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Blog Post · August 9, 2023

Large Cities Lose Population even as They Add New Housing

photo - Row of Townhomes in Stages of Construction

California is in the midst of an unprecedented demographic period: the state’s population is declining for the first time since records have been kept. Between January 2020 and January 2023 California lost almost 800,000 residents, according to estimates by the state’s Department of Finance.

Yet at the same time, new housing continues to be built and occupied (the vacancy rate has changed very little). California’s population today is about the same as the state’s population in 2015, but there are now almost 800,000 more housing units. So why does the state still have a housing crisis? In part, fewer people are spreading out across more housing. And in most large cities, there is not enough new housing to make up for this shift.

These new patterns come after decades of the state’s population growth outpacing new housing. For three decades—the 1980s, the 1990s, and the 2000s—new housing did not keep pace with growth. The number of people per household increased from 2.68 in 1980 to 2.90 in 2010. Housing prices, both to purchase and to rent, escalated rapidly over this period.

figure - New housing now outpaces population growth

It stands to reason that population loss plus new housing increases would help to alleviate California’s housing crisis. But it’s not clear that’s the case. Housing prices and rents remain high. Looking at patterns for California’s large cities (those with at least 100,000 people) can help explain this conundrum. (Note that we’re excluding those living in groups quarters, such as nursing homes and prisons.)

Over the past few years, 53 of the state’s 73 large cities lost population even as they added new housing. The poster child for this pattern is Oakland, which had the fifth largest rate of increase in housing units and the seventh largest decline in household population. The number of occupied housing units in Oakland increased by almost 8,000, but the household population declined by almost 14,000. Fewer people lived in more housing units.

In contrast, Menifee in Riverside County represents the pattern of change that had long characterized California, with strong increases in housing fueling sharp increases in population.

figure - Most large cities lost population even as they added new housing

In Oakland, virtually all of the new housing (96%) is in large buildings with at least five units, whereas in Menifee single-family detached houses make up almost all (98%) of the new housing. Housing units in large buildings tend to have fewer bedrooms and hence fewer people per household (1.8 in Oakland, 2.2 statewide) than single-family houses (2.8 in Oakland and 3.0 statewide).

This pattern occurs across the state, albeit in less extreme fashion. Cities that are adding population are building more single-family housing, whereas cities that are losing population are building multi-family housing in large buildings.

figure - Cities that gained population were much more likely to add single-family detached houses

In dense cities with little land available for new housing, it makes sense to build large multi-unit buildings. Per acre, more people are accommodated. And infill development is better than sprawl for the environment. But it changes the nature of the population that is accommodated.

Families with children are much more likely to prefer to live in single-family homes. According to the PPIC July Statewide Survey, 74% of adults with children at home would prefer to live in a single-family home, even if it means that needing a car to commute and drive locally. Young adults are the group most likely to prefer to live in a condo or townhome if it were convenient to use public transit to commute and travel locally. But even among this group, only 40% choose the condo or townhome option, while 60% choose the single-family home.

In recent years, California housing policy has sought to encourage infill and discourage sprawl, often through an emphasis on affordable housing in large multi-unit buildings. Multi-unit infill development has the advantage of being more environmentally friendly and can accommodate more people per acre of land. But multi-unit developments are not generally family friendly and are seldom available for home ownership. Finding ways to make multi-unit housing more attractive to families could play a role in stemming the state’s population losses.


Housing Political Landscape Population