California has the highest poverty rate in the nation, according to analysis from the U.S. Census Bureau, and according to Texas Public Policy Foundation VP Chuck DeVore on Forbes, California’s new rent control law will likely make things worse.
“California’s new housing stock has been severely restricted by the state’s myriad of web of development fees, restrictive zoning rules, environmental laws—including greenhouse gas restrictions—and lawsuits,” DeVore said. “Now it’s about to get much worse, with statewide rent control further discouraging new investment in the state.”
DeVore notes that the bill also strengthens already-strong tenant protections, now barring property owners from pursuing evictions without a government-approved reason. The California Association of Realtors said that the bill will, “…impose onerous standards upon small property owners and, in turn, exacerbate the state’s housing crisis.”
“In 2018, California builders started construction on 116,400 single and multi-housing units, likely not enough to accommodate demand with what was expected to be about 125,000 new households in the state,” DeVore notes. “At this rate, it would take builders 122 years to completely turnover the state’s 14.3 million housing units. California’s 2018 construction starts were 31% below the state’s historical average since 1960.”
There is good news for homeowners and buyers in California, though. CoreLogic reported that home sales in July grew from the year prior for the first time in a year. Growth was motivated by lower mortgage rates. Home prices across the state were less than 2% above last year, and prices in the Bay Area fell annually for the third-consecutive month.
The nine-county San Francisco Bay Area saw the purchase of 7,404 new and existing houses and condos, which is a 2.2% year-over-year decline. Median-sales prices, though, fell 4.1%—the largest decline December 2011’s 10.5% drop.
The report finds that an estimated 42,432 new and existing homes and condos were sold in July, which is a 5.1% increase from June and up 1.8% from July 2018. CoreLogic, however, stated that housing activity usually declines, with the average decline for the two months being 5.3%.