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Massive Investment in Thwarting Housing Crisis Unlikely to Impact Home Values in High-Cost Areas

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Monday January 20, 2020
Massive Investment in Thwarting Housing Crisis Unlikely to Impact Home Values in High-Cost Areas

On Friday, Governor Gavin Newsom reaffirmed his commitment to affordable housing by unveiling a proposed budget that adds to last year’s historic investment in the housing market. Last year, Newsom appropriated $1.75B (that’s a record) to housing production and plans to add another $500M this year – although the $500M will go to California’s housing tax credit program (ultimately, houses will be more affordable). 

To be clear, one of the driving forces behinds Newsom’s drive to ramp up housing is to combat the homeless epidemic; he has described homelessness as “the issue that defines our times.” To that end, Governor Newsom is directing $750M to build housing for California’s exploding homeless population. As we noted in a previous article, California theoretically needs to build about 3.5 million new homes to avoid a housing crisis, but Governor Newsom has said that achieving that goal by 2025 is unlikely at this point. 

The net result of this will be an initial surge in low cost housing, but that will be temporary as vacancies fill up. Ultimately, the supply of high-value homes like those found in Studio City, Tarzana, Sherman Oaks, and Encino will not be impacted by this necessary investment in California infrastructure. As a result, it should remain a seller’s market for the near future.

At the Chernov Team we understand that knowledge is power, and knowledge of legislation and budgets concerning massive housing developments is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.

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