This week, we’ll be taking a closer look at the affordable housing crisis in California. More specifically, we’ll investigate whether increasing the number of homes constructed has created more affordable housing for lower- and middle-income California families. 

In some California cities, such as San Francisco, the rent for a 1-bedroom apartment can be upwards of $2,660 per month. For a single-family home in San Francisco, the average price is over $1.625 million, suggesting that California offers some of the least affordable housing of any U.S. state. 

California

Looking at the California housing market from 1995 to 2017, it’s evident that the increase in overall construction has done little to address the housing crisis facing the state. For instance, while overall construction of new homes increased by 326% for this period, the number of homes constructed via LIHTC financing fell by 19%. 

Similar to our analysis of New York last week, this data suggests that a robust policy solution to the housing affordability crisis requires more interventions than simply building more homes and expecting prices to fall.


The overall share of new construction designated for lower income California families has also dramatically declined between 1995 and 2017. In 1995, 57% of new construction was financed via LIHTC. However, this figure fell to 10% in 2017.

In the following chart, you can take a look at the exact number of homes placed in service and financed via LIHTC each year from 1995 to 2017 for California.

The extent to which housing within a state is considered affordable is multifaceted with factors such as population, economic activity, and local policy shaping the average price of a home in the area. To continue learning about how we can harness policy to support the creation of vibrant communities across the U.S., we’ll take a look at the relationship between housing starts and low-income construction in the state of Washington next week.


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