East Bay Housing Shortage Means Economic Growth May Not Benefit All: Report

EAST BAY, CA -- Despite strong economic growth in the East Bay, not everyone may benefit because of the housing shortage, an economist said following the May 12 release of a report written by his firm.

Chris Thornberg, Ph.D., cautioned though that unless more housing is built in the Bay Area the benefits of the economic growth will not reach everyone.

The report released Friday morning was written for the East Bay Economic Development Alliance by the staff Beacon Economics where Thornberg is a founding partner.

Median homes prices in Alameda and Contra Costa counties jumped about 70 percent between 2010 and 2015 because people are willing to pay those prices, Thornberg said. However, some East Bay residents are moving elsewhere because they can't afford to buy a home in the area.

Thornberg cited several reasons for the housing shortage such as the challenges developers face in getting new housing permitted, the high cost of permits and the opposition to new housing by existing residents.

Also, Proposition 13 provides only a limited incentive for the construction of new housing because it limits the amount of property taxes local governments can collect, Thornberg said.

Add to that the large amount of public services such as police and fire protection demanded by residents, and it doesn't make financial sense for local governments to encourage housing construction, he said.

Still, Thornberg, who's been studying the East Bay economy since 2003, said it's as strong as he's ever seen it.

Between February 2016 and February of this year, nonfarm jobs grew by 21,200 or 1.9 percent, higher than the nation's 1.6 percent.

Unemployment in the East Bay could drop below four percent this year, the report suggests, as the region's economic growth continues.

Bay City News contributed to this report/Image via Shutterstock