Op-Ed — Jonathan Gunter: 'A new Ojai hotel is no way to fund affordable housing'

By Jonathan Gunter

Black hats vs. white hats are a sideshow. At today’s price, we couldn’t have bought our house. Most of us couldn’t. Gov. Gavin Newsom’s laws SB8 and SB9 risk our financial futures and unique community. Expect some pushback!

After the Thomas Fire, rebuilding permits took well over a year. “Updated” building codes meant delays, huge costs — and bigger bucks for the counties! Were permits expedited for those who lost homes? Did Newsom use his bully pulpit to push regulators for a affordable building codes?

The other major price driver is Mr. Market. Artificial low Fed rates allow wealthy buyers to bid up home prices while renters lose hope. National housing expert, Barry Habib, calculates new leases up 20% year over year, with 5.8% yearly rises thereafter.

One UK in-law trains people to build “cob houses.” Time-tested, do-it-yourself “cob” mixes straw, sand and earth for walls. Cob houses last for centuries, and dot UK’s countryside.

I asked an Ojai friend, who knows cob: Is this possible in Ventura County?

"Of course not!" he replied!

Entrenched stick-built home builders out-lobby innovators. Our real estate bill is two-thirds (hilly, unbuildable) land, one-third house. Attention, please, Gov. Newsom!

Fifty-three mandated "affordable housing units" in a valley of some 5,000? This pleases politicians and philanthropist investors, but does it move beyond “feel good”?

Sixty-six percent of U.S. families own their home. California is stuck at 55%. Given our prices, few developers build here. Eighteen million Californians must bid on a static rental stock. Biden’s Build Back (a little bit?) Better Bill aimed for 1 million subsidized housing units.

I predicted in November that Sen. Joe Manchin would nix this bill.

CPA real estate developer John Cox has built in many states, but never in California! Running against Newsom in 2018 and 2021, Cox said he builds apartments in Indiana for $80,000 a unit, which would cost $500,000 in California, due to regulatory delay.

What could reform U.S. housing? Politics or a 2008-scale real estate crash! Nobel economics laureate Robert Schiller wrote (per Case-Shiller housing indices) the median U.S. house costs 46% more than its July 2006 peak. Shiller’s book “Irrational Exuberance” called the subprime crash!

Shiller’s 10-year Cyclically-Adjusted S&P Price/Earnings ratio) is >40— at this level only 2% of the time in the last century.

Billionaire investor Jeremy Grantham is stunned to see all four major asset classes so overvalued at once. Having called the crashes

of 2000 and 2008, he asserts we are above 1929’s risk — at Dutch Tulip level!

In a crash, over-extended landlords become forced sellers. Would gleeful new buyers lower their rents? Could modular factory construction lower building costs? Are you there, Gov. Newsom?

Might a housing crash “help”?  The Fed will create trillions in “mouse click money” to buy treasury and mortgage bonds, thus lowering rates. Investors will feel pushed into higher return stocks, commodities and real estate!

I know crashes: 1975, 1987, 2000 and 2008. Values rise — until they don’t. As Q1 is Wall Street’s perennial best, they will keep the punch bowl full and indices rising through Q1/22.

I expect a crash between April Fool’s and Halloween.  The latter is poetic, as midterms come eight days later. Guess who’d

be blamed for any crash before Nov. 24? If Donald Trump (or his surrogate) wins in 2024, think Q1/29! There is no local quick fix. Patience!

My UK brother-in-law had a long career rezoning land for development. He recounted his failed the efforts in one local zoning meeting. A polite, elderly local councillor took him aside to ask, "Can’t you just wait ... and come back when we are gone?"

— Jonathan Gunter lives in Oak View.

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