Californians worry about the cost of living. This home can help

from Dan WaltersCalMatters

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When the Public Policy Institute of California released a new poll late last monthmedia coverage focused primarily on how the 11 gubernatorial candidates fared with voters.

However, the poll tested several other questions, one of which is the cost of living for Californians. The survey found that 70 percent of respondents believe their incomes are not keeping up with inflation, and San Francisco Bay Area residents have the greatest financial fears.

PPIC survey results correspond to a a new report by the Federal Bureau of Economic Analysis.

The bureau says the cost of living for Californians in 2024 was the highest of any state — nearly 11 percent higher than the national average — with rents 53 percent above the national average and utilities 63 percent above.

The bureau also said the Bay Area is the most expensive region in the nation, and four other California regions make the top 10: Los Angeles, San Diego, Napa and Oxnard.

The PPIC survey and the Bureau of Economic Analysis report suggest that the cost of living should be high on the policy agenda. They are the root cause of California’s other socioeconomic problems, like those of the state highest ranking for poverty and unemployment and on an outflow of Californians in other countries looking for an affordable life.

The 11 gubernatorial candidates frequently mention the cost of living in their pitches to voters, but rarely specify how they would reduce it.

For example, billionaire Tom Steyer promises to build a million new housing units during his governorship, reminding Gavin Newsom’s promise to build 3.5 million units when running for governor in 2018, “because our decisions must be as bold as the problem is.”

Newsom has signed dozens of bills aimed at spurring housing development, but the actual rate of construction, about 100,000 units a year, is nowhere near the 2.5 million units the state housing agency now says are needed.

Making serious progress on housing will require some politically difficult policy changes. One would be to encourage the assembly of parts of housing or even entire units in factories, thereby reducing the time and cost of on-site construction.

New study by UC-Berkeley’s Terner Center for Housing Innovation declared that manufactured housing could reduce apartment costs, which “in California typically exceed $400,000-$500,000 per unit and are even higher in high-cost metro areas where housing needs are most acute.”

Assemblywoman Buffy Weeks, an Oakland Democrat who chairs the Assembly Select Committee on Housing Innovation, says it will push through factory-built housing in legislation.

“California is a leader in innovation—it’s time to apply that thinking to solving our housing crisis,” Weeks said.

So why factory-built housing was not embraced in California? Simply because construction unions have used their political clout to block it at the state and local level.

The irony is that during World War II, California construction magnate Henry J. Kaiser invented the assembly line for building Liberty shipswithout which the United States and its allies could not have assembled the stockpiles of military supplies to liberate Europe from Nazi domination.

In the near term, the high cost of living in California and Newsom’s broken housing promises could hamper his presidential campaign.

CNN anchor Dana Bash cited the Bureau of Economic Analysis report in a recent Newsom interview while promoting his new autobiography, which dealt with his mother’s financial worries after his father abandoned the family.

“California has the highest cost of living in the U.S., 11 percent above the national average. Families are leaving because they can’t afford rent, a home or raising a family,” Bash said, adding, “People are still struggling to afford things like your mom was.”

Newsom shrugged off the question, going on to brag to his stock that California has the fourth-largest economy in the world, adding, “We dominate every key industry: AI, quantum, robotics.”

He was evasive and lame.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.