Friday, March 24, 2006

A few new homes

In the Sacramento Region 77,000 new homes have been built and sold since 2001. But wait there’s more…………Thirty thousand more are on the way in Rancho Cordova, 21,000 in south Placer County and another 7,800 in Elk Grove. But wait there’s more…………….
According to the Sacramento Area Council of Governments, in their recently released 50-year growth blueprint, the agency calls for the building of 840,000 new dwelling units to accommodate the future population of the area.
According to another report released by the California Building Industry Association, Sacramento County needs 62,619 additional more homes than the number we already have in the pipeline. According to the report released this week 128,000 new homes are in the planning stages for Sacramento, Placer and El Dorado Counties and that isn’t enough. We could use another 62,000.
The builders point out that California homes cost $300,000 more than the rest of the country and the percentage of homeowners in the area is much less than the national average. While true that the national home ownership rate is close to 70 percent while our state’s ownership rate is around 57 percent I am not sure that another gazillion new homes is going to ever bring our ownership rates in line with Iowa or Ohio.
The builders are pointing out in their report that the high cost of home ownership reduces the percentage of homeowners. Then it naturally must follow, that if the cost to build a home (permits, building fees, development costs, government regulations, restrictive zoning etc) is reduced then our ownership rates will increase. The argument has some merit but our state has some unique demographics that are against a high home ownership rate.
The Capital Region already has a higher percentage of people who own their own homes. The percentage for the state is 57 while the percentage for Sac County is 62 percent and for Placer and El Dorado another 10 points higher. Placer and El Dorado County are already within national ownership rates it is Sacramento that needs some attention.
If all environmental and government restrictions were lifted today on all new developments I still don’t think it would reduce the cost of local housing by $300,000. If the social impact of increased population is to be paid for, then it will come from the specific development and/or everyone collectively. There has been a balance. The builders are pointing out that high development costs are preventing home ownership and they are right. But the report is too simplistic in saying just build more homes and “presto” problem solved. We can’t figure out how to solve the social problems that we already have with the people already here. Maybe we should work on that first.
Have a good weekend.


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