The Golden State has seen some of the highest home prices since the pandemic shook the housing market, as low rates sparked demand for homes, which in turn intensified competition for homes and led to a rise in the cost of properties. In February 2020, the median listing price in California was $575,000. By May 2024, that figure had skyrocketed by more than two hundred thousand dollars. Homes in the state now cost an average of $787,000, according to Federal Reserve Economic Data.
The Demographia International Housing Affordability report, which examines the cost of housing around the world, found that some of the least affordable areas were in California. Of the five expensive areas the report looked at for housing, four were in California: San Jose, Los Angeles, San Francisco and San Diego.
“The study also has serious implications for the prospects for upward mobility. High housing prices, relative to income, are having a clearly feudalizing impact in our home state of California, where the main victims are young people, minorities and immigrants,” Joel Kotkin, the director of the Center for Demography and Policy at Chapman University, wrote in the report. “Restrictive housing policies may be presented as progressive, but in social terms their impact might be better characterized as regressive.”
Newsweek contacted Kotkin through his website on Monday for comment on what specific policies have struggled to help with affordability in California.
Kotkin has written in the past that the state’s focus on what he describes as “densification” has struggled to improve housing supply, which would be key to helping with affordability.
“The state’s new, supposedly development-friendly housing laws have yet to produce more housing on a scale sufficient to address the affordability crisis, and recent data suggests an accelerated decline in housing production,” he noted last year in a Los Angeles Times column. -written with Wendell Cox, director of Demographia, a public policy consulting firm.
Overall, the report, which was prepared by Chapman and Canada’s Frontier Center for Public Policy, said migration during COVID, where people moved from urban areas to suburbs or places outside of U.S. metropolitan areas, ., was a key factor in housing prices.
“The result was a demand shock that drove up housing prices substantially as households moved for more space, both inside homes and in yards or gardens,” the report said.
“In the United States, work hours done at home are now four times greater than in 2019 before the pandemic,” the report notes. “San Diego estimated that nearly two-thirds of the US home price increase during the demand shock could be attributed to the shift to remote work.”
A “For Sale” sign is displayed outside a home on September 22, 2022, in Los Angeles, California. Home prices in the state have skyrocketed since the pandemic. A “For Sale” sign is displayed outside a home on September 22, 2022, in Los Angeles, California. Home prices in the state have skyrocketed since the pandemic. Dinner Allison//Keynote USA/Getty Images
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