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The State of California's Housing Markets
1990 - 1997

State Releases Report Card on Housing Affordability and Supply:

California Must Improve Its Grade

SACRAMENTO - Business, Transportation, & Housing Secretary Maria Contreras-Sweet, announced the recent release of the California Statewide Housing Plan update. Secretary Contreras-Sweet reports that unlike California's experience following the recessions of earlier decades, housing construction has not led the economic rebound nor spiked back up following the recession of the early 1990s. The resulting supply shortage, particularly in rental housing, is driving many of the problems of the State's housing sector. "California is projected to outpace the rest of the nation in jobs, income, and population growth during the next ten years," notes Contreras-Sweet. "However, the State's ability to sustain its economic expansion is threatened by continuing housing affordability and supply problems." These problems are detailed in the recently released report The State of California's Housing Markets 1990-1997.

Due to the size of the California Housing Markets 1990-1997, the document can be down loaded by the following sections:

The Statewide Housing Plan (SHP) update was prepared for the California Department of Housing and Community Development by the Institute for Urban and Regional Development, University of California, Berkeley. It describes housing conditions in California since the 1990 census. Highlights of the report include:

Demographic and Income Trends Impacting Housing:

  • Between 1990-1997 California gained 3.2 million residents (10.7 percent increase, despite the out-migration of an estimated 1.2 million residents in the early 1990s. The highest growth rate was in the Central Valley (16 percent).
  • Over 80 percent of this growth was from natural increases (births over deaths), not immigration.
  • Over the past 10 years, the service sector has accounted for the highest job growth and this trend is expected to continue. While the service sector includes a broad range of wage levels, it includes a high proportion of low-wage jobs, as does the next highest job growth sector- the wholesale and retail trade.

Continued Lagging Housing Production. Production has not kept pace with demand. While California has had an annual average need for over 200,000 units during most of the 1990s, permits have averaged just over 100,000 units annually. The greatest shortfall has been in multifamily construction, which constituted only 24 percent of residential permits during 1990-1997.

Residential overcrowding, which doubled in the State between 1980 and 1990, continued to increase significantly in selected metropolitan areas, including Los Angeles, Orange, and Santa Clara counties.

Sharp increases in rents have occurred in selected metropolitan markets of the State. Between 1995-1997, the asking rents in San Francisco, Santa Clara, and San Mateo counties increased by 20 percent to 35 percent.

By 1995, housing cost burdens for lower income households had skyrocketed, with over 60 percent of lower income renters paying more than 50 percent of their income for housing. For very-low income households, the situation is most extreme, with almost 80 percent paying more than 50 percent of their income for housing costs.

California's homeownership rate continues to lag behind the national average, with the third lowest rate in the country.

California faces loss of affordability of a large portion of its existing federally subsidized housing stock, including a significant share of 92,000 Section 8 units which have contracts expiring by 2002. Contracts on over 40,000 of these units could be terminated as soon as 2000.

Contreras-Sweet notes that Governor Davis recognizes the importance of housing to the State's economy and the quality of life to California residents. As a result, the Governor called for a State-level Housing Task Force to address the problems outlined in the report. "For too long, housing problems in California have not received the attention they deserve," according to Contreras-Sweet. "Governor Davis knows an adequate supply of affordable hosing is critical to California's ability to attract and retain business and industry. He knows that too many California's go to sleep each night in overcrowded, substandard housing, and tragically, many California's suffer the greatest housing deprivation, homelessness. Governor Davis also knows that to successfully address these problems, the State must be a leader and it must work in partnership with all levels of government and the private sector."

The release of the SHP update marks the first step in a comprehensive effort to address California's housing needs. The information in the report will lay the foundation for California's efforts to tackle our serious housing problems before they derail our economic expansion and quality of life. "The era of high expectations begins now," according to Contreras-Sweet. "Californians have the right to expect the State to work aggressively to develop meaningful strategies to address the problems outlined in the report. The Governor's first budget began this effort with new funding for successful housing programs, partnerships with Federal and local governments, and the establishment of a State Housing Task Force."

For questions about the report, "California Housing Markets 1990-1997, Statewide Housing Plan Update," or for more information about housing needs in California, contact the California Department of Housing and Community Development, Housing Policy Development Division at (916) 323-3176.

HCD is interested in hearing about, and encourages further data development and research on California's complex housing market conditions. Information the CSHP or other information on California housing issues can be addressed to HCD, Division of Housing Policy Development, (916) 324-8652, or by email to: cahouse@hcd.ca.gov .

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