Perhaps the most pressing issue in California is the shortage of housing units that is now taking its toll on many Californians. The State Legislature will return to Sacramento this month from its summer recess and when it does, there will only be four weeks to address the crisis through legislation.
During the Legislature’s recess, the Public Policy Institute of California (PPIC) released a report stating “the first half of 2019 saw a substantial decline in the number of new housing units authorized by building permits.” This decrease could be due to the recession that hit California a decade ago, which caused the construction in the state to decrease from 200,000 units a year to 35,000.
State officials report that to fight the 2.3 million unit shortage, 180,000 units would have to be built per year to manage the loss, support the growing population, and balance out the previous construction shortages. In 2018, the PPIC stated that construction was down 16 percent and multi-family construction was down 23 percent.
During Governor Gavin Newsom’s campaign, one of his key promises was to build 3.5 million housing units by 2025. However, at the current rate of construction, it is unlikely that there will be more than 500,000 new housing units by 2025.
After the budget signed by Newsom, mostly low-income projects were supported by the couple billion dollars that were allocated. To build the additional 100,000 units annually, a minimum of $35 billion would be required.
