Analysts have separated into two camps around Golden State real estate, one more bullish than the other. “Two recent reports — from Fitch Rating, a Wall Street credit reviewer, and Arch MI, a seller of mortgage insurance — attempt to gauge the stability of regional housing markets by tracking changes in real estate metrics vs. other economic measurements,” the Orange County Register reported. “Using a California prism, the studies draw wildly different conclusions. Fitch concludes California housing is among the most overvalued housing markets in the nation. Yet California is not on Arch MI’s list of riskiest places to own.”

“California was one of 10 states with overvalued housing by Fitch’s standards. Four states had the same pricing mismatch as California: Florida, Hawaii, Oregon and Utah. Next states on the dicier scale — 10 percent to 14 percent overvalued — were Arizona, North Dakota, Nevada and Texas […]. Idaho was in the worst shape at 15 percent to 19 percent overvalued. But Arch MI saw California with riskiness below the norm. California’s risk of falling home prices is ‘minimal’ or a 2 percent change of depreciation in the next two years. National risk by this math is 4 percent.”

Searching for answers

Along with an analytical split surrounding a possible housing bubble, residential options in California have been opening a gulf of their own. “California is one of the most unequal states in the country, and its housing market is similarly bifurcated, offering both multimillion dollar houses and rent-controlled apartments, but less and less of a foothold for people in the middle,” the American Interest observed. “This is a key reason so many working class families have left the Golden State in the past 25 years.” In a recent report issued by Bankrate.com analyst Claes Bell, “California ranked as the toughest state in the nation for first-time home buyers, who typically would be in the millennial age bracket of 18 to 34,” according to the Los Angeles Times. 

Policymakers grappling with the state’s compounded housing challenges have no shortage of plans to pore over — over 130 bills touching upon the issue, the Times noted. “Reams of statistics support the depth of the problem: California’s homeownership rate is at its lowest since World War II, a third of renters spend more than half of their income on housing costs and the state has nearly a quarter of the nation’s homeless residents — despite having 12% of the overall U.S. population,” the paper noted in a breakdown of some leading legislative contenders — which range from proposals to expand low-income rent-controlled units to increasing tax credits to pushing easier and less traditional permitting. 

Back to rent control?

The push toward increased rent control has been spearheaded by Assemblyman Richard Bloom, D-Santa Monica. “Bloom wants to repeal the state law known as the Costa-Hawkins Rental Housing Act, named after a moderate-leaning Democratic former state senator from the Central Valley and a short-time Republican assemblyman from Orange County,” the Sacramento Bee recalled. “During 1995, Jim Costa, now in Congress, and Phil Hawkins, who served just two years in the state Assembly, became the face of a disputed political campaign lodged largely by landlords and real estate interests to weaken – statewide – the ability of cities to pass strong rent-control laws. It came nearly two decades after the rent-control movement, born in cities like Santa Monica, Los Angeles, San Francisco and Berkeley, was spreading across the state.”

In core metro areas across California, rents have risen dramatically — in part reflecting an influx of wealthier residents to downtown urban neighborhoods, but also fueling a domino effect of hikes further down the affordability chain. “Statewide, average rents have increased 60 percent over the past 20 years. In 2016, median rents in the Bay Area and Los Angeles area ranged from $2,427 to $4,508, according to a housing report from the California Department of Housing and Community Development,” the paper added. “Nearly half of California’s households rent, and 84 percent of them are considered ‘burdened,’ spending 30 percent to 50 percent or more of annual income on rent.”

Millennials matter in elections

Happy Cinco de Mayo. It’s also Thursday.

Are California millennials a political bellwether?

“With Donald Trump riding high in statewide polls and Bernie Sanders committed to seeing through his youth-fueled campaign all the way to the convention, California has become a large and unlikely test case for how millennials might vote in the general election — both in terms of ideology and simple turnout.”

“Although anecdotal evidence has shaped a popular view of millennials as a dejected and politically disconnected generation, some data analysis has complicated that picture,” writes CalWatchdog.

In other news:

• It’s official: Starting June 9, you need to be at least 21 years old to smoke and vape in California. LA Weekly has more.
• The state Supreme Court will hear arguments Thursday on Gov. Jerry Brown’s  sentencing-reform ballot initiative. The Los Angeles Times has more. 
• A new analysis of education statistics shows California ranking 45th in 2015 in  reading and math assessments for Grades 4 and 8. Less than 30 percent of California 4th and 8th graders were at or above proficient levels in math or reading. The San Jose Mercury News has more. 
• Progressive groups say CalChamber’s annual ‘job killer’ list killing good legislation and has too much influence over state lawmakers, reports the Los Angeles Times. Some of the groups complaining are SEIU, Planned Parenthood and Sierra Club. 

Assembly:

• In at 9 a.m. 

Senate: 

• In at 9 a.m.. Full day of budget hearings. 

Gov. Brown:

• No public events scheduled.

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New followers: @clarklee @judibeecher

Video 1: Scott Walker on right-to-work and Obama criticism.

Video 2: Scott Walker on Iran, Russia and Keystone XL.

