03/29/2024

California’s current home-building pace won’t tame skyrocketing prices soon, forecast says

California appears unlikely to be able to build enough homes in the coming years to put a meaningful dent in skyrocketing housing prices triggered by a shortage of affordable dwellings, according to economists who prepared a new UCLA Anderson Forecast.

This also holds true for the Bay Area, where an analysis of housing data by this news organization indicates it might take the area’s major metropolitan areas between 14 and 36 years even to modestly roll back housing prices.

The latest quarterly UCLA Anderson Forecast, released Wednesday, estimates how much construction would be required to reduce home prices in the Golden State by even 10 percent, to roughly 2014 levels.

“We find that to obtain a modest 10 percent reduction in price requires a little over 20 percent more housing,” economist Jerry Nickelsburg wrote in the forecast, which focused on the state’s economy. “Making housing affordable in California is difficult at best.”

This news organization analyzed the pace of residential housing construction in the Bay Area’s three major employment centers — Santa Clara County, the East Bay and the San Francisco-San Mateo region — and compared the current level of home building to the 20 percent increase the Anderson Forecast says is needed to achieve a modest 10 percent reduction in prices. The analysis indicated that the region is a long way off from a 20 percent growth in supply.

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