Commentary: Fires Put Further Strain on Housing Market As Governor’s Prior Efforts Have Come Up Short

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The impact of the devastating fires in Los Angeles on the housing crisis, of course, can’t be determined just yet.

However, the Associated Press had an alarming report that noted, “California wildfires could leave deeper inequality in their wake.”

The AP reports that “the fires also burned through a remarkable haven for generations of Black families avoiding discriminatory housing practices elsewhere. They have been communities of racial and economic diversity, where many people own their own homes.”

They continue, “Some now fear the most destructive fires in California’s history have altered that for good. Recovery and rebuilding may be out of reach for many, and pressures of gentrification could be renewed.”

While wealthy homeowners have the ability to move or rebuild, for many, they will be unable to do so.

Meanwhile, the state has failed to resolve the housing crisis.

In an interesting statement in the Sacramento Bee last week, political consultant Dan Schnur called Governor Newsom “one of America’s “savviest politicians.”  Schnur argued that Newsom “frequently makes bold promises and then walks them back when they fail to materialize.”

“Newsom has set himself up to be in a position where whether he keeps his campaign promises or not doesn’t matter,” said Schnur.

The problem of course is that Newsom committed to build 3.5 million homes by 2025.  He then walked that back to “2.5 million units by 2030, calling his original commitment a “stretch goal.””

But of course that hardly helps to resolve the housing crisis.

Then there is the homeless problem.

The Bee reports, “The state has received permit requests for 1.3 million units statewide since 2018,” and adds, “That’s in addition to the governor’s ongoing $12 billion plan, which he announced in May 2021, to finance the construction of thousands of units to house people who are homeless and living on the street.”

Meanwhile, an audit last year found that the state “had spent billions of dollars to address homelessness between fiscal years 2018 and 2021 but had not effectively tracked how the money was spent.”

The governor’s office then backed up their record, arguing that it “added strong accountability and reporting requirements for local governments that receive state funding.”

In fairness, the national report from HUD showed that the problem of homelessness is now a national problem.  And while the state leads the nation in both homelessness and unsheltered homeless people, the state’s growth in homelessness was a modest 3.1 percent in 2024 compared to 18 percent nationwide.

Once again the Bee noted that Newsom was able to use this data to defend the record of his administration.

“That is a very good statistic as it relates to the work we’re doing to get people sheltered and to get people the support that they deserve,” Newsom said at a press conference.  “Forty states saw larger increases. In California, we’re making progress, but we have to continue to do more.”

Not mentioned by the Bee is what doing more actually means.

Ned Resnikoff, the policy director for California YIMBY, noted that there was another bright spot in the data.  It turns out, homelessness among military veterans “has fallen to a record low.”

Resnikoff notes that how this happened was a variant on Housing First.

One obstacle to implementing the strategy more broadly, he argues, has been the availability of housing.

Resnikoff lays out the problem that happened in California— “California spent roughly $24 billion over the next few years on efforts to combat homelessness, including the widely acclaimed Homekey program that converted empty hotels and other underutilized real estate into homeless housing.”

In February 2024, Gov. Gavin Newsom’s administration estimated that Homekey had created “over 15,300 units of housing to serve over 167,000 Californians.”

However, Resnikoff notes, “these investments did not end homelessness in California. Between 2020 and 2024, the state’s point-in-time counts registered an almost 16% increase in homelessness. This has led a number of observers—mostly, but not exclusively, from the right—to declare Housing First a failed strategy. “

The biggest obstacle to expanding Housing First is “housing.”

He notes, “Where homes are scarce, like in California, it is more difficult and more expensive to get people off the streets and into housing.”

As Resnikoff puts it: “Without significant land use reforms that remove existing barriers to housing development — barriers such as restrictive zoning, complicated permitting rules and arbitrary requirements that increase construction costs — any large-scale Housing First program will resemble bailing out a sinking ship with a measuring cup. Unless we repair the hole in the hull, we’re only going to keep sinking.”

And try as they might, California has not been able to make a big dent in the housing crisis.  And what’s happened now in Los Angeles will make that even more challenging.

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