Video 3: Scott Walker on medical marijuana, same-sex marriage.

Video 4: Scott Walker advances immigration plan.

Video 5: Scott Walker on winning the millennial vote.

Video 6: 2016 Showdown: Scott Walker vs. Jeb Bush.

A recent report by the U.S. Census Bureau analyzing statistics from the latest American Community Survey showed the Millennial Generation is struggling to find full-time employment, obtain affordable housing and reach financial independence. The problems are particularly bad here in California.

Young Californians are not only worse off than their parents’ generation, but they’re doing worse than their counterparts in the rest of the country.

“Many of the differences between generations examined within these latest data reflect long-term demographic and societal changes,” said Jonathan Vespa, a Census Bureau demographer. “Three decades of decennial census statistics combined with the latest American Community Survey statistics give us a unique view of how — and where — our nation is changing.”

Better educated but worse job climate for young Californians

Among the five years of data, the most striking statistics are in the area of employment. Despite being better educated, young Californians are earning less money than their parents and are less likely to have full-time employment.

In 1980, 71.1 percent of Californians aged 18 to 34 were employed — better than the national average of 69.3 percent. Today, California’s employment rate of young adults is lower than the national average at 62.1 percent.

Tom Allison and Konrad Mugglestone of Young Invincibles write, “The great recession hit young workers hard, leaving roughly 5 million young adults unemployed five years after the downturn officially ended.

Young Californians earning less today

Of those young people working full-time, wages are down in 2013 inflation-adjusted dollars. Thirty-four years ago, the average Californian earned $36,961 dollars per year. That median wage has dropped to $35,734 per year for the average Californians aged 18 to 34.

As Slate recently wrote of U.S. Census data analyzed by the Young Invincibles, “For Americans between the ages of 25 and 34, annual income earned from wages has fallen in four of the top five biggest employment sectors — retail (down 9.9 percent), the leisure and hospitality business (down 14.65 percent), manufacturing (down 2.87 percent), and professional and business services (down 4.28 percent).” According to the study, the one exception is health care, which has remained nearly unchanged.

While Californians earn more than the national average, much of the wealth has been concentrated in the Bay Area, which skews California’s statewide figures.

In San Francisco County, the average full-time worker, between the ages of 18 and 34, earned a median annual salary of $59,580 — more than double the average wages in rural Madera and Modoc counties. The average young worker in the tech-dominant San Jose metro region earns $51,149 per year — 52 percent more than their counterparts in the Los Angeles metro area.

Millennials can expect lower wages  throughout  their working lives. Lisa Kahn, a labor economist at Yale University, found that college graduates that enter a weak economy suffer lower wages throughout their entire careers.

“I find large, negative wage effects of graduating in a worse economy which persist for the entire period studied. I also find that cohorts who graduate in worse national economies are in lower-level occupations, have slightly higher tenure and higher educational attainment, while labor supply is unaffected. Taken as a whole, the results suggest that the labor market consequences of graduating from college in a bad economy are large, negative and persistent.”

Price of housing top in nation

While wages have declined for millennials, the cost of housing has continued to increase.

California is home to three of the most expensive major cities for housing in the country: Los Angeles, San Diego and San Francisco. The most expensive city in the country, San Francisco, has an average median home price of $744,400 and requires an annual salary of $145,500 to pay the nearly $3,400 mortgage, according to Business Insider. That’s double Seattle and Chicago and more than three times the cost of Houston, Dallas and San Antonio.

The city of San Jose estimates the average apartment in San Jose rents for $2,230 — up by 49 percent in the past four years.

“Housing costs in the peninsula, from San Francisco to San Jose, have doubled in the last five years,” writes Kerry Cavanaugh of the Los Angeles Times. “It’s even worse in San Francisco, which recently surpassed New York City as the most expensive rental market in the nation.”

More Californians live with Mom and Dad

Unsurprisingly, due to these increased housing costs, millennials in California are more likely to live with their parents than those in the rest of the country or previous generations.

According to the U.S. Census Bureau report, 34.5 percent of Californians aged 18 to 34 are living with a parent who is the householder. That represents a dramatic shift from 1980, when just 1 in 5 young Californians lived with their parents. Then, fewer Californians lived with their parents in comparison to the rest of the country. Now, more Californians live at home than the national average.

“Housing is typically the largest share of household expenditures and raising its price reduces discretionary incomes, while increasing poverty,” writes Wendell Cox, principal of Demographia, an international public policy and demographics firm.

Poverty, too, has increased among young Californians. Nearly one in five Californians aged 18 to 35 lives below the poverty line, an increase from 1980.

“Let’s say you’re a kid out of college and your first job, you’re getting paid $40,000 a year,” Richard Green, director of the USC Lusk Center for Real Estate, told the Los Angeles Times. “You want to live in a safe neighborhood in Los Angeles, with decent access to jobs, transit, et cetera. You’re looking at $1,400 to $1,500 a month in rent. So that means you’re paying $18,000 a year out of your $40,000 just in rent.”

The U.S. Census Bureau analyzed five years of demographic, economic and housing data collected between 2009 and 2013.