11/20/2023 0 Comments California housing bubble 2021![]() Whether Californians will begin clustering together again as COVID concerns ease is an open question. But the median price in March was still 29% above where it was three years earlier. Since then high interest rates have brought California’s housing inflation back down to earth slightly. That’s an increase of 44% in less than two years. Starting in June 2020, the median price of an existing single-family home shot up from $626,170 to a peak of $900,170 in May 2022, according to data compiled by the California Association of Realtors. ![]() Even if the total number of Californians continues its gradual downward drift, more homes are needed to house the roughly 38 million sticking around. ![]() That worsened the state’s housing shortage. But the pandemic put the trend on overdrive. Over the last 40 years, the number of people living alone doubled across the country. The trend toward fewer people living in each home is nationwide and long term. COVID Worsened the Housing CrisisĪ particularly dramatic driver of such change: the pandemic.Įager to keep COVID at bay and seeking more space to work from home, Californians dumped their roommates when they could and sought out places to live on their own, resulting in a great “ spreading out,” as analysts at the Public Policy Institute of California put it. And people’s housing wants and needs change, too. Young Californians grow old enough to live out on their own while older ones begin to die off. But it’s also because the shortfall is “a moving target,” explained Len Kiefer, deputy chief economist at the Federal Home Loan Mortgage Corporation. That’s in part because the size of the hole is so large. If the shortage is relatively modest, he said, and “if we continue like this for another decade, with very slow population growth or essentially no population growth, and with fairly robust housing construction, then it should start to eat into that lack of housing,” he said.īut if the state needs to hit McKinsey-esque levels of new production, counted in the millions of units, “we’re still a long, long way off,” he added. Alas, the state has only hit that annual mark five times since 1980 - and not once since 1990. That definition of the state’s shortage led the office to estimate 210,000 each year. In 2015, for example, the Legislative Analyst’s Office, an agency that serves as a think tank for state legislators, framed the issue with the following question: How many units would the state have had to build between 19 to keep the median value of an owner-occupied home increasing at the same rate as the rest of the nation, rather than skyrocketing so much higher, as it has for the last half century? One of the reasons these estimates vary is because there’s no single definition of a “housing shortage.” The administration acknowledged the state’s sluggish population growth in its latest proposed budget for next year, which gauged the need at 148,000 new units per year. And last year, in putting together housing goals for regions across the state, the department’s total prescription added up to 2.5 million new homes over the next eight years (or 315,000 per year). The department published another estimate in 2018 urging 180,000 units per year through 2025.
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