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The endangered western home.

There was a dream, and it went something like this. Five P.M., in a tranquil suburb, on a quiet street named for the trees that shade it. Pine. Or Oak. Near the street's end stands a handsome home. Somehow, every aspect of the house--every window, every door, every shingle, every nail--bespeaks stability, happiness, and peace. Across the newly mowed lawn two children romp under the watchful eye of their mother. All three smile as they hear the thrum of a well-tuned V-8 and see a large American sedan glide into the driveway. Dad is home, and all is right with the world.

In 1993, many of us might challenge--might hoot at--any number of details of this dream. But something at its heart still draws us: the idea of home.

For baby-boomers now nearing middle age, dreams of home are colored by memories of the places that sheltered them as children. Some of the places are real: Bellevue, Lake Oswego, San Mateo, Woodland Hills. Some are television never-never lands: 4222 Clinton Way (the Brady house), 211 Pine Street (Beaver Cleaver's), even 17230 Valley Spring Lane (Mister Ed's). All exert a powerful pull.

But in 1993 the dream of homeownership seems, well, shaky. In the 1980s, much of the Pacific West--and especially California--saw home prices spiral upward so fast that many young families felt permanently locked out of the market. Now prices are dropping again, though just a little. That news is a silver lining for aspiring buyers, a dark cloud for recession-battered sellers. Interest rates have dropped as low as they've been in decades--but how long will they stay that way? Is a deed a ticket to riches or an invitation to bankruptcy court? If the idea of homeownership could be multiple-listed, it would have to be classified as a fixer-upper in a transitional neighborhood.

To look at the status of the Western home, circa 1993, just head northeast on the Antelope Valley Freeway late any weekday afternoon. Here, 40 miles outside Los Angeles, the landscape steps straight out of the old, wild West, with gorges and rock outcrops that were the stamping grounds of 19th-century bandit Tiburcio Vasquez. But the freeway itself is pure late 20th century. Taillights chase taillights, and the only outlaws in evidence are commuters doing 70 in the fast lane.

What's the rush, and to where? Crest Soledad Pass and you'll see. Below you stretches Palmdale-Lancaster, a sea of rooftops flooding out into the Mojave Desert. A few blinks of an eye ago, it seems, these twin cities were desert outposts best known for their proximity to Edwards Air Force Base. Today they form a 170,000-person metropolitan area. The billboards advertising new subdivisions along Avenue S tell part of the story--three-bedroom, two-bath, $130,000, low down--but not all. Last year, foreclosures were up 65 percent in Los Angeles County, and Palmdale-Lancaster has been hit especially hard.

For another vantage point, head to Sparks, Nevada, in the eastern shadow of the Sierra. Between 1980 and 1990, the Reno-Sparks area added 46,000 new residents; for the last two years, the state of Nevada has been the fastest-growing in the nation. One big reason for the growth is a median home price some $100,000 less than in neighboring California.

Or look at St. George, Utah. For decades this was a quiet, mainly Mormon town in Utah's "Dixie," a place you stopped on your way to Zion and Bryce Canyon national parks. No more. St. George has become a new promised land for retirees, golfers, and lots of other people who appreciate blue skies and red rock scenery--and housing prices that average about $100,000. The town has grown from 11,350 in 1980 to more than 28,500 today, making residents wonder just how long it will be before St. George loses the small-town charm that attracted so many newcomers there in the first place.

Finally, visit one of those close-in urban neighborhoods that yuppies and others discovered in the 1980s: West Adams in Los Angeles, Potrero Hill in San Francisco, Central District in Seattle. Priced out of the suburbs of their youth, baby-boom buyers flocked to these districts in the 1980s, attracted by interesting architecture and a reasonable commute. Now these same homeowners are raising families--and having to cope with urban problems like struggling school districts and crime. Flee or fight? Yet another quandary for Western homeowners.

In this article, when we talk about "home," we're talking about a detached single-family dwelling. Despite the growing presence of condominiums and townhouses, this type of house remains Westerners' overwhelming preference. (Last year in California, 77 percent of first-time buyers purchased detached single-family homes.)

In terms of percentages, fewer Westerners own homes than do people in other parts of the country, though the figures are pulled down by the low rate of ownership in our populous coastal states. According to the 1990 census, 64.2 percent of Americans nationwide lived in their own homes: in California, that rate is 55.6 percent. (Western states where the rate of homeownership is higher than the national average are Idaho, Montana, New Mexico, Utah, and Wyoming.) In the 1980s, the rate of homeownership declined in every Western state except Hawaii.

The low rates are the result of a simple and obvious fact: housing is expensive here. According to a recent National Association of Home Builders' housing survey--which factors in both median home price and median income--the nation's five least affordable metropolitan areas are all in California. They are San Francisco (median home price $285,000), Santa Cruz ($215,000), Salinas-Seaside-Monterey ($169,000), Santa Rosa Petaluma ($182,000), and Oxnard-Ventura ($195,000). You want to know the five most affordable metropolitan areas in the West? Here they are: Greeley, Colorado ($69,000); Denver ($91,000); Salem, Oregon ($75,000); Fort Collins-Loveland, Colorado ($85,000); and Salt Lake City-Ogden ($90,000).

It's hard to over-state the impact of the 1980s' rise in housing prices on the Golden State. From 1978 to 1990, the average price of a new California home rose 65 percent more than the cost of living.

Back in 1970, the median-priced house in California cost only 7 percent more than the median-priced house nationwide; by 1990, that differential was 111 percent. And because these statewide figures include less costly areas like the San Joaquin and Sacramento valleys, they don't adequately gauge the price rises in coastal metropolitan areas like Orange County and the San Francisco Bay Area.

