California’s housing crisis is the worst threat to our middle class lifestyle since the recession. Our median home listing price is nearly twice the national average, and besides Hawaii is higher than any other state. Our median rental rate is half again higher than the national average, and is also the highest in the nation (other than Hawaii).
When factoring in housing costs and other basic necessities, nearly one in five Californians lives in poverty, according to the U.S. Census Bureau. Workers suffer too-long commutes or overcrowded lodgings to afford to live in the Golden State. Lawmakers, Governor Brown – and voters – applied some band-aids to the problem over the last several years, mostly in the form of additional money to subsidize housing for the poorest Californians and homeless mentally ill. But as to the state of affordability and availability, voters are not impressed.
According to the 2018 CalChamber Poll, 59 percent of voters, especially younger voters and parents, believe that owning a home is a big part of the American dream. Among voters who are not homeowners, 63 percent say that owning a home sometime in their life is a high priority. But these aspirations run headlong into reality. Nearly half of voters believe the housing shortage is a very significant issue, up from 35 percent just two years ago. Indeed, more than half of voters say they would move to another state to improve their ability to purchase a home.
This isn’t just voters talking; many Californians are voting with their feet. According to Next 10, from 2006 to 2016, more than a million more people moved out of California to other states than moved from other states to California. Next 10 found that the main driver for net out-migration appears to be high housing costs, since migration rates are highest for those at lower-wage levels. Most residents who moved out of California were concentrated in lower-skilled, lower-paying fields — namely sales, transportation, and food preparation. But migration trends suggest that the middle class is also being priced out of the state. Even the Bay Area is joining this trend. According to the Silicon Valley Institute for Regional Studies, outward migration from the Bay Area has accelerated, with more people leaving the region than any other spot in the country.
More troubling, the CalChamber poll found that 60 percent of voters with children living at home agree with the statement, “My children will have a better future if they leave California.” Top of mind for these parents: cost of living, including housing. Four of five parents believe their children’s generation will have a harder time purchasing their first home in California than their own generation.
When it comes to identifying solutions to housing affordability, California voters prefer solutions that increase private development of housing – as long as it is not in their own back yards. The most popular approach would be to focus on creating more jobs in areas of the state where housing is cheaper, followed by limiting litigation over housing projects that have already been approved by local officials.
Unsurprisingly, the least popular solution for voters involves increasing density of residential housing in their own neighborhoods. While generally supportive of California’s leadership to reduce greenhouse gas emissions, voters turn skeptical when solutions affect their costs of transportation and housing. Voters overwhelmingly oppose climate change regulation measures – already under consideration by state officials – that would significantly increase home prices or purposely design roads to be more congested or not expand highway capacity.
During the campaign, Governor Newsom proposed setting a goal to build 3.5 million new homes by 2025 to stem the state’s housing problems. This would nearly quadruple the current rate of home construction. He will need unprecedented cooperation from the Legislature to accomplish this daunting, but necessary, task.
Loren Kaye, President, California Foundation for Commerce and Education