Building boom amid disaster: New housing springs up during Calif. drought

LOS ANGELES — California is in dire need of two resources. One is man-made: housing. The other is natural: water.

But building more of one could drain the supply of the other, a significant conundrum for state and local planning officials, who need to ensure that California’s economy grows and the state keeps attracting more residents.

The state is in the fourth year of an exceptional drought, which began just as the housing industry started to bounce back from the devastating blow dealt by the Great Recession and housing crash.

At the same time, the shortage of housing is severe. The number of units built went from a high of almost 213,000 in 2004 to a low of 36,000 in 2009. It has inched up every year since but hit only about 85,000 last year and is projected to go up to about 107,000 this year. And any time supply can’t keep up with demand, prices soar. The median home value in California is $449,500 (half are worth more, half less), up 5.8 percent over the past year, according to Zillow. Median prices have topped $1 million in San Francisco. The company projects a 2.8 percent increase statewide within a year.

So even during a historic drought, the need for new housing trumps the need for water, and construction is unabated in the state with the highest housing costs in the nation. Gov. Jerry Brown’s emergency declaration mandates 25 percent cut in water use but no limit on new housing developments.

“We’re not saying ‘Let’s not develop,’’’ said Jeremy Madsen, the chief executive of the Greenbelt Alliance, a San Francisco Bay Area organization promoting sustainable growth. “We have a really acute housing crisis. It’s hard and arguably irresponsible to argue against development, but it has to be development in the right place.”

There have been few local moratoriums on new construction and water hookups. One of the rare reactions to the shrinking water supply came from Pismo Beach last week, when the City Council approved its first building moratorium in three decades in anticipation of water shortages. The moratorium applies only to construction on vacant lots.

But elsewhere in California, plans for large developments are progressing.

Paso Robles is going ahead with two proposed annexations that will allow for more buildout. The city of Folsom has a couple of plans for 25,000 housing starts. Several developments are on the books in Palm Springs and the rest of the Coachella Valley.

“We do recognize there is a drought, but we haven’t gotten to the point of water rationing and not building new housing,” said David Sedlak, a co-director of the University of California’s Berkeley Water Center. “None of the utilities have felt they were in danger of running out of water.”

Communities have built water storage and water recycling plants. A new desalination plant just began operating in Carlsbad.

And the drought has encouraged eco-friendly developments that have built-in recycling systems and solar panels.

What the drought has done is lead to more dense development and infill housing, and “that’s the kind of thing we hope to see more of in the future,” Sedlak said.

In an opinion piece published in The San Jose Mercury News last month, Madsen wrote, “Smart growth development is water wise.”

According to him, land use was not part of the statewide climate strategy a few years ago. “Now it’s part of every state and local climate dialogue in California,” he said.

Despite construction, there is still a shortfall of about 100,000 units a year — which has less to do with the drought than with environmental regulations and high fees, said Dave Cogdill, the president and CEO of the California Building Industry Association.

The state needs to add 200,000 units a year to keep up with population growth and replacement of old housing stock.

Two-thirds of the 13 million existing housing units were built before 1980, when 10 million fewer people lived here. Now at more than 38 million, California’s population is projected to hit 50 million by 2050.

New homes are 50 percent more efficient in their water use than housing built before 1980, Cogdill said. “If we just focused on that [older] housing stock, we could save 300 billion gallons of water a year,” he said.

That’s because new construction has to abide by rules for low-flow toilets and shower heads and utilize new technology, including Energy Star appliances.

Developers are quick to point that about 80 percent of California’s water goes to agriculture, not urban areas. “We’re really not the culprits,” Cogdill said. “We’re adding a very small portion on an annual basis.”

Almost two-thirds of new housing units built every year are multifamily ones, which tend to need less water for outdoor watering.

“Trying to work on the water shortage by cutting off the California economy in some way or trying to limit the population is the wrong approach,” said Ezra Rapport, the executive director of the Association of Bay Area Governments, whose members are served by 10 water agencies. “The best approach is to develop a sustainable water supply.”

So far, water conservation measures have been enough. But if the drought becomes the new normal in California because of climate change, he said, the state will have to make significant investments in more water storage, water recycling and use of water-saving technologies in agriculture and in housing.

“There may come a day of reckoning when people can’t develop,” Sedlak said.