Imagine you finally bringing the car to the mechanic to investigate the mysterious warning lights that flashed on the dashboard for the past week and a half.
The mechanic tells you that the brake fluid in the car is too low. Low danger. He said your brake fluid supply has reached “crisis” levels and sounds scary and very expensive.
Naturally, you want your car to have non-critical brake fluid. “How much more do I need?” you asked.
“Quart.” “No, it’s actually a three-quart. Or maybe seven gallons – but only reaching the rear brakes. Actually, let’s settle the lower half an ounce.”
That’s the case with housing shortages in California.
The Legislature has been raising bills for nearly a decade, Arti. General Rob Bonta has been filing lawsuits, and Gavin Newsom has been renovating institutions, undermining executive orders, and citing Ezra Klein’s clear goal of relaxing the state’s chronic residence.
California simply does not have enough housing, and this shortage is the main reason for our housing affordability problem – in fact, the state and everyone around and the vast majority of scholars who have studied this problem, seem to agree with it now.
The consensus was on display this year, when lawmakers passed two massive changes to the state housing law, a development that blocks environmental litigation for apartment development and another that would make the more intensive development near large public transport stops in big cities. A few years ago, both were legislators. Today, even opponents of these bills have embraced the premise that the state faces a “housing shortage”, a term that evoked at least 30 times this year in committee hearings and floor speeches.
Now, if only anyone can reach a consensus on the actual extent of housing shortage.
Many people try to come up with a number on this issue.
In 2015, the Legislative Yuan’s office, the Legislature’s policy analysis shop and think tank, made housing costs equal to those of the rest of the country by counting how many major metropolitan areas were established over the previous three decades.
It has 2.7 million missing units.
A year later, consulting giant McKinsey consulted Laos, putting the state’s “housing shortage” at 3.5 million homes, apartments and apartments, a news magazine.
Not all estimates reach seven digits. In 2024, the nonprofit published an estimated shortage of 840,000 units for growing housing policies, which was proposed a few years ago by 820,000 freddie Mac.
California Housing Partnership is a nonprofit that advocates affordable housing, capping the deficit at 1.3 million units, not just any unit. This is how many houses the country needs to add, and these houses can afford people with a certain income.
Then, this summer, a group of housing analysts, including economists at Moody’s analysis, came up with a staggering low figure of just 56,000, although the authors admit that this may be underestimated.
The national housing supply estimates are spread throughout the place: from 8.2 million to 1.5 million (and a controversial paper, zero).
Theoretically, the concept of “housing shortage” is very simple, and Anjali Kolachalam is an analyst at UP Growth.
“It’s basically just the gap between the housing you own and the housing you need,” she said.
In fact, defining and then starting to quantify “the housing you need” is an exercise full of messy data, guessing and inconvenient needs for judging a phone call.
Most estimates begin with the target vacancy rate. In any reasonably well-functioning housing market, logically, some houses and apartments are empty, either because they are between renters and so just built or sold, they are fixed or renovated, or are someone’s second home. A moderate vacancy rate allows you to pull up Zillow or craigslist and fail to get a “result not found” error. A very low person shows that there are not enough houses to move around.
But, choose a “healthy” vacancy rate (reflecting the functional housing market) and then support the number of other homes needed to hit it, not science. Most estimates turned to historical data to find a certain level, when supply and demand were not completely unresolved. Whether the relative affordability is usually 2015 or 2006 or 2000 or 1980, the researchers and may vary depending on the region being considered.
Apart from that, many researchers are trying to pose value to what is sometimes called “pressure” demand or “missing family.” Those are the people who would have left and bought their own apartment or bought their own place, but because the affordable place of residence is not available, they choose to live with their roommates, with their parents or in more extreme cases, without any kind of shelter.
Without a survey of everyone living, it is impossible to accurately measure how many people entered the camp.
“This concept of ‘repressing demand’ is bound to be in the call for judgment of economists,” said Elena Patel, a researcher at the Brookings Agency.
These changes in these methods help explain some of the differences in shortage estimates. Other differences pop up due to changes in the data.
For example, the Moody-led report specifies a national shortage of about 2 million units, both of which increase the number of new units required for the overall vacancy rate and require a buyback of homes measured by “suppressing” demand. However, for California-specific estimates, the latter data cannot be made, and it is possible to ignore most of the shortages across the state.
Then some estimates differ because analysts define shortages in a completely different way.
The California Housing Partnership explores the differences in the number of households considered by the federal housing guidelines, namely, having a “very” or “extremely” low income, and the number of units that these households can rent for less than 30%.
The 1.3 million gap has encountered a completely different problem from the overall shortage of houses.
Finally, there is a scale issue. Overall, the housing market is local. The national shortage will add up to San Francisco and Detroit, covering up the extremes of both. Shortage estimates in states as large and diverse as California may have the same problems.
“It’s like looking for weather forecasts for a trip to the beach and being told that the national average temperature could be 67 degrees,” the Moody’s leading analyst author wrote.
What is more valuable than fixing any shortage estimates is to study all estimates together and appreciate that they are huge in general, overall, said Daniel McCue, a researcher at the Harvard Housing Research Center.
“Whether it’s 1.5 million or 5.5 million, it’s a big number,” he said, which leads to the inevitable takeaway. “There is still a lot to do. It’s too far.”
Patel of Brookings said trying to accurately count the ultimate vague concept of “housing shortage” is still a worthwhile exercise because it provides lawmakers and planners with a benchmark for measuring progress.
How much taxpayer money should the state invest in affordable housing development? How should the region be proactive in pursuing changes in local zoning? “The more specific you can be in decision-making land, the better,” she said.
In fact, California does have its own set of specific numbers.
The Department of Housing and Community Development presents planning goals for districts across the state every eight years – other homes that every municipality should plan, which are broken down by affordability. In fact, these are the official estimates of the state shortage by the California government.
To piece together these numbers, state regulators will look at population growth forecasts to meet demand for future homes and then adjust to illustrate all the homes not built during the previous period, but maybe it should be. If a region has too many households and thinks it is overcrowded, it will have more units. If the vacancy rate is below a predetermined level, more units will be obtained. If there are many people spending more than 30% of their income on rent, more (affordable) units.
State regulators have taken this process more seriously in recent years, which has sparked continued opposition to local governments and neighborhood activists that circumvent density.
In the state’s last estimate, the first-line totals are 2.5 million units.
This upcoming cycle has begun in rural northern areas and will be gradually rolled out across the state in the coming years, and it will generate another number. For state lawmakers, this will be an estimate of how much brake fluid the car needs.
Ben Christopher writes for calm people.
