The Least Affordable Place to Live? Try Salinas [California]

New York Times ^ | 5/7/06 | ALINA TUGEND

[conservative in nyc]

IN 2005, the least-affordable place in the country to live, measured by the percentage of income devoted to mortgage payments, was Salinas, Calif.

The second was the Santa Cruz-Watsonville area of California.

The third? Santa Rosa-Petaluma, Calif.

In fact, California has the distinction of having the 11 least-affordable metropolitan areas in the country. One would need to go all the way down to 12th place — and across the country to the New York region's northern suburbs — to find a non-California metropolitan area on the least-affordable list of 2005.

Much of California is pretty. It has beaches and the mountains and, of course, the weather. But why are places like Salinas, which is surrounded by agriculture, topping places like Honolulu (No. 17) and Miami (No. 22) on the out-of-reach list?

There is no one answer, but demographers and public planners who study such trends say that a confluence of factors in California — both artificial and natural — have combined to create a particularly acute problem.

"California has both political and geographical constraints on building," said Dowell Myers, professor of policy, planning and development at the University of Southern California. "That drives up prices, and then it snowballs."

The geographical limits on developable land are the hills and the coast, while the political restrictions are state and local regulations that prevent building new homes, in response to both environmental and congestion concerns.

"One of the key factors here is the basic law of supply and demand," said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "California is in marked contrast to Florida, where you can expand without constraint. It's more like the New York suburbs, where too many dollars are chasing too few homes."

[conservative in nyc]

[CaliGirlGodHelpMe]

Everybody wants to live in California. Go figure.

[Pro-Bush]

I believe it, I grew up in Salinas. Had to relocate to Sacramento to be able to buy a home and raise a family due to being priced out of the housing market. I hope to go back someday.

[LukeL]

That map is a little bit misleading. I live 30 miiles north of Milwaukee and the home prices around here are very high but the average income is high as well. A 1200 sq ft ranch house can easily run $200,000.00. But if you travel just 45 more miles north the home prices are nearly cut in half. Despite being near Green Bay.

[conservative in nyc]

Everybody wants to live in California. Go figure.

Not really. As the article points out, more Americans are moving out of California than moving in. Relatively high birth rates and foreign immigration are fueling California's population growth. The supply of land is limited in many areas due to geography - hemmed in by the Pacific to the West/South and mountains to the East/North. The article also blames Proposition 13 for lack of supply, claiming California towns would rather have Wal*Mart than houses.

[HarmlessLovableFuzzball]

You choose what you want. Beautiful pristine countryside with unaffordable homes, or an abundance of (only barely) affordable nondescript homes minus the pretty countryside.

[CaliGirlGodHelpMe]

If these people could see the number of houses that are going up in places like Elk Grove and Lincoln - the pace of building here is phenomenal.

But yes, my statement that "everybody wants to move here" was rhetorical.

[DB]

The key to the article is the ratio of income to mortgage payment.

Salinas is a heavily agricultural area (as you know). Salinas has a high number of migrant workers that don't have high incomes. Those people skew the numbers because of their low incomes and high numbers.

[BunnySlippers]

A California Native still enjoying it ..

[BunnySlippers]

That was my original take on it as well ...

[Pro-Bush]

You make a good point, although a 1500 sq ft fixer upper still runs around $500,000. My brother just bought one near Hartnell college.

[DB]

The latter part about prop 13 is BS.

Prop 13 caps property taxes at 1% of value with a maximum increase of 2% per year. If the property changes ownership it is assessed at current market value.

The fact is the revenue from property taxes has increased dramatically. With the huge increase in valuations and the fact the people don't stay in the same home very long (around 7 years is the average I believe) they've been reaping a huge windfall.

A typical 1800 sqft track house averages about $500,000 these days in central California. That's $5,000 a year in property tax (not including various overrides). The same house sold for around $200,000 10 years ago.

I don't want to hear about not collecting enough property taxes for the cities. It is all BS.

[Caipirabob]

"California is in marked contrast to Florida, where you can expand without constraint.

Tell that to any developer here in SoFlo. Come to think of that, talk to Scripps about trying to open their headquarters. Constraints? Do you enjoy jumping through fire rings while juggling? Well, try it some time...

It's them damn liberals, dontchaknow...

Scripps debacle in liberal Palm Beach County (My home...)

; )

[DB]

My point wasn't that California has high housing costs.

It's that Salinas is in no way the "least affordable place to live".

There's no way those same farm workers that do live in Salinas could even come close to living in San Francisco for example. It is a drastically more expensive place to live.

[DB]

I should add, that the $500,000 track house isn't for a new track house... New houses are more.

[Pro-Bush]

True. I agree with you. East Salinas is where the migrant workers live, and rent is not so bad there - especially when you have about 10 adults + kids to a household.

[angelanddevil2]

I live in the Bay Area of San Francisco. A 2 bedroom 1063 sq ft town house cost me 382,000 two years ago. I have no idea how much it is worth today.

[RedStateRocker]

I live in Santa Rosa (but my mom and my heart are in Montana). the homes in my neighborhood are about 1100 square feet and sell for between 600 and $700K. Pre-WW2. we (my parents) paid $17000 for it in 1968. I love prop 13.
There's plenty of land elsewhere; we don't need any more people in California.

The limiting thing in California is water. Has been for 150 years. There ain't much to begin with, it ain't where it needs to be and Vegas is quite prepared to outbid us for Colorado river water in the future.

[glorgau]

But why are places like Salinas, which is surrounded by agriculture, topping places like Honolulu

Because they are like the old antebellum South - they have a large slave population. The huge "undocumented population" is the disposable element of the local economy.

[Pro-Bush]

While the median household income in Salinas remains at $44,667, the median home price now lies in excess of $630,000 according to the Monterey County Realtors Association. This means that when financed through a regular 30 year loan at 5.7% interest with a $100,000 downpayment, the mortage payment on an average 1300+ sq ft home would be in excess of $3,000 a month. Assuming a houshold spends 50% of all net income on housing an annual gross income of $95,932 would be required. If the household only spends 30% of all net income on mortgage payments an annual gross income of $143,899 would be required. Only 8.54% of households in Salinas have six-figure incomes, excluding many from a housing market in which fixer-uppers start in the 500,000's.

Monterey County Realtors Association