1. California’s Housing Future: Challenges and Opportunities
The Draft Statewide Housing Assessment 2025
California’s Housing Future: Challenges and Opportunities,” is a Draft Statewide Housing Assessment, that has been more than a year in the making and Along the way we’ve consulted experts, academics, and other agencies. This is our first comprehensive update since the year We see it as helping inform the critical housing conversations happening now and for years to come. We purposely released the report in draft form to allow time to engage in significant public outreach and conversations like this one to generate even more potential options to address our housing challenges. As part of this process we engaged in six public workshops around the state, a 60 day comment period (which generated more than 60 comment letters), and dozens of other stakeholder engagement events.
We are looking forward to incorporating the feedback we’ve received and revising the Assessment with a goal of releasing in Summer 2017.

2. Production Not Keeping Pace With Projected Need 180,000 new homes needed annually
Average 205,000
Average 80,000
Although not new to many of you, when we look at the data it’s easy to see the significant housing challenges we have:
We have a very low supply of new homes compared to our need.
We only averaged 80,000 new homes annually over the last 10 years, less than half of our projected need just to keep up with population growth. And far less than what we were building annually in previous decades with more than 200,000 new homes a year.
Source: Construction Industry Research Board/California Homebuilding Foundation Reports 2005, 2013, 2015; Graphic by HCD
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3. Renter Households in Greatest Need Outnumber Affordable Rentals (2:1)
300,000 unit surplus
61,000 unit shortfall
960,000 unit shortfall
1.5 million unit shortfall
1.0 million unit shortfall
Families continue to struggle to make ends meet. Nearly one-third of renters pay more than 50% of their income toward rent and this is even more severe for lower income renters; 80% of our extremely-low income renter households pay more than half of their income toward rent. In Orange County 53% of all renters meet that definition of cost burden and 27% pay half their income towards rent.
When we look at the available rental stock, we can see what drives this burden. We have very few rental units affordable to ELI and VLI households in comparison to the number of households in that income range. For example, there is a 1.5 million unit shortfall between the number of very low and extremely low income households and the number of rental homes available at prices these families can afford.
This is not exclusively a rental issue, homeownership rates are also at their lowest in California since the 1940s.
Renter Households
Affordable and Available Rental Units
Source: 2016 National Low Income Housing Coalition tabulations of 2014 American Community Survey Public Use Microdata Sample (PUMS) housing file. Graphic by HCD.
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4. High Housing Costs and Needs Have Consequences
Environment/Transportation: As households move further from jobs, longer commutes raise transportation costs and pollution
Economy: Lack of housing supply costs the California economy $140-$233 billion dollars annually.
Poverty: When housing is factored in, California’s poverty rate is the highest in the nation.
Economic Mobility: Children that grow up exposed to poverty have a greater chance of lower economic mobility later in life.
Health: Housing instability negatively impacts mental and physical health, and providing housing can lower public health and social services costs.
Education: Children experiencing housing instability experience reduced academic outcomes.
Lack of supply and rising costs have far-reaching consequences for all of California.
As we just discussed: Environment: When housing costs push people further from jobs, longer commutes not only impact quality of life and family transportation costs but also increase pollution for everyone. Removing barriers to infill development and development in areas of opportunity would not just alleviate the housing crisis, but also support the State’s climate change goals.
Economy: In terms of economic output, a recent study out of Berkeley estimates that squandered building opportunities add up to a national loss of $1.5 trillion/year. In California alone, these estimates suggest a theoretical loss of a staggering $238 billion dollars annually.
Chang-Tai Hsieh & Enrico Moretti, Why Do Cities Matter? Local Growth and Aggregate Growth (National Bureau of Econ. Research, Working Paper No ).
Poverty: Housing costs also increase our poverty rate, according to the census California has the highest poverty rate in the nation when you take into account housing costs. Since 2000, more people are living in distressed neighborhoods. In California’s 10 largest metros the population experiencing poverty grew by nearly 30%, but grew by more than 50% in the highest poverty census tracts.
