Home prices climb out of reach for many in Nevada County (GRAPH)
Since the Great Recession, the value of homes has rebounded quickly. Too quickly, according to Teresa Dietrich, meaning many Nevada County residents can’t afford homes on the market.
The former president of the Nevada County Association of Realtors provided data describing how a lack of affordable homes has begun to slow the housing market over the last year.
Accordingly, there was a 33 percent decline in homes for sale between September 2018 and February 2019, and a 12 percent decline in homes sold over the same time period.
What’s more, from January to February of this year, the number of homes for sale, the number of homes sold, as well as the number of new listings have all declined.
Dietrich said the data over the past few months is partially due to seasonal adjustment. Fewer people sell when it’s cold and wet.
“The properties don’t show their best when they are covered in snow,” she said.
However, there are plenty of eager buyers, she said, which means the problem is not solely seasonality. The greater issue, she said, is a lack of affordable housing — homes under $400,000 — for buyers.
“How can people in the service industry afford a home unless there are more affordable homes available?” Dietrich said.
THE ‘MISSING MIDDLE’
Nevada County’s Habitat for Humanity has a name for this growing issue: The ‘Missing Middle,’ which refers to people earning between 30 and 80 percent of the median income — about $57,000 — who have no affordable housing options.
According to executive director of Nevada County’s Habitat for Humanity, Lorraine Larson, these individuals have nowhere to go, often choosing to move to more rural areas or leave the state of California entirely to purchase a home.
Graph created by Digital Engagement Editor Samantha Sullivan.
“We’re stressing our families out,” said Larson. “Even a rural area like ours, in order to afford a decent home here, you have to make more than $70,000.”
The nonprofit is frequently getting calls from individuals needing a home, she said, as Habitat for Humanity is the only available option for families that need a home for under $200,000. The problem has become so dramatic it’s left her believing it’s impossible to have a nice, stable life for working class families.
“The American Dream just isn’t possible,” she said.
The reality of the issue hits close to home for Larson.
“My kids can’t afford to buy a house here,” she said.
The rising costs of fire insurance, public fees, higher interest rates and more costly regulations to build a home have all contributed to the construction costs of more expensive homes, said Dietrich. She noted the affordability index in Nevada County is at 31 percent, meaning that only 31 percent of county residents can afford to buy a house in the area.
This problem isn’t just local. There is a shortage of affordable housing across the country, according to a Reuters poll, significantly outpacing wage growth.
From interpreting state data, Dietrich anticipates the problem getting worse in Nevada County, if solutions aren’t proposed.
“Housing (interest rates) in California are expected to go up another 3 percent in 2019,” she said.
Constructing more affordable housing, according to both Dietrich and Larson, puts constraints on builders, who pay service costs up front, including new, expensive regulations.
“We’re going to have to figure out how to incentivize builders to build the price range that’s needed here,” said Dietrich, explaining that most homes cost contractors $400,000 to build.
Among those incentives may include not having builders pay up front cost for the home’s services, things like sewer and water services, said Dietrich.
In coming months, a proposal for more affordable homes is expected in Grass Valley.
About 50 homes, she said, below $400,000 have been set to be constructed on Whiting Street. But, she added, the planning is not finished.
“(People) won’t be able to move into (these homes) for another 18 months.”
Contact Sam Corey at 530-477-4219 or at email@example.com
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