California housing dear

Press, 15 August 1988, Page 7

California housing dear

By

JOHN HUTCHISON

San Francisco An American family from somewhere “back East,” attracted by better climate and greater job opportunities, sells up and moves to California, like the hundreds of thousands who migrate westward to join a population also swelling with immigrants from Asia and Latin America.

The family leaves a comfortable three-bed-room, two bath house on a half-acre section, selling it for $90,600. On arrival in California it gets a painful jolt: a comparable house on a smaller section will cost $167,400 — if one can be found before some other of a half-dozen

clamouring buyers hasn’t got there first.

The terms “affordable housing” has become a phrase of despair to intending homebuyers in much of California. The figure of $90,600 is reported as the median price of a home in the United States. The $167,400 is the median for a comparable home in California. Although $90,600 will buy such a house in some rural or small-city areas of the state, a place within reasonable reach of the job in the San Francisco area has risen in price 25 or 30 per cent in the last year, and .the median is $209,687, according to a new survey published by

a real estate brokers’ association.

The pinch is so severe that only 13 per cent of home-seekers in the counties surrounding San Francisco have income qualifying them to buy medium-priced singlefamily houses. In the state as a whole, the percentage is 25. Last year the figures stood at 17 and 32 per cent. Most lending agencies want no less than 20 per cent down, with the remainder amortised over 30 years. An annual income of $52,000 is needed to qualify for a $167,000 home on those terms. For a home costing $209,000, the lender wants to know

that the husband and wife have a combined income of $65,000. Many families, even though two members are fully employed, find such standards beyond reach.

However, in the face of such prices, homebuyers compete fiercely for houses in the San Francisco Bay area, and it is common for a house to be sold on the day it appears on the market, at or above the asking price. An example: Last April, a seller was planning to offer a simple house 96km from San Francisco for $134,000 — $lOO,OOO more than it had cost in 1975. Prices were moving upward so rapidly that, on

the recommendation of the broker, the house was put on the market in July for $140,000. It sold on the first day for the asking price. Two other prospective buyers asked to be considered if the first deal fell through.

The housing crunch in California is already thought to be causing some firms to move to other states or two decide not to locate here. Added to the overloading of California’s schools, roads, transportation and public services, the affordable housing shortage is the final straw for some, who give up their hope of living here — and go back home to lowa.