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    Report Finds CA's Housing Shortage Significantly Overstated

    (March 10, 2004) -- California's housing shortage -- which some have likened to a crisis -- is actually much smaller than previous estimates and almost entirely confined to the state's three largest metropolitan areas where it is also smaller than previous estimates, according to a report released March 10 by the non-partisanPublic Policy Institute of California (PPIC).

    The report, In Short Supply? Cycles and Trends in California Housing, concludes CA's housing shortage is about 138,000 units, a sizable number but far from the 500,000-1,000,000+ units cited in some media accounts. provides a link to the full report, with salient excerpts below.

    The report found that many estimates compared housing production rates across decades...and CA's new housing production did fall from 2.1 million units in the 1980s to 1.1 million in the 1990s. However the authors argue that factors driving supply and demand -- especially larger economic and demographic factors -- must be taken into account...and found that several factors explain most of the reduced housing production during the 1990s, including:

    • The severity and duration of the early 1990s recession
    • A dramatic slowdown in population growth during the 1990s
    • A change in the composition of population growth in the 1990s: Immigrants and children (who consume less housing than others) constituted a larger share of growth
    • Developments in monetary policy and financial markets, including investments in stocks as opposed to real estate, in the late 1990s

    The report did find significant shortages in the L.A., San Francisco and San Diego metropolitan areas...although the size of these shortages is also lower than previous estimates: 101,000 units in L.A. for example.

    The authors also found that shortfalls in these areas are partially offset by surpluses in other geographic areas, including Fresno and Sacramento Counties...and suggest that policies designed to address housing focus on specific regions.

    As reported first by (link below), the issue of whether LB has done its "fair share" of providing housing units arose at a Feb. 19 Planning Commission meeting when city management disclosed in an extemporaneous colloquy what some neighborhood activists have long suspected: the City of Long Beach has met -- and exceeded -- its regionally specified number of housing units.

    "[W]ith our RHNA [pronounced RI-nah] numbers, our Regional Housing Allocation Need, we've actually met and exceeded that," said Beth Stochl, Manager of City Hall's Housing Services. In a follow-up conversation with, Ms. Stochl indicated that she does believe there is a housing crisis.

    "I say this based on income, overcrowding and the age of our housing stock," Ms. Stochl said, adding "The fact that we are 10th nationally in poverty level shows we need affordable housing," she said, adding that for for roughly 27% of LB residents, 50% of their income goes to housing. "For all these reasons, I believe we do have a significant housing crisis, and from my viewpoint it is a very significant crisis for low and very low income residents."

    The authors of the Public Policy Research Institute's report noted that their conclusion that the state's housing shortage had been overstated does "not mean that there are no hardships with respect to housing supply and new construction in California. There may be serious problems in markets for low-income housing, and there is evidence of a housing shortage in the state’s largest metropolitan areas. However, they do suggest that the supply crisis may be overstated, and that our position in 2000 was perhaps better, and certainly not much worse, than in 1990."

    Source: In short supply? Cycles and trends in California housing, Summary, p. viii, / Hans P. Johnson, Rosa M. Moller, and Michael Dardia. Copyright © 2004 by Public Policy Institute of California All rights reserved

    To view the report in its entirety in pdf form, click here.

    The Public Policy Institute of California, established in 1994 with an endowment from William R. Hewlett, describes itself on its web site as a private, nonprofit organization dedicated to improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues.

    Related coverage:

    Disclosed @ Planning Comm'n: City Mgt. Says LB Has Met -- And Exceeded -- Regionally Required Level of Housing Units(with audio coverage)

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