Economic Mobility: This has long-term consequences for the families. In fact, studies show that where a child is raised affects the future economic potential of that child and children with greater exposure to poverty during childhood are up to 45% more likely to have difficulty escaping poverty as adults.
Health: We have the largest homeless population in the country. California accounts for a disproportionate 22% of the nation’s homeless population, but only 12% of the overall population. Housing instability negatively impacts health, but addressing homelessness can lower public health and social services costs though decreased emergency room visits, better health, and reduced use of social services.
Education: In terms of education, when children experience housing instability, especially homelessness, they experience reduced academic outcomes.
According to Brookings, the number of people living in distressed neighborhoods has grown by more than 5 million since Brookings found that since 2000 the growth in the poor population for California’s 10 largest metro areas was an average of 28%, but the growth of poor residents in the high poverty census tracts was an average of 53%.
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5. Potential Options to Address California’s Housing Challenges
Reform Land Use Policies
Invest in Affordable Homes and Community Development
Address Housing and Access Needs for Vulnerable Populations
We have identified three broad categories of options to address CA’s housing challenges:
The first category is land use reform which can play a critical role in advancing affordability, sustainability, and equity. This includes Increasing the supply of housing affordable to all income levels by reducing time and cost of development and linking housing production and other housing goals to non-housing incentives and investments
The second is Addressing Housing and Access Needs for Vulnerable Populations through Greater Inter-agency Coordination, Program Design and Evaluation. This includes increasing coordination between federal, State and local health, social service, and housing systems and Invest in permanent supportive housing and ensure consistent evaluation of programs.
Finally Investing in Affordable Home Development and Rehabilitation, Rental and Homeownership Assistance, and Community Development. Including Identify an ongoing source of funding for affordable housing that does not add costs to the State’s General Fund.
As you’re well aware, the Governor announced in his budget, a strong commitment to work with the legislature to address the state’s housing shortage and affordability pressures. Within the budget, he provided a set of principles to consider in developing a comprehensive package including the need for streamlining regulatory processes, increasing both accountability and incentives for building more housing, and the need for a permanent on-going, non-general fund revenue source. The ideas in the Governor’s Budget align and build from the framework presented in “California’s Housing Future,” and the data and principles from the final version will not only inform policy making in the near term, but for the next decade to come.
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6. Accessory Dwelling Units (ADU)
Housing Related Parks Program
HRP Program – DPY 2014
Accessory Dwelling Units (ADU)
ADU’s offer an opportunity to maximize housing choices within existing neighborhoods.
Adds to supply
Facilitates affordability
Meets the State’s planning priorities
All local governments must now allow ADU’s and update their ordinance
Technical Assistance
Finally I was asked to present a little on Accessory Dwelling Units:
ADU’s are a unique opportunity to address a variety of housing needs and provide affordable housing options for family members, friends, students, the elderly, in-home health care providers, the disabled, and other as well as offer an opportunity to maximize housing choices within existing neighborhoods. Recent Legislation has made several changes to address barriers to the development of ADU’s
Changes include:
Requiring a local government to ministerially approve ADU’s if the unit complies with parking requirements, the maximum allowable size of an ADU and setback requirements
Removes barriers from additional parking requirements reducing parking requirements to one space per bedroom or unit
Remove some fee barriers such as prohibiting certain requirements such as requiring new or separate utility connections if the ADU is part of an existing stricter and ensures that ADUs are not considered new residential uses for the purpose of calculating utility connection fees or capacity charges, including water and sewer services
Fire sprinklers shall not be required in an accessory unit if they are not required in the primary residence
AB 2299 (Bloom) general.
AB 2406 (Thurmond) authorized local governments to permit junior accessory dwelling units (JADU), which are similar to ADU’s. JADU’s must be completely contained within the space of an existing residential structure.
Legislation removes a local government’s ability to make findings to require additional parking and reduces parking requirements to one space per bedroom or unit.
Fire sprinklers shall not be required in an accessory unit if they are not required in the primary residence.
State Housing & Community Development (HCD)

7. Thank You Contact Melinda Coy Melinda.Coy@hcd.ca.gov (916) 263-7425
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