California’s housing affordability crisis continued to worsen in the third quarter of 2005, according to a report released Thursday, prompting the California Building Industry Association to urge state and local officials to remove barriers to new-home production.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index, which analyzes affordability for 161 metro areas across the nation, found that – as usual – California’s 24 metro areas were at the bottom of the list.

The respected national survey of housing affordability, which analyzes what percentage of homes for sale in a metro area are affordable to households earning the local median income, found that 18 of the 20 least-affordable housing markets were located in California, including the bottom nine. In the state’s most affordable metro area – Butte County – only 25 percent of area households could afford to buy the median-priced home.

“Once again, it’s been documented that California communities are the least affordable in the nation,” said CBIA Chairman Layne Marceau, a San Francisco Bay Area home builder. “This is directly due to more than 30 years’ worth of actions by state and local governments that have limited housing production and made new homes, condominiums and apartments ever-more expensive to build.

“There’s simply no reason why 89 percent of the families in Indianapolis can afford to buy the median-priced home there while less than 3 percent of the families in Los Angeles can do so. There’s no reason why California’s home-ownership rate is the second-lowest in the nation.”

Marceau said even more alarming is the fact that affordability continues to get worse each quarter. During the third quarter, affordability fell in 21 of the state’s 24 metro areas – by 6 percentage points or more in Kern, Tulare, and Solano counties. Affordability increased marginally in Sonoma and Santa Barbara counties and held steady in San Diego County.

Since the fourth quarter of 2004, affordability has declined in all of the state’s metro areas – most dramatically in Central Valley communities where until recently affordability hovered in the 40 percent to 50 percent range.

In Kern County, affordability fell from 42.1 percent in the fourth quarter of 2004 to 23 percent in the third quarter of 2005. Other Valley metro areas experienced similar declines: Butte County – 40.2 percent to 27.9 percent; Tulare County – 40.1 percent to 23.3 percent; Shasta County – 30.4 percent to 18.1 percent; and Fresno/Madera Counties – 25.3 percent to 12.9 percent.

Marceau said the main reason for the state’s housing affordability crisis is simple economics – home builders need to build nearly 250,000 new homes and apartments each year to keep up with population growth, but even in a good year just over 200,000 are actually constructed.

“Thanks to growth control measures, development approval processes that can take 10 years or more, endless environmental lawsuits by activists opposing new housing and all of the other built-in obstacles, it’s nearly impossible to meet the state’s housing needs. But until supply catches up with demand, housing affordability will only get worse,” he said.

To increase the availability – and affordability – of housing, CBIA is sponsoring legislation designed to remove barriers to production by: making sure that there’s an adequate supply of land to build well-planned housing in all communities; streamlining the approval process to increase the supply of more-affordable higher-density homes and condominiums in the state’s job centers; and requiring local governments to provide more justification – and be more accountable – for the fees, ultimately paid by new-home buyers, that drive up the cost of each new home by tens of thousands of dollars.

The California Building Industry Association is a statewide trade association representing more than 6,400 businesses – home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.

***

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