Housing affordability inched downward throughout the state during the second quarter of 2009 as a result of incremental price increases and increased demand sparked by the state new-homebuyer tax credit, the California Building Industry Association said today.
The quarterly National Association of Home Builders/Wells Fargo Housing Opportunity Index found that homes were less affordable in 16 of the state’s 28 metro areas included in the report.
On a statewide basis, the HOI found that a median-income family could have afforded 62.7% of the new and existing homes that were sold during the second quarter, down from 64.4% in the first quarter.
Robert Rivinius, CBIA’s President and CEO, said the decrease in affordability could signal the bottom of the market and that prices are likely to go up as existing home inventories drop and builders sell more homes, leaving fewer homes on the market and leading to increased competition among buyers.
“If you’re a buyer and you’re sitting on the fence, now is the time to buy,” Rivinius said. “While it’s not a huge decrease in affordability, it could signal that the bottom of the market is here and we could be facing an imbalance in supply and demand as housing production hasn’t kept up with population growth, and we’re already seeing news reports of increased competition among buyers.”
Rivinius added that more homes need to be produced to help keep housing more affordable in California.
“It’s estimated by the California Department of Housing and Community Development that California needs to be building around 230,000 units per year to keep up with population growth, but California homebuilders couldn’t even put up a third of that number in 2008, and we’re expecting even less production in 2009,” said Rivinius. “We need lawmakers to ease regulations and make building more feasible in order to keep up with population growth and meet the demand to help sustain these affordability levels.”
Rivinius said that policy makers must defer or lower development impact fees so that builders will be able to get projects off the ground more quickly and affordably in hopes of avoiding a housing shortage once the market corrects itself.
San Francisco, San Mateo and Marin counties once again took the lead as California’s least-affordable metro area, and second in the nation, with just 26.9% of the homes sold affordable to a median income family, down from 32.1% in the first quarter. San Luis Obispo County came in third (31.8%), followed by the Ocean City metro area in New Jersey (32.6%) and Honolulu, Hawaii (41.8%). The New York City metro area continued to hold the title of the nation’s least affordable market for the fifth quarter in a row (21.2%).