Source: bisnow.com | Re-Post MNM Partners, LLC 10/5/2017 –
With the highest cost of housing in the nation, California’s affordable housing crisis is threatening the economic vitality of the state.
The majority of renters, more than 3 million, pay more than 30% of their gross monthly income for housing, and one-third of renters, about 1.5 million, pay more than 50% of their income for a place to live, according to a California Department of Housing and Community Development report.
The accepted standard for housing affordability is that no more than 30% of monthly income should go for housing, according to Paul Habibi, a continuing lecturer of finance and real estate at UCLA.
In Los Angeles, to meet that 30% requirement for the median-priced home would require the median household receive a 52% raise from $63K/year to $96K/year, Habibi wrote in a recent op-ed piece. A 14% raise would cover the median-priced apartment.
“Affordable housing is being addressed to some extent, but we have a huge supply constraint in Los Angeles that’s driven by multiple factors,” Habibi said. “But the long and short of it is we have more demand than we have housing supply. It’s driven up the cost of housing, and it’s created a pretty dramatic affordability crunch.”
Habibi said the most effective way to address affordability is to build more housing of all types, affordable, workforce and market-rate, to create less upward pressure on rents. But California’s housing production has averaged less than 80,000 new units annually over the last 10 years, and current production continues to fall far below the projected need of 180,000 additional units annually, according to a California Department of Housing and Community Development report.