Housing Affordability Analysis, 2014-Q4
The CALIFORNIA ASSOCIATION OF REALTORS® takes a comprehensive look at the recent issues in housing affordability in the California real estate market.
Content
HOUSING
AFFORDABILITY
C.A.R. Research & Economics
www.car.org/marketdata
HOUSING AFFORDABILITY AND
HOMEOWNERSHIP
2015 - WHERE ARE WE TODAY?
• Housing market is under-preforming given
fundamentals
– Low mortgage rates
– Job & Income growth are back
• And yet…
– Sales off 7.6% in 2014 compared to 2013
– Share of first-time buyers LOW
– Affordability key concern for renters
INADEQUATE HOUSING SUPPLY ISSUE
• Housing supply constrained in long-run
– New construction recovery is very slow
– Missing 165,000+ new units per year
– Production has fallen short of housing needs
• Inhibited by
– Fiscal interests of local government
– Residents who disdain further development, especially
multi-family
– Unfavorable legal/business environment for
development in general & multi-family in particular
CALIFORNIA’S 3 HOUSING GAPS
• Housing Gaps:
– Housing affordability gap
– Homeownership gap
– Housing production gap
• Chronic problems spanning decades
AFFORDABILITY GAP
HOUSING AFFORDABILITY DOWN
SHARPLY SINCE Q1 2012
California vs. U.S. – 1984-2014
% OF HOUSEHOLDS THAT CAN BUY
A MEDIAN-PRICED HOME
80%
CA
70%
60%
50%
40%
30%
20%
10%
0%
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
US
Annual
Quarterly
HOUSING AFFORDABILITY IN CA: BY COUNTY
HAI
70
60
50
40
% able to purchase median priced home
2014 Q4
64
59 57
56 56
53 53
50 49
45
41
30
20
10
0
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
31 29
29 28 27 27
26 24
23 22 21
21 20
17 15 15
14
INCOME REQUIRED TO BUY A MEDIAN-PRICED
HOME IN CA: (PEAK VS. CURRENT)
$100,000
$91,552
$80,000
$60,000
• Change in minimum required income:
$35,228
• Increase in income attributed to
interest rate increase:
$338 (1.0% of total change)
$56,324
$40,000
• Increase in income attributed to price
increase :
$34,890 (99.0% of total change)
$20,000
$0
2012 Q1
2014 Q4
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
VERY SLOW REAL INCOME GROWTH
In 2013 Dollars
$70,000.00
U.S.
CA
2013 gap = $5,600
$60,000.00
$50,000.00
$40,000.00
$30,000.00
$20,000.00
$10,000.00
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
$0.00
SERIES: Median Household Income
SOURCE: US Census Bureau, Current Population Survey
HOW WAGES MEASURED AGAINST INCOME
REQUIRED TO BUY A HOME
California
$120,000
$100,000
$86,040 $89,450
$80,000
$60,000
$112,180
Annual Mean Wage
$96,980
$91,552
$71,630
$47,540
$55,660
$40,000
$20,000
$0
Chefs and
Head Cooks
Teachers
SOURCE: Bureau of Labor Statistics, C.A.R.
Firefighters
Police and
Computer
Sherriff's
Programmers
Patrol Officers
Registered
Nurses
Software
Developers
(Applications)
Min. Inc
Required to
Buy a Med.
Home
HOUSING AFFORDABILITY GAP
• Affordability crisis goes beyond low
income households
– Lack of affordable housing for low income service
workers is apparent
– Less obvious problem: moderate income
households who cannot afford homes in/near
communities where they work
– In general, there are programs to assist the first
group, but not the second group
HOUSING AFFORDABILITY INDEX - CA
What Will Happen When Mortgage Rates Increase?
% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT
Q4-2014 Median Price $452,140
50%
40%
36%
34%
20% Downpayment
32%
30%
28%
26%
30%
24%
23%
20%
10%
0%
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
MEDIAN MONTHLY MORTGAGE PAYMENT - CA
What Will Happen When Mortgage Rates Increase?
