The UCLA Anderson 3Q 2015 forecast on September 28 focused on the Housing Industry and the problems caused by the lack of affordable housing, especially in Southern California. Important topics discussed were: Are we in a housing bubble? What kinds of solutions are being discussed to address the lack of affordable housing?
1. The state of for sale vs. for rent housing market can be summarized as follows: Prices and existing home sales will continue to rise, despite higher interest rates in the forecast. UCLA’s David Shulman notes that the housing recovery is occurring under the backdrop of an unprecedented decline in homeownership. Homeownership matches that of 1989, but the trend will begin reversing. Declining homeownership means a rise in renting, which has triggered a boom in multi-family housing starts, which bottomed out in 2009 at 112,000 units; there will be more than 400,000 this year and an average of 460,000 units over the next two years. For more on the speakers’ research and analysis, see http://newsroom.ucla.edu/releases/ucla-anderson-forecast:-nation-and-region-remain-healthy.
2. Providing affordable housing in California has several problems: Efforts to build more affordable units encounter zoning codes, building regulations and socio-economic and political constraints. A senior economist from UCLA, Jerry Nickelsburg, offers a strategy: Affordable housing policy needs to be explicit about targeting people such as police officers, teachers and others who might not be able to afford them.
3. However, the future of this type of approach remains in question: The coming years might be a bit less predictable since the California Supreme Court decided California Building Industry Association vs. City of San Jose in June. The justices let San Jose require that all new developments of 20 units or more have 15% units below market price or pay a fee. There would be no project-by-project negotiations over whether inclusionary affordable housing requirements apply. The case has been appealed to the U.S. Supreme Court. Read about it here: http://www.allgov.com/usa/ca/news/top-stories/report-says-housing-boom-wont-make-it-more-affordable-in-california-150930?news=857536.
One speaker panel of practicing developers and industry experts acknowledged that affordability is a crisis. However, panel members lacked trust in government-driven solutions.
RSG is working with clients to come up with some solutions to the local issues regarding the lack of affordability. Let us help with strategies and implementation. We are all in this fight together!