Middle-income households in California face a critical dearth of housing options, increasingly squeezed by the rising costs of housing on the private market and limited resources from the public sector. A new study by Garcia et al. (2022) at the UC Berkeley Terner Center for Housing Innovation explores these problems in detail and proposes several policy solutions. Key takeaways:
- As housing prices continue to rise faster than incomes, housing security is increasingly a luxury for the wealthy in California. In 2019, over a third of Californians earning between 80-120 percent of their region’s area median income (AMI) were paying over 30 percent of their income on housing, and 10 percent paid over half of their income.
- Fewer homes are being built for low and middle-income Californians with growing cost burdens: “While [homes for] very-low and low-income categories are the most underbuilt … only 40 percent of units targeted at those earning 80–120 percent of AMI have been built.”
- Building on the progress of Senate Bill 9 (2021), California cities can tackle the rising costs of development and lack of housing inventory by encouraging lower-cost multifamily housing with land use and zoning reforms.