Thursday, August 25, 2005

California: The Least Affordable State

The California Building Industry Association published a news release today focused on the findings of the brand new National Association of Home Builders/Wells Fargo Housing Opportunity Index, which was also released Thursday. It says the affordability of housing in California "continued to free-fall during the second quarter of 2005." Here's an exceprt from the news release:
Robert Rivinius, CBIA's Chief Executive Officer, said the report is the latest proof that state and local policymakers must take action to reverse the downward affordability spiral, which he said is due primarily to the fact that new housing supply has not kept pace with the state's inexorable population growth. California is adding between 500,000 and 600,000 people a year, equivalent to adding the population of a Boston or Milwaukee every year.

"Even with housing production at its highest level in 15 years, our industry still should be building another 30,000 to 40,000 homes and apartments a year to keep pace with population growth," Rivinius said.

"During the 1990s, affordability was not great by national standards, but it still stood at 50 or 60 percent in many parts of the state," he said. "Even in San Francisco, it was in the 20-percent range. But today, affordability can be measured in single digits in half our metro areas, and less than 30 percent in our most affordable region. The national average, meanwhile, is 45.9 percent.

"Every quarter, the picture gets bleaker for California families trying to achieve the American Dream of homeownership. How much worse do things have to get before state and local policymakers understand why we have such unaffordable housing costs and do something to fix the problem?"

Also in the news release, the CBIA lists the least affordable communities in the state, according to the index:
The 10 least-affordable metro areas nationwide during the second quarter and their affordability ratings were:

• Santa Barbara County (3.2 percent)
• Los Angeles County (3.6 percent)
• Monterey County (3.7 percent)
• Orange County (4.4 percent)
• Merced County (4.7 percent)
• San Diego County (5.1 percent)
• Santa Cruz County (5.3 percent)
• Stanislaus County (6.1 percent)
• San Joaquin County (7.3 percent)
• San Luis Obispo County (8.5 percent)
The news release also takes aim at the Califfornia Legislature for not passing legislation that the CBIA says would help ease the situation by making it easier to build homes.
Despite the fact that California is home to the 10 least-affordable metro areas in the U.S., along with 18 of the bottom 21 and 24 of the bottom 31, Rivinius said it does not appear that help from the Legislature is on the way.
Read the entire news release at this link.

— The Boy in the Big Housing Bubble