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Housing Shortage May Be Less Severe Than Thought

Data show state's home crunch is mostly in L.A., Orange County, the Bay Area and San Diego.

March 10, 2004|Roger Vincent | Times Staff Writer

California's housing shortage is primarily confined to Los Angeles, Orange County, San Diego and the San Francisco Bay Area and may not be as intense as previously thought, according to a study to be released today.

There is little evidence of a housing crunch outside these popular -- and densely populated -- urban and suburban markets, said the Public Policy Institute of California, a nonpartisan San Francisco think tank that researches economic, social and political issues.

The state has an overall net shortage of 138,000 housing units -- a figure that includes apartments, single-family homes and other types of housing, according to the study of census data. That is a less severe shortfall than some economists and homebuilders have suggested in recent years.

But the situation varies sharply in different areas of the state. The Bay Area has a shortfall of 168,000 units, Los Angeles and Orange counties are short a combined 146,000 units, and San Diego needs an additional 87,000 units, the report said.

By contrast, the researchers found an abundant supply of housing in non-coastal areas such as the San Joaquin Valley and the Inland Empire.

"The big concern is that there is no new construction in metropolitan areas," said report co-author Hans Johnson, who blamed such public policies as local slow-growth ordinances and state tax regulations that financially reward municipalities for building stores instead of houses.

That said, housing construction, which plummeted in California during the 1990s, has rebounded in recent years, although it remains well below the levels reached in the late 1980s and hasn't kept pace with population growth.

There were good reasons for the anemic level of housing development in the 1990s, Johnson said. The state experienced the worst recession since the Great Depression at a time when many young people were leaving the state instead of forming households and the smaller "baby bust" generation was replacing baby boomers as the primary target of homebuilders.

In addition, the state's population growth during the decade was concentrated among children and immigrants, who consume less housing than others.

Homebuilding industry representative Guy Bjerke, who has seen the report, acknowledged that the common practice of linking housing needs with statistics on job creation has resulted in unreliable estimates of the severity of the state's housing shortage.

"If you looked at some of those numbers, you had to scratch your chin and wonder how civic society could be operating with those deficits," said Bjerke, president of the Home Builders Assn. of Northern California.

But the acknowledged shortages in metropolitan areas vindicate calls to change public policy to allow more housing construction, he said.

"You have to make it possible to produce enough housing units that builders can compete with one another and dampen prices," he said.

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