California Housing Partnership, an NLIHC state partner, released a report on the state’s affordable housing shortage and investments in housing production. Over the past three years, the California Affordable Housing Needs Report 2022 shows, California has more than doubled its production of new affordable homes. Despite this progress, the state is funding 16% of the total number of affordable homes needed to meet its housing goals.
The report finds that half of California’s six million renter households are low-income – that is, making at or below 80% of area median incomes (AMI). One million of these renter households are extremely low-income (ELI), making at or below 30% of AMI. Average asking rent in California has increased by 11% since last year, but wages are not keeping pace. A renter would need to earn $42.46/hour to afford the average asking market-rate rent for a two-bedroom apartment – nearly three times the state’s minimum wage of $15/hour. Even in below market-rate homes, many low-income renters face cost-burdens: a renter must earn $19.50 an hour to afford rent for a two-bedroom apartment set at HUD’s state rent limits for households earning 50% of AMI. The median wages for many occupations – including farmworkers and laborers, home health and personal care aids, childcare workers, retail salespeople, and janitors and cleaners – fall below that threshold.
Although California has made significant commitments to address the affordable housing shortage, the state’s progress falls short of what is needed to secure affordable homes for all California renters. The number of new affordable homes funded through the federal Low Income Housing Tax Credit (LIHTC) program and state funding programs increased from 7,177 in 2019 to 19,304 in 2021. Despite this growth, the number of homes funded in 2021 was only a small fraction of the annual production goal of 119,287 homes.
The report also highlights a significant contrast between state resources for renters and homeowners. While 99% of state homeowner resources come from permanent sources, only 10% of state renter resources are permanently funded. One-time funding sources – including the Coronavirus State Fiscal Recovery Fund along with the remaining balances of several voter approved bonds, discretionary Cap and Trade auction revenues, and annual budget allocations – account for 90% of the state’s $4.884 billion in renter resources in fiscal year (FY) 2021-22. Meanwhile, virtually all the state’s homeownership resources – which cost $5.748 billion in FY21-22 – are permanently funded.
The California Housing Partnership and other housing advocates across California are pushing to increase long-term funding for affordable housing and homelessness solutions. The Roadmap Home 2030 – a comprehensive framework of equity-centered, evidence-based policy solutions to build affordable homes, protect low-income renters, end homelessness, and advance racial equity and economic inclusion in California – outlines concrete proposals to build on the state’s current progress towards its housing goals (see Memo, 4/19/21).
“State leaders have committed record amounts of budget surplus in the past two years to combat homelessness and displacement,” said Matt Schwartz, president and CEO of California Housing Partnership. “However, we cannot afford to rest on the progress brought by these one-time investments. The Roadmap Home calls for establishing clear long-term goals and comprehensive systems-change strategies to ensure that the investments made today will achieve the outcomes so many Californians have been longing for, including an end to homelessness and extreme housing cost burdens.”
Click here to read the full California Affordable Housing Needs Report 2022.