California housing expensive

California Real Estate



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Dreaming of that California lifestyle? Well you better be saving.

Gavin Newsom, (Democrat) Candidate for Governor: “The reason our poverty rate is high or the highest in the country is the cost of housing.”

News Caster, One: “The number of people in California who can afford to buy a home continues to fall.”

The median home price in California is 519 thousand dollars, while the national median is two hundred and seventy five thousand dollars. Between January 2012 and 2019 the average list price for homebuyers rose about eighty-five percent. The median home price in the United States only rose about 53 percent in the same time frame.

Today a mere 54 percent of Californians are homeowners; only New York State had a lower rate.

So what’s going on here California has been a hot spot in the country’s growing job market: between 2010 in 2018 more than 29,000 jobs were added each month. That adds up to around 3 million jobs in less than a decade.

Meanwhile the pace of new housing construction hasn’t kept up: between 2010 and 2017 California issued about six hundred and thirty-five thousand new housing permits; and that’s well under the state’s projected housing needs.

This contrast is particularly stark in the Bay Area where the average home value in certain counties has surpassed 1 million dollars.

Jordan Levine, Deputy Chief Economist, California Association of Realtors: “All these high-income workers now want to own home, but there’s just simply not enough housing out there for them to buy. And so unfortunately what you’ve seen happen is that housing has ended up going to the highest bidder.”

So why were so few homes being built in California?

For starters it’s not cheap to build there. Homes in California’s coastal metros are three times more expensive to build than in the rest of the country. The cost of labour, land, material and government fees are all very high in California.

California also has more comprehensive building standards which can add to costs and bogged down the pace of new construction. According to a 2015 government report on housing costs the state requires builders to use high-quality building materials, such windows insulation in heating and
cooling systems to achieve certain energy efficiency goals.

Another factor limiting housing supply is local control over zoning.

Moira O’neill, Senior Research Fellow, Berkeley Law: “A lot about the realities local control of land is in the sense the cornerstone of all land use regulation.

These rules allow residents to snub out new developments that might change their neighborhoods. That power can be used to cancel plans for things like new apartment buildings. Apartments can house more people in a given amount of space, which in turn can increase strain on local roads or

So some homeowners in California oppose their development. This opposition to increased population density can limit new housing supply for middle and lower income Californians and drive up prices for existing homes.

There is also a debate around the law that passed decades before the latest housing boom.

Howard Jarvis, California Anti-Tax Activist: “We have proven here in California that we the people — not the politicians — are still the boss.”

In the late 1970s California limited large increases in property tax to 2% annually, unless the property is sold or renovated. Critics say this tax law can influence local governments who determine how available land is used.

They argue that officials give preference to businesses over housing developments because companies can generate tax revenues beyond property tax, which could mean that this local tax law limits the supply.

The global market is also playing a role in California’s housing loads. Chinese buyers are currently leading foreign investments in the United States real estate. And nearly 40 percent of the Chinese buying American real estate make their purchase in California. Their bids were often placed at the higher end of the market, which contributed to accelerating market rates.

These foreign investments spiked in the latter part of 2015, but have since declined.

While the state analyzes its options, California sheds residents at ever increasing rates: net migration has been negative for the last decade in the state.

And a big reason why is that California with its weather and opportunities is just too expensive.


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1. People are poor because they are lazy and refuse to work. True or false?

2. Have house prices increased, decreased or remained the same? Is the cost of housing the same in all parts of the United States?

3. In California, is the supply and demand for housing balanced and in equilibrium?

4. What are the three main factors that limit the supply or construction of new houses?

5. Everyone in California wants to create more affordable housing in the form of apartment buildings. Is this right or wrong?

6. Is the increase in housing prices entirely domestically influenced?

7. Are people “voting with their feet”?


A. Is housing affordable in your city? Is it cheap, medium-priced or expensive?

B. Have housing and demographics changed over the years?

C. Do people complain about housing? How do different people cope?

D. What might happen in the future?

E. What are some solutions to housing problems? What should people do?

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