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MARIN COUNTY'S NEWS MONTHLY - FREE PRESS
(415)868-1600 - (415)868-0502(fax) - P.O. Box 31, Bolinas, CA, 94924

December, 2006

 

California's Housing Affordability Remains Lowest In Nation

SACRAMENTO - Despite a cooling housing market where prices have fallen slightly, affordability continued to worsen in most California markets during the third quarter of 2006, the California Building Industry Association reported today.
CBIA's analysis of the quarterly National Association of Home Builders/Wells Fargo Housing Opportunity Index found that during the third quarter of the year, affordability fell in 14 of the 28 California metro areas surveyed. Adding to the grim picture, in 20 metro areas less than 10 percent of the homes could be afforded by families earning the median income there.

Robert Rivinius, CBIA President and CEO, says that the report simply verifies what Californians already know: affording a home in California is becoming more and more out of reach.

"Despite all of the doom and gloom about housing prices dropping, affordability has improved only slightly and only in some parts of the state, and this does nothing to negate the fact that in the entire nation, the nine least affordable places to buy a home are here in California, as are 18 of the bottom 20." Rivinius said. "When will our legislators and our local policy makers finally realize just how serious our housing affordability crisis is, and start taking steps to restore the American dream to more California families?"

California's homeownership rate is just 57 percent, 13 points below the rest of the nation. This homeownership gap means that 1.6 million California families are being denied the benefits of owning their home, including the fact that homeownership is the biggest source of wealth creation for most families across the nation.

The index calculates the percentage of homes in a metro area that were sold there during a three-month period that could be afforded by a family earning the region's median income. The index assumes buyers will finance 90 percent of the purchase price with a 30-year fixed-rate mortgage, and takes into account prevailing interest rates, property taxes and insurance costs. Although prices eased in some markets, interest rates ticked upwards as well, according to the NAHB study.

Los Angeles County, for an eighth consecutive quarter, continued to have the nation's lowest affordability of the 203 metro areas surveyed, with just 1.8 percent of the homes sold affordable to the county's median-income family. Other metro areas in the nation's bottom five are Monterey County (2.6 percent), Orange County (3.8 percent affordable), Stanislaus County (4.1 percent), and Merced County (4.3 percent). A complete listing of the nation's 50 least-affordable metro areas, also comparing affordability with the previous quarter, may be downloaded from our website.

Rivinius noted that nationally, 40.4 percent of homes are considered affordable and that in 98 metro areas across the country, at least half of the homes are still affordable.

"We think housing prices have stabilized and we know interest rates are very favorable, so this is a great time to buy a home," Rivinius said. "But we could make it even better by enacting needed reforms that would make it possible for our industry to build enough homes to house our growing population - especially more homes designed for first-time buyers.

He said that needed reforms include making more land available for development in a well-planned, orderly way; streamlining the approval process; and reforming the state's environmental laws, which are too often used not to protect the environment but instead merely to stop or delay growth.

In addition, he said local officials need to take a close look at the "developer fees" they charge, which are really hidden taxes passed along to the new-home buyer. In many cities, fees total more than $50,000 per home and today fees in excess of $100,000 per home are not unheard of.

"California's at risk for losing its college graduates and young families," Rivinius warned. "If they can't hope to buy a home here, more and more of our best and brightest leaders of tomorrow will leave California for communities in other parts of the country where homeownership is still a realistic possibility."

The California Building Industry Association is a statewide trade association representing some 6,700 businesses - homebuilders, remodelers, subcontractors, architects, engineers, designers and other industry professionals. A recent study determined that homebuilding generates approximately $68 billion a year to the California economy and creates an estimated 487,000 jobs statewide. More information is available on the Association's Web site, www.cbia.org.


John Frith
VP/Public Affairs
California Building Industry Assn./PCBC
1215 K Street
Suite 1200
Sacramento, CA 95814
Ofc: (916) 443-7933 ext 332
Cell: (916) 803-3005
[email protected]


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