Fisher Center for Real Estate and Urban Economics

This paper examines current housing conditions and housing policy in California, describes key issues faced by different regions and segments of the population, identifies the major mechanisms for addressing these issues, and suggests where attention should be focused in addressing future growth pressures. California’s two key housing issues relate to affordability and location relative to jobs and transportation routes. These issues have been further complicated by the collapse of the housing bubble in 2007 and 2008, which led to extensive foreclosures and price declines throughout the state. State regions with the least affordable housing going into the housing bubble have not experienced the greatest housing cost adjustments during the downturn. Improvements in affordability that have occurred at the outskirts of metropolitan areas may lead to worsening congestion and transportation access as the workforce moves away from job centers to more affordable housing. The addition of “global warming” legislation—AB 32 and SB 375—also complicates efforts to resolve California’s housing issues. Housing policy at the state level is dependent on funding that comes from federal and local sources and an implementation system that often requires interacting with multiple state agencies, other levels of government and the major private sector actors in the housing market (builders and financial institutions). Going forward, major roles for the state include providing coordination and direction for housing availability for all segments of the population, expanding funding resources for housing production and services for underserved income groups, and providing a venue for addressing the balance between housing needs and transportation planning.