Housing data reflects downward trend
Only 11 percent of California homes are considered affordable
By John Loesing newstip@theacorn.com

According to the California Building Industry Association and other housing permit data, single-family housing starts in May stayed relatively level statewide, while multifamily homes saw a strong boost. But production for both single- and multifamily units remains well behind last year's levels.

Permits in May were pulled for slightly more than 7,000 single-family homes statewide, down 2.5 percent from the previous month, but down 40 percent from May 2006. Multifamily housing starts- condos and apartments- totaled 3,500, which is up 14 percent from the previous month. Condos and apartments are down slightly when compared to May 2006.

During the first five months of the year, production began on 54,300 homes and apartments, nearly 29 percent less than last year's total.

"Statewide, the number of new projects has dwindled," said Alan Nevin, the Building Industry Association's chief economist.

Nevin said the Riverside/San Bernardino metropolitan area accounts for about 50 percent of the decline in this year's singlefamily housing production. Production in the rest of the state remained relatively stable.

Nevin said the Riverside/San Bernardino and the San Francisco/Oakland areas also accounted for half the decline in multifamily housing. Multifamily permits in most other areas of the state generally matched last year's levels.

Not all buyers relieved

The housing downturn is not good news for prospective homebuyers struggling to buy their first home. Nevin said the current market conditions don't reflect the state's chronic need for new housing to accommodate its growing population.

The city of Lancaster, for example, is rated the 10th fastest growing city in the United States, according to the U.S. Census Bureau. Seven California cities are in the Census Bureau's fastest growing top 25.

Robert Rivinius, president and CEO of the California Building Industry Association, said more than 200,000 new homes, condos and apartments are needed each year to meet the state's housing needs.

"What's pressing is the need for housing in the entry-level market," Rivinius said. "Unless major reforms are enacted soon, it's doubtful we'll meet that need in the near future."

Affordability still low

Due to lower home prices and favorable financing, housing affordability in California improved modestly in the first quarter of 2007- but was still by far the worst in the nation.

According to the quarterly National Association of Home Builders/Wells Fargo Housing Opportunity Index, nine of the 10 least affordable metro areas in the nation were located in California.

The least-affordable metro area in the nation continued to be Los Angeles County, where just 3 percent of the new and existing homes sold during the first quarter of the year were affordable to the county's median-income household.

Next in the bottom 10 were Orange County (4.4 percent), Monterey County (4.6 percent), Merced County (5.6 percent) and New York City and its suburbs.

On a statewide basis, only 11 percent of California homes are considered affordable.

"In California, there are only two metro areas- Chico and Redding- where affordability even topped 25 percent," said Wes Keusder, a Southern California homebuilder.

Despite modestly lower prices and stable interest rates, first-time homebuyers still face difficult barriers, Keusder said.

Oversupply is a main reason why local housing sales have fallen, yet prices in east Ventura County and the Conejo/Las Virgenes valleys haven't dropped in tandem because the region remains a desirable place to live.

DataQuick Information Systems reported the median price for new and existing homes and condominiums in Ventura County was $590,000 in May, down just 1.6 percent from $599,000 last year.

The median price for a previously owned home in the San Fernando Valley increased in May to $650,000, the Southland Regional Association of Realtors said.