If this week revealed anything about California’s governor race, it’s that the state’s housing crisis has started to scramble long-standing political boundaries.

Gubernatorial hopeful Xavier Becerra let voters know earlier this week that, if elected governor, he would declare a state of emergency over the state’s housing shortage on his first day. 

The remarks came amid a barrage of attacks familiar to any poll-leading candidate on a debate stage, as the seven leading candidates in the race gathered for the final debate on Thursday ahead of the June 2 primary.

The steep delta between California’s housing supply and its demand has been called many things, but Becerra’s proposal to officially declare a state of emergency over the housing shortage is an escalation that would give the governor sweeping powers to suspend regulation and spend state money — with limited legislative oversight — to address the issue. 

In Becerra’s eyes, this would also allow him to freeze rising home insurance rates. The pledge comes as Farmers Insurance Group, the state’s second largest home insurer, announced this week that it would hike its rates by 1.5 percent this fall, affecting over 900,000 homeowners. The rising cost of home insurance in California has grown to crisis level following the Palisades wildfires last year, with many insurers leaving the state altogether. 

Whether the governor actually holds the authority to freeze insurance rates remains unclear, and candidates running for state insurance commissioner have pushed back on this claim. 

Housing played a minor role during Thursday’s debate, after getting top billing last week when New York Times columnist Ezra Klein hosted the five leading Democrats for a California housing forum. The race’s leading Republican, former Fox News commentator Steve Hilton, declined Klein’s invitation then, but told voters Thursday that he wanted to see the state expand its development area, a position sure to unsettle California’s anti-sprawl environmentalists. If the state could increase its developed land from 6 to 7 percent, it would make room for 10 million new homes, Hilton said. 

A new era of non-union labor?

Jumping back to last week’s gubernatorial housing forum, one of the spicier moments came when former Orange County congresswoman Katie Porter said she did not want to see prevailing wage requirements on residential projects while the state worked to build out of its housing crisis. Becerra also said he supported relieving certain low-rise residential projects from union wage rules. 

The comments — especially coming from two leading Democratic candidates for California governor — reflect growing friction with the high cost of union labor in the state. Union labor has become an increasingly hot topic in San Francisco, where the Building and Construction Trades Council has long held sway, as the city recovers from its post-pandemic doom loop. Despite the headlines of the city’s hot streak — from rising rents to trades of major towers in its downtown core — the exorbitant price of construction has essentially thwarted new builds of any kind.

Some industry leaders say a once third-rail idea of using non-union labor is now on the table. Scott Clement, CEO of Revel Architecture & Design, said he has seen a “switch flip” at BisNow’s annual Bay Area Office Summit on Thursday. He said a lot of people are “on the verge” of finding an alternative to union labor as costs continue to rise.

“Everybody’s trying to figure out how to make the deal pencil,” Clement said. 

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