In recent months the Vanguard has been focusing on, in addition to the local housing crisis, the issue of California’s overall housing crisis. The legislature last week passed a package of 15 bills aimed at increasing housing – in a state where the estimated need is about 1.8 million new units over the next decade.
As Dan Walters wrote back in May: “Soaring housing costs are distressing millions of Californians, forcing them to devote 50 percent or more of their incomes to shelter. It hits the working poor particularly hard, gives us the nation’s highest poverty rate and threatens the economy.”
A report in August found, “Nearly 70 percent of poor Californians see the majority of their paychecks go immediately to escalating rents.”
Some have suggested that California will not solve its housing crisis until and unless it addresses the “elephant in the room” – illegal immigration.
As one poster put it: “[T]he housing problem will never go away in California as long as we have policies in place that welcome illegal immigrants.”
But there are problems with that claim, and the available data does not seem to back up the claim that immigration is behind the housing crisis.
First of all, the number of unauthorized immigrants declined slightly, from a high point in 2007 of 12.2 million down to 11.3 million. The number of new immigrants declined during the Great 
Recession and, if anything, has increased only this year.
Second, and perhaps more importantly, the data from California’s population since 2010 suggests a supply problem with housing, rather than a demand-driven crisis.
Dan Walters wrote in May: “California has seen a relatively modest population growth, 2.3 million or 6 percent, since 2010, but has added just 400,000 housing units, a 2.9 percent increase.”
In other words, the state itself is growing since 2010 at a rate of less than one percent per year (which is lower than Davis’ advertised rate) but has been adding housing at less than half that.
The new housing data seem to support that contention.
“Los Angeles saw its population grow by 6.5 percent in 2010-17, but its housing stock increased just 4 percent.”
“Other cities’ gaps were as bad or worse. San Diego: 8 percent population growth, 3.9 percent housing growth. San Francisco: population up 8.6 percent, housing up 5.9 percent. San Jose: 10.7 percent more people, just 5.7 percent more housing. Sacramento: population up 5.7, housing up 1.1 percent.”
In other words, the data suggest that this isn’t a growth demand issue, it is a supply issue.
The third problem with the theory is that the pressure for housing seems to be coming from the wrong place to be driven by undocumented immigration.
A report in the San Jose Mercury News from late August bears this out. The exploding cost of housing is forcing home prices to absurd levels. We wrote a few weeks ago that in the Silicon Valley people making $160,000 are having trouble affording housing.
The Mercury News reports that “even extremely high incomes aren’t enough to blunt the cost of housing. In San Jose, where the current median income is nearly $100,000, renters can still expect to pay 40 percent of their monthly income on rent, according to an analysis by the real estate data firm Zillow.”
That is clearly not a trend driven by unauthorized immigration.
The problem, the Mercury News reports, is one of gentrification.
They write, “It’s difficult to measure things like ‘gentrification’ and ‘displacement’ – when the arrival of higher-income, higher-educated residents in a community results in the expulsion of longtime lower-income residents. But there’s little question change is happening rapidly across many California cities.”
They cite research out of UC Berkeley which “found that more than half of low-income households in the Bay Area are at risk of, or already experiencing, gentrification. It’s not just lower-income communities bleeding households – higher-income neighborhoods are losing their lower-income members as well. And in places like the Boyle Heights neighborhood of Los Angeles, gentrification protests have exposed escalating tensions between longtime Latino residents and new, predominantly white arrivals.”
Those low-income people who are being forced out are leaving the state.
“From 2000 to 2015, the state lost nearly 800,000 residents with incomes near or below the poverty line. Nearly three-quarters of those who left California since 2007 made less than $50,000 annually. The leading destination for California’s poor? Texas.”
Again, these people are not being forced out by an influx of immigrants, they are being forced out because higher-income earners are not finding enough housing and are bleeding into lower-income neighborhoods.
Bottom line, California’s population really isn’t increasing at a huge rate. The one percent growth rate we have seen since 2010 is on par with the mandated growth rate of Davis – a slow growth community. The problem is that housing is increasing at less than half the rate.
Will the new legislation lead to an increase in housing? That remains to be seen. But the data we see doesn’t point to unauthorized immigration as the culprit.
