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

Ventura County is 12.5% short of its needs, ranking No. 1 in state and US

Buzz: California is home to 11 of the 25 largest housing shortages in the United States.

Source: My trusty spreadsheet examined an Up For Growth study of housing underproduction that examined construction from 2012 to 2021 in 193 US metropolitan areas, including 23 in California.

Summary

The high housing costs in California are frequently attributed to construction failing to keep up with population and economic growth.

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

Ventura County: Home construction has fallen 12.5% short of local needs (the largest gap in the country). The deficit equates to a shortfall of 36,161 residential units.

Inland Empire: 10.7% short (third in the country), or 160,841 units.

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

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

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

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

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

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

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

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

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

Specifics

In the grand scheme of things, let’s compare California’s 23 markets to the 170 other metros with under production…

According to the findings of this study, California metros are 873,730 units short. This equates to a deficit equal to 6.5% of all homes in the state.

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

According to this calculation, California’s underproduction is roughly twice as severe as elsewhere.

Caution

It should be noted that estimates of housing shortages vary greatly. This is due to the math’s many assumptions, which range from measuring demand (people or jobs) to housing density (people per home) to the starting point (good or bad times).

According to the logic of Up For Growth, industry-supported researchers, the country is 3.9 million housing units short.

This deficit is in the middle of other groups’ projections. These projections range from just under 2 million to more than 6 million.

The bottom line

Forget about the debate over the size of the housing deficit.

Instead, consider the consequences across California through the lens of key housing cost metrics reported by this study.

Between 2012 and 2021, rent growth in the 23 California metros averaged 4.9% per year, compared to 3.4% in the other 170 metros.

Rent is regarded as a financial burden by 53% of Californians, compared to 46% nationally.

Consider median home prices, which are increasing at a 10% annual rate in these California metros compared to 5.6% nationally.

Conclusion

Here are the other California metros included in the study, in order of shortfall…

Fresno was 5.6% short (28th out of 193), or 18,770 units.

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

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

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

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

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

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

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

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

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

San Luis Obispo-Paso Robles: 2.144 units short (No. 128).

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