The recent Palisades and Eaton fires have not only caused significant personal loss for many Californians but have also exacerbated the state’s ongoing housing crisis, which is largely attributed to misguided human policies rather than natural disasters. As the state grapples with the aftermath of these fires, the housing shortage is becoming increasingly dire, further complicating an already challenging situation for residents seeking affordable housing.
In November, Governor Gavin Newsom made headlines by purchasing a $9 million home, a stark contrast to the struggles faced by many Californians who are unable to find affordable rentals or homes. Despite attempts at reform aimed at increasing housing supply and affordability during his administration, progress has been minimal. The median home price in California is now 2.5 times higher than the national average, with coastal areas seeing prices nearly 400% above the national norm. This has contributed to California having the second lowest homeownership rate in the United States, at just 56%, trailing only New York.
The rental market is equally challenging; for instance, the average cost of a two-bedroom apartment in Los Angeles is approaching $3,000 a month, which is about $1,000 more than the national average. While some California baby boomers and Generation X homeowners have benefited from escalating property values, younger generations, particularly those under 35, face a starkly different reality with homeownership rates half that of their peers nationwide. This demographic is increasingly leaving California in search of more affordable living conditions.
The roots of California’s housing crisis can be traced back to excessive construction regulations and legal challenges that have hindered the development of new residential units for decades. Although the state has pushed for policies promoting dense housing developments near transit corridors, these measures have not effectively addressed the housing shortage. High-density construction, often referred to as "YIMBY" (Yes In My Backyard) development, is costly due to expensive land, high material costs, and stringent labor and permitting requirements. Even when affordable units are included in new developments, the overall impact on housing availability remains limited.
Research from experts, including UCLA and London School of Economics professor Michael Storper, indicates that forced densification does not yield significant cost savings for housing. Additionally, public sentiment shows that a majority of Californians prefer single-family homes over high-density living arrangements. Polls have indicated widespread opposition to legislation that would eliminate single-family zoning in much of the state, reflecting a disconnect between policy initiatives and the preferences of the populace.
California’s climate goals have also influenced housing policy, promoting multi-unit constructions in urban areas under the assumption that they are more energy-efficient. However, studies suggest that building size does not necessarily correlate with sustainability, and many residents are opting for longer commutes to purchase homes rather than renting in urban centers.
As the state seeks solutions to its housing challenges, some experts propose that California should streamline permitting processes and encourage the construction of townhomes and single-family homes rather than imposing high-density mandates. Additionally, expanding development in less costly areas could provide opportunities for first-time buyers, especially in light of the growing trend of remote work, which allows for more flexible living arrangements.
To effectively address the housing crisis, California must explore a variety of alternatives that cater to the needs of those seeking affordable housing options. If the state hopes to maintain its appeal and economic vitality, it will need to reevaluate and adjust its housing policies to better align with the desires of its residents.