We may be celebrating — if that’s the right word — the tenth year since the onset of the financial crisis and collapse of the real estate market. Yet before breaking out the Champagne, we should recognize that the hangover is not yet over, and that a new housing crisis could be right around the corner.
This is particularly true in California, which took one of the biggest hits in 2008 as its sky-high prices collapsed, causing enormous problems in areas including the Inland Empire, where incomes are lower and the economy was largely built around new housing construction. The urbanist punditry helpfully came out in force to declare such areas as “the next slums”.
The unsurprising slowdown in housing after the Great Recession was further hampered, once the economy began to recover, in large part due to tough regulations. By 2017, California metros like Los Angeles-Orange and even the Bay Area were producing housing at half to one-third the rate, on a per capita basis, of places such as Nashville, Dallas, Houston, Orlando and even Indianapolis and Columbus. The shortfall in single-family home production, greatly discouraged by state policies, lagged even further. Stronger land-use regulations have been associated with higher land cost and regulatory delays driving house prices well beyond historic norms, as recent research indicates.
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