Southern CA struggles to keep up with housing demand

Dive Brief:

Southern California continues to lag other markets in keeping pace with housing demand. Analysis of Census data by The Orange County Register found that the region added 34,000 housing units from July 2015 to July 2016, a 0.53% increase that trails the national average of 0.68% for the period.
Still, SoCal was slightly ahead of the state overall, which had a unit increase of 0.52% for the year, lower than more than half of U.S. states. That figure was, however, higher than the 0.43% annual increases the state recorded from from 2010 to 2015.
SoCal’s lag is even more pronounced in Los Angeles County, Curbed Los Angeles reported, where the addition of 16,600 units during the period represented just a 0.47% increase. At the same time, the city’s population grew by 27,173.

Dive Insight:

California is the center point for the housing crunch, with demand continuing to outpace supply and home prices climbing as a result. An estimated 180,000 new homes are needed annually in the state to meet population growth, but only 80,000 are being built, according to a recent report from the state’s Department of Housing and Community Development.

In April, the median home price in Los Angeles reached the record high of $550,000 set in 2007, an increase of 6% from April 2016 due in large part to the confluence of strong demand and tight inventory conditions.

Though the state saw a percentage-point improvement in affordability during Q1, buyers there need an annual income of more than $100,000 to afford a median-priced single-family home.

In the face of mounting housing affordability woes, state legislators have introduced a total of 130 bills in response, as the governor demands lawmakers help drive housing creation. The Los Angeles Times editorial board agreed, noting such reforms could include approving housing development near transit, requirements to meet housing demand, and rewarding jurisdictions that build more affordable housing.

The lack of housing mobility due to tight inventory conditions is one factor encouraging owners to remodel their existing homes. Owners in California, along with New York, spent the most of owners in states nationwide on home-remodeling projects in 2016.