California, Nation Headed in Opposite Directions on Homeownership.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Nov. 2, 1999--

Unlike the rest of the nation that has seen homeownership rates reach record levels in 1999, California has been unable to convert its booming economic prosperity into homeownership opportunities for working families.

Despite a vibrant economy that is expected to produce four hundred thousand new jobs over the next year, the cost of owning a home in California is still far out of the reach of the average working family. According to the numbers released by the U. S Bureau of the Census, California's homeownership rate has dropped in the third quarter to 55.8 percent, second only to New York, which holds the dubious distinction of having the lowest homeownership rate in the nation. California's homeownership rate is 11 points below the national rate of 67 percent.

"California is in the midst of a housing crisis that will have a direct and lasting impact on the quality of life for working families," said Robert Rivinius, Chief Executive Office of the California Building Industry Association. "If California policy makers are serious about addressing the state's housing crisis, our homeownership rate must approach the nation level, which means 1.4 million more families would be living in their own home."

The median home price in California is $208,500, a full $56,000 above the national average. Without dramatic action, the problem is expected to worsen, with the state's population projected to grow annually by almost 600,000 -- more than 1,600 people a day. The California Department of Finance projects that the state needs 250,000 new housing units a year just to keep pace with population growth. In 1999, California is expected to produce only 141,000 housing units.

Rivinius specifically pointed to the impact that restrictive policies, such as urban growth boundaries, are having on residential construction. These growth boundaries restrict land available for development to limited areas, sending land and home prices soaring. As the cost of development increases, the result is an inadequate supply of new homes and additional price increases. Typically these growth control plans rely on theoretical planning to meet housing needs without considering their practical implications.

"The most important component of a smart housing policy must be the development of an adequate and affordable supply of housing. The building industry supports higher density development and infill projects, however, excessive construction dispute litigation makes it nearly impossible for builders to find insurance to build attached units," Rivinius added. "We believe that California must make the development of a comprehensive housing policy its top priority, so that every working family has access to housing choices, good schools and safe neighborhoods for their children."

CBIA is aggressively supporting critical reforms to reduce the cost of homeownership so that more working families can achieve the dream of owning their own home. These include the development of a statewide infrastructure investment plan, and construction defect litigation reform, particularly involving condominiums and town homes, the most affordable and land efficient forms of housing. Without these tools, housing starts will continue to lag far behind current demand, and the cost of the average home will continue to be out of reach of the average working family.

The California Building Industry Association is a statewide trade association representing 6,000 home builders, remodelers, subcontractors, architects, engineers, designers and other industry professionals.