Rae Anne Sanchez
American Government
Prof. Petri
Introduction
Affordable housing is still an issue in most countries of the world. In the United States, housing continues to be a major social and economic issue, particularly in cities. However, the problem differs in magnitude from one state to the other. The state of California has one of the worst housing shortages in the United States. The state, despite generating wealth in the tune of billions of dollars and being home to some of the wealthiest corporations such as Google, Facebook, and Apple, it has, still is, and is set to struggle with housing shortages (Buhayar and Christopher). The housing problem in California is so serious that it has resulted in billions of dollars in revenue losses. Even though most states in the US are struggling with housing problems, California is somewhat worse off. The state must do more to combat the issue or risk increased housing costs, climbing rent rates, and potentially disruptive movements of lower-income families out of the state.
The California Housing Crisis
California is no doubt the wealthiest state in the United States. The state’s counties generate nearly 748 billion dollars, a higher GDP than Switzerland and Saudi Arabia (Stuart). The state is a major attraction for high-end technology giants such as Apple, Facebook, and Google. As such, the state has and continues to witness high job growth rates, higher than the US national average (Matt et al.)The high job numbers attract graduates and other persons from across the country, to the detriment of low-income families that have lived in the state for years. Therefore, the population of the state keeps on increasing. However, an increasing population and increasing job numbers is a welcome sight, until the increasing population can no longer access affordable housing (Matt et al.). Estimates show that California needs to build at least 3.5 million more homes by the middle of the next decade, a milestone that might take up to 2050 to achieve (Buhayar and Christopher).
There are several factors behind the California housing crisis. First, the state’s high job growth rate encourages more people, particularly graduates from all over the country, to move to California. As more people move to the state, the population increases. While the increase in population is itself not a problem, the problem comes when the rate in the number of housing units being constructed fails to match the increase in population—as a result of the units being constructed falling short of the increase in population, competition for access to housing increases, thereby driving up the cost of buying or renting houses (Matt et al.). As such, the median price for a house in California stands at $600,000, a figure that is twice the US national level (Buhayar and Christopher).
Similar trends are evident in the cost of renting a house in California, with the rent prices significantly higher than those of other states at an average of $2400 for a two-bedroom (Matt et al.). The state of California accounts for a quarter of America’s homeless people despite having only 7 % of the population (Buhayar and Christopher).
California has four of America’s five most expensive residential markets in Silicon Valley, San Diego, Orange County, and San Francisco (Buhayar and Christopher). The cost of housing in California is so high that 40% of the state’s population is burdened by rent, with rent payments consisting of over 30% of their incomes (Buhayar and Christopher). Despite incomes being considerably higher in California compared to the national average, the very high housing costs mean that low-income earners are more likely to either leave the state or risk becoming homeless (Matt et al.). Furthermore, the increase in incomes has not kept up with rising housing costs. Homeless people are forced to sleep in cars in parking lots due to the high costs of housing (Stuart).
Several factors other than the increase in California’s population vis-à-vis the increase in housing also contribute to the California housing crisis. Local jurisdictions in California contribute to the housing shortage by forming opposing new developments in the name of environmental preservation and maintaining the neighborhood’s character. Furthermore, downzoning that has existed since the 1970s has constrained the development of new housing. For instance, downzoning in San Jose is as high as 94%, with restrictions only allowing for the development of single-family homes (Buhayar and Christopher).
Another factor exacerbating the crisis is the change in climate that frequently causes wildfires in the state. The frequent wildfires have made large parts of California inhabitable, with restrictions set in place to prevent people from putting up houses in high-risk areas. The rising costs of the destruction caused by these wildfires make it impossible for restrictions to be lifted. Furthermore, some areas of the state, such as Silicon Valley that are home to tech giants, have continually been resistant to the development of new houses (Buhayar and Christopher). The reduced numbers of construction workers and the high costs of construction in the US generally have also increased the costs of housing, not only in California but also in other states. As the construction industry continually employs fewer workers due to increased costs and fewer people willing to work in the industry in favor of white-collar jobs, the costs of houses are set to increase nationally. However, this rate will be higher in California due to its higher costs of land, rent, and housing that make it less likely for construction workers to work there (Matt et al.). As a result, fewer housing units may be constructed in California than in other less expensive and affluent US states.
