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California Spending $500 Million To Raise More Roofs

Written by on Wednesday, 31 May 2000 7:00 pm
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Just days after California's governor announced a half billion dollar effort to help build more homes in California, new record home prices underscored the pressing need for speed in that effort.

California will need more than 200,000 housing units every year from now through 2020 to meet demand that the state's existing housing production system simply can't manage, according to "Raising the Roof" a recent study prepared for the California Department of Housing and Community Development.

The report released last week says enough land exists to meet the challenge, but thwarting such an effort thus far has been the Golden State's labyrinth-like system of development laws and procedures, funding and lending programs, and public, private, and non-profit organizations that produce and operate housing in California.

Since the early 1990s, a booming economy fueled largely by the technology industry has left California hundreds of thousands of homes short of the demand and many residents unable to afford what is available.

The median price of an existing, single-family detached home in California during April 2000 was $241,600, the highest on record and an 11.6 percent increase over the $216,490 median for April 1999, according to the California Association of Realtors, in conjunction with Transamerica Intellitech. The state's median is almost twice the national median price of $136,700, according to the National Association of Realtors.

In the San Francisco Bay Area, the state's most expensive region, almost as few as one in 10 residents can afford the median-priced home in the area's most expensive cities, including the city and county of San Francisco, and Contra Costa, San Mateo and Monterey counties. In Santa Clara County, because of higher, technology industry-driven incomes, more people can afford homes, but only less than two in 10, according to CAR.

In Gov. Gray Davis' May budget revision, the governor earmarked an unprecedented $500 million to promote the supply and affordability of an array of housing options.

The "Raising the Roof" report says California chronically under-produces housing, particularly in coastal markets and so much so that in 1990, statewide demand exceeded supply by more than 660,000 units. California produced enough homes to actually exceed the demand from 1990 to 1994, but by 1997, housing production again lagged, this time by 145,000 units statewide. The state is currently about 200,000 homes short of what's needed.

The report said 13 counties are each projected to add 100,000 or more new households from 1997-2020 with most of the population growth driven by births rather than migration.

Analysis of land supply in 35 urban counties reveals that California has more than enough raw land to build the necessary housing through the year 2020, even while allowing for wetland, farmland, hillside, and floodplain protection, according to the report prepared for the state by the University of California-Berkeley's Institute of Urban and Regional Development (IURD), with support from the university's Fisher Center for Real Estate and Urban Economics.

Developable land supply, however, will be limited within several of the most high-growth counties because of development constraints. Adoption of even moderately limiting urban growth boundaries by high-growth counties in the Bay Area and Central Valley would further constrain land supplies below levels required to meet future housing production needs, the report says.

Necessary to foster more development are changes like the stepped-up application process for disclosures in low income housing recently announced by California's Department of Real Estate.

The department will now give priority processing to low-income housing development builders' public report application.

Responsible for assuring that subdivisions consisting of five or more lots or units meet the statutory requirements before they offer sales to the public, the state requires the developer to provide a disclosure statement called the Public Report to all prospective buyers before the purchase contract is signed.

"If indeed California is to remain a state where people from all backgrounds and walks of life are able to pursue the American dream of home ownership and secure housing tenure, then substantial investment and innovation in housing development policy, financing, and planning will be required," the report says.

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  About the author, Broderick Perkins

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.