According to William Schantz, we can observe that around nine out of ten people living in California are facing a problem with affordable housing. Californians are unable to afford houses to find houses that span within their budgets. Due to these reasons, many people are inclined to leave the state in search of a more budget-friendly lifestyle that will suit their requirements and needs.
Reasons for Expensive Housing As Per Schantz
High Construction Costs
When we talk about California, it can easily be labeled as one of the worst cities regarding construction and housing costs. As per the U.S. Government, in 2018, the median cost of one unit in California ranged around $326,000, while it was at $126,000 in Texas. The difference between the median costs of Texas and California is quite significant.
The expensive rates attached to construction are one of the most prominent reasons that lead to the highest prices of homes in California in all of the nation.
Expensive Land
As per William Schantz, the most prominent reason for Californian houses not being affordable is that the land is more expensive in California compared to other areas. California, also known as the Golden State, bears the land cost of 12% of the total construction, while in other states, the cost of the land is about 5% of the total construction cost. This significant gap makes the land more expensive, and hence, the homes end up being expensive as well.
Cost of Labor
When it comes to labor, the cost of labor is also very expensive in California. According to Schantz, one of the primary reasons for these high costs is that after the Great Recession took place in 2008, a huge jolt was given to the construction industry as many construction workers left the industry. This created an increasing shortage of adept, efficient, and skilled workers at their work.
If this wasn’t enough, a boom in construction took place that outdid the growth in the industry of construction.
Density Restrictions
According to William Schantz, there are a lot of density restrictions that limit the number of apartments that can be built in one specific area. With the ever-increasing size of the buildings, the developers can truly benefit from it due to the advantage that they get from economies of scale, which ends up reducing the cost for each apartment.t
Only specific houses can be allowed in a lot, and the rest of the area cannot be used to build more houses as per the rules. This creates a hike in the rates of affordable housing.
Schantz’s Ending Thoughts
If you need a house in California, you will have to spend a lot more on the mortgage or even rent. While it can be done if you have saved up enough, it can be quite financially draining for many people to spend so much on the house.
With constant searching, you can find an affordable house, but it will take a lot of patience to meet your perfect house within your budget.