—David M. Greenwald reporting
“the data from California’s population since 2010 suggests a supply problem with housing rather than a demand driven crisis.”
That could only be true if there were fewer housing units now than there were in 2010. If not then it is a demand problem.
“That is clearly not a trend driven by unauthorized immigration.” Totally and completely unsupported conclusion.
“First of all, the number of unauthorized immigrants declined slightly from a high point in 2007 of 12.2 million down to 11.3 million.”
Mixing national and state level data is not useful and seems intended to deceive.
Exactly. California has almost 3 million illegal immigrants reported living here now, with some believing the number is probably much higher than that. The LA Times reported that 1 in 10 workers in California are illegals.
They’re all living somewhere and taking up housing.
That doesn’t make them the proximate cause of the housing crisis. If you look at the data, population growth is growing at a relatively low level, the problem is supply is growing slower. Second, where the housing demand is coming from is at the top not at the bottom. The population of immigrants has been stable to decreasing since 2007. Therefore the change is not caused by immigrants. Logic here is missing.
Have you calculated in that soon Gov. Brown will sign a bill making CA a sanctuary state? How many new illegals will that bring in? How much more pressure will that put on the housing market?
Perhaps, but given that border crossings are down right now, that would be speculation. However for the current crisis, you can’t argue that immigration rather than lack of housing supply is behind it.
If they all magically went away somehow, someone else would have to move in to do the jobs they’re doing. The need for housing wouldn’t change just because the immigration status of the people changed.
“Perhaps, but given that border crossings are down right now, that would be speculation. However for the current crisis, you can’t argue that immigration rather than lack of housing supply is behind it.”
Of course you can. People who are already in the country illegally are moving to jurisdictions of lower risk. This reverses the previous trend of people seeking the best economic opportunity as risk was equal.
“Logic here is missing.” At least we agree on that statement.
I like the title:
There’s a question mark behind it like it was going to be researched in the article.
Then I read the article and it comes across more as a piece were a preconceived conclusion was already made and then cherrypicked info used to back it up.
Much of it is not even “cherry picked” it is completely fake. “Demand has increased while supply was remained constant, therefore we have a supply problem”. Say What?
“California has seen a relatively modest population growth, 2.3 million or 6 percent, since 2010, but has added just 400,000 housing units, a 2.9 percent increase.” So you are arguing that a less than 1 percent population growth rate is the proximate cause. Keith is arguing that an existing population base is the proximate cause as though explaining a variably by a constant makes sense.
LOL…If we were building out the supply at a 10% per year rate but demand went up 15% would that still be considered a supply problem?
“Demand has increased while supply was remained constant, therefore we have a supply problem”.
You make up that quote yourself? I didn’t write it.
It wasn’t I who attributed you that quote but it is basically what you stated in the article.
No the Walters quote is what I stated in the article – the rate of increase for population is modest at 1 percent but the problem is the housing supply is only growing at less than half a percent.
Keith: And it wasn’t you who attributed that quote, it was Jim.
Howard’s suggest is a good idea since it’s easy enough to lose track of who is talking within the web of responses
I knew you didn’t attribute the quote to me. I have no problem with how the reply button is set up now. It’s not that hard to follow and figure out who’s responding to whom. If anything the problem lies with some commenters not knowing how to hit the reply button.
In other words build to meet market demand (which has no bounds), and then deal with the consequences. (That type of argument can be used to “blow up” Davis’ “1%” growth cap, Measure R, etc.) Hey, there’s a “demand” for it, right?
The 1% growth cap is somewhat meaningless anyway, since it doesn’t include mixed-use development. I believe it’s also based upon number of units, and not size or expected number of occupants.
Exactly…..
Exactly nothing.
Exactly you wrote this:
Which was Jim Hoch’s point.
Now there’s an argument.
David has no idea of the difference between supply and demand problems. If BART has ten cars on the 8:00 AM from Martinez and they are sufficient most days and then one day three cars go out of service then you have a supply problem. Demand remains constant while supply diminishes. If one day they are close three lanes of the 80 and people decide to take BART instead then you have a demand problem, demand increased while supply remained constant.
