Homeownership in California

November 19, 2007

I recently spoke on a panel discussion at a housing summit sponsored by the California Latino Legislative Caucus. Legislative leaders including members of the California State Assembly and California State Senate were in attendance from throughout the state. Their concerns are simple: the price of housing in California is too high - way too high for most people to afford. Statisticians were there to point out that as the Latino population continues to grow in our state, home ownership for this demographic segment will continue to become more elusive.

Even more telling is a simple fact that tells the story of why home ownership is so difficult for many in our state. According to the California of Realtors, the median-priced home in the state is $589,000. Here in San Diego, it's $595,000. These prices compare to a national median of $240,000, according to the National Association of Home Builders. The state's median income of roughly $64,000 would have to more than double for a family to afford the state's median-priced home. Not surprisingly, say the national homebuilders, 23 of the top 25 least affordable housing markets are located in California. In most areas of California, fewer than 10% of the homes available are affordable to median-income households.

As another illustration, our nation's capital, Washington, DC, is twice as affordable as our state's capital, Sacramento. Orange County, Florida - home of Disneyworld - is seven times more affordable than Orange County, California - home of Disneyland. Lastly, with the money you would need to buy a home in San Jose, you could buy: two homes in Boston; three homes in Tucson; and four homes in San Antonio. Economics 101 comes into play here. There is not enough supply so the price goes up. That's what has happened in California.

Speaking at this meeting as both the Chair of the San Diego City Council's Land Use and Housing Committee and as President of the League of California Cities, I outlined an eight-point plan that cities should follow to help produce more housing and to make housing more affordable. I said that unless the State of California provides more incentives to aid in the production of more housing and more affordable housing, the dream of owning a home will continue to be priced outside of reason for most people.

While we are currently in a depressed housing market, California and especially San Diego will likely be the first to recover mainly because of the desirability to live here.

Building smart growth projects and building sustainable development projects is what will help California more than anything else. This past year two different bills in the Senate aimed at reducing carbon emissions by controlling Vehicle Miles Traveled (VMT) and providing zoning certainty for builders. Both bills (SB 375 and SB303) were made into two-year bills as we continue to work with key stakeholders in an effort to addresses the concerns of both bills without limiting local land use authority or hurting housing production. The San Diego region gets hit particularly hard in the VMT area mainly because we have so many people who travel such a long distance to get to work. This is especially true for those who live in what was at one time more affordable areas such as Temecula, Perris and Murrieta. These long-distance commuters add to our region's VMT - mainly because these areas provided attractive and affordable housing alternatives than in our own region.

Among the key points I outlined are important for cities to follow, including San Diego area:

1. Plan for more compact development that includes housing and jobs in one place. Striving to reduce the dependency on the automobile is key.
2. Take advantage of existing transportation infrastructure and encourage more infill development. As part of this, encourage higher density zoning and discourage low density zoning. Reduce onerous parking requirements. Too often land is wasted for parking when it could be used for housing.
3. Provide greater development certainty - more up-front land-use planning that streamlines the development process
4. Better jobs/ housing balance. Encourage housing infill in commercial areas to reduce automobile trips
5. Encourage more mixed-use planning - create sustainable communities and neighborhoods to help reduce the dependency on the automobile
6. Encourage more mixed-income housing areas - provide more work-force housing (housing for police, fire, healthcare professionals, teachers and more). Interestingly enough, there was opposition this week at City Council on simply following a state law which requires local government to provide a density bonus for more affordable housing production. No wonder housing prices are so high.
7. Produce more transit oriented development - direct development to existing transportation centers that help reduced dependency on the automobile
8. Responsible infrastructure investment - there is simply not enough investment in our infrastructure at both the local and state levels. Proposition 1B ($20 billion in transportation projects statewide) barely scratched the surface in terms of what is needed to begin addressing our transportation infrastructure backlog.

The City Council will be looking at our city's General Plan early next year. In fact, the Land Use and Housing Committee will spend the entire day in a workshop on the new General Plan on December 5th at 9:00 a.m. in the Council Chambers. These issues are addressed in the new General Plan.

The people of San Diego need to ask themselves a question: do we want to work toward more sustainable development? If so, we must work together to address the points outlined above.