California's High Housing Costs Could Cause Problems
California is adding jobs and wages are going up, but a new economic review warns a housing shortage could crimp the state's economic growth.
Three new reports from Beacon Economics looked at housing, wages and migration. The studies found California continues to create jobs and attract people from other states. However, the reports also find there is not enough new housing in the pipeline.
A growing population is increasing competition for housing, which is driving up prices. That situation isn't getting any better.
"California homeowners spent more of their housing income on housing costs, and that was about 25.7 percent, than homeowners in any other state. And just as importantly, California renters paid more than renters in all but two other states," said Noel Perry, the founder of Next 10. That's the nonpartisan think-tank that commissioned the analysis.
The reports found developers are only building new homes for about 21 of every 100 residents moving into the state. That pinches supply in a market where there's already a shortage.
"Home prices here in California are more expensive than in all other states and are becoming unaffordable for the middle class," Perry said.
California homeowners and renters pay more for housing than residents of nearly every other state, according to the reports.
The strong economy is keeping housing from being an issue, but Perry said an economic downturn could expose the weakness.