As California real estate prices rise three times faster than household incomes, more than 50% of the state’s households cannot afford the cost of housing. There are many ways to tackle this crisis. Our findings include:
From 2009 to 2014, California added 544,000 households but only 467,000 net housing units. States such as New York have added nearly 80 percent more housing units than California relative to population growth. As a result, California’s real estate prices have increased by more than 15 percent since 2009, but median income by only 5 percent.
The state now has a $50 billion to $60 billion annual housing affordability gap. Virtually none of California’s low-income and very-low-income households can afford the local cost of housing. Nearly 70 percent of these households would have to spend more than half of their income to afford the local cost of housing.
California ranks 49th among the 50 US states for housing units per capita. Benchmarked against other states on a housing units per capita basis, California is short about two million units. To satisfy pent-up demand and meet the needs of a growing population, California needs to build 3.5 million homes by 2025.
Source : McKinsey Global Institute