California's housing affordability crisis continues to deepen, as the state
is now home to the 11 least-affordable housing markets in the entire nation,
according to a report released today.
Robert Rivinius, chief executive officer of the California Building
Industry Association, said the results of the study make it even more urgent
for the Legislature to act this year to enact needed reforms to allow housing
production to finally meet the demand for new homes and apartments.
"Just one day after Governor Schwarzenegger told the Legislature in his State
of the State address that we need reforms to make more homes and apartments
available to California families, this new report is a fresh reminder of how
serious the crisis is and how it's getting worse," Rivinius said.
"It used to be that California dominated the 'bottom 10' list of
least-affordable metropolitan areas. Now we are the bottom 10 - and then some.
What's worse is that even in California's most affordable market - Tulare
County - less than half of the county's residents can afford a median-priced
home.
"What more proof does the Legislature need to finally pass reform laws to
make it easier and less-costly to build the homes our working families need?"
The newly revised National Association of Home Builders/Wells Fargo Housing
Opportunity Index found that during the third quarter of 2004, 19 of the
bottom 25 housing markets nationally were in California. In fact, 25 of the
43 least affordable markets are found in California.
The least-affordable market out of 162 metropolitan areas nationwide was
Santa Barbara County, where a family earning the median income could afford
only 4.9 percent of area homes. The next four least-affordable areas were
San Diego County, Monterey County, Los Angeles County, and Orange County.
(A PDF file listing all California metro areas is available in the Newsroom
section of the CBIA Web site,
www.cbia.org.)
In comparison, the NAHB survey found that in the nation's most affordable
market, Lima, Ohio, 90.5 percent of homes sold during the third quarter of
2004 were affordable to families earning the area's median income. Among
larger metro areas nationwide, the most affordable were Grand Rapids, Mich.,
where 86 percent of the homes were considered affordable, and St. Louis, Mo.,
where the affordability rate was 83.7 percent.
"In cities around the country where housing production keeps up with demand,
affordability is far greater than it is in California, where a web of
restrictions, regulatory hurdles, and the highest building fees in the
country have caused far too few homes to be built and driven up prices for
those that have been built," Rivinius said. "As the Governor said so
eloquently, the Legislature must act to solve this crisis."
On Wednesday, the Governor told lawmakers that reforms to solve the housing
crisis are a top State priority:
"We need roads and we need affordable housing. The median price of a home
in California is $460,000. That is too much. A home of your own is part of
the American Dream. I believe in such dreams, so I will propose legislation
that eliminates regulatory and legal hurdles that delay construction and
increase the costs of new housing. I want a California where people spend
less time sitting on the freeway and more time in the homes that they own,"
the Governor said.
Besides removing the barriers that the Governor referred to, CBIA supports
a number of other measures to make the American Dream possible for more
Californians, including making sure that there's an adequate supply of land
to build well-planned housing of all kinds - high-density condominiums as
well as single-family homes, especially in the state's job centers.
The California Building Industry Association is a statewide trade
association representing more than 6,000 businesses - homebuilders,
remodelers, subcontractors, architects, engineers, designers, and
other industry professionals. A recent study determined that
homebuilding generates approximately $60 billion a year to the
California economy and creates an estimated 526,000 jobs statewide.
The Housing Opportunity Index calculates the share of homes sold in an
area that would have been affordable to a family earning the median income.
For income, NAHB uses the annual median family income estimates for
metropolitan areas published by the Department of Housing and Urban
Development. NAHB assumes that a family can afford to spend 28 percent
of its gross income on housing, a conventional assumption in the lending
industry. That share of median income is then divided by 12 to arrive at
a monthly figure. On the cost side, the monthly principal and interest is
based on a 30-year fixed-rate mortgage with a 10 percent down payment.
The interest rate is a weighted average of fixed and adjustable rates
during that quarter. The cost also includes estimated property taxes and
property insurance.
