Everyone in California knows, or should know, that the state has a massive housing shortage that persists despite the efforts of its politicians to push construction.
State officials say we need to build 180,000 new housing units each year to meet demand, even though the state’s population has been slowly declining of late. At best, California is building about half that number, adjusted for losses from old age, fire and other calamities, and construction appears to be slowing due to sharp increases in interest rates.
The economic laws of supply and demand mean that housing shortages result in high home prices and rents. Because those costs, particularly rent, filter down to Californians on the lower rungs of the economic ladder, they result in California having the highest poverty rate of any state, 13.2%, when the cost of living is factored in. the calculation.
Poverty decreased somewhat during the COVID-19 pandemic, thanks to a series of temporary federal and state support programs. As they fade, the underlying causes, particularly high housing costs, remain.
Continually, some impoverished Californians run out of options to keep a roof over their heads and fall into homelessness, giving California the highest number in the nation and the highest relative proportion of people homeless.
Some recently released data not only underscores this unfortunate cycle, but also reveals its contrast to what is happening elsewhere.
The first data set comes from Matin Real Estate, a Portland broker, and compares California home construction to other states, expressed as units per 1,000 residents.
Nationwide, according to the firm, 5.3 housing units are being built for every 1,000 US residents, but individual states range from a high of 11.7 in Utah to a low of 1.27 in Rhode Island. Idaho, Florida, and South Carolina round out the top construction states, while Connecticut, Illinois, and New York trail behind Rhode Island.
California isn’t in the bottom tier, but it is 13th from the bottom at 3.04 per 1,000. If California were to match the national rate, it would be producing 212,000 units a year, slightly more than the state’s official goal, but also a level California once reached.
It should be noted that Florida, a state that California Gov. Gavin Newsom often looks down on, is one of the nation’s leaders in home construction at No. 2. Texas, another archrival, is No. 6.
California fares even worse in the second data set, which shows the relative impact of rental costs.
Forbes Homes, a website dedicated to residential costs of living, compared rents to incomes in all 50 states, using data from federal agencies, and found that California renters have the second-highest rent burden in the country, the factor that dominates the very high rate of poverty in the state.
Hawaii renters fare worse, spending an average of 42.06% of their income on maintaining a home, while California ranks second at 28.47%, followed by New Jersey, Massachusetts and Delaware.
The numbers from both data sets are important indicators of California’s stark socioeconomic divide between those who get to enjoy California’s unparalleled scenic and cultural wonders and its mighty economy, now said to be the fourth largest in the world, and those who struggle to survive.
The availability and cost of housing are the central factors in this division, whose most worrying manifestation is the explosion of miserable encampments on the sidewalks of the main cities of the state.
As California politicians declare their commitment to dealing with homelessness, they must also recognize that it stems from a chronic housing shortage in the state that shows no signs of abating.
CalMatters is a public interest journalism company committed to explaining how the California State Capitol works and why it matters. For more Dan Walters stories, go to Commentary.