California used to be where the American Dream came true. Americans would trek out west to live in our beautiful state, and build a life for themselves and their families.
An integral part of that was purchasing a starter home. Sadly, home ownership of a single family unit in California has become unattainable for vast swaths of the population.
A new article in the LA Times breaks down the unfortunate reality prospective homeowners face in Southern California.
“Making compromises has always been a part of house hunting, but in a market where some two-bedroom homes are selling for $1 million or more — often for hundreds of thousands over the asking price — middle-class buyers are forced to take whatever they can get.”
As a result, more buyers are now choosing alternatives, which in turn has increased the price of those options.
“As more buyers choose alternatives, condo price increases are outpacing single-family home price increases. In August, the median sale price for L.A. condos was $675,000, a 7.1% jump year over year, according to Redfin. During that same stretch, single-family homes increased 0.4%.
The same is true for townhouse prices, which have increased 6.7% year over year for a median of $700,000.”
Not only are Californians downsizing, they’re paying even more than ever before to do so. This also has a knock-on effect for those on the lower end of the economic strata. As the middle class are squeezed out of their homes, the lower classes are squeezed out of theirs as well.
California has recently made moves like eliminating parking zones to help increase the number of affordable housing units.
Governor Newsom also signed a bill this week to create more housing at a faster rate. The governor’s official statement reveals they will dedicate “$1 billion in awards to 30 shovel-ready projects through the California Housing Accelerator – creating 2,755 new homes for Californians.”
While these policies should help mitigate the issue, none of them address the fact that California is overpopulated. We’ve written extensively in the past about how California faces an extreme housing shortage due to overpopulation. We’ve also chronicled how mass immigration has affected the housing market in our state.
Our formula from back in 2017 can be applied all the same in 2022:
Population growth = greater housing demand = higher housing prices.
California’s leaders must tackle the state’s problem with overpopulation, much of it fueled by mass immigration. Until you face that issue head on, you’re bailing water out of the boat without fixing the leak.