March 25, 2023

California fails to build housing fast enough to meet demand, new analysis reveals

California’s housing production has failed to keep up with population growth over the last decade, a new analysis released last week from the Public Policy Institute of California found.

After analyzing 2020 Census data, analysts from the PPIC determined that the state added 3.2 times more people than housing units in the last 10 years, meaning there are now 2.93 Californians for each occupied housing unit.

“The state’s exorbitant housing costs have long been driven by too many potential buyers chasing after too few houses,” PPIC said in a blog post released Friday. “The typical home value in California is considerably more expensive than in the rest of the country, and while incomes here are also higher, they are not high enough to match.”

According to the PPIC’s analysis, several counties in the inland regions and the Bay Area saw significant changes in home value over the past decade.

The data shows Stanislaus County led the state with a 122% increase in typical home value between 2010 and 2020, followed by San Joaquin at 115%, Merced at 108% and coastal San Mateo County at 103%. Santa Clara County had a 95% increase over the last decade, San Bernardino and Madera Counties saw a 94% increase, and Alameda, Solano and Sacramento counties had over a 90% change.

PPIC noted that part of this increase is caused by residents who have relocated to inland areas east of the Bay Area and Los Angeles, driving up prices in their new neighborhoods. Analysts also said that prices are high because new housing has not been created to meet this demand, and in turn, “discourages people from moving to the state or pushes out those already here, keeping population growth low.”

Amid this housing shortage, the state’s housing development continues to lag, the PPIC reported. In its post, the PPIC said average production dropped from 147,000 new homes per year in the first decade of this century down to 71,000 every year since.

The lack of housing production is having an outsized impact on middle-income Californians, who are living in precarious housing, housing they cannot afford, or are commuting hours to work because they cannot afford to live in the city or region where they are employed, Matthew Lewis, director of communications for California YIMBY, told The Center Square.

“What we’re seeing is that the people moving to California now have higher incomes, and since we’re not adding housing, what that means is somebody had to leave to make room for them,” Lewis said. “And so we now have, as a matter of de facto policy in the state of California, if you’re a middle income worker, you shouldn’t come here. Or if you’re a middle income worker living here, you should leave because we’re not going to build the housing that you need.”

Lewis added that while there is a lot of focus on creating transitional housing for people experiencing homelessness and providing subsidized housing for low-income folks, the “middle income Californians, who are the majority of Californians, have nothing.”

In its analysis, PPIC notes that while several recent housing bills aim to make it easier to build in-law units, restrict local governments’ ability to block new housing and ease zoning restrictions for single-family units, “it remains to be seen whether they are enough to boost production to the levels many consider necessary.”

Lewis, however, said he’s confident that the provisions under Senate Bill 9 and Senate Bill 10 specifically will be “incredibly useful” for building middle-income housing in neighborhoods where it was previously illegal. These bills, which YIMBY supported, are, however, just a starting point, Lewis said.

“[These bills] will help because they will result in more homes being built in our cities where we need them, but we really need much more aggressive action if we’re going to get to the millions of homes that we’re short to accommodate our current population and the population that we’re going to have in 2050,” Lewis said.

This article was originally posted on California fails to build housing fast enough to meet demand, new analysis reveals

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