Affordability Requirements to Reduce Market Rate Deliveries

Rockwell at 1688 Pine St. in Pacific Heights is one of the new condo projects underway.

SAN FRANCISCO—California is facing a housing crisis that has reached alarming proportions: demand is far outstripping supply, driving prices up and keeping far too many working Californians from becoming first-time homeowners. The lack of supply and the resulting affordability challenge is having serious impacts on long-term homeownership in the Golden State.

According to US Census Bureau data, the national homeownership rate for the fourth quarter of 2015 was 63.8%, while California’s rate for the same period was below that, at 54.1%. Furthermore, analysts expect California’s homeownership rate to stagnate below its historical rate of 55% for years to come due to a dearth of supply and prices exceeding average incomes. If the state does not start to address the home affordability issue, businesses will forfeit competitive edges as housing costs and availability act as impediments to attracting and retaining workers, says analyst reports.