The Far-Reaching Implications of California’s Affordability Crisis

Analysis from the San Francisco Chronicle states that California’s housing crisis is not just impacting homeowners, but the business community as well. 

“We sold our 1,310-square-foot house on a 10,000-square-foot lot for $335,000. In Oregon, we purchased a 1,408-square-foot home on two-thirds of an acre for $168,000. More houses, more property, no sales tax, much lower gas taxes, similar property tax rates. The decision was a no-brainer,” said Nina Kingsley-Keller in the Chronicle’s article. 

The author of the article, Ken Monroe, Chairman of the Family Business Association of California, said data shows 53% of Californians are considering moving because of the high cost of living. Also, 63% of millennials want to leave. 

“If they leave, who will be left in the workforce when the Baby Boomers retire?” Monroe asks. 

Monroe continued by saying lawmakers “must come up with real-world solutions to clear the way to build the millions of new homes and apartments our state desperately needs.”

“Lawmakers must realize that the government isn’t going to build the 3.5 million housing units the governor has set as his goal,” Monroe said. “The private sector—and their thousands of employees—are going to build them. What government officials can do is recognize that their actions over the past 40 years, no matter how well-intended, are a major reason for our shortage.”

He added that legislators must stop adding new mandates that increase costs. The California Environmental Quality Act requires all new homes to have solar panels, which could add between $9,000 and $10,000 to the cost of the home. 

Zillow previously reported that the total value of U.S. homes reached $33.6 trillion in 2019. 

California made up the highest share of the nation’s housing value at 21.2% and 12% of its population. Texas is the next most populated state at 8.8% but accounts for just 5.9% of housing value. 

The home values of New York ($2.7 trillion); Florida ($2 trillion); Texas ($2 trillion); and Washington ($1 trillion) combined to exceed California’s $7.1 trillion in home value. 

Three metros reached the trillion-dollar mark—New York ($3.2 trillion); Los Angeles ($2.5 trillion); and San Francisco ($1.6 trillion). Los Angeles was the only market to add more than a trillion dollars of housing during the decade, gaining $1.1 trillion. 

California was home to three of the five metros that gained the most value: San Francisco ($827 billion); New York ($657 billion); San Jose, California ($360 billion); and Seattle, Washington ($356 billion).