Abstract

Most people in California enjoy the housing shortage; very few are suffering from it. These words, from a high-ranking executive of one of the largest savings and loan associations in California, reveal the high degree of confusion and the narrowness of perspective which color our perceptions about housing problems in the state today. The purpose of this article is to clarify the nature of the housing crisis in California and to discuss some of the policy options for the 1980s. Social change, however, has distorted the meaning of this conventional measure of the housing expense burden. The housing shortage is exacerbated by a series of nonmarket factors which limit housing production even in the face of rising prices and excess demand. Though California savings and loan associations have been experimenting with alternative mortgage instruments in recent years, they have given little consideration to the price level adjusted mortgage (PLAM), which could do more to promote affordable housing than any other innovation in housing finance.