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California’s high housing costs are driving poor and middle income people out of their housing like never before. While some are fleeing coastal areas for cheaper living inland, others are leaving the state altogether.

Homelessness is on the rise. California is home to 12 percent of the U.S. population, but 22 percent of its homeless people. Cities that have seen dramatic rent increases, such as San Francisco and Los Angeles, attribute their spikes in homelessness directly to a state housing shortage that has led to an unprecedented affordability crisis.

Housing experts trace the problem back to the 1970s. Backlash began to arise – in coastal communities, in particular – from neighbors who opposed new housing in their neighborhoods.

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.

The company [SOLiD] moved into the Sunnyvale space just four years ago, excitedly touting the space then as its new U.S. headquarters and a place to grow. In an interview, an executive cites the Bay Area’s expensive real estate as one reason for the move to Texas. 

California’s rent control movement, strongest in the late 1970s and early 1980s, is again gaining steam as the state faces an extreme housing shortage that has led to skyrocketing rents and rampant tenant displacement. State officials call it an unprecedented crisis, exacerbated by the erosion of state and federal funding for low-income housing development. Activists are launching new rent control campaigns up and down the state, from Sacramento to Pacific to Glendale.

Despite the frequent portrayal of long commuting as the norm, only 2.2 percent of the nation’s workers travel 90 minutes or more, one way to work. Moreover, that long commuting is concentrated in and near just a few combined statistical areas (CSAs), the larger the larger metropolitan area definition that combines adjacent metropolitan areas like Bridgeport-Stamford with New York, San Jose with San Francisco and Riverside-San Bernardino with Los Angeles. Figure 1 shows that 17 of the 25 metropolitan areas with the largest share of 90-plus minute commuters are in or adjacent to just four combined statistical areas (CSAs). . . . None of this is surprising, considering that each of these markets is plagued by urban containment land use policies that force up house prices. Harvard research indicates that domestic migration is being driven by the differential in house prices and people have been leaving the New York, Washington and San Francisco CSAs for other parts of the country. Seattle has done better, simply because its expensive housing is still a bargain compared to the much more onerous house costs in coastal California, from which migrants are being drawn.

A constant tenet of Marin County’s guiding ethos is resistance to growth, manifesting itself in a kind of environmental apartheid. Under the guise of preserving a serene environment, Marin County’s residents and politicians use every means possible to avoid building new housing that would allow more population growth, particularly low- or moderate-income dwellings. They’ve been remarkably successful. Between 1969 and 2015, while California’s population was doubling, Marin County’s grew by just 28.4 percent. . . . When California’s housing shortfall became acute and the state government started getting serious about the housing quotas it had been assigning to communities, Marin County’s assemblyman, Democrat Marc Levine, carried a 2014 bill to exempt it from quotas until 2023, arguing that Marin needed more time to get it right. However, without waiting for a scheduled report on the county’s progress on meeting its housing quotas, Levine persuaded legislative leaders last month to insert into a budget “trailer bill” (Senate Bill 106) a brief passage that extends Marin County’s exemption from quotas for an additional five years, until 2028.

A developer wants to build 4,400 new homes there — one of the largest projects recently proposed in one of the country’s most unaffordable regions. The development would overlook a railway that drops riders into the heart of San Francisco in 15 minutes, reducing the need for cars and cutting the greenhouse gas emissions that come from them. State and regional leaders have endorsed the project. But its fate rests with Brisbane, a city of 4,700 people that annexed the property 55 years ago. And no one, not even the developer, thinks Brisbane’s residents will approve all 4,400 homes.

Using linked housing and tax records from Denmark combined with a major reform of the mortgage interest deduction in the late 1980s, we carry out the first comprehensive long-term study of how tax subsidies affect housing decisions. The reform introduced a large and sharp reduction in the mortgage deduction for top-rate taxpayers, while reducing it much less or not at all for lower-rate taxpayers. We present three main findings. First, the mortgage deduction has a precisely estimated zero effect on homeownership. This holds even in the very long run. Second, the mortgage deduction has a sizeable impact on housing demand at the intensive margin, inducing homeowners to buy larger and more expensive houses. Third, the largest effect of the mortgage deduction is on household financial decisions, inducing them to increase indebtedness. These findings suggest that the mortgage interest deduction distorts the behavior of homeowners at the intensive margin, but is ineffective at promoting homeownership at the extensive margin and any externalities that may be associated with it.        

Pricey rents in California’s hottest housing markets – San Francisco and Silicon Valley – are continuing to soar, and new data out this month suggests rising costs in major metropolitan areas are driving people out to search for cheaper living elsewhere. The real estate firm Yardi Matrix analyzed trends across California, and found rents are rising faster in Sacramento and the Central Valley than any other part of the state.

In many corners of Southern California, home prices have hit record highs. And they keep going up. In Los Angeles County, the median price in June jumped 7.4% from a year earlier to $569,000, surpassing the previous record set in May. In Orange County, the median was up 6.1% from 2016 and tied a record reached the previous month at $695,000. Across the six-county region, the median price — the point where half the homes sold for more and half for less — rose 7.5% from a year earlier and is now just 1% off of its all-time high of $505,000 reached in 2007, according to a report out Tuesday from CoreLogic.

The mortgage interest deduction, a sacred cow in the U.S. tax code, does nothing to promote homeownership, according to an academic paper released Monday, a finding that undermines one of the core justifications for the tax break. Letting taxpayers deduct mortgage interest encourages them to buy bigger homes and more expensive homes – but it doesn’t change that fundamental decision about whether to buy in the first place