Ben van der Meer, Staff Writer, Sacramento Business Journal
A new report from think tank Next 10 says California isn’t building
enough housing to keep up with demand.
Builders have said for years that California isn’t building enough new housing to meet demand. A new report released Thursday is now saying the same thing – and warns of consequences for the state’s economy if things don’t change.
Builders have said for years that California isn’t building enough new housing to meet demand. A new report released Thursday is now saying the same thing – and warns of consequences for the state’s economy if things don’t change. The report, from Bay Area think-tank Next 10, found only Alaska had fewer housing permits for every 100 new residents over the last decade. Between 2005 and 2015 – which includes the last couple years of the housing boom – there were only 21.5 permits issued in California for every 100 people new to the state.
Noel Perry, founder of San Francisco-based Next 10, said the numbers appear to apply statewide, and include both rental and ownership housing. He said he had no specific data for the Sacramento region. But the North State Building Industry Association has pointed out a typical homebuilding year for the Sacramento region is 8,000 to 12,000 new single-family units. The region hasn’t been anywhere close to those numbers since 2007, and would seem unlikely to do so this year.
“If we continue to create jobs, the state could face a critical shortage in a group of middle-income workers,” Perry said.
The report doesn’t list any policy prescriptions for addressing the issue. However, the report notes that in the state’s urban areas, 45 percent of developers cited costs, neighbor opposition or both as reasons they typically don’t proceed with infill projects.
Builders also cited the California Environmental Quality Act, and related challenges such as zoning and potential lawsuits, as an ongoing challenge to building housing of all kinds. And Perry said Proposition 13, which limits property-tax increases, may compel jurisdictions to favor approving retail projects instead because of the resulting sales tax dollars.
The result is a notable gap between who moves here and who leaves, Perry said. Of the 625,000 state residents who left between 2007 and 2014, Next 10’s report found 563,000 of them made less than $50,000 a year. Roughly another 139,000 made $50,000 to $99,999. By comparison, during that time the state attracted more than 52,000 people with bachelor’s degrees, and more than 80,000 people who make $150,000 a year or more.
Because California’s income tax structure tends to fall more heavily on high-income residents than low-income residents, Perry said, the migration pattern suggests the standard of living, including housing costs, compels more people to leave than income taxes do. However, the period also includes a time when the state lost many middle-class jobs, particularly tied to real estate and construction.
“There has to be a balance,” he said, acknowledging California’s environmental stewardship and relatively stable property taxes are also reasons people like to live here.