Real Estate Talk: California Needs 1.8 Million Homes to Meet Demand

By Marty Kovacs, SCVBJ Contributor

Last update: Wednesday, March 1st, 2017

California needs an additional 1.8 million new homes by 2025 to meet expected population growth, which means 180,000 new units must be built annually compared to the paltry pace of 80,000 homes per year seen for the last decade.

From 1955 to 1989 the state saw 200,000 units built annually so it definitely is possible.

With California’s desirable climate, diverse economy, and many of the nation’s top colleges, the state continues to experience strong housing demand, according to a draft statewide housing assessment released recently by the California Department of Housing and Community Development.

The report — California’s Housing Future: Challenges and Opportunities — notes, however, that housing construction is constrained by regulatory barriers, high costs, and fewer public resources.

In addition to the 100,000-unit shortfall per year in new construction, some of the housing challenges facing the state include:

The report noted that potential actions on the cost of housing fall under three broad categories:

“New home construction is unsustainably low,” said Ben Metcalf, director of the Dept. of Housing and Community Development. He was the keynote speaker at the recent  “Housing Our Workers” forum organized by the Southland Regional Association of Realtors, the Valley Economic Alliance, and BizFed Institute.

“It compounds today’s challenges, Metcalf said.” Over the coming weeks I’ll explore the concerns and recommendations that emerged from that forum and the state’s housing assessment report.

Marty Kovacs is the 2017 Chairman of the Santa Clarita Valley Division of the 9,500-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

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Real Estate Talk: California Needs 1.8 Million Homes to Meet Demand

Marty Kovacs is the 2017 Chairman of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. Courtesy photo.

California needs an additional 1.8 million new homes by 2025 to meet expected population growth, which means 180,000 new units must be built annually compared to the paltry pace of 80,000 homes per year seen for the last decade.

From 1955 to 1989 the state saw 200,000 units built annually so it definitely is possible.

With California’s desirable climate, diverse economy, and many of the nation’s top colleges, the state continues to experience strong housing demand, according to a draft statewide housing assessment released recently by the California Department of Housing and Community Development.

The report — California’s Housing Future: Challenges and Opportunities — notes, however, that housing construction is constrained by regulatory barriers, high costs, and fewer public resources.

In addition to the 100,000-unit shortfall per year in new construction, some of the housing challenges facing the state include:

  • Lack of supply and rising costs are compounding growing inequality and limiting advancement opportunities for younger Californians. Without intervention much of the housing growth is expected to overlap significantly with disadvantaged communities and areas with less job availability,
  • Continued sprawl will decrease affordability and quality of life while increasing transportation costs.
  • The majority of Californian renters — more than 3 million households — pay more than 30 percent of their income toward rent, and nearly one-third — more than 1.5 million households — pay more than 50% of their income toward rent.
  • Overall homeownership rates are at their lowest since the 1940s.
  • California is home to 12 percent of the nation’s population, but a disproportionate 22 percent of the nation’s homeless population.
  • For California’s vulnerable populations, discrimination and inadequate accommodations for people with disabilities are worsening housing cost and affordability challenges.

The report noted that potential actions on the cost of housing fall under three broad categories:

  • Reforming land use policies to advance affordability, sustainability, equity.
  • Addressing housing and access needs for vulnerable populations through greater inter-agency coordination, program design, and evaluation.
  • Investing in affordable home development and rehabilitation, rental and homeownership assistance, and community development.

“New home construction is unsustainably low,” said Ben Metcalf, director of the Dept. of Housing and Community Development. He was the keynote speaker at the recent  “Housing Our Workers” forum organized by the Southland Regional Association of Realtors, the Valley Economic Alliance, and BizFed Institute.

“It compounds today’s challenges, Metcalf said.” Over the coming weeks I’ll explore the concerns and recommendations that emerged from that forum and the state’s housing assessment report.

Marty Kovacs is the 2017 Chairman of the Santa Clarita Valley Division of the 9,500-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

About the author

Marty Kovacs

Marty Kovacs, SCVBJ Contributor

  • ErikKengaard

    California needs 20 million fewer people. Then homes would be affordable, as they were in the first half of the twentieth century.

    • Cynical Observer

      Leave it to the realtors like Marty Kovacs to demand “more housing construction”. They don’t have to commute to the main parts of Los Angeles every day to be able to afford a home for their children in a safe community like Santa Clarita. The vast majority of this community’s bread winners have to spend two hours or more each work day on the jam-packed freeways going to and from work.

      Santa Claritans do not need another 25,000 houses in Newhall Ranch, adding 40,000 more people to clog the 5 Freeway.

      Santa Claritans do not need the County to keep approving thousands of houses north of Santa Clarita all the way up to Palmdale making commuters lives miserable on the 14 Freeway.

      Realtors who publish canned opinion pieces, spouting the party line of those who profit from making commuters’ lives miserable, should be shunned.

      • ErikKengaard

        Every faction has its agenda, and furthers that agenda by propaganda. It’s all about shifting the Overton Window. And that propaganda works on Grubers (of which we have too many).

  • ErikKengaard

    “Nothing could prevent the California electorate from simultaneously demanding low electricity prices and no new generating plants while using ever increasing amounts of electricity.” Professor Thomas Sowell

    “Nothing could prevent the California electorate from complaining about lack of housing while voting for increased population despite a fixed supply of land.”