Driven by a short supply of housing and low incomes, Merced has attained
the dubious distinction of being the ninth least affordable place to buy
a home in the United States.
A study released Thursday by the California Building Industry Association
shows that only 10 percent of people who earn the median income in the
county can afford to buy an average-priced home here.
Merced's median income for a family of four in 2004 was $43,900, according
to the study, and the average price of a home was $247,000.
The nation's most affordable housing was located in Lima, Ohio,
where 90.5 percent of the homes sold during the third quarter of last
year were affordable to families earning the median income.
Merced isn't the only California city on the list of least affordable
housing. The top 11 cities, including San Diego, Salinas, Los Angeles,
Santa Cruz, Stockton, and led by Santa Barbara, are in the state.
In Merced, fully 60 percent of homes sold are purchased by outside
investors. Jeff Lawry, president of the Merced Association of
Realtors, said investors are buying up homes all over the county.
"You can see this in the rental market. A couple of years ago there was
only a 2 percent vacancy rate in rental homes, now it's up to 15 percent,"
he said.
Along with investors, commuters are also fueling the housing market,
Lawry said. People from the Bay Area are moving here and taking advantage
of comparatively cheap home prices.
In San Francisco, the median home price was more than $660,000, while
the median income was $95,000.
The factors driving up the price of homes in Merced are also the
factors that have kept California cities firmly in the top slots of
least affordable places to buy homes.
John Frith, spokesman for the California Building Industry
Association, said that between a growing population in the state and
regulatory roadblocks, there just aren't enough homes for people to
buy.
Frith said many communities don't want growth at all, and trying to
get new development through the permit process takes years.
"We have 600,000 people moving (to California) every year, and not
enough homes and apartments being built," Frith said.
Before Proposition 13 passed in the 1970s, local governments got
money from property taxes. But when property tax increases were put
on hold under the proposition, local governing bodies had to get
the money elsewhere.
"Now the developers have to pay. They don't have a lot of choice
but to write the check, but they also pass those costs along to
the homebuyers," Frith said.
The state's many endangered species have also factored in to the
cost of homes and the delay in building, Frith said. Merced County
has hundreds of vernal pools that are home to endangered species,
and developers have to mitigate for any land they build on.
"Add to these the number of lawsuits brought by environmentalists,
and some developers have just said forget it," Frith said.
Although many Mercedians can't afford home now, Lawry said he
believes the future will be better.
As the University of California, Merced, opens and more businesses
are drawn to the area, Lawry said incomes will likely go up. He
said a number of large housing developments that are being built
also will help, but he doesn't want anyone to get their hopes up
too high.
"I think that prices may tend to slow down a bit in the future, but
I don't see them going the other way for quite sometime," he said.
