To Address Poverty in California, Invest in Housing

A recently released report by the California Housing Partnership Corporation details California’s dire shortage of affordable housing and the impact it is having on the state’s residents. Although it is the wealthiest state in the nation, California’s high housing prices greatly burden low income household and exacerbate poverty in the state. Federal government measures of poverty that do not include housing costs calculate California’s poverty rate as 16.2%, but when adding housing costs the rate increases to 22%, the highest in the nation. Based on this measure, nearly 1 in 4 California children are living in poverty.

High housing costs put the greatest strain on households with lower incomes. Those in the bottom quartile pay two-thirds of their income toward housing costs, leaving very little to cover transportation, food, healthcare, and other expenses. In contrast, the median California household pays a much more manageable 27% of its income toward housing.

California Rent by Income

Overcrowding, in which there the number of people living in a dwelling exceeds the total number of rooms (not just bedrooms), is also a serious issue in California. Although California is home to just 12% of the country’s population, it houses 30% of all overcrowded households. Children living in such conditions are more likely to perform poorly in school and less likely to graduate from high school, which negatively impacts their future job prospects and exacerbates a cycle of poverty.

Left alone, this problem will likely get worse. Since 2000, rents in California have increased by 21% but renter incomes have decreased by 8%, placing an ever increasing burden on renter households. Since the Great Recession, however, state and federal investment in the production and preservation of affordable housing in California have dropped by a combined 69%. In order to ensure that California is the type of place where children can succeed, workers can afford to live, and consumers have money left over to spend after paying their rent, affordable housing investment must be prioritized. Not only is this the right thing to do, but it would be good for the California economy as well.

California Rent-Income Spread and Housing Investment Trends

-Sean Griffin

Source: http://www.chpc.net/dnld/2015StatewideHousingNeedReportFINAL.pdf

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2 thoughts on “To Address Poverty in California, Invest in Housing

  1. jacobmedina2016

    Well this is a shocker that you wrote about low-income housing, Sean (Sean really likes learning about low-income housing and wrote his DC thesis on it.) I completely agree with your points. The house is such an important factor for growing up as a child. Having a safe place to live, a quiet place to do homework, and enough leftover income to eat is very important for development. I am surprised median rent did not fall post-2008 with overall housing prices. I wonder how much of the price increase occurred due to Silicon Valley driving up surrounding rental prices in the cities around it. Either way, the increase in median rent with the decrease in renter income puts a lot of people in a very tough position.

    Reply
  2. Victor Matheson

    Nice post. Along the lines of Jake’s idea, I wonder if some of this is driven by pockets both poverty and high rental prices. For example, it could be that the use of statewide averages obscures what is actually happening in local housing markets. That being said, this post presented some interesting data that I was not previously aware of.

    Reply

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