No. 449



Back in the early 1800s there was a famous slogan that went "Go West Young ManÉGo West." Many did, seeking their fortune and a better life for themselves and their families. Other than gold and the natural beauty of the state, this may be one of many reasons why California today is our nation's most populous state. If you are heading to California other than for a vacation or to visit relatives, you had better think twice. Unless you have tons of money, you probably won't be able to afford a house when you get there. What I am going to share with you may make you appreciate where you live, and if you are a homeowner the fact that you have been able to achieve The American Dream.

I have a friend who lives in Arizona and has a son in California who has really done well financially. His name is Doug Hackney and he lives in Carlsbad, which is located on the coast about halfway between San Diego and Long Beach. In a recent e-mail that Doug sent to his dad, he talked about the challenges in the San Diego area of the affordability of housing. When I read it, he pointed out many things I had never thought about and I suspect this is true for many of you who live in other areas of the country. As I said, after you read this, you may appreciate even more where you live and what you have.

Doug pointed out that fewer than one in six families could qualify to buy a typical home in this part of California. This is determined by something called "The affordability index," which measures how many people in an area can quality for a mortgage to buy a home. To explain, for any given area the affordability index takes the median price for a resale (used) single family home, adds the mortgage costs, taxes and insurance and compares the resulting qualification income requirements to the median household income. In San Diego, the median (meaning half are above and half are below) price for a resale single family home is currently $449,350.

Including a 20% down payment, with all insurance and taxes added, the household income required to quality for a 30 year fixed rate mortgage for that home at today's interest rates is $105, 313. Unfortunately for those trying to buy a home, the median county household income is $55,000. This means that only 16% of the people who live in the San Diego area can qualify for a mortgage to buy the median home. You might ask, "How does that compare with other areas?" In the U.S. as a whole, 57% qualify for a home. The only area in California that comes close to that is the high desert, at 58%.

In case you are wondering, other areas in California come in at: Sacramento: 38%, Riverside/San Bernardino 33%, Northern California: 27%, Los Angeles: 24%, San Francisco Bay Area: 19% and Orange County: 18% and the state as a whole has an affordability index of 25%. Doug goes on to say with some elaboration that No. 1: you can't shop your way out of the problem. A home in Ocean Beach that looks like it was built in the 50s has 598 square feet of living space and is a single story bungalow on a 1751 square foot lot, lists for $445,000. It will sell, because it's only a few blocks from the ocean.

No. 2:Ê you can't choose your way out of the problem. Because of abusive lawsuits for "construction defects" that cost the industry billions in the 90s, most builders refuse to build more affordable condominiums that sell for $200,000 to $500,000. New homes in this area start at $600,000. No. 3: you can't drive your way out of the problem. You have to travel all the way to Riverside County to find new homes in the mid-$300,000 to $500,000 ranges and then drive down I-15 to jobs in San Diego. Traffic in this corridor is expected to increase form 95,000 to 230,000 cars a day over the next 25 years.

No. 4: you can't build your way out of the problem.Ê Because there are a Byzantine maze of environmental laws and permits to build in this area, it takes five years before you can even begin to build a house. Combine this with the fact that new development is opposed by anyone who already owns a home. This also means that teachers, policemen, firemen, etc., are unable to own a home in the communities they serve. Young families cannot buy a home that has a yard for their children. Doug concludes by saying that none of the politicians, editorialists, government bureaucrats or housing industry leaders have come up with any viable solutions. Now doesn't that make you appreciate what you've got? Viola and I are perfectly content to live here in God's Country. Ê(Jim Davidson is a motivational speaker and syndicated columnist. You may contact him at 2 Bentley Drive, Conway, AR 72034.)