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California Builders Want to Reverse the Tide on Home Prices
Legislation and court rulings have taken a serious toll on housing affordability in California since the 1960s and the state’s rate of homeownership ranks 49th in the nation, only higher than New York’s, according to a new homeownership study by Alan Nevin, chief economist for the California Building Industry Association (CBIA).
Compared to the national average of nearly 70%, only 58% of Californians own a home, and homeownership levels are significantly lower for California’s growing Latino population, the report says. Nevin cites findings from the Greenling Institute in Berkeley that Latinos have accounted for only 22% of all home loans reported by mortgage lenders even though they make up 35% of the population. The same study found that only one in 20 blacks can afford a new home in California.
Even as late as 1970, the report says, single-family home prices in California were in step with those in the rest of the country, but restraints on development started cropping up gradually since that time and today the median price of a home resold in the state is more than $548,000, compared to $215,000 for the entire nation, a difference of well over $300,000.
The good news, according to the report, is that the situation can be turned around if the state starts supporting public policy reforms that are being advocated by CBIA in its 2006 Campaign for California Homeownership.
“We must act immediately to begin closing California’s homeownership gap,” said Layne Marceau, the state association’s 2006 chairman and president of the Northern California Division of Shea Homes. “Home builders are ready to work together with state and local officials to reform public policies that have prevented too many working families from being able to afford their own home. We have offered real solutions that can help make the American Dream of homeownership a reality for more California families.”
“The state’s population is growing by some 600,000 people a year,” Marceau added. “We need to meet our needs with a wide range of solutions — building more homes and condos, and also increasing the innovative conversion of office buildings and apartments to help give Californians more choices.”
One of the key components of the association’s legislative agenda is Senate Bill 1800, which would ensure that a sufficient supply of land is zoned to meet a community’s long-term housing needs. Also on the association’s legislative agenda are construction litigation reform, infrastructure financing, flood protection, fee accountability and reform of the California Environmental Quality Act, which the CBIA says is often used as a weapon against residential development in both infill and suburban projects.
The report notes that if California’s homeownership rate were even with the national average, an additional 1.6 million families in the state would own their home today.
“California could achieve parity with the nation if it were to add 50,000 owned units each year during the next third of a century,” the report says. “More aggressively, it would require the creation of 81,000 ownership units a year over 20 years.” These figures, however, don’t include the additional housing that will be needed to accommodate population growth.
Increasing homeownership opportunities could result in more than $4 billion a year in increased property tax revenues alone, the report says.
Want to Know the Housing Starts Through 2014?
Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.
To learn more, visit www.housingeconomics.com.
 Attend the Spring Construction Forecast Conference in April
Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
For more information, visit www.nahb.org/cfc.
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