Governor Gavin Newsom, who recently took office in January, focused his campaign primarily on fixing California’s housing crisis—which remains a priority to this day.
While his plans would significantly increase production at a drastic rate, results have shown that there is more new housing this year than previous years.
Newsom was given an unprecedented $1 billion budget to fight homelessness, along with a homelessness task force to put forward a plan to fine cities that go against production guidelines.
Earlier this year, the governor announced that the state was suing Huntington Beach for blocking new housing required by state law.
More recently, Newsom announced that he’d fine cities up to $600,000 a month if they did not cooperate with production.
The governor has also signed an executive order to build affordable housing on excess state lands. Curbed reports that economists have emphasized that building new housing is an integral part of addressing steep rental and home costs.
Sally Forster Jones, the Executive Director of Luxury Estates at Compass’ Beverly Hills commented,
“There has definitely been an influx of new construction across all price points, particularly luxury. Asking prices have increased significantly for these properties over the past few years. As a result of the increased number of properties on the market, we have seen more competition and we have also seen price reductions on some of them.”
Jones continued by saying, “The properties that fetch the most attention and receive offers at or near asking, are those with “wow factors” that can’t be found elsewhere (i.e. notable architect, prime location, one-of-a-kind features/amenities, etc.). Homes that are under the most stressed prices are those that are similar to others. With these properties, buyers have a variety to choose from and as a result, are in a better negotiating position. The unique properties are achieving record prices.”
Currently, Newsom’s projected plan is to build 3.5 million homes by 2025. Ultimately, this amounts to above 500,000 units per year.
There are reportedly 9,400 units already on the way into the second half of 2019, with Los Angeles County on track to have 10,000 housing units built before the end of the year, according to Curbed.
Although this won’t hit Newsom’s targeted goal, it is a significant increase compared to housing built in 2017 and 2018.
Although the governor’s objective is to reduce home costs, the median home price has notably gone up as construction increased.
The median price of a Los Angeles home rose just half a percentage point between June 2018 and June 2019, as stated in a report by CoreLogic. However, home prices in the area were climbing 8 percent annually last year, and have slowed considerably since then.