The Economic Consequences of the Housing Crisis In California
California, once known as the land of golden dreams, has become a housing nightmare. The housing crisis in California is getting worse. According to a statewide survey that was conducted earlier in 2019, a majority of California residents said that one of the biggest problems in their region was lack of affordable housing. However, what was the most shocking about the results of this survey was that 35% of Californians said that the incredibly high housing costs have made them consider leaving California.
In 2018, California was ranked 49th in terms of housing units per resident. Basically, there are too many people and too few houses. The number of new housing units constructed must be in-line with the rate at which the population of the state is increasing. For example, between 2011 and 2016, California added one housing unit for every 5 new residents of the state. This caused the cost of existing properties to skyrocket.
The housing crisis in California has left a dent in the economy of the state. Some of the most prominent economic consequences of the housing crisis in California are listed below:
Loss In Economic Output
California suffered economic losses of more than $140 billion/year due to the severe scarcity of housing. Among these losses, more than $50 billion/year was due to reduced consumption. Due to the high cost of housing in California, a major portion of people’s income goes into rents or mortgages, as a result of which, they spend less on other things.
Elimination of the Economic Ripple Effect
As a result of the housing crisis, the economic ripple effect has been eliminated. The economic ripple effect is accompanied by new home construction. Numerous professions benefit from new house construction, including architects, roofers, plumbers, and realtors. According to a report, California has suffered an economic loss of more than $90 million as a result of lost construction activity.
No New Jobs
New housing projects create jobs in a state. With the housing crisis in California, there are no new job opportunities. When the housing construction industry thrives, it serves as an economic driver. As per the study conducted by the California Homebuilding Foundation, the last peak in the construction industry was observed in 2005, as a result of which, 486,000 jobs were created in California.
The Way Out
The only way out of the housing crisis in California is the construction of millions of new houses. It is the only solution to the devastating problem that California is facing today. With new construction projects, numerous opportunities will spring for different businesses. For example, when a new construction project begins, the first thing that is done is the installation of a temporary power pole for the supply of temporary power to the construction site, the demand for temporary power permit pulling services also increases. This, in turn, creates lots of opportunities for the power sector industry. It is just one of the many job opportunities that a thriving housing construction industry produces.