MONTHLY MORTGAGE
$2,400
$2,000
$1,525
Q4-2014 Median Price $452,140
20% Downpayment
$1,624
$1,727
$1,833
$1,942
$2,054
$2,169
$2,286
$1,600
$1,200
$800
$400
$0
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
MINIMUM QUALIFYING INCOME - CA
What Will Happen When Mortgage Rates Increase?
Q4-2014 Median Price $452,140
Minimum Qualifying Income
20% Downpayment
$120,000
$100,000
$81,798
$85,768
$89,873 $94,108
$98,468
$102,949
$107,544
$112,249
$80,000
$60,000
$40,000
$20,000
$0
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
HOMEOWNERSHIP GAP
HOMEOWNERSHIP RATES
California Vs. U.S. – 9.9% gap in 2014
75%
CA
Peak: 69.0%
70%
65%
US
64.5%
64.8%
60%
Peak: 60.2%
55%
53.7%
50%
45%
40%
SERIES: Homeownership Rates
SOURCE: U.S. Census Bureau
54.9%
HOMEOWNERSHIP RATE BY AGE OF
HOUSEHOLDER
SOURCE: Census Bureau
OVER 1/3 LIVE WITH THEIR PARENTS
45%
41%
36%
40%
35%
30%
20%
25%
20%
15%
10%
1%
5%
1%
0%
I rent
I live with my
parents
SERIES: 2014 Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
What is your current living situation?
I own
I live in a dorm
Other:
MILLENNIALS’ BIGGEST CONCERNS
Price/Affordability (45%)
Problems with Credit, Mortgages, or Taxes (19%)
Maintenance/Upkeep (14%)
Satisfaction with Home/Location (7%)
Responsibility (4%)
What are your biggest concerns about home ownership?
SERIES: 2014 Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FIRST-TIME BUYERS UP IN ’14 BUT
STILL BELOW LONG-RUN AVERAGE
% First-Time Home Buyers
Long Run Average
50%
40%
Long Run Average = 38%
28.1%
30%
30.5%
20%
10%
0%
2005
2006
2007
2008
QUESTION: Was the buyer a first-time buyer?
SERIES: 2014 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2009
2010
2011
2012
2013
2014
WHY DO WE CARE ABOUT LOW LEVEL
OF FIRST-TIME BUYERS?
• It signals a constrained flow of new households in
the housing market
• Trade-up market cannot be replenished in the long
run
• First-time buyers represent the main impulse that
drives the state’s homeownership rate
REASONS FOR RENTING INSTEAD OF BUYING
Can't afford to buy
44%
9%
Poor credit / Can't qualify
Renting is easier
6%
Young/Starting out/Not ready
6%
Flexibility/Freedom if renting
6%
Cost/Upkeep/Responsibility
5%
Plan to / Saving for down
5%
3%
Never considered it/No interest
Disabled/On disability
2%
SERIES: 2013 Renter Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
STUDENT LOAN DEBT:25% OF RENTERS
Student Loan Debt
Amount of Debt
<$10,000
Refused, 2%
No, 75%
78%
$10-$20K
8%
$20-$50K
6%
Yes, 23%
SERIES: 2013 Renter Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$50-$100K
3%
> $100K
2%
Refused
2%
STUDENT DEBT: DRAGS ON HOME SALES
CALIFORNIA’S HOUSING DELIMMA
• Even with everything (or at least most things) going right, our
homeownership market is in trouble…
• The rental market, even with the conversion of 500,000 SFH’s,
is still exhibiting inadequate supply
• CA Housing Needs = Minimally 165,000 Units Annually
– Regulatory Problem
– Impact Fees
– Public Attitudes
HOUSING PRODUCTION GAP
CA PERMITS UP BUT MORE UNITS NEEDED
2014: 85,065 Units, Up 3.4% from 2013
350000
Single Family
Multi-Family
300000
250000
200000
150000
100000
50000
0
SERIES: New Housing Permits
SOURCE: Construction Industry Research Board
Household Growth: 220,000-250,000/yr
# OF HOUSEHOLDS LOST IN THE GREAT
RECESSION
1,200,000
Households not formed
1,000,000
957,834
800,000
600,000
575,156
400,000
200,000
0
-200,000
-5,485
165,105
2009
2010
SOURCE: California Dept. of Finance; compiled by C.A.R.
