Beacon Economics

A trio of new reports from Beacon Economics show that high home prices are driving low and medium-wage workers out of California. The studies also say that not enough homes are being built.

By Kevin Smith, San Gabriel Valley Tribune
Posted: 03/03/16 – 2:01 AM PST | Updated: 1 hr ago

California boasts some of the highest wages and fastest rates of job growth in the nation but high housing costs are pushing many people out of the state, according to a trio of reports released Wednesday.

The reports from Beacon Economics in Los Angeles address “Employment by Income,” the “Current State of the California Housing Market” and “California Migration.”

Beacon notes that 625,000 more U.S. residents left California between 2007 and 2014 than moved into the state. The vast majority ended up in Texas, Oregon, Nevada, Arizona and Washington.

The search for more affordable housing is sending low and middle-income workers out of the state, while higher-wage workers continue to move in, which argues against the theory that high taxes are driving people away.

“California has an employment boom with a housing problem,” said Christopher Thornberg, a founding partner with Beacon. “The state continues to offer great employment opportunities for all kinds of workers, but housing affordability and supply represent a significant problem.”

Figures from price tracker CoreLogic reveal that Los Angeles County’s median price in January was $490,000, a 6.5 percent increase from a year earlier. Median prices in many L.A. County communities were considerably higher.

Arcadia’s median price, for example, was $880,000 in January, while Burbank’s was $650,000 and Torrance was $632,000.

San Bernardino County’s median home price in January was far lower — just $265,000. Still, prices were much higher in such cities as Chino Hills ($483,500) and Upland ($495,000).

Those high home prices have caused homeownership rates to trend much lower in California than in other states. And they’re still declining, according to one of the reports.

How low?

In 2014, California ranked 49th in homeownership, with only 53.8 percent of homes being owner-occupied. California’s average homeowners spent 25.4 percent of their household income on housing costs — more than homeowners in any other state.

Texas homeowners, by contrast, spent an average of 19.3 percent of their household income on housing.
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California’s problem is further compounded by the fact that housing is in short supply. From 2005 to 2015, permits were filed for only 21.5 housing units per every 100 new residents in the state. That put the Golden State second to last behind Alaska, where only 16.2 housing permits were filed for every 100 new residents.

On the flip side, Michigan saw 166 permits filed for every 100 new residents.

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