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July 11, 2017 

Low housing inventory in California, and across the country, has been a recurring theme in the public discussion of residential real estate markets. One way to put this shortage in perspective is by comparing the state of California, with a population of 39.25 million residents, to the Houston MSA, with a population of 6.77 million residents. As you can see from the graph above, between 2008 and today, California and Houston have issued a substantially similar number of building permits despite the huge difference in their respective populations (the Houston MSA has less than 1/6th the population of California). In 2012 and 2014 the Houston MSA even surpassed California in issuing 1-unit building permits.  Furthermore, it is clear that California has not returned to issuing similar levels of building permits to its historical average prior to the financial crisis of 2007. 

While California’s population has continued to grow, the 50,311 permits issued last year was the lowest recorded over a 50-year time span prior to 2008. The population is far and away outpacing the production of homes, and has landed California in a housing shortage. McKinley provides capital to private builders looking to supply much needed housing.