223,058
2011
2012
2009 - 2012
POPULATION AND HOUSEHOLDS WILL
CONTINUE TO GROW
California 1970-2020
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
SOURCE: Moody’s Analytics
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
-
HOW DID WE GET HERE?
Why the Production Shortfall?
• Shortage of Land:
– Production shortfall greatest in cities where need is most critical
• High Costs of Development
– Fees in most California communities are higher than elsewhere in
US
– Infill development costs higher than suburban development costs
– Environmental policies, etc increase costs
– Lengthy permitting process increases cost per unit produced and
favors deep pockets
HOW DID WE GET HERE?
• General Desire for Low Density Land Use
– Preference for detached single family homes
– Disdain for multifamily developments
• Cost of service to cities higher than other land uses
• NIMBYism:
– Desire to preserve existing character of community
– Dislike for multifamily, higher density development by residents
and officials
– Quality of life concerns
– Fear of crime and other negative aspects associated with density
WHAT IS OUR FUTURE?
“…If current trends continue, California will build less than 60
percent of the new housing needed over the next 20 years.”
Little Hoover Commission Report on Housing in California
SOLVING CALIFORNIA’S
HOUSING PROBLEM
SOLUTIONS
• Production Gap is Primary Source of CA’s Housing Problems
• Solutions must include:
– Increase in Production
• Infill and brownfield opportunities in urban areas where shortage is critical
– Revitalization of Neighborhoods
– Change Incentive Structure Facing Cities
• Fiscal
• Housing & Zoning Requirements
• Enforce housing elements of general plans, create incentives to comply
– Improve Business & Legal Climate for Developers
SOLUTIONS
• Attitude Shift is Essential to Moving Toward
Solutions…
–
–
–
–
By Households as Residents
By Households as Taxpayers
By Local Elected Officials
By State Officials
• … and an Attitude Shift Requires Education and
Heightened Awareness of Problems, Implications, and
Solutions!
• Solutions will take time
SOLUTIONS - LOCAL
• Permanent city affordable housing subsidy source
• Dedication of a share of county tax increment
financing to affordable housing
• Revise zoning code and/or density bonus ordinance to
increase
• Ease parking and set-aside requirements to enable
more backyard homes; granny flats
• Convert unlawful but affordable units
• Collaborate with business community
SOLUTIONS - STATE
• CEQA Reform
• Inclusionary Zoning
• Experiment with social impact bonds & health
funds as a source
2015 FORECAST
CALIFORNIA HOUSING MARKET OUTLOOK
2009 2010 2011 2012 2013 2014 2015f
SFH Resales (000s)
416.5
422.6
439.8
414.9
383.3
402.5
24.5% -12.3%
1.4%
4.1%
-5.9%
-7.6%
5.0%
Median Price ($000s) $275.0 $305.0 $286.0
$319.3
$407.2
$447.0
$478.7
% Change
-21.1% 10.9%
Housing Affordability
Index
51%
48%
-6.2%
11.6%
27.5%
9.8%
7.1%
53%
51%
36%
30%
27%
4.5%
3.7%
4.0%
4.3%
4.5%
% Change
30-Yr FRM
474.9
5.0%
4.7%
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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AFFORDABILITY
C.A.R. Research & Economics
www.car.org/marketdata
HOUSING AFFORDABILITY AND
HOMEOWNERSHIP
2015 - WHERE ARE WE TODAY?