The entire analysis is deceptive anyway due to David’s choice of 2010 as a baseline. House building is cyclical and 2010 represented the lowest point after the building boom of the 2002-2009. Using 2010 as a baseline means you are trying to prove a narrative through “fake news”.
No… not ‘fake’ news… he used real facts… opportunistic/”cherry-picked” news? Perhaps…
Exactly…..
Key word…”perhaps” … or perhaps not…
Actually it was Dan Walter’s choice to use 2010 as a baseline. I would have used 2007. Either way, immigration has been going down, it’s way down this year, and the number of immigrants have declined as well. What’s driving the housing crisis is not an increase in demand, it is the failure of the housing market to keep up with a lower than usual increase in population growth and that’s not being generated by immigration.
David, do you have evidence that immigration is decreasing in the housing markets experiencing pricing pressure? National numbers are not useful. It is not a stretch that given our favorable policies we are attracting a greater share.
“Fewer immigrants are arriving in the United States from Mexico and the number without legal status has been on the decline in California, according to newly-released data from the Pew Research Center.”
It seems like California is following the trend. Remember it’s not a national issue, it’s a few key states.
There are many factors “driving” California’s housing crisis. Singling out illegal immigration is convenient scapegoating. Undocumented immigrants make up only a fraction of immigrants to the state–most immigrants are citizens from other states or non-citizens here legally. The housing crisis is due to, e.g., local resistance to housing development, over development of high end housing compared to low and moderate income housing, etc. Focusing on illegal immigration as the source of the problem diverts attention from the more significant drivers.
This is the key point. There are those who are using this issue as a reason not to address the housing crisis. Some because they are opposed to immigration and some because they are opposed to new housing.
“Focusing on illegal immigration as the source of the problem diverts attention from the more significant drivers”
This is true as far as it goes. If a citizen or legal resident wants to move to Santa Monica there is not that much we can do about it. They will bid for a place and drive up prices. With illegal immigration there is something we can do about it. That’s a big difference.
Jim – You make my point. For many, illegal immigration is like a squirrel to a dog. Immigration–legal or illegal–is not the source of the housing crisis and it won’t be resolved until we keep our focus on the real drivers.
Migration is the source of the housing crisis though what percentage is attributable to illegal immigration is debatable.
Do you have some plan to reduce other forms of migration?
Jim: Not really. We’ve had a one percent growth rate in the state for the better part of the decade, that’s not a sign of tremendous growth. This is the part you keep missing – the problem is on the supply end if you can’t keep up with housing for one percent growth.
You act like 1% growth is no big deal. 1% growth/year in the most populated state adds 400,000 new residents per year. That’s like adding an Oakland or an Anaheim every year. That’s a big deal in my book, even though you attempt to downplay it.
Keith: Are you interested in solving the housing crisis or do you wish to join Jim in his quest to tilt at wind mills?
I think Eric’s spot on here, the housing crisis will not be resolved under we focus on real drivers and I think you and Jim were factually wrong to focus on illegal immigration as an underlying source and the legislature’s package while not perfect is a step in the right direction.
“tilt at wind mills” says the guy who has written 3,489 articles on building houses at UCD
The amusing part of this discussion is that it is focused on the “low end” of the housing issue… it ignores the the overwhelming impact overseas buyers have on the “high end” market in California (and other similarly attractive states)… People from overseas are looking for safe places to park money and create a nexus for residency. Lots of overseas money going into higher end housing, land, condos etc. is flooding in from overseas. Not saying its a bad thing, but it is a very important factor in driving real estate value. Basically, there are a LOT of vacant units that have been purchases purely as investments.
Forget illegal immigrants for the moment. Supply is available developable land. Demand is people.
Increasing population density is the main driver of the price of land, and thus the price of housing. High immigration is the main driver of population density.
See, for example, Immigration and the revival of American Cities by Jacob L. Vigdor for the Americas Society/Council of the Americas and the Partnership for a New American Economy, in which he claims that more than 40 million immigrants currently in the united states have increased housing prices nationwide by $3.7 trillion. Or, get the population and housing price data for 1900 to 2010 from the Bureau of the Census and do your own analysis.