California’s Housing Shortage Double National Average

California’s Housing Shortage Double National Average

Construction work on a large scale housing project of over 600 homes in Oceanside, Calif., on June 25, 2018. (Mike Blake/Reuters)

Travis Gillmore

Travis Gillmore

10/25/2023

Updated: 12/30/2023

The number of Americans in need of housing are increasingly exceeding availability nationwide, with shortfalls jumping approximately 3 percent to nearly 4 million homes across the country between 2019 and 2021. Meanwhile, California’s number is twice the national average, according to a recent study.
Published by Up for Growth—a public policy housing advocacy group based in Washington, D.C.—the 2023 Housing Underproduction report determined that shortages are spreading across states, with counties impacted jumping by 32 percent.
“Evolving over the course of history, we have cultivated a housing landscape that is inaccessible, exclusive, and ultimately unsustainable,” the authors wrote in the report. “Not a single state is providing enough housing for its citizens, and the nation is poorer, less diverse, and less dynamic than it could be if everyone who wanted it had access to affordable shelter in high-opportunity areas.”
The number of homes lacking has increased from approximately 1.65 million across 100 areas in 2012 to 3.89 million spread throughout 193 communities in 2021, the latest data available, with 83 percent of all markets experiencing worse conditions than in prior years.
The estimates for underproduction differ depending on how they are calculated. Several factors affected the results in the study, including assumptions based on demand, wages, housing density, and economic conditions.
Nearly 900,000 homes—about twice the national average—are needed to meet demand in California.
The metropolitan area encompassing Los Angeles, Long Beach, and Anaheim led the field in housing units needed—more than 339,000—while the City of Oxnard—on the coast south of Ventura—topped the charts percentagewise needing more than 36,000 units added to its supply of nearly 300,000 homes to overcome demand.
Also, according to the report, rents increased in the Golden State at a faster clip, averaging 4.9 percent annually between 2012 and 2021, while national averages hovered around 3.4 percent over the same period.
A “For Rent” sign posted in front of an apartment building in San Francisco, Calif., on June 2, 2021. (Justin Sullivan/Getty Images)

A “For Rent” sign posted in front of an apartment building in San Francisco, Calif., on June 2, 2021. (Justin Sullivan/Getty Images)

Californians also rate as the most rent-burdened, with 53 percent of renters paying more than 30 percent of household income on rent and utilities, as compared to 46 percent nationally.
Further impacting housing affordability is appreciation, with homes in California increasing 10 percent annually, while the rest of the country saw prices climb 5.6 percent, according to the report.
One Northern California family said the price of homes prevents them from purchasing, and the cost of rent and utilities combined keeps them from being able to save enough to buy.
“My wife and I both work full time, and we live frugally, but we still find it tough to make ends meet raising children,” longtime Bay Area resident Michael Collins told The Epoch Times. “And unless something drastically changes, there’s no way we’ll ever be able to afford a home here. Everything costs more than $1 million.”
Further complicating matters are regulations limiting housing development with restrictive zoning laws and prolonged approvals that often include costly environmental reviews.
“These laws create a shortage of housing that artificially increases home prices,” Richard D. Kahlenberg—senior fellow at the Progressive Policy Institute based in Washington, D.C.—wrote in an article published in the report. “When not enough housing is built, long-term residents can be negatively affected in various ways,” including missed educational and employment opportunities.
A sign is posted in front of a home for sale in San Francisco on May 11, 2023. (Justin Sullivan/Getty Images)

A sign is posted in front of a home for sale in San Francisco on May 11, 2023. (Justin Sullivan/Getty Images)

National Trends

With work-from-home routines altering lifestyles, some chose to live in less developed areas following the pandemic, according to the report.
Trends seen across states include popular city centers seeing population losses while small towns and suburbs are experiencing increases.
Suburbs saw underproduction—the difference in available units and those in demand—jump 4.5 percent, and small towns increasing nearly 48 percent, according to the report.
Between 2020 and 2021, new households in small towns increased by 300,000 while construction of new, single-family homes fell more than 13 percent, resulting in rising home prices, the authors noted.
“Not since the beginning of suburbanization in the early 20th century have household formation patterns shifted as dramatically as they have since March 2020,” the authors wrote. “Although the United States produced more housing units in 2020 than in 2019, it was insufficient to meet demand, and production was misaligned with quickly shifting preferences for where people wanted to live.”
For every 1.76 new households formed across the country, only one new home was built, according to the study.
Urban, major metropolitan areas were the exception, with availability increasing slightly, about .3 percent, due to population loss in city centers following the pandemic, the report found.
A single-family house in West Los Angeles that sold for $4.3 million. (Courtesy of Carian Slepian, International Property Realtor in CA)

A single-family house in West Los Angeles that sold for $4.3 million. (Courtesy of Carian Slepian, International Property Realtor in CA)

Though population is declining in rural areas such has not stopped the spike of underproduction—with shortages having quadrupled over the past 10 years, and some existing housing units aging and at risk of becoming uninhabitable, according to the report.
A change in federal policy that saw funds once used to revitalize rural areas redirected for other purposes should be reconsidered, according to the study.
“Increasingly, it seems reinvestment in an aging housing stock and expanding infrastructure may be the best solutions to meeting housing needs,” the authors wrote. “But federal investment is key to helping rural communities thrive.”
A lack of resources and affordability prevent some rural communities from meeting housing needs, and developers are less likely to approve projects in areas where lower wages reduce tenants’ ability to pay, according to the report.
Solutions recommended include reducing regulations including the elimination of restrictive zoning policies. The authors additionally recommended a move toward public investment to develop low-cost housing options.
With housing shortages costing the economy approximately $1.6 trillion annually in lost wages and productivity, according to a University of Chicago study led by economists Chang-Tai Hsieh and Enrico Moretti and cited in the report the authors said such a prioritization will stimulate the economy.
“Taken together, these policies can increase affordability while also increasing housing equity, ensuring superior economic and fiscal outcomes,” the authors wrote.
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Travis Gillmore

Travis Gillmore

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Travis Gillmore is an avid reader and journalism connoisseur based in California covering finance, politics, the State Capitol, and breaking news for The Epoch Times.

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