Housing Shortages and Wildfires Making California Nearly Unlivable
More people live in California than in any other state in the Union. Looking at that fact alone, it's not surprising to learn there's a housing problem.
There are not enough houses and housing units to go around, right? Sure, that's a big part of the dilemma.
But compounding the problem is that there are not enough affordable houses and housing units to go around.
The median rate for a house in California is now $600,000. That's more than twice the national level.
Residents Drain Too Much on Housing
Of the country's five most expensive residential markets, four are in the Golden State.
They are Silicon Valley, San Francisco, Orange County and San Diego. Los Angeles is not far behind, in seventh place.
California has the country's highest share of households exhausting more than 30 percent of what they make on housing.
The state needs to build 3.5 million housing units by 2025 to address the shortage of housing. That's according to the McKinsey Global Institute.
Exodus Is Worsening
If that doesn't happen, the already serious homeless problem will worsen. Especially in Los Angeles, San Francisco and Oakland. The state already accounts for about 25 percent of the nation's homeless population.
Housing development expenses are so high that the pace of development in California is slowing. That's despite the need for reasonable housing.
If a developer can't make a gain when a tenant is asked for $4,000 a month for a one-bedroom apartment, that's a problem.
No wonder more people are now leaving California than are moving in. Despite the fact that unemployment is at an all-time low there, at 4 percent.
Most of the people who have decided to leave California have lower than average incomes. But the housing situation has now become a middle class problem too.
Big Tech Pitching In
Big Tech is interested in trying to solve this quandary. Apple, Facebook, Google and Microsoft have all committed between $500 million and $2.5 billion to the cause.
Why? Well, it's certainly a good PR move on their part. They've been criticized for creating this problem by bringing so many employees to the state.
But the bottom line is that housing shortages make expansion difficult for them. Not just for their employees, but for the public at large. They see their pledged contributions as something to gain from.
Each of these groups have declared they'll allow housing development on the land they already own.
Asset Turns Into Liability
How would these groups gain from their contributions? There are several answers to that question.
Bank loans and equity from private groups are two ways. But there are a number of other ways connected with local, state and federal housing programs.
The goal is to give more housing for the homeless and middle-income housing for professionals such as teachers. As well as market-rate units where many of their employees could live.
But here's a big problem. A move to California used to be an asset in recruiting for these groups. Now, it's considered a liability. Thanks to the housing crunch.
'An Unsustainable Environment'
Amie Fishman is with the Non-Profit Housing Association of Northern California. Here's what she says.
"It is unconscionable that so many people are sleeping in the streets every night. It is unconscionable that people are driving hours and hours to and from their jobs. We are living in an unsustainable environment."
And the problem will not be solved by tech giants throwing large sums at it. David Garcia is policy director for the Terner Center of Housing Innovation at the University of California-Berkeley.
He says, "There is no answer to the California housing crisis without the construction of millions of new houses."
Wildfires Linked to Housing Problem
As anyone who has watched or read the news in recent years knows, housing is not California's only problem.
Wildfires are now regular occurrences. They force people to leave their homes with just the clothes on their backs. Destroy residences and landscapes. And pollute the air like never before.
The Center for Insurance Policy and Research estimates that 2 million homes in California are at high or extreme risk for wildfire.
These fires are confining the areas where new homes can be built. Officials may decide to make some of these areas off-limits to new construction.
A Problem Waiting to Happen Elsewhere?
Now, other states may not have California's wildfire problem. But reasonable housing could become a bigger problem in the future than it already is.
According to the Bloomberg news service, the rest of the country is become more – not less – like California.
Despite a record-breaking economic expansion for the U.S., fewer houses are being built than previously. And the fewer houses there are, the higher the rates go. The average person cannot gain the funds to own their own home.
Chris Herbert is the managing director of Harvard's Joint Center for Housing Studies. "California is not alone," he says. "It's just more extreme."