An op-ed in the Los Angeles Times today by Mike Gatto detailed some of the greater challenges facing the California housing market, as well as a few potential solutions to the problem. The key takeaway is that the housing market in California is deemed by many to be unsustainable due to the sheer complexity of it.

According to the article, subsidies alone are capable of depleting the state of California’s budgets if certain cities were to focus on the needs of other cities. Not only that, but natural physical limitations (read: geographic landscapes) of California cities tend to drive up real estate values especially as other settlements and surrounding populations are needed to service these areas as they grow. This creates a growth in the job market as well, resulting in higher costs of living for all of the areas affected.

In addition to cyclical patterns regarding real estate and housing market values in the entire state of California, the inflated costs of development and construction continue to drive up prices too. According to the author:

Several factors explain the high cost of construction. For example, our building and zoning laws are needlessly byzantine. Because there is no single problem, there is no single, magical solution. Developers in Monaco face nothing similar to California’s bureaucracy, but a combination of other factors still make housing there quite expensive.

One problem facing the state of California is improper planning for infrastructure that will ultimately support and sustain the population of California’s cities. For example, it is not uncommon for a new settlement or planned subdivision to be lacking in resources like public transportation, water, and/or other utilities. To sustain these populations and ultimately stabilize the affordability of housing within cities is to promote more job growth in tandem with resources.

People want to live where there are jobs and culture. For years, government has tried to subsidize housing in expensive areas. But rather than bring housing where there are jobs, maybe we should try to foster more jobs where there is abundant housing. Making inexpensive areas more livable would also help bridge the gap between rich and poor in California. If an employer is willing to relocate to an area with cheap housing and core infrastructure (transit, water, healthcare), then our policies should facilitate that.

A couple of final points made by the author indicate that the general inflation of home prices are in relation to the value of the US dollar, and he suggests that housing market advocates and activists shift their attention to the Federal Reserve. And lastly, trends are impacting the housing market as well. He implies that home buyers and residents of California look to residential areas that are considered bargains in lieu of rising and uprecedented prices in other areas considered more trendy and hip.

While having a roof over your head is a human right, being hip is not. Even during times of unprecedented price increases, there are often bargains to be had in places that are a little less trendy. Some, but not all, of the complaints about affordability come from people who are simply frustrated that they can’t live in the stylish neighborhood of their choice.


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For more on the information referenced in this post, you can read the entire original article hosted by the LA Times here.