| HOMEBUILDING INDUSTRY OVERVIEW
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California's Housing Affordability Crisis
A home of your own it's the American dream. And it's the California Dream as well. In fact, a recent poll showed that 86 percent of California families want to live in a single-family home in a safe neighborhood with good schools.
The dream of homeownership for California’s current and future residents is fading fast. In 2005, California had a homeownership rate that was the second lowest in the country (58.9 percent), a full 10 points below the national rate, according to New America’s Asset Building Program.
Two important factors have lead to the severity of this crisis. First, California’s population is growing at a rapid rate. The state is expected to gain more than six million residents between 2000 and 2020 -- the equivalents of adding the population of the Phoenix, Las Vegas and Tucson metro areas combined -- while housing production each year has not come close to matching this population increase. In fact, new housing production over the past ten years has averaged little more than 120,000 homes and apartments annually. As a result, California’s cumulative housing deficit is nearing 1 million homes and apartments.
The second factor is attributed to California's high home prices. The supply and demand housing imbalance has led California median home prices to skyrocket over the last few years. California doesn't have enough homes to handle its current population, so demand has pushed prices beyond what families can afford. In addition, California has failed to plan for the increased populations, practically ensuring that families will continue to be priced out of the state's housing market.
Current communities need to look to viable planning solutions that will help solve the housing crisis.
The Building Industry Association – Los Angeles/Ventura Chapter (BIA/LAV) is working to be a leader in finding solutions to this housing crisis and is dedicated to creating quality communities for California’s diverse population. This includes providing critical infrastructure for communities such as schools, roads and parks, and protecting open space and natural resources.
Why Production Isn't Keeping Up With Demand
Homebuilders, committed to being part of the solution to California’s housing crisis, face countless barriers to building at the levels needed to meet the current and future demand for homes -- growth measures or zoning ordinances that limit the ability of developers to add new homes and build new communities and constraints such as fees, no-growth and restrictive land use policies are further slowing production and increasing home costs.
Fees. Local governments impose a variety of fees on every new home or apartment built. Averaging 15 to 20 percent of the cost of a new home, in some communities, fees exceed $100,000.
NIMBYs. Many people support new housing as long as it's built somewhere else. And NIMBYs have learned to use all the twists in the state's environmental laws to stall and delay proposals for years.
Lack of developable land. Growth control measures and the amount of time it takes to get any project approved has caused an acute shortage of buildable lots in urban areas of the state. In many communities, the cost of the lot alone is more than $300,000 before one shovel of dirt is turned.
Despite these barriers, the homebuilding industry is still a major economic engine throughout California and provides numerous benefits to all Californians.
The Benefits of Housing
Homebuilding is an integral component of California's economy. A recent study by the Sacramento Regional Research Institute found that the homebuilding industry contributes $68 billion a year and 487,000 jobs to the state's economy. In Los Angeles and Ventura counties those numbers directly translated into $6.6 billion and 42,000 jobs last year alone. The report also found that each dollar spent on new housing construction generates another $0.80 in total economic activity, and each job created supports an additional 1.2 jobs.
And building new homes also benefits the economy in the long run. The report found that the housing industry as a whole generates $273 billion a year and 960,000 jobs, 13 percent of all economic activity in the state.
The benefits of building quality new homes in a community go beyond economics. New housing also provides new parks, libraries, and schools that everyone benefits from. And new housing paves the way for enhanced shopping, restaurants, and cultural activities that improves our quality of life.
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