immigrants have moved to the U.S. since January 2021. But to appreciate the biggest reason home prices are skyrocketing in the United States, you have to evaluate the policies made by the Democratic machine that rules California, of which Kamala Harris is now the reigning avatar.
The biggest factor driving home prices up is the fact that we aren’t building enough of them, and the ones that are getting built cost far more than they should because of excessive building codes and permit fees. California’s regulatory process just to get approval to build a subdivision is enough to deter investors, and then the “impact fees” and other permit costs can add over $100,000 to the price of a home. Thanks to this government abuse of the housing industry, the median price of a home in California is now more than $900,000. With a 6.35 percent mortgage interest rate, the monthly payment is $5,600. Because of these stifling regulations and punitive fees, even if demand drops, home prices will continue to rise.
While she was Attorney General in California, Harris played a critical role in making it harder to build homes. In 2008, the state legislature passed Senate Bill 375, designed to reduce the state’s “greenhouse gas emissions” by requiring planning agencies to adopt Long Range Plans that would aim to reduce “sprawl” development and encourage alternatives to driving. In plain English, the state legislature was imposing a development cordon around every major city and making it almost impossible to build housing unless it was high-density “infill” within the footprint of existing neighborhoods.
In an attempt to comply with SB 375 while still preserving some capacity to develop new housing, the San Diego Association of Governments (SANDAG) put forth a state-mandated plan that environmental activists thought didn’t go far enough to reduce “sprawl” and encourage alternatives to driving. Environmental groups objected and filed suit.
In response, three former California governors—Gray Davis (D), Arnold Schwarzenegger (R), and Pete Wilson (R)—had this to say in a guest editorial they wrote in opposition to the environmentalist’s lawsuit:
Frivolous lawsuits also cost taxpayers real dollars. Recently, the San Diego Association of Governments was the first region in the nation to complete a new long-term regional growth and transportation plan that would reduce greenhouse gas emissions and pollution. After two years of extensive collaboration which generated 4,000 public comments, the plan was adopted. Preserving over half of the region’s land as open space, the plan will create more than 35,000 jobs and generate an additional $4.4 billion in economic activity. Unfortunately, before the ink was even dry, local anti-growth groups filed a CEQA lawsuit putting this “smart growth” blueprint at risk, and unquestionably delaying, if not costing, jobs.
But Attorney General Kamala Harris took the side of the environmentalist extremists, defying three former California governors, including a member of her own party. In a press release issued by her office, she intervened in the lawsuit, claiming, among other things, that “the transit plan also prioritizes expanding or extending freeways and highways.”
According to Harris, building more roads, which facilitates building more homes, is a bad thing. Imagine that. Harris’s intervention is generally credited with influencing the outcome of the trial in favor of the environmentalists. The precedent set by that ruling discouraged the development of new housing throughout the state by scaring cities and counties into adopting aggressive restrictions on urban growth.
Harris’s record as Attorney General in California, a post she held from 2011 through 2017, consistently favored environmentalist extremism, higher taxes, and more regulations that not only attacked home builders but also every business providing construction materials. Investor Kevin O’Leary, speaking on Fox News last month, described exactly what homebuilders are up against in California:
The other insidious problem, and California is a good example, the policy on regulation is so punitive, to set up a tract of land to build housing, that many people don’t even do it. I don’t even invest in real estate in California or in New York. It’s impossible to get the permits. And the craziness about it is it’s really holding back pricing because up to 40 to 50 percent of the embedded cost of each house is the regulatory cost of getting through the process. How insane is that?
Kamala Harris owns this debacle. California has institutionalized environmentalist extremism, along with every other big government expansionist policy imaginable. The result has made it impossible for private housing developers to profitably build homes people can afford. Harris’s answer isn’t deregulation, it’s the failed policies of rent control and tax-subsidized “affordable housing.”
This is what Kamala Harris offers the American people who just want to be able to afford a roof over their heads. It is a sham.
– – –
Edward Ring is a senior fellow of the Center for American Greatness. He is also the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. Ring is the author of Fixing California: Abundance, Pragmatism, Optimism (2021) and The Abundance Choice: Our Fight for More Water in California (2022).
Photo “Kamala Harris” by Kamala Harris.
