USC economist and demographer share insights and concerns about California’s housing market.
By Jennifer Castenson
Many challenges face the California housing market. Buyers and renters are confronted with ever-increasing prices brought on by escalating costs that builders and developers are dealing with as a consequence of more and more demanding regulations.
The high demand and the increasing challenges mix like oil and water. But, what if it isn’t even entirely understood? What if the demand is even more intense than has been popularly forecast?
That inaccuracy is what Dowell Myers, professor of policy, planning and demography at University of Southern California has been studying. Myers and his colleagues, including Richard Green, professor, director and chair of the USC Lusk Center for Real Estate, are dissecting the numbers and the trends to better understand where the California housing situation is headed and how it can be improved in the future.
Myers has been working to understand how factors influencing the recession are now coming to life in today’s market. Depressed homeownership, millennials living at home and population growth are now adding more stress to the already strong rental housing demand. These slights to demand are added to the recession’s impacts to the supply side that include restricted supply of workers, financing and land constraints and political resistance. All add up to lower supply than needed.
Housing is available, but at a higher price than most can pay. In his blog, Green discusses the dissection of equality in the state as well, pointing out that higher income earners seem willing to pay the costs of California's access to labor markets and the gorgeous landscape. He shows that at the same time, low income people are moving out to find more affordable housing, because the only state with fewer units per person is Utah.
When higher income people compete with lower income people for the same resources, the higher income people tend to win.
In this podcast episode of HIVE RE:Think, host Philip Beere speaks to both Green and Myers, participants in the inaugural 2016 HIVE conference, about the challenges that the state faces, some of the misconceptions that are being published and some ideas on solutions.
Myers also developed research that shows just how many individuals will end up being pushed out of, or dislodged from, the California market because of these challenging conditions. Myers compliments Green’s ideas with his data that shows, in many cases, the highest payer gets first choice. Then, there is the factor of the millennials coming of age to move out of their household structure to form their own. When that happens in California, where new jobs are being formed at the highest salary ranges and attracting well-paid newcomers, the millennials have the last choice of housing.
So, where does this mean California is headed and how will the rest of the country be able to learn from and respond to their own housing pressures? More will be discussed at this year’s HIVE conference, scheduled December 4 to 5, at the JW Marriott in Austin, Tx. Registration is available online now.
The original article can be found here.