California Dominates List of Least Affordable Housing Markets; National Study Shows High Home...

SACRAMENTO, Calif.--(BUSINESS WIRE)--Aug. 22, 1996--In San Diego, only two out of five homes are affordable to the average family.

In Santa Rosa, the percentage drops to less than one in three homes. And in San Francisco, home to the nation's most expensive housing, only 22 percent

Those are among the findings in a new study release this week by the National Association of Home Builders which shows that California home prices continue to rank among the highest in the nation. The study also shows that those prices continue to shut thousands of California families out of the dream of owning a new home.

The quarterly study, which measures affordability based on median income and median home prices, placed nine of the 15 least affordable housing markets in the nation in California. San Francisco topped the list and Santa Rosa ranked sixth. San Jose came in at eighth, San Diego at tenth, Oakland at eleventh and Los Angeles at fifteenth.

Kimberly Dellinger, Deputy Director for Housing Policy and Regulatory Reform at the California Department of Housing and Community Development, said the national study is further proof that California's high home prices are severely restricting the housing options for Californians. HCD estimates that fewer than 40 percent of California families statewide can afford a median priced home. "Homeowners are becoming an endangered species in this state," said Dellinger, "and that ought to be a concern to everyone."

Robert Rivinius, Chief Executive Officer of the California Building Industry Association, said a major reason for California's high home prices are developer fees, time-consuming permitting processes and other regulatory barriers. School fees charged in some California markets can add as much as $20,000 to the price of a home and environmental permitting can tack on an extra five years.

"These fees and other regulatory barriers are hidden costs that are taking their toll on California home buyers," said Rivinius, noting that even slight increases in the price of a home can exclude thousands of families from the home buying process. Every $1,000 added to the price of a new home locks out tens of thousands of potential buyers, according to an national study.

Rivinius added that fees and regulation also are hampering housing production within the state, further restricting housing options for Californians. HCD estimates that 250,000 new housing units are needed annually in California to keep pace with population growth and new household formation. However, recent estimates show that California home builders will produce only 99,500 units in 1996, making it the fifth year in a row the industry will fail to top the 100,000 mark.

In an effort to improve housing affordability in California, CBIA is seeking regulatory relief through several legislative reforms. Those include SB 569 (Leonard), a school bond bill that also includes reform measures designed to bring fairness and dependability to the school finance system and to cap runaway developer fees. SB 569 is currently awaiting action in the Assembly Appropriations Committee.

"The easiest way to start tackling our housing affordability problem is to reduce some of these hidden costs that are unfairly taxing new home buyers," said Rivinius. "We need to create a level playing field, one that makes buying a new home an option for as many Californians as possible. -0-

                Housing Opportunity Index: 2nd Quarter 1996
                     15 Least Affordable Metro Areas

1.  San Francisco, CA
2.  Santa Cruz-Watsonville, CA
3.  Salinas, CA
4.  Honolulu, HI
5.  Portland-Vancouver, OR-WA
6.  Santa Rosa, CA
7.  San Luis Obispo-Atascadero-Paso Robles, CA
8.  San Jose, CA
9.  Provo-Orem, UT
10. San Diego, CA
11. Oakland, CA
12. Salem, OR
13. New York, NY
14. Jersey City, NJ
15. Los Angeles-Long Beach, CA

Source: National Association of Home Builders.

CONTACT: California Building Industry Association

Pam Runquist, 916/443-7933