California endures housing crisis

A new study to be released by the Public Policy Institute of California suggests there’s a major housing shortage in the state’s employment centers, a top official with the California Building Industry Association said Tuesday.

Timothy L. Coyle, CBIA’s senior vice president for governmental affairs, said although the study has flaws in its methodology, it repeatedly acknowledges that there’s a serious housing shortage in the key job centers of the state – San Diego, Orange County, Los Angeles and the Bay Area.

“Furthermore, the report reaffirms what CBIA has been saying about the causes of these shortages – growth control and other governmental constraints have limited the supply of needed new housing,” Coyle said.

The study uses a newly developed methodology to calculate how many homes and apartments should have been built in California, based on such factors as nationwide housing production, immigration levels, demographics of immigrant families, and the state’s economy. PPIC researchers concluded that the state’s housing shortage is far less than the amount calculated by other researchers, who place the shortfall at about 1 million units.

But Coyle pointed out that an appendix to the study shines a bright spotlight on the lack of production during the 1990s. Since the state’s housing market bottomed out in 1993, the study reported the San Francisco Bay area was 21 percent short of the housing it needed between 1993 and 1999. During the same period, the report found the San Diego region underproduction rate stood at 20 percent; Sacramento region (5 percent); Los Angeles County (30 percent); Inland Empire (15 percent); Ventura County (10 percent); and Orange County (10 percent).

“The report looks back at the past decade, perhaps as a way to justify its low estimate of unmet housing needs, but in so doing it overlooks what every reputable scholarly institution is telling us – housing shortages are crippling affordability,” Coyle said. “As all economists will tell you, high prices signal market shortages, and no state has higher housing prices than California.”

The median price for an existing home in January was $405,720, the California Association of Realtors reported two weeks ago. That’s 21 percent higher than January 2003 and 68 percent higher than in 2000.

C.A.R. also reported that “constraints on supply continue to impact both the availability and affordability of housing options for California families,” noting that there is only a two months’ supply of homes on the market, compared to a normal seven- to 10-month supply.

Coyle also registered concern that the report implies a possible retreat from development in the areas with the greatest housing demand. The report cites hostility to residential development in the state’s primary job markets and suggests that inland areas may be the place to go.

“CBIA believes the housing needs all over the state demand public policies that support new development,” he said. “But, despite the warnings from PPIC, California policy-makers should not yield to NIMBYs and other no-growth advocates and abandon the so-called coastal areas when that’s where the people and the jobs are. To do so would be bad public policy – driving development further and further away from job centers and placing greater stress on the environment as well as on California’s working families.”

The California Building Industry Association is a statewide trade association representing more than 6,000 businesses.