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The Californication of the country’s housing market - Fortune   

In the decades since, the Golden State has grown into a gross exaggeration of every other state, complete with a housing crisis that is threatening to metastasize across the rest of the country. Its extremes are written across its largest city, Los Angeles, home to miles of posh gated communities where homes sell for hundreds of millions as well as the country’s largest skid row.

With 39 million people powering an economy larger than that of France or Russia, California needs to build 180,000 homes per year to keep up with population growth, according to an estimate from the state’s department of housing and community development. Yet in this regard, its record is pathetic, averaging less than 80,000 homes a year over the last decade.

To understand how we got here requires going back to the 1970s, an era when the postwar boom curdled into the double shock of “stagflation,” a nasty mix of stagnant growth and growing inflation, and when two of California’s legendary Republican politicians, Richard Nixon and Ronald Reagan, put their stamp on national and statewide housing markets. Generations of California Democrats would entrench those policies, many of them for supposedly environmentally friendly reasons. Yet more than anything, experts, economists, and activists told Fortune, something more fundamental snapped in the American mind that decade: A house became worth more as a financial asset than a place to live. And when it comes to the housing market, a bigger and bigger share of America has a California state of mind. 

Continued here



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