By David M. Greenwald
Executive Editor
California not surprisingly leads the nation in an affordable housing unit deficit—though every state in the nation has a deficit.
A new report from Fitch Ratings shows California with “a deficit of 1.4 million affordable and available housing units for households earning at or below 50% of area median income.”
That’s worse than states like Texas, Florida, New Jersey and Illinois—all of which have large gaps in affordable housing, but none of which are as large as California’s.
“Historically low housing supply and homeownership has been placed even further out of reach for many low-income households,” according to Senior Director Karen Fitzgerald.
“Competition has intensified for rental units, which has accelerated rent growth,” said Fitzgerald. “These factors have intensified the housing cost burden among low income households, further widening the affordability gap.”
Fitch’s report notes that the “foundation of the affordable housing problem is a deficiency in the general housing supply” across the nation.
That supply is particularly acute now. The report estimates that only seven homes were built for every 10 households between 2010 and 2016, creating “intense competition” for existing affordable housing stock.
California’s housing crisis has been the focus on Governor Newsom and the state legislature. So far, however, efforts to close the housing gap have fallen short.
Newsom campaigned on building about 3.5 million new homes. He has not gotten close to that.
A CalMatters article from October found, “He’s walked back the goal many times, settling on a new target earlier this year: Cities need to have planned a combined 2.5 million homes by 2030. So, a million fewer homes planned for, not built, and over a longer time frame.”
Instead of 500,000 a year, “In the nearly four years since he took office, California cities are projected to have permitted a total of about 452,000 homes — less than he pledged he’d build in one year alone.”
As a result, a long-term trend has been exacerbated.
“California’s Home Prices and Rents Higher Than Just About Anywhere Else,” a 2015 LAO report concluded.
While California has long been more expensive than the rest of the nation “[b]eginning in about 1970, however, the gap between California’s home prices and those in the rest country started to widen. Between 1970 and 1980, California home prices went from 30 percent above U.S. levels to more than 80 percent higher.”
The trend has only gotten worse since then.
The LAO found that “our model estimates that keeping California home prices from growing faster than the nation between 1980 and 2010 would have required the state to have… (b)uilt substantially more new housing—in the range of 70,000 to 110,000 additional units each year.”
Public Policy Institute of California in a study found that what new housing has happened “fails to make up for decades of under supply.”
They find, “California’s new housing has fallen short of population growth. The state added 3.2 times more people than housing units over the last 10 years. There are now 2.93 Californians for every occupied housing unit, behind only Utah (3.09) and Hawaii (2.93), and far above the average of all other states (2.53).”
To start addressing affordable housing needs, this week Senator Scott Wiener introduced a new bill.
“California has a deep housing shortage, and we need every available tool to create the housing we so desperately need,” said Senator Scott Wiener. “Low income and working class people have the greatest need, and religious institutions and colleges have enormous excess land that can and should be used for affordable housing. Let’s make it easier for these nonprofits to build these critically needed homes.”
According to Senator Wiener’s office, “Many faith and charitable institutions have excess property – for example, overly large parking lots – on which they can build affordable housing. Faith communities have, for a long time, partnered with nonprofit housing developers to build affordable housing on their land.”
However, “current zoning laws in many cities prohibit the building of multifamily apartment buildings, or any housing at all, on this property.”
In addition, Wiener’s office said that “getting this land rezoned and getting a project through the approval process can be difficult or impossible, and incredibly expensive – often due to CEQA lawsuits and appeals. It’s not unusual for it to take three to four years and millions of dollars to resolve a single lawsuit, while appeals regularly take six months to resolve.”
SB 4 ensures that churches, faith institutions, and nonprofit colleges will be able to build affordable housing on their land “without having to go through an expensive and difficult rezoning and discretionary approval process.”
But, clearly, California is going to need a lot more to close its affordable housing gap.
Given that many places in California actively pursue sprawl and growth, this suggests a wage gap (and lack of “penciling out” for developers – in the absence of subsidies).
A lack of Affordable housing is not the same thing as a general lack of supply. “Supply” is often more dependent upon factors such as interest rates, than it is on actual construction. “Supply” is expected to increase, as the housing market continues to decline. (Though no doubt a lot of existing homeowners are reluctant to move for now – when prices are declining, and they’ve already locked in low interest rates.)
I’d like to see the definitions and calculations used in regard to this claim (which is already several years old, for that matter). Did this refer to “creation of households” (which is different than population growth)? Did it refer primarily to creation of low-income households?
Does it account for turnover of existing housing?
What are the raw numbers and assumptions used, here?
California’s population has been leveling-off for a long time, and is now dropping. In addition, millenials across the entire country aren’t even having kids in a sufficient number to replace themselves. Not even close to doing so.
https://kslnewsradio.com/1960317/millennials-dont-have-kids-because-they-dont-want-to/
https://www.businessinsider.com/us-birth-fertility-rate-decline-having-baby-millennials-kids-cost-2021-6
Ron O
If you have questions about the report, you can research it your self. The various affordability indices have generally gotten worse since 2016.
Immigration is a large source of population growth for the U.S., and even more so for California. I previously posted for you the California Department of Finance’s population growth forecast. You haven’t yet posted your qualifications as a demographer to refute their forecast.