California’s Ongoing Struggle with Housing Shortages: Unveiling the Laggard State

California’s chronic shortage of housing has persisted for years, prompting numerous legislative attempts to alleviate the crisis. These efforts primarily aim to streamline the permitting process for developers and reduce the obstacles faced by housing projects’ local opponents.

The most recent session introduced Senate Bill 423, an extension of the permit streamlining provisions of Senate Bill 35, with a crucial expansion into the state’s coastal zone. This move is seen as a significant blow to NIMBYs (Not In My Backyard) who often utilize the California Coastal Commission’s land use authority to block developments.

State Senator Scott Wiener, who championed both bills, believes that SB 35’s streamlining provisions have already played a pivotal role in developing over 18,000 units of affordable housing since 2017. While this figure appears impressive, it’s merely a fraction of the annual new housing construction required, currently estimated at 109,000 units in 2023.

California’s Ambitious Housing Goals

California has implemented a strategy to enforce housing goals by assigning quotas to each region and, subsequently, goals to individual cities for housing development. It also prohibits arbitrary conditions on proposed developments and takes legal action against cities that fail to meet its standards.

While the initial statewide goal was 180,000 units a year, the state has since lowered it to 148,000, considering recent population declines. Unfortunately, California is still far from achieving its housing goals, with the 2023-24 budget projecting the construction of just 109,000 units this year.

The state has allocated nearly $15 billion directly and indirectly to housing production in the 2023-24 budget. However, it’s estimated that California needs at least $90 billion in annual private and public investments to meet its 148,000-unit goal – assuming there are adequate resources and land available to support such construction.

California’s Housing Shortfall in Perspective

To better understand California’s housing challenges, a state-by-state report conducted by RubyHome Luxury Real Estate analyzed the construction of each state’s housing stock since 2010, revealing discrepancies in development vigor.

Texas emerged as the leader, with 22.5% of its 11.1 million housing units built between 2010 and 2022. Meanwhile, California landed in the 41st position, with a mere 8.1% of its 13.6 million housing units constructed since 2010.

The repercussions of this underproduction are significant. A supply and demand imbalance has led to limited housing options and an increasing number of households struggling to afford housing. These factors have also contributed to rising homelessness risks. While legislation like SB 423 and significant state investments are steps in the right direction, they have not yet bridged the housing gap that continues to expand.

The housing crisis in California persists, emphasizing the urgency for comprehensive and effective solutions to secure adequate, affordable housing for all residents.

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