• Housing market is under-preforming given
fundamentals
– Low mortgage rates
– Job & Income growth are back
• And yet…
– Sales off 7.6% in 2014 compared to 2013
– Share of first-time buyers LOW
– Affordability key concern for renters
INADEQUATE HOUSING SUPPLY ISSUE
• Housing supply constrained in long-run
– New construction recovery is very slow
– Missing 165,000+ new units per year
– Production has fallen short of housing needs
• Inhibited by
– Fiscal interests of local government
– Residents who disdain further development, especially
multi-family
– Unfavorable legal/business environment for
development in general & multi-family in particular
CALIFORNIA’S 3 HOUSING GAPS
• Housing Gaps:
– Housing affordability gap
– Homeownership gap
– Housing production gap
• Chronic problems spanning decades
AFFORDABILITY GAP
HOUSING AFFORDABILITY DOWN
SHARPLY SINCE Q1 2012
California vs. U.S. – 1984-2014
% OF HOUSEHOLDS THAT CAN BUY
A MEDIAN-PRICED HOME
80%
CA
70%
60%
50%
40%
30%
20%
10%
0%
SERIES: Housing Affordability Index of Traditional Buyers
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
US
Annual
Quarterly
HOUSING AFFORDABILITY IN CA: BY COUNTY
HAI
70
60
50
40
% able to purchase median priced home
2014 Q4
64
59 57
56 56
53 53
50 49
45
41
30
20
10
0
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
31 29
29 28 27 27
26 24
23 22 21
21 20
17 15 15
14
INCOME REQUIRED TO BUY A MEDIAN-PRICED
HOME IN CA: (PEAK VS. CURRENT)
$100,000
$91,552
$80,000
$60,000
• Change in minimum required income:
$35,228
• Increase in income attributed to
interest rate increase:
$338 (1.0% of total change)
$56,324
$40,000
• Increase in income attributed to price
increase :
$34,890 (99.0% of total change)
$20,000
$0
2012 Q1
2014 Q4
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
VERY SLOW REAL INCOME GROWTH
In 2013 Dollars
$70,000.00
U.S.
CA
2013 gap = $5,600
$60,000.00
$50,000.00
$40,000.00
$30,000.00
$20,000.00
$10,000.00
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
$0.00
SERIES: Median Household Income
SOURCE: US Census Bureau, Current Population Survey
HOW WAGES MEASURED AGAINST INCOME
REQUIRED TO BUY A HOME
California
$120,000
$100,000
$86,040 $89,450
$80,000
$60,000
$112,180
Annual Mean Wage
$96,980
$91,552
$71,630
$47,540
$55,660
$40,000
$20,000
$0
Chefs and
Head Cooks
Teachers
SOURCE: Bureau of Labor Statistics, C.A.R.
Firefighters
Police and
Computer
Sherriff's
Programmers
Patrol Officers
Registered
Nurses
Software
Developers
(Applications)
Min. Inc
Required to
Buy a Med.
Home
HOUSING AFFORDABILITY GAP
• Affordability crisis goes beyond low
income households
– Lack of affordable housing for low income service
workers is apparent
– Less obvious problem: moderate income
households who cannot afford homes in/near
communities where they work
– In general, there are programs to assist the first
group, but not the second group
HOUSING AFFORDABILITY INDEX - CA
What Will Happen When Mortgage Rates Increase?
% OF HOUSEHOLDS THAT CAN BUY, ALL ELSE CONSTANT
Q4-2014 Median Price $452,140
50%
40%
36%
34%
20% Downpayment
32%
30%
28%
26%
30%
24%
23%
20%
10%
0%
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
MEDIAN MONTHLY MORTGAGE PAYMENT - CA
What Will Happen When Mortgage Rates Increase?
