Why do California housing costs remain high? Researchers identify two factors
The number of new homes built in California has dramatically overshadowed the state’s meager increase in population in recent years, but housing costs in the state remain high.
What gives, asked researchers at the Public Policy Institute of California, a nonpartisan think tank.
Demographics, they said in a blog post published Wednesday.
From 2019 to 2025, the state added more than 677,000 homes, state data shows. During that time, California’s population grew by less than 30,000.
But there was something else happening: Fewer people were sharing a place to live in the state, the researchers found. Part of that was due to California’s growing senior citizen population — older adults are more likely to live alone or with just one other person. Also, there was a slight increase in the number of young adults who found a place to live on their own.
“As a result, more units are needed to house the same number of people,” the researchers said.
“Have we built ourselves out of the housing crisis?, No,” said Hans Johnson, one of three researchers who was involved in the study.
State legislators and Gov. Gavin Newsom have for years tried to jump start construction by cutting through regulations and making it harder — and more costly — for local governments to deny projects. That has left many at the Capitol frustrated by the state’s persistently expensive housing costs.
The researchers pointed to another issue beyond just demographic changes.
“The state has made real strides in adding supply, and that supply is being used,” they said, but California is still “reckoning with decades of underbuilding and the compounding effects of rising costs.”
A few years of increased construction isn’t going to drastically reverse that. But Johnson said lawmakers should keep up their efforts.
“This report very much says: ‘Yes, we need to continue to build more housing.’ ”
