Friday, August 26, 2005

Solano County home affordability rises slightly

Note: This was due primarily to one large condominium project in Vallejo that closed over 160 sales in the $120,000 to $290,000 ranges during the past few months. It is now finished its sales. DB

August 26, 2005

Solano home affordability rises slightly
High number of lower-priced homes not a trend that will last, experts say

By RACHEL RASKIN-ZRIHEN, Times-Herald staff writer

Of all of California's metro areas, only Solano County recorded an increase - albeit a slight one - in housing affordability in the second quarter of 2005, according to a building industry association's report released Thursday.

Housing affordability in the county went from 16.2 percent to 17.2 percent last quarter, the NAHB/Wells Fargo Housing Opportunity Index report shows. Experts attribute this to a higher number of lower-priced homes on the market locally. It's a seeming trend reversal experts don't expect will last.

"There were an increased number of homes sold in Solano County and more were sold below the median affordability level," said Deana Vladic, spokeswoman for the California Building Industry Association, which produces the quarterly report.

"This is good, because it means more housing was available this quarter. But we don't expect this to have a long-term effect unless more housing is built in the area. It's a supply and demand thing."

But even at just over 7 percent, the area's affordability rating is on the low side compared to many other metro areas. It means fewer than 20 percent of the people earning the area's median income can afford to buy a home here.

Solano County Association of Realtors president Corrine Oakes said the minor rise in the area's affordability rating indicates a blip - a larger-than-usual number of smaller, less expensive homes on the market.

"It's only a snapshot of the market at a given moment," Oakes said. "I don't see home prices falling in Vallejo or in Solano County."

In Tulare County, the state's most "affordable" area, the affordability rating was just 29.3, down from 35.0 three months earlier. Nationwide, the report found that only seven metro areas outside California - New York City; Nassau-Suffolk, NY; Barnstable Town, Mass.; Reno, Nev.; Miami, Fla.; Boston; and Newark, NJ. - were less affordable than Tulare County.

And the rest of the state's housing affordability continued to free-fall during the second quarter.

Robert Rivinius, the building association's chief executive officer, said state and local policymakers must act to reverse the downward affordability spiral, which is due primarily to new housing supply not keeping pace with the state's burgeoning population. California is adding between 500,000 and 600,000 people annually, the equivalent of adding the population of Boston or Milwaukee every year, he said.

To keep pace, there needs to be 30,000 to 40,000 homes and apartments built annually, Rivinius said.

"During the 1990s, affordability was not great by national standards, but it still stood at 50 or 60 percent in many parts of the state," he said. "Even in San Francisco, it was in the 20-percent range. But today, affordability can be measured in single digits in half our metro areas, and less than 30 percent in our most affordable region. The national average, meanwhile, is 45.9 percent."

The California Building Industry Association is a statewide trade association representing more than 6,300 businesses - home builders, remodelers, subcontractors, architects, engineers, designers and other industry professionals.

- E-mail Rachel Raskin-Zrihen at or call 553-6824.

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