Supply short of demand: Expert says housing prices climb due to lack of construction in California, Nevada County
On the rise
Single family home median price
Statewide (price is up 0.9% from May, up 7% from June ’16)
June 2017 M ay 2017 June 2016
$555,150 $550,080 $518,830
Nevada County (price is down 2.3% from May, up 8% from June ’16)
June 2017 May 2017 June 2016
$380,000 $389,000 $352,000
Source: Data from California Association of Realtors
California needs 180,000 more homes this year to meet demand, but just 100,000 are planned for construction.
At that rate, said Oscar Wei, it’s likely the Golden State will be nearly 2 million short of the number homes needed by 2030.
Wei, a senior economist with the California Association of Realtors, said low inventory is the reason behind to rising prices around the state, including western Nevada County. The statewide median home price has hovered above the $500,000 mark for four consecutive months and reached its highest level — $555,150 — since August 2007.
According to Wei’s organization, June’s median price across California was up 0.9 percent from the prior month and was 7 percent higher than June 2016.
Closer to home, Nevada County’s median price was $380,000 in June, actually down 2.3 percent from May 2017 but 8 percent higher than June 2016. But according to county records, that median price has climbed from $250,000 recorded in fiscal year 2012-13.
Wei discussed the current housing market conditions during a talk with the Nevada County Association of Realtors earlier this month. His hour-long presentation also looked at the economy as a whole, including impacts of inflation, job opportunities, consumer confidence and market uncertainty.
But the bottom line, Wei said, when it comes to the rising cost of homes in California, and western Nevada County, supply is simply not meeting demand.
“If people are not putting their houses up on the market, we can always build more, right?” he asked. “Are we building more?”
An emphatic “No!” followed in response from the audience.
“I should say are we building enough?”
“And you’re right,” he said.
Out of reach for many
According to the Nevada County Association of Realtors, there are currently 436 homes on the market across the county.
That number is up over 421 homes on the market at the end of June, but the exact same inventory for July 2016.
With demand driving prices higher, the result is properties are being pushed out of reach for many — particularly younger, first-time buyers — as most cannot afford a home with a single income source. Nor can many couples afford homes, even with combined incomes.
According to Wei, the minimum household income required to buy one of California’s median-priced single family homes — at half a million dollars — would be $101,220 a year.
To put this in perspective, Wei noted a California chef’s median income is estimated at about $50,000, and elementary school teacher makes a mean of around $74,000 yearly and police and sheriff officers make a mean of $97,000.
Nevada Joint Union High School Superintendent Louise Johnson, who attended Wei’s presentation, said higher housing prices can make it difficult even if schools are able to recruit new teachers to the community.
“We really feel it with affordable housing,” Johnson said. “For example, we had quite a number of teachers retire this year. So we’ve hired new ones and it’s hard for a young person just starting out to be able to find housing and afford housing.”
Andrew Rolland is an intern at The Union. Contact him at firstname.lastname@example.org.
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