What caused the climb? You hear a lot of different answers. One is that a huge cohort of baby boomers came of home-buying age. Another is sheer population growth. California's population increased by 6 million, or about 25 percent, between 1980 and 1990. But new single-family housing (including condominiums and townhouses) came fairly close to keeping up with that pace, increasing by 20 percent.

Some experts, like Cynthia Kroll of the University of California's Center for Real Estate and Urban Economics, believe that strict land-use controls, time-consuming permit processes, and impact fees levied on developers for streets, utilities, and schools are partly to blame. "They made developers build higher-priced homes," she says.

Others are less certain. "It's really hard to say why there was the huge rise in California housing prices," says William Fulton, editor of the California Planning and Development Report. "Developers will say it's the regulatory structure, and that's part of it. But if that's true, why are developers willing to sell houses today for $30,000 less than they were a few years ago? The boom was a feeding frenzy, one of those things you really can't predict."

Whatever the frenzy's causes, its effects were dramatic. In California, new development leapt to cheap land on the outskirts of metropolitan areas. Notes Cynthia Kroll, "People are willing to move far away and put up with long commutes rather than move into multifamily housing."

A second effect of the boom was rapid growth in cities outside California. San Francisco housing sociologist Nina Gruen notes that in 1990-91, for the first time in California's history, more 30-to-45-year-olds left the state than moved in. "Who can blame the emigrants when single-family detached homes located in desirable neighborhoods can be purchased in so many other states for less than $100,000?"

The most publicized destinations for ex-Californians were the cities of the Pacific Northwest. Indeed, if you believed some reports, every Seattle coffee bar was being overrun by tanned and sunglasses-wearing barbarians from the south. In fact, that view is a tad oversimplified. "Certainly Californians contributed to the rise," says Dick Conway, a Seattle-based economist. "But not to the extent that anecdotal evidence would suggest. In the immediate Seattle area, Boeing's adding 50,000 jobs probably accounted for one-third of our growth." Regardless of the reasons, the rises in population and price were nearly as stunning as they were in California. Between 1980 and 1990, King County's population rose 19 percent, while housing prices doubled.

Just as striking was the rapid growth of cities and some small towns in the interior West. "There was a ripple effect," notes John Tuccillo, chief economist for the National Association of Realtors, "a spillover from California to Phoenix, to Las Vegas, up the spine of the Rockies." Some of these ripples came from city folk cashing in high-priced homes to finance a more relaxed life amid spectacular scenery; that's one reason the population in Montana counties nearest Glacier and Yellowstone national parks grew by 14 to 18 percent, while Montana's statewide growth was but 1.6 percent. Meanwhile, many first-time home buyers flocked to inland cities with low housing costs and reasonable job opportunities: Las Vegas grew from 164,674 in 1980 to 258,295 in 1990; Fresno, California, from 218,202 to 354,202; and Austin, Texas, from 379,560 to 465,622. This rush from the coast continues--in last quarter of 1992, two of the hottest housing markets in the nation were Richland-Kennewick-Pasco and Spokane, both in eastern Washington.

The boom years also changed the house itself. High land prices meant that new homes stood on smaller lots. But the houses grew larger--nationwide, in fact, the average new home is almost 40 percent larger than the new home of 1970. And luxury became paramount. Recalls developer Larry Riggs, of Warmington Homes in Costa Mesa, California, "As we went through the '80s, we became extravagant. You could add any amenity, the buyer would pay. More was better. It was 'Build it, and they will come.'"

And there was another change--in the psychology of the homeowner. Sure, we continued to see our home as a refuge, a haven, our castle. But with prices spiraling up all around us, we also came to see it as a potential gold mine. Buy, sell six months later, buy again: any tyro could become tycoon. In the era of dress for success, this was address for success.

Well, that era's over. Throughout much of the West--and especially in California--the real estate boom seems as passe as a four-year-old power tie. "Normally, declines are gradual," says economist Tuccillo. "But there's been a combination of factors--defense cutbacks, the Japanese recession that stopped the influx of capital from Japan--that have caused California prices to come down quickly." According to the Real Estate Research Council of Southern California, home prices in Los Angeles County have dipped 10 percent since their peak in April 1990; in Palmdale-Lancaster, they've dropped as much as 18 percent. The Northwest has been affected, too: Seattle home prices have flattened out, and cutbacks in the aerospace industry are fueling speculation of further declines.

Many builders now concentrate on starter homes. After the excesses of the 1980s, developer Riggs says, "We're going in the opposite direction, toward efficiency and cost effectiveness." Bernie Sandalow, of the Los Angeles-based development company Kaufman and Broad, agrees: "Today's home buyers are value-driven. They don't want to pay for what they don't want." Perhaps the most extreme examples of this trend are the homes builder Ira Norris is offering in Victor Valley, in the desert northeast of Los Angeles. The homes are small--they start at 925 square feet--but so are the prices--$60,000 and up.

And so the housing landscape has shifted, and it continues to shift. But some verities of the 1980s still hold. One is that Westerners looking to buy houses have to make trade-offs and tough decisions that their parents didn't have to make and that people in most other parts of the country still don't have to make.

Another is that for almost all of us, those trade-offs and tough decisions are worth it. Over the last few months Sunset interviewed builders, lenders, and academics about the state of homeownership in the West. But by far the most powerful voices were those of Western homeowners who more or less in unison said, "We love our house."

The dream's details change, but its heart remains. In the next pages we'll show you how Westerners in the 1990s have achieved--or are still struggling to achieve--the dream.
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Title Annotation:Special Report
Author:Fish, Peter; Gregory, Daniel
Publication:Sunset
Date:May 1, 1993
Words:2171
Previous Article:The making of a Sunset classic.
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