The California Budget Project says home prices in the state have risen three times faster than wages over the last three decades. The think tank wants more pressure applied on developers to build affordable housing.
Julie Small: RealtyTrac, the Irvine-based firm that tracks real estate data, is out with its top 100 foreclosure list for last year. A dozen California regions made the top 100. Add them up, and the California total sails past 400,000 homes. The RealtyTrac list leads us to a report from the California Budget Project. The Sacramento-based think tank looked into why so many homeowners here have fallen into foreclosure. The Budget Report's Jean Ross says it's easy to figure out: Many homeowners have to spend far more than the recommended one-third of their monthly income to pay the mortgage.
Jean Ross: And that's why they're getting crunched now as fuel prices go up, as inflation picks up, and as their mortgage payments go up – is they just are stretched past the breaking point.
Small: Over the last 20 years, home prices in California have risen three times faster than wages. That's partly because home building, especially apartment construction, hasn't kept pace with population growth. Ross says high prices for housing means fewer young families can afford to live here – and she says that could hurt the state's economy down the line.
Ross: That's critical, because for most families, their home is their major source of savings. So if you don't have that house, you don't have a financial asset you can live off potentially in retirement as a form of retirement savings. And I think it does speak to the stability of our community.
Small: The California Budget Project wants the state to pressure local governments to require developers to build more low-income housing in new residential developments. And there's a way to do it, says the Budget Project report: The legislature could reward communities that build more affordable housing with transportation funds that voters approved last year.