Exploring the Housing Riddle in California: Why Does the Cost of Living Remain High Despite Population Trends?

The cost of living in California remains high despite a decrease in population and an increase in housing stock. According to recent demographic figures, California’s population has decreased by 375,800 since 2020, while the housing stock has grown by 432,700 residences. However, the median home price has increased by 25% and rents have seen a 24% hike in 12 metropolitan areas.

Various economic factors have contributed to the high cost of living in California, including fluctuating mortgage rates, high demand from investors, developers focusing on luxury housing, low unemployment leading to increased housing demand, and inflation driving up wages. Additionally, the types of homes being added to the residential stock are mostly on the pricier side, such as single-family homes, rentals with five or more units, and attached homes.

Despite the increase in housing stock, there are still challenges such as vacant homes, which make up 6% of the housing created since 2020. The vacancy rate in California has barely changed, and ideas to reduce vacancies, such as taxing owners of empty homes, have been proposed. Furthermore, the average number of Californians living in an occupied housing unit has decreased, leading to a demand for more housing units.

Overall, the decrease in population density and the increase in housing stock have not translated to more affordable living in California. The state continues to face challenges in balancing housing supply and demand, and addressing the high cost of living remains a complex issue.