CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, SEPTEMBER 20, 2019, OR THEREAFTER
FOR RELEASE: FRIDAY, SEPTEMBER 20, 2019, OR THEREAFTER
BY THOMAS D. ELIAS
“THE
CRISIS FOR FIRST-TIME HOME BUYERS”
No
one doubts there’s a crisis in California housing. State lawmakers took plenty
of actions this summer, getting set to pass a batch of bills that Gov. Gavin
Newsom will gladly sign into law.
These
will temporarily suspend the right of cities and counties to make new building
standards, raise fees on low-income housing construction or impose moratoria on
new housing. They will streamline the approval process for housing developments
where income of buyers or renters is limited to 120 percent of the area’s
median income. And other tactics aimed at making housing available to those
with lower middle-class incomes.
But
no one appears to be looking out for first-time home buyers, mostly hopeful
young adults who often save for years toward the usual 15 percent to 20 percent
down payment on a house or condominium.
Those
folks face a real crisis. A new study from the international real estate
service firm Point2 Homes notes that the share of first-time buyers in the
total sales nationally and in California dropped from 50 percent in 2010 to 33
percent in 2018, and even lower this year, which is not yet complete.
At
the same time, the median price (half of all homes are above this level, half
below) of an entry-level home has risen faster than home prices in the move-up
buyer segment, people getting their second or third homes. First-time buyers
pay 31 percent more today nationally than 10 years ago, the study showed, but
far more in California.
Meanwhile,
repeat buyers pay only about 28 percent more on average than in 2010.
Part
of this comes because home prices were depressed during the mortgage crisis
that helped fuel the Great Recession of 2008-11. But most of it is due to the
continuing upward swing of almost all home prices, most notably in California.
This
is true even now that prices appear to be leveling off in some parts of the
state. Home prices increased by 35 percent nationally in the years since the
crash, but in parts of California, the rise was much steeper.
In
San Diego, for one example, the average home price rose by 101 percent, more
than doubling. San Francisco was only slightly behind, with a 100 percent rise
from a median price of $638,661 in 2009 to $1.274 million last year. Never
before has California seen such large increases.
The
huge problem this creates for youthful prospective first-time home buyers is
unprecedented and constitutes a crisis state government must address. If
California doesn’t take care of its young adults, many of whom are also young
parents, many of those people will go elsewhere, a trend that has already
begun. These same folks often make up the most educated portion of the state’s
workforce, so businesses will follow to wherever they move in large numbers.
Yes,
this might ease the traffic gridlock afflicting many urban areas of California,
but it can also lead to recession. If they go, they will lessen demand for new
housing, costing thousands of construction jobs and lowering the state’s tax
receipts just as it has taken on new responsibilities like providing Medi-Cal
health insurance to many more residents.
It
could also lower the equity now held by millions of homeowners, for whom their
living quarters represent by far their largest assets.
So
what’s California to do? The state could begin by dedicating some of its
current $21 billion budget surplus to helping young home buyers whose purchasing
power has dropped precipitously through no fault of their own. One way to start could be a low-interest
loan fund for first-time buyers amounting to several billion dollars that could
enable this vital group to get onto the housing merry-go-round that has so
frustrated them.
If
California had what could amount to its own version of Fannie Mae, the Federal
National Mortgage Assn., it could stem the flow of educated young persons to
other states and make its economy almost recession-proof.
But
so far, Newsom and the Legislature appear focused on Band-Aids rather than the
needed radical surgery. As it stands, they brag about increasing housing, but
ignore a major chunk of the problem.
-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.
No comments:
Post a Comment