DICK SPOTSWOOD

FOR the past decade a red-hot issue in Marin and California has been the housing "crisis." The implication was that local government must encourage construction of hundreds of thousands new homes and condominiums of both the affordable and market-rate variety. The theory being that without prodding, hordes of Californians would have no place to live.

The current financial debacle demonstrates that this well-intentioned effort was badly off the mark. While there certainly is a real crisis, the upshot isn't that the Golden State has too little housing. It had too much. There is now a housing glut.

Thousands of vacant properties sit on the market with prices collapsing. Much housing has unintentionally become affordable with little sign that the trend will soon turn. It will take years for the state to exhaust its current housing inventory.

It's time to junk the concept behind California's Department of Housing and Community Development rigid formal demanding more construction in every jurisdiction. Instead, replace it with self-enforcing incentives promoting more affordable rental apartments.

The rush to build condos and homes was a left-right combination resulting in catastrophe. The Bush Administration struck out with its "ownership society" notion. That held that all would be right in American if everyone simply owned their own home. Liberals always wanting to do good and at the same time aid their allies in labor and the construction industry couldn't wait to guilt trip the state into building more of everything.

Much of the new housing was added to the state's oversupply while dubious lending practices to unqualified homeowners sparked America's financial collapse. Even Shaun Donovan, the Obama Administration's secretary-designate of Housing and Urban Development, acknowledges the reality that some people just can't afford to own a home. Instead, for them renting is the better long-term option.

A prime example of the absurdity of the current "housing guidelines" as enforced by the Association of Bay Area Governments (ABAG) is its continuing demand for construction of 27,000 housing units in the glut's ground zero, Contra Costa County.

In Marin, the new reality is demonstrated by the decline of housing prices in San Rafael and Novato. Marin Multiple Listing Services currently show 78 condos with sales pending, most in San Rafael and Novato. The median asking price is only $236,900. Twenty-nine are priced under $200,000, 33 are in the $200,000-$300,000 range and four are in the $300,000-$400,000 range.

This price correction inadvertently achieved affordable housing. Sales prices are now often less than the cost of construction.

Building more units may prop up the construction industry, but otherwise only exacerbates price declines.

Marin's overall housing stock is adequate for the next decade, but ABAG honchos still think we need more. According to them, in the next six years, San Rafael needs precisely 1,403 new homes of which 574 are market rate. Novato must build another 1,241 units of which 646 aren't even designed to be affordable. ABAG's scheme is bankrupt central planning in desperate need of reform.

While we are maxed out with full-priced homes there remain a valid social imperative to continue promoting diverse ranges of rental housing throughout Marin.

ABAG should drop its current approach and instead limit its directives to requiring cities and counties to zone land exclusively for affordable rental housing.

Even better is to encourage conversion of existing condos to rentals. Effectively accomplish both goals with self-enforcing tax incentives such as cutting real estate taxes and eliminating permit fees for properties that are permanently dedicated as rentals.

The goal should be to encourage free markets to do the right thing without cadres of well-paid state and regional bureaucrats enforcing counterproductive mandates.

Columnist Dick Spotswood of Mill Valley shares his views on local politics every Sunday in the IJ. His e-mail address is spotswood@comcast.net Read his musings at http://blogs.marinij.com/spotswood/

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