The 3.5 Million Unit Housing Shortage in California is Bad Data, Causing Legislative Missteps

In Gentrification, Housing, land use, legislature, News by Jill Stewart

Several bills in Sacramento facing votes in early July would force cities to permit huge luxury housing projects — but a detailed new study finds that legislators are being misled by a “3.5 million housing unit shortage” that’s untrue. The findings by Embarcadero Institute make clear we need 1.1 to 1.4 million units that directly address the affordability crisis, not luxury.

Embarcadero Institute, a non-profit research group, found that the 3.5 million number generated by developer consultants McKinsey & Co is exaggerated by at least 2 million units. Yet the 3.5M figure is cited by journalists and is driving a raft of “trickle down” luxury housing bills.

We agree with San Francisco’s “nexus study,” showing that forcing cities to permit more luxury housing, the aim of SB 330 and SB 592, worsens the shortage of affordable units — by rewarding gentrification, eviction, demolition and displacement while creating few actual affordable units.

The worst bills heading for Assembly votes in Sacramento are Senate Bill 330 (D-Skinner) and Senate Bill 592 (D-Wiener). Neither creates a single unit of affordable housing. Both are driven by bad data and “trickle down” beliefs. SB 330 and SB 592 strip land-use powers from cities, handing it to for-profit developers to overrun existing, thriving communities.

The Embarcadero Institute study found, “McKinsey & Company used New York’s housing per capita as the goal, but California is not New York. … What if the housing stress the state is experiencing is being driven by a housing mismatch? What if we are producing enough market-rate housing but we have a dearth of affordable housing? Affordable housing was only 23% of California’s housing production in 2018, yet 43% of households are lower-income.”

Please email this groundbreaking, and downloadable Embarcadero Institute report to your assembly member and state senator. It’s not too late to halt the misguided scorched-earth bills in Sacramento, SB 330 and SB 592, that will destroy thriving working-class and residential areas, yet give us zero affordable units.

After emailing your assembly member and state senator, please send this study to the following Assembly Members who will vote soon because they either serve on the Housing Committee or Local Government Committee:

Assembly Committee on Local Government:

Assembly Committee on Housing and Community Development: