A home under construction. Photo via Wikimedia Commons
A home under construction. Photo via Wikimedia Commons

Despite a growing economy, housing in California will become less affordable over the next two years, with construction unable to keep up with demand, according to a UCLA forecast.

The influential UCLA Anderson Forecast released Monday predicted total employment growth in California of 2.7 percent this year, 2.2 percent next year and 1.4 percent in 2017. As a result, the unemployment rate will drop below 6 percent for the balance of the year, then average 5.2 percent next year and 4.8 percent in 2017.

That growth will place new demand on housing, but unless there are “significant changes to zoning” and other laws restricting building, prices will simply rise, according to a special report by Jerry Nickelsburg, senior economist for UCLA Anderson.

Nickelsburg said the typical response of “just build more housing” is unrealistic since such a move would require major changes in zoning codes, environmental requirements and building regulations.

“Certainly some of this is happening, particularly along mass transit corridors, but to make a significant impact the changes would have to be quite dramatic,” he wrote. “Realistically, this is not going to happen in the coming few years.”

Nickelsburg also said government agencies need to reconsider their policies surrounding affordable housing if they hope to make a dent in the problem.

“The economics are clear,”  he wrote. “When affordable housing is provided, say by requiring developers to have a fixed percentage of their new units ‘affordable,’ then the demand for that housing will be in excess of the supply.”

Nickelsburg added that “the policy itself recognizes that building constraints — natural or regulatory — will not permit a sufficient number of new homes to be built to satisfy the demand at affordable levels.

“This being the case, affordable housing policy needs to be explicit about who the housing is for,” he wrote. “For example, one might advocate affordable housing so that teachers in public schools can purchase housing that would otherwise be difficult for them to acquire.”

For the United States overall, UCLA Anderson director Edward Leamer predicted GDP growth of 2 to 3 percent over the next two years, with a generally healthy economy.

“We see a healthy economy during the next two years with only a small chance of a recession and a small chance of a surge in growth,” Leamer wrote.

City News Service contributed to this article.

Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.