In California, 24% of the population lives in a one-person household, according to the 2014 U.S. Census. This is up significantly from 19% of the population in 2000. This breaks down to single-households making up:
- 29% of rental units; and
- 20% of owner-occupied units.
Part of the increase in single households has to do with the decline in married couples. 54% of California adults were married in 2000, declining swiftly to 47% by 2014.
Zillow observes middle-aged adults who are more likely to be living alone today than they were in previous decades are driving the shift. This is due to an increasing number of people getting divorced — particularly as the economy improves and more people feel the confidence to strike out alone. The solitary living trend is also fueled by more people simply never marrying, increasingly common amongst members of Generation Y (Gen Y).
Californians are particularly likely to live alone. Roughly one-in-four Californians live alone here in the Golden State, whereas the national average is just one-in-seven, according to Zillow. Thus, California’s housing supply needs to meet the unique demographic makeup of its population. How is the state doing on that front?
More rentals, condos needed
California needs much more residential construction activity to keep up with its burgeoning population and the increase in single households.
For instance, in Los Angeles County, just 254 new units were built for every 1,000 new individuals who migrate to or are born in the area annually. Granted, only about 60% of area residents are adults that need separate housing. Still, population growth far exceeds the number of new housing units in Los Angeles and across the state.
As evidence, rental vacancies are at historic lows, with the statewide average at a low 4.1% in 2015. Low vacancy rates cause rents to rise faster than renter incomes, a phenomenon being universally observed across California’s large metropolitan areas.
The California Legislative Analyst’s Office estimates the number of additional units needed to maintain consistent housing costs and keep up with the growing population — on top of the new construction already completed or underway. The Office estimates the number of new units needed to be built each year for the past 30 years in each area would be:
- 35,200 new units in Los Angeles;
- 13,300 new units in San Francisco;
- 6,100 new units in Orange County; and
- 550 new units in San Diego.
California construction starts are well below what is needed to meet our state’s growing demand for housing. Construction has been meek since the 2008 Great Recession, still at less than half pre-recession levels eight years later. 97,600 permits for new construction units were issued in 2015, according to the U.S. Census. In contrast, during the peak construction year of 2005, 205,000 construction units were started.
What’s needed to induce builders to increase residential construction?
- local governments can re-zone to allow for denser, taller buildings in desirable living areas (close to jobs and amenities), taking planning out of the hands of local not-in-my-backyard (NIMBY) advocates; and
- state government and local governments can provide incentives for builders to build more low- and moderate-income housing.