'Political Choices' Blamed for Calif. High Home Prices
To see the one single regulatory factor driving up housing cost in El Dorado County click here: http://www.5050inv.com/TrafficReport.2008.pdf
Home prices in California have skyrocketed to such an extent that three-quarters of the residents in some metro areas can't afford to buy a house.
And an eye-opening report from www.NewGeography.com discloses that the unaffordable home prices are largely due to "regulatory factors" and high impact fees.
Until the early 1970s, home prices in California were in line with the rest of the country, with the median home just 7 percent above the national average. By 2013, it was 109 percent above the average.
In the San Francisco metropolitan area, only 17 percent of households can now afford to buy a home, compared to 60 percent nationwide. The Los Angeles, San Diego, and San Jose metros have affordability levels of 20 percent to 30 percent.
"Now even the middle class is forced into either being 'house poor' or completely shut out of home ownership, or may simply be obliged to leave the area," writes report author Joel Kotkin, executive director of NewGeography.com, whose books include "The Next Hundred Million: America in 2050."
In what could serve as a lesson for the rest of the country, Kotkin blames regulatory factors that restrict building in many areas in California and thereby sharply increase property costs. The cost of land that is available for housing has risen nine times as much in the Golden State as in the rest of the nation since 1970.
Housing prices are also driven up by sky-high impact fees, which are used to fund capital improvements. The average impact fee for a single-family home in 2012 was $31,100, easily the highest in the nation. The fees on multifamily units averaged $18,800.
"The roots of our state's massive social regression lie in political choices made by the state, counties, and cities," observes Kotkin in his report, which originally appeared in the Orange County Register.
He also notes that a growing percentage of working households are being forced to spend 50 percent or more of their income on housing, and adds: "This emerging social disaster has received little attention from the so-called progressives, whose policies in part are responsible for the state's growing housing crisis."