California’s top officials and the bureaucrats who support them persist in telling us that there is a massive housing shortage in the state, amounting to between 1.8 and 3 million units (over the past five years, they used varying figures within this range). .
That means the state — with 14.6 million existing units as of mid-2022 — is short about 10%. If this shortage is real and not simply a figment of the imagination of state Department of Housing and Community Development (HCD) officials, few vacancy indicators should appear on new apartment buildings. apartments and condominiums that have proliferated across the state since 2021.
However, there are many. It’s hard to find a building from 2015 or later at market rate without huge signs advertising vacancies. Now here’s a study that begins to show why: Even in the midst of a building boom, not enough housing is being built to fill the shortage, while prices and rents remain too high for most who would like moving to new housing, even for many so-called affordable units.
With rents around $2,700 a month for two-bedroom apartments in the state’s largest cities, that’s easy to understand. It also doesn’t include the state’s estimated 170,000 homeless people, who can barely afford any rent, and so resort to tents where no public shelter is available.
A look at some of the state’s most in-demand housing areas provides details on what’s happening. The aforementioned study comes from the website RentCafe, which reveals that construction in California’s densest zip codes doesn’t match new developments in other places like Dallas and Washington, DC.
The 92101 ZIP code that hugs the San Diego Bay coastline offers fabulous views, exceptional restaurants and 5,345 homes built between 2017 and 2022, the latest figures available from the construction boom era. This represents a 46% increase in available units.
This large percentage increase may have brought some relief to prices, but it hasn’t happened: the median apartment rent there is $3,048 per month, or more than $36,000 per year. How many Californians can afford it? Additionally, the increase of 92,101 housing units is only the eighth-fastest-growing ZIP code in America, but No. 1 in California.
The Dallas and DC ZIP codes far exceeded this, with the 20020 ZIP code near the White House adding 10,098 units in the same time, a 73% increase. Even with the significant new supply, rents there still average around $3,000 per month, not much different from those in the San Diego Bay Area. These figures go a long way toward making obsolete the old rule that more supply leads to lower rents.
The new supplies also haven’t reduced rents in San Francisco’s 94103, California’s second-fastest-growing ZIP code in terms of new housing with 4,379 new units and an increase in supply of housing by 66% since 2017. The ZIP code includes the Civic Center, around which apartment rents remain average about $3,300, even though prices have fallen about 7% over the past year overall. the San Francisco Bay Area.
All of this suggests a new housing differential between urban, suburban and rural areas. Rents of $1,000 or less aren’t very difficult to find in the least dense ZIP codes among California’s 1,763 ZIP areas. However, in the densest areas, where land prices are high and most likely to attract builders seeking high returns on investment, prices remain high while supply increases.
This suggests a determination among developers who own new buildings to keep prices high even when demand is low, in order to avoid rent controls that could keep prices and profits low for decades if landlords were allowing rents to go down now. It also suggests that the housing shortage figures cited by the HCD and its patronizing politicians may be largely inflated figments of their imagination.
One thing is certain: Although density advocates in the California Legislature, led by state Sen. Scott Wiener, a San Francisco Democrat, and Gov. Gavin Newsom, remain convinced that high supplies equivalent to lower rents, even when reality says it is incorrect. . Perhaps the state should instead emphasize single-family housing and less dense areas where history shows Californians actually want to live.
Email Thomas Elias at firstname.lastname@example.org and read more of his columns online at californiafocus.net.
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