By MADISON HIRNEISEN
THE CENTER SQUARE
(The Center Square) – All 50 states in the nation have a deficit of affordable housing units, but no state has a shortage as high as California.
According to a new analysis from Fitch Ratings, California has a deficit of 1.4 million affordable and available housing units for households earning at or below 50% of area median income. That’s more pronounced than other states with large gaps in their affordable housing stock, which include Texas, New York, Florida, New Jersey and Illinois.
Fitch’s report notes that the “foundation of the affordable housing problem is a deficiency in the general housing supply” across the nation. The report estimates that only seven homes were built for every 10 households between 2010 and 2016, creating “intense competition” for existing affordable housing stock.
“The U.S. population continues to increase, albeit at a slower rate over the past 15 years. With construction not keeping pace, the strain on housing affordability is notable,” the Fitch report states.
On top of lagging supply is the issue of rising housing costs. With 30-year fixed mortgage rates rising significantly this year and topping 7% in October 2022 coupled with elevated home prices, homeownership is “out of reach for many low income borrowers, thereby exacerbating the affordability gap,” according to Fitch.
The housing crisis in the Golden State is not new. California lawmakers and Gov. Gavin Newsom have highlighted the state’s housing shortage and introduced legislation aiming to address it in recent years. So far, the efforts have had little effect.
California’s housing prices have been higher than the rest of the nation for decades, but the gap started to widen between 1970 and 1980 when the prices went from 30% higher than U.S. levels to 80% higher, according to a 2015 assessment from the Legislative Analyst’s Office. In order to have kept California housing prices from growing faster than the nation between 1980 and 2010 would have required 70,000 to 110,000 additional units each year, according to the LAO.
Additionally, California’s new housing production “fails to make up for decades of undersupply,” and there are roughly 2.93 Californians for every occupied housing unit, according to the Public Policy Institute of California.
When running for governor in 2017, Gov. Newsom, who was the lieutenant governor at the time, promised to lead an effort to develop 3.5 million new housing units by 2025. But as of this year, only 13% of those homes have been permitted, and he’s settled on a new goal: 2.5 million homes by 2030, as reported by CalMatters.
To spur housing production, California lawmakers have introduced several measures in recent legislative sessions to reduce minimum parking requirements near public transit that can stall housing development, streamline the process to subdivide an existing lot and open up underutilized commercial spaces for housing development.
Housing and homelessness still remain high priorities for the governor and lawmakers heading into the 2023-2024 legislative session. Several bills to address affordable housing development have already been introduced in the first week of the new session, including one that would make it easier for churches and nonprofit colleges to build housing on their excess land and another to prohibit landlords from demanding a security deposit higher than one month’s rent.