NCPA - National Center for Policy Analysis

No Place to Call Home

November 18, 2003

House prices may be soaring and sprawl remains a common complaint, but most Californians want more housing to be built. The shortage has resulted in record high prices and prevented access to newcomers and the poor.

  • Over the past decade, California has drawn 11 million new immigrants, but built only 1.3 million new houses.
  • In East Los Angeles, a Mexican-dominated area, there is an average of 2.5 households in each housing unit.
  • From January to May of 2003, median house prices in California rose by 16 percent, to $369,000.
  • In the United States, 65 percent of people on average incomes can afford a median-price house; in California, the share is 27 percent, down from 40 percent in the mid-1990s.
  • In 1978, voters passed Proposition 13 which cut property taxes in half and constrained growth; it is now more attractive for local authorities to give permits to new shopping malls, from which they receive a share of sales taxes, than new houses, where property taxes are constrained.
  • Between 1986 and 2000, numerous local initiatives to stop housing growth were passed.
  • Environmental pressures increased fees for developers; now the approval process adds about $70,000 to the cost of a single-family home.

Legal disputes over construction defects have also decreased the number of available condominiums. Condos accounted for 30 percent of new houses in the mid-1990s, but only 2 percent by 2000.

Source: "Homeless Masses: Not Enough Houses in California," The Economist, July 12, 2003.


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