While many financial experts suggest that housing costs should be in the area of 1/3 of Income, this simply isn’t realistic for most Californians. Comparing a 1980-2000 historical housing average to today’s average shows the burden Californians are under to provide a roof over their head.
For Renters, today’s average costs ranges from a high of 48% of income in Los Angeles to a low of 32% of income in Sacramento Historical averages were 36% for Los Angeles down to 31% for Sacramento.
For Homeowners’, mortgage and related housing costs range from a high of 43% of income in San Jose to a low of 25% of Income in Sacramento. On the positive side, excluding San Jose and Los Angeles which saw an increase of between 3%-1% respectively, most other areas saw a decrease ranging between 1% to 6% when compared to historical averages.
Pretty clearly, there supply in the rental market is not keeping up with demand resulting in the increased rents. As a matter of policy, California should focus on creating a building friendly environment allowing the supply side of available housing to catch up with demand.