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California Housing Supply Lags Behind Job Growth, Report Finds

California’s affordable housing crisis has reached emergency proportions and could damage the health of the state’s economy, according to a recent report from a policy research organization.

“Year after year, many [California] renters pay far too large a share of their incomes for rent, and Californians face some of the nation’s least affordable homeownership markets, making it difficult for young families to achieve the ‘American dream’ of homeownership,” the report states. “While the poorest households face the most severe housing problems, millions of California’s middle-income households also face substantial difficulties in finding shelter they can afford.”

The 27-page report, “Locked Out 2004: California’s Affordable Housing Crisis,” looks at both the for-sale and rental housing markets and offers statistical breakdowns by county and major metropolitan area. The California Budget Project (CBP), a research organization based in Sacramento, released the report in January.

“California has long had some of the least affordable housing markets in the country, and this report points out that a growing number of the state’s working families are struggling to find adequate housing,” said NAHB President Bobby Rayburn. “Communities in California and across the nation need to do more to address the workforce housing problem.”

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Workers face long commutes between the housing they can afford and their jobs, and the high cost of housing leaves families with less income to spend on other necessities, the report states. For low-income families the implications are even more severe, as many are forced to forgo basic necessities or live in substandard or overcrowded housing. The housing crisis has also made in difficult for many of the poorest households to leave welfare for work, according to the report.

The state’s homeownership rate in 2002 was 58% — the fourth lowest in the nation. Nationally, 57% of households in 2002 could afford to purchase the median-priced home in their market, compared to just 29% of California households.

“In many parts of the state, the income needed to purchase a median-priced home is considerably higher than the income earned even in moderate-waged occupations,” the report notes. “For example, the median annual wage for a firefighter in the Bay Area was approximately $70,000 in 2002; he or she would need an income of nearly $124,000 in order to buy the median-priced home — a gap of nearly $54,000.”

Housing construction has not kept up with the job growth in most areas of the state, creating an imbalance between jobs and housing, according to the report. “This geographic mismatch often forces families to move outside the community in which they work in order to find affordable housing, leading to increased traffic and commute times and increased stress on families who spend time in transit,” the report states.

Housing production declined significantly in the 1990s, the report notes. Among the causes of the decline were legislative changes that made investments in rental housing less profitable on an after-tax basis. Neighborhood opposition, commonly known as NIMBYism (Not In My Back Yard), has blocked or delayed construction of many affordable housing projects across the state, according to the report.

A decline in federal and state funding for affordable housing has also contributed to the problem, the report says.
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