Day to day, most people can safely ignore that New Zealand rests along the boundary between the Indo-Australian and Pacific tectonic plates. But nature has a way of asserting itself. At 12:51 p.m. on February 22, 2011, the city of Christchurch was rocked by the aftershock of an earthquake that had struck more than five months earlier. Nearly 200 people died in this tragedy; some 70,000 were displaced.
According to the Insurance Council of New Zealand, at more than $31 billion, this was the “biggest insured event” in the nation’s history. Ten thousand homes needed to be rebuilt and another 3,500 demolished. As a result of this sharp decrease in housing supply, the cost of shelter spiked. In the aftermath of the Christchurch earthquake, New Zealand activated emergency authority to require local governments in the metro area to rezone land for housing, and the city proper was forced to allow denser townhouses as well. According to a 2021 report to the Department of the Prime Minister and Cabinet, the rezoning was described as “releasing decades of land in one go.”
The Christchurch City Council estimated that 41 percent of the housing growth from 2010 to 2018 was a result of legalizing denser housing in the city. More ambitious changes followed elsewhere, most notably in the nation’s largest city, Auckland, which was pressured to allow—and fast-track—lots of new housing. A number of economic studies have subsequently shown that these reforms increased the supply of new houses while moderating prices: According to one study, rents would have been 28 percent higher without such reforms. The policy was a success, yet New Zealand still struggles to provide sufficient housing, and residents spend 30 percent more of their income on housing than the OECD average. Even with smart policies, it can take years, if not decades, to fully address a shortage.
New Zealand shares many similarities to the United States. It’s a car-dependent, heavily suburbanized country; more than 80 percent of the nation’s homes are detached, single-family homes—20 percentage points more than in America. And today, America’s second-largest city is facing its own natural disaster, and a set of choices for how to rebuild.
There are few places in the U.S. with a tougher housing market than Los Angeles, meaning there are few places where the destruction of several thousand homes would be harder to bear. By one estimate, Los Angeles County is 500,000 affordable homes short of having sufficient housing for its residents; an appalling homelessness crisis has resulted. Now, on top of this, one estimate predicts that the Los Angeles fires have consumed up to $275 billion in total damages and economic losses. According to Redfin, 6,354 homes have been destroyed or damaged, resulting in significant downstream consequences. “A rental listed for $16,000 per month got bid up to $30,000,” one agent recounted.
In the coming months and years, the Los Angeles housing market, already extremely tight, will feel the strain of displaced homeowners and renters looking for a way to stay in the region as their neighborhoods undergo the long process of rebuilding. And it is a long process—just look at the state of Hawaii, where just three of the 2,000 homes destroyed by the 2023 wildfires have been rebuilt, Reason reported last week. The interminable pace is due in large part to the local and state governments’ failure to shape the regulatory environment to encourage housing production.
At least in California, policy makers are showing some signs of life: California Governor Gavin Newsom signed an executive order waiving some of the red tape that holds up housing production, such as the California Environmental Quality Act (CEQA). But Newsom’s order applies only to properties that burned down or were substantially damaged, and it prevents new housing from exceeding 10 percent of the original structure’s footprint and height. This means, in most cases, that only a single-family house like the one that existed previously can be built.
“I’m glad the governor and the mayor have issued executive orders to try to make it easier for people to get quick permits,” California State Senator Scott Wiener, a leading housing advocate, told me. “But I think it’s really important not to force homeowners to automatically rebuild the same way as before.”
Wiener and others, such as newly minted Representative Laura Friedman, whose district covers parts of Los Angeles, have argued that exempting infill housing from CEQA—not just rebuilding what was there before—is a crucial part of the solution. In a phone call last week, Friedman told me of a friend who’d lost her Pacific Palisades home of 50 years to the ongoing fires. But, Friedman went on, the family doesn’t necessarily need to replicate their old home. “She and her family are devastated,” Friedman told me, “but she told me that at her age, she prefers to now move into a condo in a place where she’s not going to be worried every night about another fire.”
The persistent threat of future wildfires means that California’s challenge is not just to rebuild what was lost, but also to build much more housing in areas less prone to wildfires to begin with. It sounds remarkably elementary: If you don’t want people to live in places that are likely to burn down, you have to build in places that aren’t likely to burn down.
Los Angeles has tried this. Days after being sworn into office in December 2022, Los Angeles Mayor Karen Bass signed a directive to ensure that housing developments where all the units are affordable would get their permits within 60 days rather than languishing for months or even years, bypassing some of the onerous requirements and regulations that usually accompany multifamily housing. This change spurred production of apartments affordable to people making less than $100,000. After a little more than a year, developers submitted plans for more than 13,770 affordable units—nearly as many as the city approved in 2020, 2021, and 2022 combined, CalMatters reported last year. Some studio units are expected to go for as little as $1,800, a remarkable coup for unsubsidized new construction in expensive Los Angeles.
It’s exactly the type of policy that would weaken incentives to build farther out into wildfire-prone territory. In fact, the program was so successful that Bass has been backpedaling on it ever since. As the story often goes, the triumph of the program meant that a lot of new buildings were allowed, sometimes in neighborhoods where at least a few residents opposed new development and complained to their local officials. Soon enough, the policy reversals began. Bass exempted areas with single-family homes from accessing the streamlined affordable-housing permits (which make up 74 percent of the city’s residential land) and then layered on a series of requirements that turned the policy from “remarkable” to “status quo,” one economist remarked.
Andrew Slocum, a developer who has affordable-housing projects approved under this program, told me he is frustrated by the rollbacks and his sense that political leadership isn’t taking the housing crisis seriously enough. Slocum recently sent an email to the Los Angeles Department of Building and Safety as well as to Bass’s office arguing that the city is illegally holding up housing projects contra state law. This is not an isolated complaint. Last fall, a county judge ruled that L.A. had violated state and local law when it blocked 360 affordable apartments near single-family homes. Los Angeles is not the first California city to be accused of flouting state requirements to permit housing more quickly: Malibu, Berkeley, Huntington Beach, and other localities have all come under scrutiny.
I reached out to Bass’s office and the L.A. Department of Building for comment, and the mayor’s spokesperson Zach Seidl replied in an email, “Since taking office Mayor Bass has executed a comprehensive strategy to confront housing unaffordability in Los Angeles.”
Seidl also told me that L.A. permits more Accessory Dwelling Units “than anywhere else in California.” This is unsurprising. Los Angeles is the second-biggest city in the nation and is almost three times as large as the next-biggest city in California. Last year, the Los Angeles Times looked at ADUs permitted per 1,000 housing units and found that L.A. barely cracked the top 10 of cities in Los Angeles County.
This is the trap California has set for itself. In order to prevent costly damages from wildfires and further residential incursions into fire-prone areas, you have to provide more housing in dense urban corridors. But in order to satisfy NIMBY gadflies and antidevelopment members of the Democratic coalition, you have to make it difficult to build new housing basically everywhere.
Los Angeles and even California are not alone in trying to balance these concerns. And in most contexts, it’s easier to fold to short-term political pressure that prevents new construction. But the math is quickly changing. In acceding to critics, policy makers might think they are satisfying their residents’ desire for stability and maintaining the neighborhood character of these communities. But by hell or high water—quite literally—change is coming anyway.
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