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Livable California

The 3.5M Housing Shortage Lie

The State Legislature has called for construction of 3.5 million homes by 2025 based on a study that uses New York as a benchmark. But is New York the right benchmark? Embarcadero Institute, the rising think tank that delves deeper than anyone watching California, found we need about 1.2 million homes, a doable, reachable number we can get to without legislative panic, attacks on city government, and destruction of communities.

If New York was the right benchmark to measure our need, the number is 3.5 million housing units needed. McKinsey & Company created the 3.5 million figure by using New York’s housing per capita as the goal. But California is not New York.

Using a very similar state like Texas as a benchmark, California’s housing need by 2025 would be 1.5 million, not 3.5 million.

An even more comprehensive “housing per capita” model of all 50 states shows we need 1.4 million housing units by 2025.

Why not use average household size to predict need? Then, the additional housing needed by 2025 would be 1.3 million.

But in fact, the state Department of Housing and Community Development already has the number, in its own excellent data. The department uses its housing need forecasts to form the basis for all regional planning. The state’s “multivariate model” suggests the additional housing needed by 2025 is around 1.1 million as opposed to 3.5 million.

It begs the question, why are State Legislators using the McKinsey analysis claiming a 3.5M housing unit need, more than 2 million higher than the state-mandated analysis by the Department of Housing and Community Development? Where are the mainstream media, who quote the 3.5 million without questioning and digging?

Please read the incredible findings of Embarcadero Institute here, in which the Institute debunks the 3.5 million housing shortage claim by McKinsey & Co., a development consultant.

McKinsey & Co.’s false 3.5M figure, exaggerated by more than 2 million units, is repeatedly cited as fact by Associated Press, Los Angeles Times, San Francisco Chronicle and others.

The false McKinsey data has fueled panic in Sacramento.

Sacramento’s reaction to the false 3.5 million shortage has been unfortunate and extreme:

— Legislators are authoring panic-driven luxury housing “trickle-down” laws that displace & destroy communities, doing far more harm than good. Examples: SB 50, SB 827, SB 330, SB 592, SB 4.

— Legislators are authoring panic-driven laws that punish, and strip power from, cities and communities who insist on rational plans, not Sacramento panic.

Please click here to read the stunning, game-changing research by Embarcadero Institute.