The dearth of housing in California will put a drag on the state’s economic growth, according to two new studies.
California will continue to pile on jobs in 2017, but its advantage over the rest of the country will shrink in the future, say a report from UC Riverside and another from UCLA.
The state cannot continue to grow as fast as it has in recent years, said economists who wrote the reports, unless it funnels more people into the workplace. But there aren’t enough homes in the state to accommodate a wave of new workers.
“Long-run growth is a function of the number of bodies in your economy,” said Chris Thornberg, an economist and the coauthor of the UC Riverside report released Tuesday.
“If we aren’t going to build new housing to meet demand, we are going to limit population growth and limit economic growth.”
Part of the problem is a slump in residential construction. In the first half of this year, new housing permits totaled 2% fewer than in 2015, and multifamily permits were down 11%, the report said.
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