The housing crisis costs continue to climb and will continue to do so until solutions are found. As low-income earners move out of the state (gentrification), California might lose labor for jobs that are often associated with these workers (Matt et al.). Besides, more residents might have to consider working in the state but living elsewhere or moving to other states altogether. As more residents move to other places, valuable labor may be lost. Estimates revenue losses to the state stand at $ 53 billion in lost consumption spending, $ 85 billion in lost construction activities, and $ 5 billion expenditure on homelessness (Matt et al.). Furthermore, some companies are either moving out or considering moving out of the state for states or cities with lower costs. When houses are few, even companies struggle to maintain employees since those that lack access to housing or cannot afford the high costs of rent and houses might even consider changing jobs in favor of companies located in less costly areas, thereby increasing employee turnover.
Remedies to the California Housing Crisis
The California housing crisis needs an urgent and long-term solution to prevent the state from experiencing more losses. While several proposals have and continue to be made, the ultimate solution is to develop more and more housing units to match the state’s population. The governor of California highlights this commitment by explaining that the state must increase the number of units it is building to secure affordable housing for its population. California’s legislature is taking legislative steps to address the crisis through legislation addressing underlying issues. Through its 2017 Housing Package, the legislature passed 14 bills that would provide funding for new housing and streamline the planning, approving, and building processes (Fletcher). For instance, Assembly Bill 686 would require public agencies to promote the construction of fair housing that would address racial gaps (Fletcher). Assembly Bill 1771, on the other hand, would promote the equitable construction of housing across different regions while ensuring that these houses differ in types and affordability (Fletcher).
The second piece of legislation passed by the California legislature is the Housing Crisis Act of 2019. The act proposes some reforms to the Housing Accountability Act, changes of the Permit Streamlining Act, and some aspects of the Planning and Zoning Law (Maclean et al.). These reforms seek to solve issues of downzoning and rent increases that continue to exacerbate the crisis. With the reforms, jurisdictions would have less sway on zoning and standardization, thereby allowing the construction of affordable houses in areas that such houses would have been restricted (Maclean et al.). Furthermore, the reforms also streamline the process of applying for housing permits by reducing the bureaucracy associated with jurisdictions. The Keep Californians Housed Act, which the governor signed into law, requires property owners to issues tenants with 90-day notices before evicting them from houses due to struggles with rent payment (Maclean et al.). Other bills would require local governments to allow the development of houses near job centers and transits (Buhayar and Christopher).
Insights from the Research
The housing crisis in California has created losses in the tune of billions of dollars, increased the number of homeless people in the state, and forced others to move to other states or areas. The crisis has been caused by rising housing costs in California, with median costs of buying a house exceeding the national average by almost three times. Some of the interest groups concerned or working to turn the tide include the state and national government, residents of the state of California, and activist groups that support the affordable housing policy. The research reveals that the California housing crisis is set to continue, and might spill to other cities due to nationally increasing housing costs, and fewer people working in the construction industry. Furthermore, the research also revealed that the crisis could be mitigated with the right policies even if partially, in the short run, and fully in the long term. However, more needs to be done to ensure that Californians and residents of other states experiencing similar problems are protected against lack of housing and high costs that can contribute to homelessness.
Works Cited
Buhayar, Noah, and Christopher Cannon. California’s Affordable Housing Crisis: Why Prices Are So High and How to Solve It. 6 Nov. 2019, Bloomberg.Com, www.bloomberg.com/graphics/2019-california-housing-crisis/. Accessed 12 Aug 2020.
Fletcher, Chanell. “Real Solutions to California’s Housing Crisis: An Update and a Look Ahead.” Climate plan, 25 Oct. 2018, https://www.climateplan.org/real_solutions_to_californias_housing_crisis. Accessed 12 Aug 2020.
Maclean, Chelsea et al. “California Legislature Passes Housing Crisis Act of 2019 and Rent Control Bill, Among Others | Insights | Holland & Knight”. Hklaw.Com, 12 Sept. 2019, https://www.hklaw.com/en/insights/publications/2019/09/california-legislature-passes-housing-crisis-act-of-2019. Accessed 12 Aug 2020.
Matt, Levin and Ben, Christopher. Californians: Here is why your Housing Costs are so high. 24 June 2020, calmatters.org/explainers/housing-costs-high-california/. Accessed 12 Aug 2020.
Stuart, Tessa. “Why Can’t California Solve Its Housing Crisis?” Rolling Stone, 6 Sept. 2019, https://www.rollingstone.com/politics/politics-features/california-housing-crisis-causes-874803/. Accessed 12 Aug 2020.