California has 11 of largest housing shortages in US, study says

Buzz: California is home to 11 of 25 US metropolitan areas with the largest housing shortages.

Source: My trusty spreadsheet reviewed a study of housing underproduction by Up For Growth that looked at construction from 2012 through 2021 for 193 US metropolitan areas – including 23 from California.

Topline

The Golden State’s high housing costs are often tied to construction failing to keep pace with population and economic growth.

Here’s the 11 biggest homebuilding deficits in the state, ranked by their shortfall’s share of local housing supply …

Ventura County: Home construction has run 12.5% short of local needs (a gap that ranks No. 1 in the US). The deficit translates to the underproduction of 36,161 residential units.

Inland Empire: 10.7% short (No. 3 nationally) – or 160,841 units.

Madera: 8.8% short (No. 5) – or 4,251 units.

Salinas: 8.3% short (No. 7) – or 9,868 units.

Merced: 7.9% short (No. 9) – or 7,053 units.

Stockton: 7.9% short (No. 9) – or 19,957 units.

Visalia: 7.6% short (No. 11) – or 11,410 units.

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Los Angeles-Orange County: 7.1% short (No. 14) – or 332,275 units.

Vallejo: 7.1% short (No. 14) – or 11,577 units.

Yuba City: 5.9% short (No. 23) – or 3,698 units.

Modesto: 5.8% short (No. 24) – or 10,547 units.

Details

Looking at the big picture, let’s compare California’s 23 markets with the 170 other metros with under production …

California metros are 873,730 units short, by this study’s tally. That’s a deficit equal to 6.5% of all homes statewide.

Other US metros are 2.55 million units short, or 3.3% of their combined supply.

So California’s underproduction, by this math, is essentially twice as deep as elsewhere.

Caveat

Note that housing shortage estimates vary widely. That’s because the math includes a host of assumptions – from measuring demand (people or jobs) to housing density (people per home) to the starting point (good times or bad).

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The logic of Up For Growth, industry-supported researchers, says the nation overall is 3.9 million housing units short.

That deficit falls in the mid-range of projections from other groups. Those estimates project the shortfall from just under 2 million to over 6 million.

Bottom line

Forget the debate about the size of the housing shortfall.

Instead, ponder the fallout across the Golden State through a prism of key housing cost metrics as reported by this study.

Rent growth between 2012 and 2021 in the 23 California metros saw the median increase 4.9% in a year vs. 3.4% in the 170 metros elsewhere.

Rent is considered a financial burden for 53% of Californians vs. 46% nationally.

Or think about median home prices, which are up at a 10% annual pace in a year for these California metros vs. 5.6% nationally.

Postscript

Here are the other California metros in the study, ranked by shortfall …

Fresno: 5.6% short (No. 28 of 193) – or 18,770 units.

San Jose: 5.3% short (No. 34) – or 36,404 units.

Sacramento: 5.1% short (No. 37) – or 46,604 units.

San Diego: 5% short (No. 40) – or 60,989 units.

Bakersfield: 4.8% short (No. 42) – or 14,320 units.

Napa: 4.7% short (No. 46) – or 2,485 units.

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Santa Rosa: 3.8% short (No. 69) – or 7,417 units.

San Francisco-Oakland: 3.6% short (No. 75) – or 66,793 units.

Santa Maria-Santa Barbara: 3.6% short (No. 75) – or 5,697 units.

Santa Cruz: 3.5% short (No. 79) – or 3,579 units.

San Luis Obispo-Paso Robles: 1.9% short (No. 128) – or 2,144 units.

El Centro: 1.6% short (No. 136) – or 890 units.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Source: Orange County Register