Californians: Here’s Why Your Housing Costs Are So High

Covid-19 pandemic still is wreaking havoc in the world affecting our lives and businesses. Real estate too is seeing some dramatic changes in the way people do business but has managed to keep its head above water thanks to the technologies available that go around the restrictions like lockdowns. 

Californians consider housing affordability a big issue and many are contemplating moving to other states. But what has gone awry?

Buying a home in California is not easy. The average home in California costs 7 times more than what the average household makes. The pandemic has also added fuel to the fire in which higher demands and limited supply are adding to the prices. Low mortgage rates are not helping either. 

Renting homes in California has also been affected by the pandemic. Now it’s cheaper to rent a home in most expensive cities and more expensive to rent in more affordable cities. This all happens due to the increasing prices which go beyond what most people can afford. Therefore, people tend to choose more affordable cities. Thus increasing demand. This vicious cycle goes on and on. Although Californians’ income is more than the national average, they simply can’t keep up with rising rents. 

Long before the pandemic, Californians had a hard time paying rent. This issue was even worse for families of color. About 30 to 50% of Californians’ income was spent on rent. The pandemic has made this even worse now. Although renting crises is worse in Bay Area and Los Angeles, the issue runs in the state where other cities like Fresno and Sacramento also experience rent increases.

California simply does not have enough housing to keep up with the demand. Over the past 10 years, Californias population has grown by 6.7% while its new housing has increased by only 4.8%.