3rd Most Expensive... How Does That Make You Feel?
"Some Petalumans are not happy their city is part of the third most expensive housing market in the United States."
'"I think it's ridiculous. It's horrible," said Peggy Glover, 65, who has lived in the city for 20 years. "People should be able to afford to buy a house," she said."
"Glover, who works as a food-service supervisor at the Marin County Jail, was reacting to a New York Times story recently published on the front page of The Press Democrat."
"According to the story, it takes 60 percent of the typical household income to pay a typical mortgage in Petaluma and Santa Rosa."
"Glover is sitting pretty on a house on the east side that has become her nest egg. She bought it for $108,000 in 1988 and it is now worth more than $600,000, she said. It's nice to have something to leave to her son and grandchildren some day, Glover said. But she would much prefer it if her 41-year-old son could buy a home of his own in Petaluma now, she said. He rents because his intermittent construction job does not generate enough income to allow him to buy."
'"The prices are outrageous," said 20-year-old Trevor Sennello."
"Right now, he said he's trying to decide what to do with the rest of his life but figured out a while back that he probably would not be able to afford to buy a home in Petaluma."
"In any case, he's "not impressed" by what you can get for $500,000 or $600,000 in Petaluma these days, he said."
"Having news of Petaluma's expensive housing market broadcast to the world by the New York Times is not necessarily a bad thing, some said."
'"It says this place is special," said Barry Pectol, manager of Bell Home Loans on Kentucky Street."
Of course it is. Sonoma County is special. We are the chosen people. It is different here. Real Estate never goes down. You can't lose. They aren't making anymore land. Tinkerbell nests in the trees in the plaza in Sonoma Valley and sprinkles pixie dust all about. Everyone wants to live here.
Ding Ding Ding... we have a new winner of the HUA Award.
"The average person is going to put it together that something is going on here ... why would you want to pay so much unless it was worth it?" (Only if the average person has their head up their butt too.)
The cost of housing has not stopped people from buying, he said.
"Publicity about Petaluma's high housing costs may bring in a few more visitors, said Onita Pellegrini, executive director of the Petaluma Area Chamber of Commerce."
'"It's not going to make anyone go away. It's not going to make locals stop buying homes," she said. "Home prices are market driven and this is wonderful place to live."'
Yet another contender. Maybe she should get out more... and I don't know... do a little reading and a tiny bit of math. Take a look at the prices of housing in Sonoma County. Take a look at the houses gathering cobwebs on the MLS.
Sonoma County listings progression
3/20/06 = 1742
3/26/06 = 1766
4/03/06 = 1888
4/19/06 = 2828
4/25/06 = 2868
4/30/06 = 2898
5/07/06 = 3052
5/13/06 = 3187
Sonoma Valley listing progression
2/14/06 = 172
2/14/06 = 183
2/24/06 = 193
2/25/06 = 200
2/27/06 = 214
3/01/06 = 219
3/04/06 = 220
3/12/06 = 230
3/20/06 = 236
3/26/06 = 238
4/03/06 = 268
4/19/06 = 291
4/25/06 = 305
4/30/06 = 315
5/07/06 = 328
5/13/06 = 346
Let's review the facts...
* In Sonoma County, the average wage is $42,171
* Employment peaked in Sonoma County in 2001 at the end of the tech boom when the county had 196,700 payroll jobs.
* By 2003, the economic downturn had wiped out 7,600 of those jobs, based on average annual employment.
* Through 2005, only 2,400 had returned.
* The Press Democrat study found that 58 percent of the new jobs created between 2003 and 2005 paid below the average wage.
* It is estimated that 60% of the new jobs added between 2001 and 2003 were lower-paying service jobs that are below the county’s average wage of $42,171 per year.
* Fifty-eight percent of new jobs between 2003 and 2005 paid below the average wage.
* The number of jobs in the county is still 3.3 percent, or 6,500 jobs, below 2001.*
* Per-capita income fell 2.6 percent in 2005.
*Adjusted for inflation, per-capita income in 2006 will increase 1.9 percent, to $29,113.
* Only 7 percent of households could afford a median-priced home in Sonoma County at year's end 2005 compared with 12 percent a year ago.
* In 2005 a Sonoma County household needed a minimum income of $152,595 to buy the typical home, based on prevailing interest rates for a 30-year mortgage.
* In 2004, the minimum income needed was $124,650.
(Did you note the per capita income is only: $29,113? Did you note the average wage is $42,171? Did you note that of the new jobs created nearly 60% are paying below that average wage? Did you notice even if they ARE paying the average wage it still is nowhere near the income needed to buy a median priced home? Did you notice that even if you double the average wage it still isn't enough? ok... just checking)
* Adjustable-rate mortgages accounted for 69 percent of loans to buy Sonoma County homes last year and only 31 percent were 30-year, fixed-interest loans - a reversal from just two years earlier.
* Buyers had to increasingly stretch financially to purchase homes. A majority turned to interest-only and other adjustable-rate loans, often making little or no down payment when purchasing homes.
* As interest rates rise, and there are conversions from adjustable rate mortgages to fixed, defaults are likely to rise.
* Default notices are rising, signaling business instability and consumer insolvency.
Percentage of home buyers choosing adjustable-rate mortgages
2003 - 36.8%
2004 - 59.4%
2005 - 69%
"For Matt White, president of Basin Street Properties, one of the major development companies in the North Bay, the cost of housing is "a very serious problem."'
"This situation cannot be sustained indefinitely, White said. As more businesses move out than move in, California is headed for trouble if something is not done to make housing more affordable, he said."
'"If you are paying 60 percent of your income for your mortgage, you are not sleeping too well at night and what quality of life is that?" White said."