Why California Housing Costs Are So High




One of the biggest reasons why California housing prices are so is that we simply haven't built enough housing. Over the past few decades, California hasn't built enough housing to keep up with the ever increasing number of people living here. The state estimates that 180,000 new homes need to be built every year to keep prices stable, but over the past ten years, California has averages less than 90,000 new housing units built a year. Furthermore, the houses that were built weren't built in ideal locations (such as coastal cities).

Another factor that is driving up housing prices is the global demand to live and work in urban California. More specifically, the Bay Area is seeing huge population growth in comparison to the rest of the state, as the tech industry of Silicon Valley attracts tons of workers eager to earn a living. As more people enter the area, there are more people competing to purchase and rent homes.

Finally, one reason why California hasn't built enough housing to keep up with its population is Proposition 13, which is a state law that caps how much local governments can collect from property taxes. Because property taxes are capped, local governments are incentivized to become reliant on other revenue sources, so they tend to allocate open plots of land to commercial buildings rather than homes.


Source:
https://www.kqed.org/news/11666284/5-reasons-californias-housing-costs-are-so-high

Comments

  1. AnonymousApril 24, 2019 at 12:35 PM

    This article is very interesting, and it's true that Bay Area house prices are so high because there are more people competing to purchase and rent homes. I think the main cause of this is because of the presence of high paying tech jobs in the Bay Area, which attracts lots of workers and their families in this areas, because the workers make lots of money, they are willing to pay higher for housing, which leads to gentrification in place like EPA and also raises house prices a lot. The trend of higher pay and better jobs in an area leading to higher house prices is also seen in places like New York City, where the finance jobs are concentrated. This leads to high prices and competition for homes as well, which is why SF and NYC have the highest house prices in the nation.

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