Local Economy
Regional Industry
Challenges Facing the California Housing Market
ECONOMIC OUTLOOK
Local Economy
• The region leads Southern California in post-pandemic job growth with a gain of 7 % based on an increase of over 110,000 workers . Through the first half of 2024 , the pace of job growth is accelerating and outpaces the national average .
• The market is becoming more expensive but still maintains a competitive advantage of affordability , and many new developments across the region will provide capacity for additional employment opportunities . This also highlights the need for more housing units to be constructed to account for the growing population .
• Trade , transportation , and manufacturing accounts for a third of the workforce . Government , education , and health services account for another third .
• Employment levels rank slightly lower due to the regions high proportion of retirees . This has also generated an outsized demand for healthcare services and medical-related real estate .
Regional Industry
Challenges Facing the California Housing Market
1 . Supply and Demand Imbalance - The state will need an additional 3.5 million homes to meet current demand , but building rates are significantly below this target .
2 . Lack of Affordability - The median home price in California currently sits at over $ 800,000 .
3 . Zoning and Land Use Regulations - Stringent zoning codes and laws such as the California Environmental Quality Act ( CEQA ) are creating lengthy approval processes and adding costly expenses that ultimately get passed on to the consumer .
4 . Fragmented Governance System - The state ’ s fragmented housing governance system is a complex web of local , regional , and state agencies .
5 . Macroeconomic Factors - High construction costs due to high labor costs and high materials costs .
6 . Impact of Natural Disasters - Insurance costs to protect against natural disasters have skyrocketed and some insurers have even left the state , greatly impacting affordability .
7 . Migration Patterns - Although California has seen a net outmigration in recent years , the state has historically experienced an influx of domestic and international migration that impacts the economics of the housing market .
4 | Coldwell Banker Commercial Land Team 2024 Riverside County Market Report Source : Element Homes , CoStar