MONTHLY MORTGAGE
$2,400
$2,000
$1,525
Q4-2014 Median Price $452,140
20% Downpayment
$1,624
$1,727
$1,833
$1,942
$2,054
$2,169
$2,286
$1,600
$1,200
$800
$400
$0
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
MINIMUM QUALIFYING INCOME - CA
What Will Happen When Mortgage Rates Increase?
Q4-2014 Median Price $452,140
Minimum Qualifying Income
20% Downpayment
$120,000
$100,000
$81,798
$85,768
$89,873 $94,108
$98,468
$102,949
$107,544
$112,249
$80,000
$60,000
$40,000
$20,000
$0
3.0%
3.5%
4.0%
4.5%
5.0%
INTEREST RATE
SERIES: Housing Affordability Index
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
5.5%
6.0%
6.5%
HOMEOWNERSHIP GAP
HOMEOWNERSHIP RATES
California Vs. U.S. – 9.9% gap in 2014
75%
CA
Peak: 69.0%
70%
65%
US
64.5%
64.8%
60%
Peak: 60.2%
55%
53.7%
50%
45%
40%
SERIES: Homeownership Rates
SOURCE: U.S. Census Bureau
54.9%
HOMEOWNERSHIP RATE BY AGE OF
HOUSEHOLDER
SOURCE: Census Bureau
OVER 1/3 LIVE WITH THEIR PARENTS
45%
41%
36%
40%
35%
30%
20%
25%
20%
15%
10%
1%
5%
1%
0%
I rent
I live with my
parents
SERIES: 2014 Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
What is your current living situation?
I own
I live in a dorm
Other:
MILLENNIALS’ BIGGEST CONCERNS
Price/Affordability (45%)
Problems with Credit, Mortgages, or Taxes (19%)
Maintenance/Upkeep (14%)
Satisfaction with Home/Location (7%)
Responsibility (4%)
What are your biggest concerns about home ownership?
SERIES: 2014 Millennials Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SHARE OF FIRST-TIME BUYERS UP IN ’14 BUT
STILL BELOW LONG-RUN AVERAGE
% First-Time Home Buyers
Long Run Average
50%
40%
Long Run Average = 38%
28.1%
30%
30.5%
20%
10%
0%
2005
2006
2007
2008
QUESTION: Was the buyer a first-time buyer?
SERIES: 2014 Housing Market Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
2009
2010
2011
2012
2013
2014
WHY DO WE CARE ABOUT LOW LEVEL
OF FIRST-TIME BUYERS?
• It signals a constrained flow of new households in
the housing market
• Trade-up market cannot be replenished in the long
run
• First-time buyers represent the main impulse that
drives the state’s homeownership rate
REASONS FOR RENTING INSTEAD OF BUYING
Can't afford to buy
44%
9%
Poor credit / Can't qualify
Renting is easier
6%
Young/Starting out/Not ready
6%
Flexibility/Freedom if renting
6%
Cost/Upkeep/Responsibility
5%
Plan to / Saving for down
5%
3%
Never considered it/No interest
Disabled/On disability
2%
SERIES: 2013 Renter Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
STUDENT LOAN DEBT:25% OF RENTERS
Student Loan Debt
Amount of Debt
<$10,000
Refused, 2%
No, 75%
78%
$10-$20K
8%
$20-$50K
6%
Yes, 23%
SERIES: 2013 Renter Survey
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
$50-$100K
3%
> $100K
2%
Refused
2%
STUDENT DEBT: DRAGS ON HOME SALES
CALIFORNIA’S HOUSING DELIMMA
• Even with everything (or at least most things) going right, our
homeownership market is in trouble…
• The rental market, even with the conversion of 500,000 SFH’s,
is still exhibiting inadequate supply
• CA Housing Needs = Minimally 165,000 Units Annually
– Regulatory Problem
– Impact Fees
– Public Attitudes
HOUSING PRODUCTION GAP
CA PERMITS UP BUT MORE UNITS NEEDED
2014: 85,065 Units, Up 3.4% from 2013
350000
Single Family
Multi-Family
300000
250000
200000
150000
100000
50000
0
SERIES: New Housing Permits
SOURCE: Construction Industry Research Board
Household Growth: 220,000-250,000/yr
# OF HOUSEHOLDS LOST IN THE GREAT
RECESSION
1,200,000
Households not formed
1,000,000
957,834
800,000
600,000
575,156
400,000
200,000
0
-200,000
-5,485
165,105
2009
2010
SOURCE: California Dept. of Finance; compiled by C.A.R.
