The Orange County Register reports [1] that although home prices in California may be stabilizing, the Golden State faces a “severe housing crisis.”
According to the report, just 30% of households can afford to buy a median-priced house, which is far below the national rate of 55%.
“High prices have taken their toll on the rental market also, which is fueling mistaken calls for statewide rent control—a policy that will further distort the market and reduce housing supply over time,” the report states.
Additionally, the report states that the housing issues in California have been caused by government land-use controls and regulations. A 2015 report from the Legislative Analyst’s Office states that between 1970 and 1980 home prices in California went from being 30% above U.S. averages to more than 80% higher, The Orange County Register reports.
The Orange County Register adds that lawmakers in the state have made little progress, as residential permits have dropped 38% over the past year.
A report by CoreLogic [2] further details the troubled market, as home sales in June declined year-over-year by 10.1%. The average sales price grew in June to a record of $508,500, but that increase was less than 2% from the year prior. Median-sale prices for homes in the San Francisco Bay Area fell annually by nearly 2%.
The previous high in median-sales price was $486,500 in May 2007. The Great Recession caused the average-sales price to fall to nearly $200,000 in 2008-09.
“June’s larger sales decline came despite a healthy economic backdrop and modestly improved affordability,” CoreLogic states. “The unemployment rate in California averaged 4.2% during the first six months of 2019, the state’s lowest average for the first half of the year since the late 1960s. Better affordability this year reflects lower mortgage rates and a flattening or, in some areas, small annual decline in home prices.”
CoreLogic states that sales declined across all levels in June. Sales below $300,000 fell annually by 18%, and sales under $500,000 fell 12.3%. Sales of homes listed at more than $500,000 dropped 7.5%, while homes prices at more than $1-$2 million fell collectively by 20.8%.