California housing woes

Photo: Nicolas Raymond/Flickr

It’s not just the Bay Area — regions across California are seeing dramatic increases in house prices while the state’s homeownership rate sits at its lowest level since World War II. That’s according to a recent report by CALmatters, a nonprofit collective of journalists that covers how California’s state Capitol operates.

Californians, on average, pay 2.5 times more than the rest of the nation to own their homes. But how did we get here, asks CALmatters report.

During the 2008-09 recession, while the rest of the country saw rental prices dip, California rental prices only plateaued. Now they’re skyrocketing, with three of the top 10 most expensive cities in the nation located in the Bay Area: San Francisco, San Jose and Oakland, according to Zumper’s latest report.

CALmatters claims that now the entire state of California is gentrifying, not just its urban centers. A graph in the report shows the average person moving to California earns between $50,000 to $100,000 annually, while those moving away from the state earn between $10,000 to $30,000 annually. The cost of living is simply too high to accommodate incomes that low. For reference, California’s minimum wage is $10.50 an hour which equates to $21,840 annually. With those numbers, how do those gainfully employed in the service industry survive, CALmatters asks.

While the median income in California is higher than the national average, it hasn’t kept up with rising prices in the state’s rental markets. In fast, that disparity has widened since 2000, with the most significant gap occurring in 2011.

Another reason cited by CALmatters is that the demand for housing far surpasses its supply, a problem exacerbated by NIMBY organizations. After the housing market crashed in 2008, construction workers left the industry en masse. In the last decade, California has experienced a 26 percent shortfall in the number of construction workers employed in the state compared to pre-recession levels.

Finally, public dollars have not been properly allocated towards building affordable housing. City dollars have been funneled instead towards administrative tasks, and developing market-rate housing isn’t going to ease the crisis anytime soon. “At the regional level, both market-rate and subsidized housing reduce the displacement pressures, but subsidized housing has over double the impact of market-rate units,” a UC Berkeley report explains.

The report doesn’t offer solutions, but rather pinpoints culprits, specifically NIMBYs, Prop 13 and the inertia taxpayers feel towards contributing their incomes towards attempts to solve or alleviate the overall problem.

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