Report: CA faces deepening affordable housing shortage

Dive Brief:

California’s lingering shortage of affordable homes isn’t expected to subside any time soon, according to a draft report from the state’s Department of Housing and Community Development, the Los Angeles Times reported.
Housing production in the state came up more than 100,000 new homes short of demand annually over the last 10 years, pushing up prices across the market. Meanwhile, homeownership rates there are at lows not seen since the 1940s. Nearly one-third of California renters spend more than half of their income on rent.
The report identified possible solutions, including reformed land-use policies, greater collaboration around addressing housing and access needs, and more investment in affordable housing development.

Dive Insight:

California is in the grips of a major affordable housing shortage as the state’s population levels rise, putting considerable pressure on the need for low- to middle-income properties in many of its metros.

Relief is not expected in the near-term, with the HCD report forecasting the state’s population to reach 50 million by 2050 from 39 million currently. Meanwhile, an average of 80,000 homes have been built annually in the state over the last 10 years, below the 180,000 needed each year to sustain growth.

State officials are seeking solutions, but, the Times notes, they haven’t of late passed wide-reaching housing legislation.

Lawmakers are currently mulling a proposal put forward last month that would see Californians who own a second home lose their ability to deduct interest on that mortgage from their state taxes. The resulting funds would be directed to an existing program that finances affordable housing. And last summer, voters in San Francisco approved a ballot measure requiring residential developments with 25 units or more to offer 25% at below-market rates, up from the previous requirement of 12%.

A report by consulting firm McKinsey released in October outlined several ways that California could bridge the gap to add more than 5 million single-family and multifamily properties across the state. They include the increased use of modular construction, local government incentives and speeding up land approval processes.

Large employers in the state are also pledging support, with social media giant Facebook last month announcing its Catalyst Housing Fund with $18.5 million to produce and protect affordable housing. The Facebook-backed alliance includes local partners and government agencies.

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