California Median Home Price Surpasses $900,000 as Economists Urge Massive Construction

California's housing market continues to reach unprecedented levels, with the median price for an existing single-family home climbing past $900,000 in April 2024. This significant milestone comes as leading urban economists, Christopher Elmendorf of UC Davis and Edward Glaeser of Harvard University, emphatically call for a dramatic increase in housing supply to combat the state's escalating affordability crisis. Their urgent plea, highlighted in a recent Los Angeles Times opinion piece, targets what they describe as a "vetocracy" hindering development.

According to data released in May 2024, the statewide median home price reached $904,210, marking an 11.4% increase from the previous year. This surge underscores the persistent housing shortage and high demand that continue to characterize the Californian real estate landscape. The California Association of Realtors (C.A.R.) had previously forecast a 6.2% rise in the median home price to $860,300 for 2024, a projection now exceeded by market realities.

In their November 29, 2023, Los Angeles Times op-ed, Elmendorf and Glaeser asserted that California's housing crisis is "a self-inflicted wound," resulting from decades of policies that have made it illegal to build sufficient homes. They specifically advocate for overcoming the state's "vetocracy," a system where numerous local regulations and community opposition effectively block new construction projects. The economists' direct message is clear: "BUILD. MORE. HOMES."

The term "vetocracy" refers to the extensive power held by various local actors and regulations to halt housing developments, contributing significantly to the state's severe housing deficit. This framework, often driven by Not-In-My-Backyard (NIMBY) sentiment and complex planning processes, prevents the market from adequately responding to demand. Elmendorf and Glaeser's research consistently points to these supply-side restrictions as primary drivers of California's exorbitant housing costs.

To address this systemic issue, the economists propose further legislative action beyond existing measures like Senate Bill 9, which allows for duplexes and fourplexes on single-family lots. They urge the state to "legalize apartments and townhouses on any residential lot, regardless of proximity to transit or existing infrastructure." Such comprehensive deregulation, they argue, is essential to foster a more affordable, equitable, and sustainable California by allowing the market to meet demand.