Half the state’s households struggle to afford the roof over their heads. Homeownership—once a staple of the California dream—is at its lowest rate since World War II. Nearly 70 percent of poor Californians see the majority of their paychecks go immediately to escalating rents.
This month, state lawmakers are debating a long-delayed housing package. Here’s what you need to know about one of California’s most vexing issues.
The regional cost of renting has surged at double the pace of overall inflation so far this century. Renters in Los Angeles and Orange counties give more of their paychecks to the landlord than any other metro in the nation. And perhaps three-quarters of Southern California’s renters claim they are ready to bolt. An exaggerated upswing in Southern California rent is frequently blamed on an economic mismatch: solid employment growth outstripping the developers’ ability to build enough apartments to meet demand, especially for those not seeking luxury digs. Rising home prices also nix ownership for many. So, a growing flock of renters is chasing too few vacant units, and that supply shortfall pushes up rent prices.
. . . a Wall Street Journal analysis of tax data in 40 counties in California—by far the biggest market for PACE loans—shows that defaults have jumped over the last year. Roughly 1,100 borrowers missed two consecutive payments in the tax year that ended June 30, compared with 245 over the previous year. That means they are in default, and could potentially have their homes auctioned off by local governments within five years.
The standstill in Brisbane crystallizes a challenge for state lawmakers desperate to address a statewide problem that has been decades in the making: Local governments wield tremendous power in decisions about whether and what kind of new housing to build, and they are not building enough. The Legislative Analyst’s Office estimates California is so behind that it needs as many as 100,000 more housing units a year — on top of what it typically constructs — just to stabilize prices.
In the nine-county Bay Area, the median price for a single-family home has topped $800,000. And nearly one-third of renters statewide — 1.5 million households — spend more than half their income on rent, according to state estimates.
A big Wall Street firm is betting that America is likely to become the United States of Renters.
On Thursday, private equity behemoth Blackstone announced a major merger of its own Invitation Homes Inc. with another company, Starwood Waypoint Homes. It's the kind of news that makes most people's eyes glaze over. But after the deal is done, Invitation Homes will be America's biggest landlord of single-family homes, owning more than 82,000 houses, mostly in major cities like Chicago and Miami.
In plain speak, this means a top Wall Street company and a top real estate company think there's a lot more money to be made renting property to Americans who either can't afford to buy or don't want to become homeowners.