California’s housing shortage is twice the national average.
The Housing Crisis in America: Shortages Exceeding Availability
The number of Americans in need of housing is rapidly surpassing availability nationwide, with shortfalls reaching nearly 4 million homes across the country between 2019 and 2021. Shockingly, California’s rate 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 reveals that shortages are spreading across states, with impacted counties increasing 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.”
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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.
Additionally, rents in California increased at a faster rate, averaging 4.9 percent annually between 2012 and 2021, while the national average hovered around 3.4 percent over the same period.
Californians also face the highest rent burden, with 53 percent of renters paying more than 30 percent of their household income on rent and utilities, compared to 46 percent nationally.
Further exacerbating the housing affordability crisis is the rapid appreciation of home prices in California, with a 10 percent annual increase, while the rest of the country saw prices climb 5.6 percent, according to the report.
One Northern California family shared their struggle, stating that the high cost of homes prevents them from purchasing, and the combined expenses of rent and utilities make it impossible to save enough for a down payment.
“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 that limit housing development, including restrictive zoning laws and prolonged approval processes that often involve costly environmental reviews.
“These laws create a shortage of housing that artificially increases home prices,” wrote Richard D. Kahlenberg, a senior fellow at the Progressive Policy Institute. “When not enough housing is built, long-term residents can be negatively affected in various ways,” including missed educational and employment opportunities.
National Trends
With work-from-home routines altering lifestyles, some individuals have chosen to live in less developed areas following the pandemic, according to the report.
Trends seen across states include popular city centers experiencing population losses, while small towns and suburbs are witnessing increases.
Suburbs saw a 4.5 percent jump in underproduction—the difference between available units and those in demand—while small towns increased by 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 by over 13 percent, resulting in rising home prices.
“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 by about 0.3 percent due to population loss in city centers following the pandemic.
Although rural areas are experiencing population decline, the spike in underproduction has not ceased, with shortages quadrupling over the past 10 years. Additionally, some existing housing units are aging and at risk of becoming uninhabitable.
The study suggests reconsidering a change in federal policy that redirected funds once used to revitalize rural areas for other purposes.
“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 hinder 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.
Recommended solutions include reducing regulations, including the elimination of restrictive zoning policies, and increasing public investment in low-cost housing options.
With housing shortages costing the economy approximately $1.6 trillion annually in lost wages and productivity, prioritizing these solutions will stimulate the economy.
“Taken together, these policies can increase affordability while also increasing housing equity, ensuring superior economic and fiscal outcomes,” the authors concluded.
How has the pandemic exacerbated the housing crisis in America, particularly for low-income populations?
Ople wanted to live.”
Furthermore, the pandemic has exposed the vulnerabilities of the American housing system. The lack of affordable housing options has left many families and individuals at risk of homelessness or housing instability. This has been particularly evident among low-income populations, who are disproportionately affected by the housing crisis.
In addition to the shortage of housing units, the quality of existing housing stock is also a concern. Many homes in America are old and in need of significant repairs and renovations. This not only poses health and safety risks for residents but also contributes to the overall unaffordability of housing, as the cost of repairs and maintenance can be significant.
So, what can be done to address the housing crisis in America?
First and foremost, there needs to be an increase in the production of affordable housing units. This can be achieved through a combination of public and private sector initiatives, such as providing incentives for developers to build affordable housing, streamlining the permitting and approval processes, and allocating funding for the construction of new housing units.
Additionally, there should be a focus on preserving and rehabilitating existing affordable housing stock. This can be done through programs that provide funding for repairs and renovations, as well as initiatives to prevent the loss of affordable housing due to gentrification or redevelopment.
Furthermore, it is crucial to address the underlying systemic issues that contribute to the housing crisis, such as income inequality and discriminatory housing practices. This may involve implementing policies that increase access to affordable housing for low-income populations, addressing wage stagnation, and combating housing discrimination.
Lastly, there needs to be a comprehensive approach to addressing the housing crisis, involving collaboration between federal, state, and local governments, as well as community organizations and housing advocates. This includes the development of long-term strategic plans, the establishment of affordable housing trust funds, and the implementation of policies that prioritize equitable and sustainable housing solutions.
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