California is home both to some of the richest people on the planet and technologies that make people rich. It is also facing a huge housing crisis which is growing by the year. The State has 12% of America’s population, but more than 20% of the country’s homeless live there — in cars, shelters and streets. These are mostly those residents who can neither afford a home nor afford to leave.
In the last 10 years, the State built not more than 80,000 houses each year, against the annual demand of 1,80,000. The result is a declining home ownership rate, which now stands at the 1940 level. At present, the shortfall is of two million houses. It is estimated that the State needs to build 3.5 million more homes by 2025 to keep up with the demand.
Inadequate supply of housing in California is driven by multiple factors. Its topography limits further expansions contiguous with already built areas. A multitude of regulations — brought in keeping environmental and equity perspectives in mind — are doing more harm than good, according to critics. A recent law mandated that all new homes be built with solar energy sources. Zoning regulations, restrictions on vertical development and overall administration of these regulations make new construction costly. Further, legislators are unable to agree on solutions.
But people are flowing into California in an endless stream. Firms such as Google and Apple reportedly occupy around nine times the amount of land they did in 2005. Technology companies attract tens of thousands of people every year. Mostly, people who come are youngsters who earn much more than people in other parts of the U.S.
Due to an influx of these affluent people, those living in California for generations are forced to either go homeless or to leave the State. The closer to the poverty line you are, the more likely are you to be driven out of the State. It has been estimated that between 2000 and 2015, nearly eight lakh residents left California, mostly for Texas. And the trend continues.
The median home price in California is 2.5 times the national figure. In the Sunnyvale area in Silicon Valley, prices of one-bedroom homes have more than doubled in the last five years. Rents are high too. A two-bedroom apartment in San Francisco could cost $4,000 per month.
Teacher living in her car
In December 2017, several media outlets reported on a San Jose State University English professor living in her car for years. Housing cost up to three-fourth of her monthly salary and she did not want to leave either her teaching job or the city.
In Palo Alto, public school teachers have to shell out up to 85% of their monthly income for paying rent. Researchers say that housing that costs not more than 31% of one’s pay-cheque is considered affordable.
The figures are worse when you consider buying a home. A recent study found that even computer programmers — whose median income is more than double the median income of other Americans — can afford just 5% of the homes available for sale in San Francisco and 12% of the homes in San Jose. Median home prices in both cities are well over a million dollars.
True, the income-home price gap is widening in other States too, but none of them can beat California in this regard. The premium on land there is such that even open grounds that park trailer-homes for low-income people are hiking their rents to force out tenants.
