The housing shortage in California is creating a state of crisis

written by Laurie Edwards-Tate Jul 10, 2018

SAN DIEGO. California, with its attractive cities such as San Francisco and Hollywood, plentiful parklands, expansive Pacific Ocean and desirable year-round climate — can mesmerize vacationers and snowbirds alike. Wishing to escape harsh weather conditions or simply seeking a change of pace, the Golden State soon becomes a serious consideration for many who are desiring to relocate.
California dreaming? Not so much if you consider the state’s ginormous housing shortage. That shortage is so bad in California that it is creating a state of crisis.

THE HIGH COST OF HOUSING IN CALIFORNIA

But what is oftentimes overlooked by California dreamers is the state’s high cost of living. Overlooked as well: the high prices for housing and apartment rentals, some of the highest in the nation.
California wannabes might be determined to find a way to live the California lifestyle. But they are very possibly ignoring the underlying facts influencing what it might cost them to qualify to buy or to rent

The housing shortage in California is creating a state of crisis.

LOW HOUSING SUPPLY CAUSES ESCALATING HOME PRICES

For those who currently own a home, the increase in housing values is highly desirable. But for first-time home buyers, however, the California real estate market makes it nearly impossible for many to afford a home. Only around 29 percent of Californians today can afford a median priced home of about $518,500.00.

Qualifying for a median priced home requires a total household annual income of $81,690.00. The estimated monthly loan payment is $2,720.00 (depending upon loan terms, down payment and the effective interest rate), according to the California Realtors Association.

In 2017, California Housing and Community Development Department estimated 3.5 million new homes would be needed to meet population growth.

SOLVING THE SHORTAGE OF CALIFORNIA HOUSING

The California Housing and Community Development Department estimates that the state needs 180,000 new homes each year to keep pace with housing demand. It follows that California should be a builder’s paradise. With millions of new homes needed over the next 20 years, the building industry could also be a positive source for creating new jobs.

However, the supply of new housing is falling dangerously short. The reasons for this are many.

For example, in 2017, approximately 110,000-115,000 building permits were requested or granted permitting the building of new California homes, according to the Construction Industry Research Board. However, estimates report approximately 70,000 fewer homes get built each year than are actually needed.

An a recent interview with a member of the California Building Industry Association, revealed a surprising multitude of barriers which prevent building badly needed new homes in California. This is especially true for those within a range of affordability.

THE COST OF OVER-REGULATION AND OTHER BARRIERS

California’s current list of regulatory barriers and cost-drivers includes

Slow permit processing
California Environmental Quality Act
Law suits from private citizens
Lumber shortages creating increasing costs
Rising materials costs
Increasing labor costs

( Source: https://www.commdiginews.com/business-2/housing-shortage-crisis-california-104294/ )

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