November 8, 2019
The troubles tarnishing the Golden State started decades before the most recent round of wildfires that have inflicted huge losses to both property and lives. Those events across the state have brought into clear focus the nightmare California faces trying to solve a complex housing crisis.
The state wasn’t delivering enough housing to meet demand before the fires, and now that many were destroyed, California faces an even steeper climb. Governor Gavin Newsom has made building more houses a priority, citing a McKinsey & Co. report that indicated the state needed 3.5 million new homes by the middle of next decade, though some believe it may take the state until 2050 to meet the target.
Demand has elevated housing prices in the state and driven the median price above $600,000, a number more than double the national average. Four of the U.S.’s top five most expensive residential markets are in California — Silicon Valley, San Francisco, Orange County and San Diego, with Los Angeles coming in No. 7.
The cost burden translates to renters too, who must spend more than 30% of their income on housing.
Bloomberg points out reasons behind California’s current severe housing shortage include “bad government—from outdated zoning laws to a 40-year-old tax provision that benefits long-time homeowners at the expense of everyone else.”
For comments, questions or concerns, please contact Dennis Kaiser