Wednesday, January 2, 2019

California population growth rate drops to all-time low: housing growth rate now exceeds population growth

Recent estimates from the U.S. Census Bureau show California population growth has dropped to an all-time low of 0.4% in 2018.  The U.S. population growth rate declined slightly to an 80-year low of 0.64% according to the Bureau.  California's pace of population growth is tied with Iowa, one spot below Indiana and one place above Wisconsin - state's that are rarely compared to California when it comes to demographics or economics.  This is the 3rd straight year California population growth has been slower than the U.S. even as job growth continue to exceed the U.S. average. 

As the housing crisis has worsened, it has become common for analysts, including me, to say that California is not building enough housing to keep up with population growth.  That is no longer true thanks to the combination of decreasing population growth and slow, steady growth in new permits.

Between 2017 and 2018, California's population grew by 158,000 people, and the state is on a pace for issuing permits for nearly 120,000 new residential units in 2018.  Even with the devastating number of homes lost to fire this year, that is still enough to keep up with population growth. 

This is contributing to the flattening out of home values and rents that is currently underway.  Of course, this doesn't mean that the housing crisis is solved - the exodus is largely driven by the pain endured by Californian's dealing with the housing crisis.  California still needs to prioritize efforts to expand supply and reduce housing costs.

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