Daily Real Estate News  

Even with Cool Down, California Buyers Priced Out
Sales might be off, but continued price appreciation means that only 23 percent of potential first-time buyers in California can afford to purchase a home, compared with 30 percent for the same period a year ago, according to a newly developed index released by the CALIFORNIA ASSOCIATION OF REALTORS®.

A statewide median price of $567,650 leaves more than 75 percent of potential first-time buyers out of the market. Since first-time buyers typically purchase a home equal to 85 percent of the prevailing median price, first-time home buyers in California would need an income of $98,720 (assuming a 10 percent down payment) to make such a purchase.

Breaking Bottlenecks

“Supply is so constrained that housing in California is unbelievably unaffordable,” observes Alex Creel, CAR’s government affairs director. “There’s been a bottleneck at the local government level in the approval process (for new housing) and our intent with the legislation of the last five years has been to break up that bottleneck,” he says, referring to the association’s efforts to increase the supply of housing.

Awaiting Gov. Arnold Schwarzenegger’s signature is a land-use housing bill, the Housing Accountability Act, giving developers additional incentives to create affordable housing by amending the current Permit Streamlining Act, which expedites the local approval process from 180 days to just 90 days if the entire subdivision is for low-income households. Under amended law, developer applicants can obtain an expedited review if the subdivision has 49 percent of the units for low- and moderate-income households.

Cities Would Need Long-Term Plans

The pending bill also requires each county and city to adopt a comprehensive, long-term development plan that would ensure they can create enough housing to accommodate their share of projected population growth. To ensure the plans are implemented, local governments will be required to report their progress to the state annually.

The bill allows judicial relief for those who challenge local governments on non-compliance. “Developers should be able to rely on the standards through the local government review process and not have the rules arbitrarily changed during the process,” observes CAR President Vince Malta.