One Quarter Of Californians - "We're Outta Here" - 11/19/2004 - Real Estate House Home Condo

One Quarter Of Californians - "We're Outta Here"
by Broderick Perkins

What's more, when Californians buy a second home, more and more of them are buying out of state in cheaper housing markets.

California has the nation's third fastest rate of home price appreciation this year, behind Nevada and Hawaii, rising more than 18 percent compared to last year, 84 percent in the past five years and a whopping 338 percent since 1980, according to the Office of Federal Housing Enterprise Oversight's Home Price Index. Nationwide home prices have appreciated about half as fast.

The California Association of Realtors says less than one in five -- 19 percent -- of the state's households can afford the median priced single-family detached home, which was $465,540 in September. That's five percent fewer than those who could afford the median priced home a year ago when that number stood at $384,690.

It's not surprising then that 24 percent of Californians say the cost of housing is forcing them to seriously consider moving -- either to another part of the state where housing is less expensive or out of the state altogether, according to the "Special Survey on Californians and Their Housing, November 2004," released this week by the San Francisco, CA-based Public Policy Institute of California (PPIC).

In collaboration with the Flora Hewlett, James Irvine, and David and Lucile Packard foundations, the institute surveyed 2,502 Californians who expressed grave concerns about the cost of housing and who see little upside to the run-up in housing prices.

Statewide, 52 percent of Californians are very concerned that the cost of housing will prevent their children from buying a home where they currently live.

Another recent institute study found that coastal Californians are migrating inland, driving much of the Central Valley's population boom and, inevitably, the cost of housing as well.

Also, a growing number of Californians are already taking their spending power out of state, often to Arizona and Nevada. In those states the number of sales of homes to San Francisco Bay Area residents has risen by as much as 6,000 percent -- that's right -- 6,000 percent. In 1999, the number of Bay Area residents buying into those states was in the single and double digits. In the first eight months of 2004 their numbers were in the triple digits, according to La Jolla CA-based DataQuick Information Systems.

For example, only three Bay Area residents purchased homes in North Las Vegas in 1999. Already this year, 182 have purchased there. In 1999, California's Bay Area residents purchased 81 homes in all of Las Vegas, but this year the number is up to 814. In all, residents of the nine-county Bay Area bought about 13,720 homes outside the region in the first eight months of 2004, compared to 6,120 in 1999, according to DataQuick.

Data Quick says it does not know if the homes are purchased as investment, vacation or retirement homes, but home prices in those locations are cheaper than in California, but have been rising along with the influx of Californians.

Wherever there are second home purchase booms, made by Californians or others, prices typically rise, often beyond the reach of locals.

The Public Policy Institute also found:

 

• Californians see benefits to skyrocketing housing prices to the economy in general, but 49 percent of them say that home price increases are bad for them and their families because of the fallout on younger family members who may not be able to afford to buy a home. Only traffic congestion is considered a greater concern than housing prices, according to the survey.

   

• Home ownership, not red or blue regions within the state, has a great impact on elections and politics -- 75 percent of likely voters in state elections are homeowners.

   

• Homeowners are more likely than renters to be very satisfied with their current housing (75 percent to 34 percent) and neighborhood (65 percent to 41 percent). They also feel safer than renters (64 percent to 40 percent).

   

• Despite home price increases and the accompanying equity growth, only a slim majority (53 percent) say it is very likely (23 percent) or somewhat likely (30 percent) that they could find a home they could afford and would want to buy in their part of California. Of those who say their home values have increased a lot, only 23 percent think they would be able to find another home to buy in their region.

   

• Only 18 percent of renters believe it is very likely they will find a home they can afford, while fewer than half (49 percent) said it is at least somewhat likely.

   

• Only 23 percent of Californians surveyed believed that the state government is doing an excellent or good job on housing and land use policy while 22 percent gave state leaders a poor grade.

   

• Fifty-seven percent favor shifting property tax dollars from state to local governments as an incentive for local leaders to approve new housing developments; 59 percent favor using transportation funding as an incentive to encourage local governments to develop integrated plans for housing, jobs, and transit; and 54 percent favor "smart growth" guidelines for local governments.

   

• Seventy percent of Californians prefer to live in a single-family detached home, even if it means they have to drive to work and travel locally. However, 53 percent also said they would choose to live in a small home with a small backyard if it meant a shorter commute to work.

   

• Californians were divided when asked if they would be willing to trade the typical features of suburban communities for more urban amenities: 48 percent prefer to live in a mixed-use neighborhood if it means proximity to stores and services, while an almost equal number, 49 percent would choose a residential-only neighborhood.