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Posted by on Dec 15, 2017 in Builders, Jim's Take on the Market, Local Government, Market Conditions | 10 comments | Print Print

California’s Housing Failure

We see these stories regularly now, but nothing is changing.  Even if we had another housing crash and prices retreated by 10% or 20%, homes would still not be affordable for most.  Hat tip to Richard!


For all of its claims of being an economic paradise, California is a failure when it comes to housing.

Not just low-income, affordable housing, but middle-income, working-class housing for teachers, firemen and long-time residents hoping to live anywhere near work.

“California has a housing crisis. We can’t provide housing to our citizens,” said Rita Brandin, with San Diego developer Newland Communities. “In Georgia, Texas and Florida, it can take a year and a half from concept to permits. In California, just the process from concept to approvals, is five years – that does not include the environmental lawsuits faced by 90 percent of projects.”

Numbers tell the story of California’s housing crisis.

* 75 percent of Southern Californians can’t afford to buy a home, according to the state realtors association.

* 16 of the 25 least affordable communities in the US are in California, according to 24/7 Wall Street.

* Officials this year declared a homeless emergency in San Francisco, Los Angeles, San Diego and Orange counties.

* 56 percent of state voters say they may have to move because of a lack of affordable housing. One in four say they will relocate out of state, according to University of California Berkeley’s Institute of Governmental Studies.

 * A median price home in the Golden State is $561,000, according to the realtors association. A household would need to earn $115,000 a year to reasonably afford a home at that price, assuming a 20 percent down payment. Yet, two thirds of Californians earns less $80,000, according to the U.S. Census Bureau.

* The household income needed to afford a median-priced home in the Silicon Valley town of Palo Alto is $450,000.

* In San Francisco, a median priced home is $1.5 million, according to the Paragon Real Estate Group.

* Home prices in California are twice the national average, and 70 percent can’t afford to buy a home, according to state figures.

* Median household income in L.A. is $64,000. That’s half what is necessary to buy a home.

*1 in 10 residents are considering leaving because they can’t afford a place to live, according to a state legislative study, while US Census figures show 2 million residents, 25 and older, have already left the state since 2010.

* In 2016, 30 percent of California tenants put more than 50 percent of their income toward rent and utilities, according to the California Budget & Policy Center. Economists consider 30 percent the limit.

* California needs to double the number of homes built each year to keep prices from rising faster than the national average, according to the Legislative Analyst’s Office.

“The biggest tragedy of California is we have stopped building houses for the middle class,” said Borre Winkle with the Building Industry Association of San Diego. “Think of California’s housing market as a martini class. We’re building some affordable housing at the low end. Absolutely nothing in the middle and the top end is high-income housing, which subsidizes low-income housing. So that is a broken system.”

In 2016, the cities of Houston and Dallas built more homes, 63,000, than the entire Golden State, which built 50,000, according to US Census Bureau figures.

“Supply and demands works,” said USC real estate professor Richard Green. “People want to be here and we’re not accommodating them with new housing and so the cost of the housing goes up.”

Read full article here (blaming building fees and NIMBYs):



  1. The problem is that price is the worst way to allocate housing resources. The worst method that is except for all the rest.

    “Developers” are not interested in providing the same quality of life as what already exists. Developers want to sell off pieces of that existing QoL to others.


  2. I read the article and loved to hear about the YIMBYs. Never heard of that, but a quick google shows its a thing that is growing. Need to look into it a little since most “movements” often have several layers of intent. I am wary of wolves in sheeps clothing….

    I’ve always thought statewide 3x density and height overlay for 1/2 mile radius around any train/light rail station would be a good start…. except in Encinitas, Carlsbad, Solana Beach and Oceanside, hahaha.


  3. I’ve got a simple question I always ask of development proposals. How does the project improve surrounding traffic?

    Then I insist the city council, instead of making a blanket finding of unmitigated impacts, they explicitly note that traffic will get worse.

    Rarely works. Always gets cheers from the audience.


  4. Discourage rent-seekers and flippers via taxation.


  5. We don’t need more housing. That just means making already bad traffic worse. Why does every single town need to be high density and filled to the max? It doesn’t. Instead you could eliminate foreign purchases or people buying 8 properties in the state. Cap them at two for example.

    Lastly, where is the rule that says you have to accommodate demand? Not everyone can patrol center field for the Yankees. Life sucks, grab a helmet.


  6. Where is the rule that says you have to accommodate demand?

    “Since 1969, California has required that all local governments (cities and counties) adequately plan to meet the housing needs of everyone in the community. California’s local governments meet this requirement by adopting housing plans as part of their “general plan” (also required by the state). General plans serve as the local government’s “blueprint” for how the city and/or county will grow and develop and include seven elements: land use, transportation, conservation, noise, open space, safety, and housing. The law mandating that housing be included as an element of each jurisdiction’s general plan is known as “housing-element law.”

    California’s housing-element law acknowledges that, in order for the private market to adequately address the housing needs and demand of Californians, local governments must adopt plans and regulatory systems that provide opportunities for (and do not unduly constrain), housing development. As a result, housing policy in California rests largely on the effective implementation of local general plans and, in particular, local housing elements.


  7. Note that each city is awarded their “fair share” of affordable housing by their ever more powerful and intrusive associations of governments. SANDAG and SCAG as examples.

    Don’t get me started.


  8. “Where is the rule that says you have to accommodate demand?”

    The macro governance rules of “Growth Economy Dominated By the Service Sector,” and the micro governance rules of “Civil Rights Religious Leaders.”

    By interacting with the former you gain or lose your job, by the latter you gain or lose your friends, relatives, and associates.

    Conclusion: Laugh at your Bosses Jokes, never violate the “Punching Down Commandment,” buy a 19 speed Cannondale––and play well, my friend.

    Play well.


  9. Small nit pick. Ten speeds are enough. If you need 19 speeds you aren’t going to be able to use them. Oh and aluminum welding is not easy. A steel frame is a couple pounds more but infinitely repairable.


  10. RD, I’ve been rolling the idea around regarding buying a bike, cannondale in particular, but seems like it would not be a pleasant experience since everyone who steal bikes to exchange for meth knows what the bike costs, and some would be very enthusiastic on relieving me of it with ostentatious displays of guns, knives, bats, or bottles of urine. And forget leaving it locked up in a public place.

    One of the obstacles of modern California virtually unknown in my younger days.



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