Sonoma County gets low grade for housing affordability in real estate report

Fewer than a quarter of Sonoma County’s households can afford to buy a median-priced home here because they do not earn enough to make the monthly mortgage payment of nearly $3,500, a new report said Tuesday.

The California Association of Realtors’ housing affordability report said just 23 percent of Sonoma County households earned the minimum annual income of $138,760 to purchase a median-priced home at $640,000 in the fourth quarter of last year.

The county’s median household income fell far below that level at $80,400, according to the Census Bureau’s latest estimate.

Statewide, 28 percent of households earned the $122,340 needed to buy a median-priced home at $564,270. Nationally, 54 percent of households made the $55,850 threshold to purchase a median-priced home at $257,600.

Monthly payment costs included taxes and insurance on a 30-year fixed-rate loan, assuming a 20 percent down payment and an effective composite interest rate of 4.95 percent.

Local officials and real estate brokers said the report confirms California has a housing crisis, and Gov. Gavin Newsom concurred Tuesday in his State of the State address.

“California should never be a place where only the well-off can lead a good life,” he said. “It starts with housing, perhaps our most overwhelming challenge right now.”

Newsom said he was committing $250 million in support to cities and counties to revamp their bureaucratic processes to approve more housing and $500 million more in grants when they achieve their goals.

The governor cited Santa Rosa and Anaheim as “local governments that do what’s right,” but did not elaborate.

Russ Heimerich, a spokesman for the state Business, Consumer Services and Housing Agency, said Santa Rosa has gained recognition for promoting housing recovery in the wake of the 2017 wildfires, including permission for developers seeking to build housing near the city’s two train stations to put up to twice as many market-rate apartments as would otherwise be allowed by promising to construct additional affordable housing.

Moves to make it easier and less expensive to build secondary homes led to more “granny unit” applications t last year than the city had in the entire preceding decade.

Santa Rosa is also considering changes to promote downtown development, such as loosening restrictions on residential density, parking requirements and limits on building height.

“I think it shows we have a lot more work to do,” said David Rabbitt, the Sonoma County Board of Supervisors chairman, referring to the housing affordability report.

Rabbitt said it is time for “a good, honest discussion” about what’s needed to expand the local housing stock.

“Right now the incentive in the market rate (for housing) is to build a bigger home for lots of money,” he said. Builders who pay for land and development fees can add the fourth and fifth bedrooms to new homes for comparatively little money, he said.

At the same time, thousands of homes are not built “because they don’t pencil out,” Rabbitt said.

Local governments need to consider allowing smaller homes on smaller parcels, as well as cutting the cost of fees and time needed to secure permits, he said.

But when new housing is proposed in a neighborhood, residents often complain it will increase traffic, Rabbitt added.

The county is considering a proposal for “micro-units” of about ?400 square feet on Airport Boulevard, he said.

Sonoma and Mendocino counties, both with an affordability rate of ?23 percent, were tied for the eighth- lowest rate out of 49 counties in the report.

In Mono and Santa Cruz counties, just 12 percent of households could afford a median-priced home - the lowest rate in the state - while Lassen County was highest with 66 percent of households earning the $37,940 needed to buy a home for $175,000.

Tiny, rural Mono County, wedged between Yosemite National Park and the Nevada border, is an outlier with median-priced homes at $640,000, the same as Sonoma County, bolstered by wealthy people buying second homes near the Mammoth Mountain ski area.

Five of the 10 counties with affordability rates lower than Sonoma County were in the San Francisco Bay Area: Alameda (20 percent), Marin (19 percent), Santa Clara (18 percent), San Francisco and San Mateo (both 15 percent).

San Francisco and San Mateo were also nearly tied with median home prices of $1.5 million, requiring household incomes of nearly $330,000.

The Bay Area, flush with high-paying jobs, has “done a terrible job of keeping pace with its economic growth,” said Jordan Levine, deputy chief economist for the realtors’ association.

Both the San Francisco/San Mateo area and Sonoma County have permitted just one new housing unit for every seven new jobs from 2010-2017, he said.

“You never want to root against a growing economy,” Levine said. But failure to create a housing supply to match it “leads to an erosion of affordability.”

In the Bay Area and around the state, affordability rates peaked in 2009 and have been consistently falling since 2012, he said.

Peter Rumble, CEO of the Santa Rosa Metro Chamber, said the report is no surprise but “certainly is disturbing for the health of our economy.”

“If anything at all, it is a heavy foot on the accelerator for action on a regulatory and financial reform for housing projects,” he said.

The chamber and North Coast Builders Exchange are co-chairing a housing council comprised of about 15 major employers, including St. Joseph Health, Kaiser Permanente, Sutter Health, Medtronic, Keysight Technologies, Redwood Credit Union and the Sonoma County Winegrowers.

The panel’s interests include supporting housing developers and promoting the need for more housing, Rumble said.

Countering the frequent criticism that more housing will add to traffic congestion, Rumble noted that about 18,500 people commute to jobs in Sonoma County, most likely because they cannot afford homes here.

If they found local housing, they would no longer be on the freeway every workday, he said.

Gary Harris, a Forestville real estate broker, put the county’s low housing affordability rate simply.

“It’s flat out tough to get people into homes,” he said.