What ’s Going on with California’s Housing Market?

Michael D. TannerDespite a pandemic, recession, andunemployment at higher than 8%, the price of a home in California is reaching record levels, with the median San Francisco Bay Area home going for just short ofone million dollars. To Californians, this will come as little surprise, but it ’s worth putting it in context: according to theNational Association of Realtors, almost 58% percent of counties nationwide have median home prices less than $150,000. Paradoxically, home prices are nearing record highs, but rents are down from their pre ‐​coronavirus peaks. While the pandemic‐​induced economic conditions are unique, California continues to face the same underlying problem that has priced out many Californians for decades: the state has a shortage of housing units, largely because of government regulations that drive up the costs of production.It ’s clear that housing prices in California are high because the state has a housing shortage. California hasfewer housing units per capita than any other state except Utah – although this number continues todecrease. Evenlow ‐​end estimates show the state over a million homes short of what it needs, with more widely ‐​acceptedestimates showing a 3.5 million home shortfall. Home prices continued to show year ‐​on‐​year increases early in the pandemic, in part because prospective home‐​sellers becamemore reluctant to list their homes. As the pandemic raged on, home price...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs