As housing prices continue to rise in California, a significant number of our residents are being denied access to the American dream of homeownership. Today, only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.

With this in mind, the CALIFORNIA ASSOCIATION OF REALTORS® convened “Housing Affordability and California’s Future,” a real estate summit held yesterday in Los Angeles. The summit brought together and drew on the ideas of top industry leaders from financial institutions, government agencies, academia, public policy and real estate, who shared one common goal: to explore ways to increase housing affordability in California. 

There are many reasons for the steep decline in affordability. California continues to be a destination for millions of people, and it is difficult for supply to keep up with demand.  But the reasons go beyond simply lagging housing construction.  In particular, government regulations worsen the problem.  Restrictive environmental, land use, and zoning regulations artificially constrain supply, which makes it difficult and expensive to meet demand.

These rules, regulations, and road blocks have taken their toll on housing.  We are now so far behind the curve that, according to the non-partisan California Legislative Analyst’s Office, the state needs to build 100,000 new homes every year – double what’s being built now — just to catch up with current housing needs.

And the McKinsey Global Institute recently reported that California’s housing shortage is costing the state more than $140 billion per year in lost economic output because Californians spend so much of their income on housing.

Before local governments can effectively address homelessness and affordability, they must recognize that it is a supply problem. It must be defined in terms that everyone can understand. REALTORS® believe the issue is appropriately defined as a need to provide adequate and affordable workforce housing for all segments of the community.

A lack of affordable workforce housing affects communities in many ways.

Once we recognize the importance of workforce housing, we can begin the process of increasing supply. Fortunately, there are many things local governments can do to address this housing shortfall, including:

The achievability of homeownership for all Californians is ultimately tied to the success of the state’s economic future, but a thorough assessment of the state’s biggest economic and real estate challenges reveals the difficulty of balancing opportunity with responsibility amidst the pressing need for solutions.

Working together with the state’s top minds and influential leaders, we can better understand the solutions we can undertake to put California back on the map for those who are looking to buy and get their piece of the homeownership dream.