The recent Palisades and Eaton fires have not only caused devastating personal losses but have also exacerbated California’s ongoing housing crisis, which is largely attributed to misguided policies rather than natural disasters. As Governor Gavin Newsom recently purchased a $9 million home, many Californians struggle to find affordable housing or even dream of homeownership. Despite attempts at reform aimed at increasing housing supply and affordability, significant progress remains elusive.
In coastal California, home prices are nearly 400% higher than the national average, with the median home price statewide being 2.5 times greater than in the rest of the country. The state’s homeownership rate stands at a mere 56%, the second lowest in the nation, trailing only New York. This situation is particularly dire for younger residents; Californians under 35 have a homeownership rate that is half the national average, leading many millennials to leave the state in search of more affordable living conditions.
The roots of California’s housing crisis can be traced back to excessive construction regulations and litigation that have hindered residential development for decades. The state’s current strategy, which promotes dense apartment construction near public transit in urban areas, has not effectively addressed the underlying issues. High-density construction, often referred to as YIMBY (Yes In My Backyard) development, is expensive due to costly land, high material prices, and stringent labor and regulatory requirements. Even when affordable units are included in new developments, the overall impact on housing availability is minimal.
Research by UCLA and the London School of Economics indicates that forced densification does not lead to substantial cost savings in housing. Moreover, a Public Policy Institute of California survey revealed that 70% of residents prefer single-family homes, contradicting the trend towards high-density living. Legislative efforts, such as Senate Bill 9, aimed at increasing housing density, faced significant public opposition and were recently overturned in Los Angeles County.
California’s climate goals have influenced housing policies that favor multi-unit developments, with the assumption that such structures are more environmentally sustainable. However, emerging studies suggest that building size does not necessarily correlate with sustainability. Many residents are opting for longer commutes to purchase homes rather than renting in urban areas, further complicating the housing landscape.
To address the housing crisis, experts suggest that California should consider expanding streamlined permitting processes for construction, particularly for single-family homes and townhouses. Rather than enforcing high-density mandates, state policies should align with consumer preferences and market demands. Additionally, promoting development in less expensive, peripheral areas could provide opportunities for first-time buyers, especially in light of the growing trend of remote work.
As the state grapples with its housing challenges, there is a pressing need for diverse options that cater to those seeking affordable rentals and single-family homes. If California aims to remain an attractive place for residents, it must rethink its housing policies and create a more inclusive housing market.