Sonoma County Feeling the Squeeze?

THE PRESS DEMOCRAT-- "Housing costs are eating bigger holes into the budgets of families in Sonoma County, where more than 4 in 10 households spend more than a third of their income on housing, according to a Census Bureau study released today."

"The bureau reported 44 percent of Sonoma County homeowners spent more than a third of their income on mortgage payments in 2005, up from 28 percent of homeowners in 1999. Renters faced a similar predicament. In 2005, 42 percent paid more than a third of incomes on rent, compared with 33 percent of renters in 1999."

'"Housing prices are just a huge gouge in everybody's income," said Bonne Gaebler, Petaluma's housing administrator."

"The numbers, which have grown dramatically over the past five years, illustrate the toll that soaring home prices and sluggish wage increases have taken on families in Sonoma County."

"To purchase homes, many home buyers must stretch their finances or turn to interest-only and negative amortization loans to get a house in Sonoma County.After two decades as renters, Rosa and Juan Meza bought their first home in Cloverdale last month."

To make the purchase, they took out an interest-only loan and financed the entire $455,000 price. The couple spend half their monthly income for their $2,300 mortgage payment, which is more than double the rent they paid for a house."

"Most home buyers Roger Farah makes loans to spend more than 30 percent of their income on mortgages and some top 50 percent, he said."

'"They're financing more of their purchase. We're starting to see more people coming forward with less down," said Farah, Santa Rosa branch manager for Mission Hills Mortgage."

"Fully two-thirds of home purchase and refinance loans in the county today are either interest-only loans or negative amortization mortgages with minimum payments that don't even cover the interest due."

'"The median monthly mortgage payment in the county jumped 38 percent between 1999 and 2005, from $1,561 to $2,156. But the median household income of families who own homes grew only 12 percent during the same period, from $64,189 a year to $72,036."'

'"It is now much more difficult for first-time home buyers to get into the market and for existing homeowners to trade up," said Mark Zandi, chief economist at Moody's Economy.com. "This decline in affordability is the catalyst for the current sharp decline in housing activity."'

"Sonoma County's median monthly rent climbed 25 percent from 1999 to 2005, rising from $864 to $1,080. But the median household income of renters increased just 5 percent during the same period, from $37,503 to $39,505."

"That more renters are spending a greater percentage of income on monthly rents suggests wages for lower-income residents aren't keeping pace, said John Lowry, executive director for Burbank Housing, the region's largest developer of affordable housing."