California housing market: Is it fixable?

Warren Oberholser
Warren Oberholser
Published on August 27, 2021

Hi, I’m Warren Oberholser. I’m a realtor in the East Bay Tri-Valley area in Northern California. My goal is to help both buyers and sellers get maximum results for one of their biggest investments, their home.

California housing market: Is is fixable?

Is the California housing market fixable?

If you just watched my latest BLOG/ video California Housing Market | Have home prices collapsed?, I discussed how California’s real estate market is strong. It appears to be transitioning to a more normal real estate cycle, which is a busy spring, slows in the summer, and revs up in the fall. With the typical real estate market pattern, fall prices tend to flatten compared to a hot spring and sometimes dip slightly.

California housing market: 2021 fall real estate market may be transitioning to a more normal/stable market

So, if the real estate market has made this transition, then it is possible for this coming fall, we see more inventory coming on.

California housing market: Possible more inventory and less bidding wars in the fall

This can help stabilize pricing, allowing the buyer to get their offer accepted with less of a bidding more type atmosphere competition resulting in better price in terms. We are a week off from the start of the fall real estate market so we’ll just have to see.

California housing market: What is the big issue?

Okay. If we are back to a more normal real estate pattern in California, what is the big issue with housing?

Well, it’s the lack of housing or low inventory. Lack of housing isn’t just an issue for residential home ownership, it also affects the rental market. Let’s start off with, why don’t we have more new construction?

Well, it’s complicated!

California housing market: What is the main issue with housing in California.? It’s complicated.

According to Lee Ohanian, professor of economics and senior fellow at Stanford Hoover’s Institution, he was featured on Siyamak Khorrami’s Youtube channel California Epoch Times.

California housing market: Lee Ohanian, professor of economics and senior fellow at Stanford Hoover’s Institution

California has regulations to both the state and the local levels that make it very difficult and expensive to build new home. Historically, to understand this, we need to go back in time. I don’t mean 2002 to 2005, I’m referring way back to 1945, right after the end of World War II to 1975. California’s population more than tripled from seven million to 22 million. During this period, even with the increase in population and housing demand, didn’t increase pricing because California was able to keep up with building demands.

California housing market: After 1975, housing prices started to skyrocket

After 1975, California’s home prices started to skyrocket, reason being, housing production was reduced to 40% of what was being built before that period. This started the first supply and demand growth in California. People continued to move to California and new housing could not keep up. So, for especially the last 30 years, California has become more and more unaffordable. The bottom line, California does not build enough homes and the ones they do build are very expensive.

The cost is reflected in regulations that:

  • 1 Delayed the building process
  • 2 Increased costs through compliance regulations
  • 3 Regulations that increased the pure cost of construction itself

According to a news report from CBS 8 in San Diego, currently:

California housing market: California will need to produce 1.8M new units by 2025
  • California’s producing 80,000 new units per year
  • To catch up to the housing market crisis, California will need to produce 1.8 million new units by 2025
California housing market: Paul Barnes, the president of Shea Homes San Diego division

Paul Barnes, the president of Shea Homes, just broke ground on a building project in San Diego that began the building process in 1990. So, from the time the plans are first presented to the city, which took 25 years just to start construction on the first phase of homes. There are several bills that are being introduced across California to speed up or fast track the building process.

California housing market: Rick Holliday, CEO & co-founder of Factory OS

In a story by CNBC, factory-built modular homes may be a viable solution. Rick Holliday, the CEO and co-founder of Factory OS, said they can cut construction costs by 20% to 40%. The style or building method is called volumetric. They build the individual units in a factory and then ship them to the actual location building site.

California housing market: The units are arranged on site per the building plans. This saves time, money and materials.

They are then arranged accordingly to the architect’s building plan so they can be stacked on top of each other or side-by-side into one large building configuration. These units or buildings can be used for both retail and affordable housing projects.

California housing market: Prefab/modular homes look & function very similiar to traditionally constructed homes.

Just an FYI. One of my clients who had just sold their home for in California, moved to Arizona and purchased a modular home. They loved the home, and I’ve not noticed any real difference between features and the home’s layout compared to standard constructed homes they have owned in the past.

California housing market: Prefab/modular homes must be properly secured to the foundation

They pointed out not all insurance carriers will insure modular homes, although they had no problem finding a company to cover it and they are not paying any additional costs or premiums for their homeowner policy. Regarding financing on a modular home, from what I understand from my local mortgage agent, there shouldn’t be any issues or premiums charge, providing the home as properly secured on its foundation. As I always say, it’s best to do your own due diligence before purchasing.

California housing market: Travis Airforce Base

The last area I’m going to address is for affordable housing and especially for veterans. The details to this story comes from Fox New’s Youtube channel and SF Chronicle. Fox News: CA Housing CrisisSF Chronical CA Housing Crisis. The City of Fairfield, which is about 50 miles from Sacramento, as a small community development named Georgetown Village, this apartment complex was originally leased by Travis Air Force Base to house its service members.

California housing market: Hunt Communities is ready to invest 30 million to renovate the complex

The lease ended over a decade ago and the complex sits abandoned. The apartment complex is made up of 300 units. The developer, Hunt Communities, is ready and able to invest 30 million to renovate the complex. So, what’s the holdup?

California housing market: Red tape between the city and millitary is preventing the project moving forward….Again, it’s complicated!

Well, it’s complicated.

Apparently, the city will not grant the developer a permit for renovations due to water rights, which are controlled by the Air Force Base. The complex presently has no water. You’re probably asking, “Why won’t the Air Force just turn the water on?”

Again, it’s complicated!

The Air Force Base position is, it is not customary to provide utilities to non-U.S. governmental ventures. This is a perfect example of how red tape with the city and county municipalities, and in this case, the military, can’t get out of its own way to create a solution.

Additional information on California housing market crisis:

Public Policy Institute of California: 90% of Californian’s Concerned about Housing price:

California Housing crisis:

I purposely keep politics out of my real estate business. However, as a resident in California, we have to reach out to our local representatives so we can get a solution or something started on the housing crisis in California.

I hope you enjoyed this article. Please let me know if you have any questions. Warren


Hello…I work with both buyers and sellers in the Tri-Valley area of Northern California. The Tri-Valley is comprised of 6 cities: Pleasanton, Livermore, Dublin, San Ramon, Danville, and Alamo. To better understand what each city has to offer, I have created a Pros and Cons video and BLOG for each – (Pros & Cons for Pleasanton, Pros & Cons for Livermore, Pros & Cons for Dublin, Pros & Cons for San Ramon, Pros & Cons for Danville and Pros & Cons for Alamo). If you are thinking about purchasing or selling a home, please reach out to me by text, phone, or email. If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!

Warren Oberholser

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Warren Oberholser

eXp Realty

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(925) 980-4603

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