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Increased demand for housing near public transportation in California may contribute to a coming mismatch between housing supply and demand that could last through the next two decades, according to The New California Dream: How Demographic and Economic Changes May Shape the Housing Market, a new report from the Urban Land Institute (ULI).

The report by Arthur C. Nelson, director of the Metropolitan Research Center at the University of Utah, analyzes housing demand in the state through 2035. It shows that the existing supply of conventional subdivision lots exceeds current demand, and will continue to do for at least the next 23 years, even if no new supply is created during that time.

ULI cites the interests of Generation X, born between 1965 and 1978, and Generation Y, born between 1979 and 1996, as contributing to greater demand for multi-family housing, as well as townhomes, duplexes, three-plexes and four-plexes on small lots in the housing markets of California’s four largest Metropolitan Planning Organizations. At least half of the demand could be for locations near public transit.

Demand is likely to be highest for rental units in Transit-Oriented Developments (TODs), the report notes. However, existing and potential TODs located within one-half mile of transit may accommodate only about two-thirds of the expected demand for such homes between 2010 and 2035.

“For the most part, Californians’ preferences mimic those of the nation as a whole, with one glaring exception,” Nelson said. “Californians consider transit options to be far more important in choosing a place to live than do people in the rest of the nation.”

The report is available online.

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