Posted by: Gaetan Lion 

I am referring to the California Department of Housing and Community Development (HCD) housing building mandates. They are called Residential Housing Needs Allocation (RHNA). The latter mandates the State builds 2.5 million (mainly) rental units by 2031.

We know the demographics are not supportive of this scheme. California’s population is projected to remain flat or decline out to 2060. See  my earlier demographic analyses on the subject: 

Sacramento consistently overestimates California’s population growth

Sacramento’s projections for the Bay Area are still way too high

Given that the demographics with flat to declining population growth do not support Sacramento’s housing build-up, the resulting economics of housing development projects fall apart.

Let’s look at two economic factors associated with the prospective collapse of the RHNA building targets. These are:

  1. Vacancy rates
  2. Interest rates

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