223,058
2011
2012
2009 - 2012
POPULATION AND HOUSEHOLDS WILL
CONTINUE TO GROW
California 1970-2020
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
SOURCE: Moody’s Analytics
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
-
HOW DID WE GET HERE?
Why the Production Shortfall?
• Shortage of Land:
– Production shortfall greatest in cities where need is most critical
• High Costs of Development
– Fees in most California communities are higher than elsewhere in
US
– Infill development costs higher than suburban development costs
– Environmental policies, etc increase costs
– Lengthy permitting process increases cost per unit produced and
favors deep pockets
HOW DID WE GET HERE?
• General Desire for Low Density Land Use
– Preference for detached single family homes
– Disdain for multifamily developments
• Cost of service to cities higher than other land uses
• NIMBYism:
– Desire to preserve existing character of community
– Dislike for multifamily, higher density development by residents
and officials
– Quality of life concerns
– Fear of crime and other negative aspects associated with density
WHAT IS OUR FUTURE?
“…If current trends continue, California will build less than 60
percent of the new housing needed over the next 20 years.”
Little Hoover Commission Report on Housing in California
SOLVING CALIFORNIA’S
HOUSING PROBLEM
SOLUTIONS
• Production Gap is Primary Source of CA’s Housing Problems
• Solutions must include:
– Increase in Production
• Infill and brownfield opportunities in urban areas where shortage is critical
– Revitalization of Neighborhoods
– Change Incentive Structure Facing Cities
• Fiscal
• Housing & Zoning Requirements
• Enforce housing elements of general plans, create incentives to comply
– Improve Business & Legal Climate for Developers
SOLUTIONS
• Attitude Shift is Essential to Moving Toward
Solutions…
–
–
–
–
By Households as Residents
By Households as Taxpayers
By Local Elected Officials
By State Officials
• … and an Attitude Shift Requires Education and
Heightened Awareness of Problems, Implications, and
Solutions!
• Solutions will take time
SOLUTIONS - LOCAL
• Permanent city affordable housing subsidy source
• Dedication of a share of county tax increment
financing to affordable housing
• Revise zoning code and/or density bonus ordinance to
increase
• Ease parking and set-aside requirements to enable
more backyard homes; granny flats
• Convert unlawful but affordable units
• Collaborate with business community
SOLUTIONS - STATE
• CEQA Reform
• Inclusionary Zoning
• Experiment with social impact bonds & health
funds as a source
2015 FORECAST
CALIFORNIA HOUSING MARKET OUTLOOK
2009 2010 2011 2012 2013 2014 2015f
SFH Resales (000s)
416.5
422.6
439.8
414.9
383.3
402.5
24.5% -12.3%
1.4%
4.1%
-5.9%
-7.6%
5.0%
Median Price ($000s) $275.0 $305.0 $286.0
$319.3
$407.2
$447.0
$478.7
% Change
-21.1% 10.9%
Housing Affordability
Index
51%
48%
-6.2%
11.6%
27.5%
9.8%
7.1%
53%
51%
36%
30%
27%
4.5%
3.7%
4.0%
4.3%
4.5%
% Change
30-Yr FRM
474.9
5.0%
4.7%
SERIES: CA Housing Market Outlook
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
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