THE STATUS OF AFFORDABLE HOUSING IN CALIFORNIA: TESTIMONY TO THE ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

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1 THE STATUS OF AFFORDABLE HOUSING IN CALIFORNIA: TESTIMONY TO THE ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT Carol Galante, I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy University of California, Berkeley March 11, 2015

2 Percent Change from 2010 California Rents Outpacing Incomes 12% 10% 8% 6% 4% 2% Median Rental Price 0% -2% Renter Median Income -4% -6% Income Data Source: 2010, 2011, 2012, 2013 ACS 1-Year Estimates, Table B Rental Price Data Source: Zillow Rent Index, All Homes,

3 Rents Rapidly Appreciating in California Metros Source: Data derived from Zillow Rent Index

4 California Working Households are Severely Cost Burdened Percentage of Severely Cost-Burdened Working Families (2012) Source: Housing Landscape 2014, Center for Housing Policy

5 Low-Income California Working Households are Most Severely Cost-Burdened California Working Households Paying >50% of Income for Housing (2012) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Extremely Low Income (<30% AMI) Very Low Income (31-50% AMI) Low-Income (51-80% AMI) Moderate-Income (81-120% AMI) Source: Center for Housing Policy tabulations of 2012 American Community Survey PUMS files.

6 Mean Annual Wages (Adjusted to 2013 $) $60,000 Stagnant or Decreasing Wages for Very Low-Income California Workers $50,000 Mean Annual Wage $40,000 Home Health Aides Security Guards $30,000 Janitors and Cleaners Restaurant Cooks $20,000 Retail Salespersons $10,000 $ Source: BLS State Occupational Employment and Wage Estimates for California

7 Decreasing Incomes for Low-Income California Households Household Income Percent Change by Quintile Source: San Francisco State of the Region 2015, ABAG. Data derived from ACS. Inflation adjusted with US CPI

8 Decreasing Vacancy Rates in California 7% 6% 5.9% 5% 4.6% 4.2% 4% 3% 2.9% Rental Vacancy Rate Homeowner Vacancy Rate 2% 1.2% 1.3% 1% 0% Source: ACS, 1-Year Estimates (Table DP04)

9 Decreasing Homeownership, Increasing Rentership in California 70% 60% 50% 40% Owner Occupied Renter Occupied 30% 20% 10% 0% Source: ACS, 1-Year Estimates (Table DP04). Universe: All Occupied Housing Units

10 Low-Wage and High-Wage Job Growth 15% in California 10% 5% Low 0% Middle High -5% -10% Source: California Occupation Profiles for 2005, 2010, and Bureau of Labor Statistics, Occupational Employment Statistics.

11 California Household Growth and New Housing Permits ( ) Source: Construction Industry Research Board/California Homebuilding Foundation and DOF Chart from "2014 Update: Highlights of the State of Housing in California", California Department of Housing and Community Development

12 Housing Shortage for Low-Income Renters Source: California Housing Partnership, How California is Failing to Meet the Needs of Low-Income Households. February 11, Slide 2.

13 California Millennials: Not Buying Homes

14 California Hit Hard by the Foreclosure Crisis June 2009 Source: Lender Processing Services Analytics, Inc.

15 Percent of Singe-Family Conventional Business Volume Credit Remains Extremely Tight Nationwide FICO under 700 FICO under 660 FICO under 620 Source: Fannie Mae Annual 10K Reports.

16 FHA Credit Score Distribution 100% FHA s Changing Risk Profile 90% 11.0% 20.1% 80% 10.7% 33.5% 70% 60% 31.4% 27.3% > % 22.5% % % 20% 22.7% 38.5% 50.1% <580 N/A 19.5% 10% 4.8% 4.0% 0% 0.7% (<580) 2.2% 0.1% (<580) 0.9% (N/A) 0.2% (N/A) Source: MMIF FY 2014 Q2 Report to Congress. Figures refer to nationwide data from 1 st quarter of each year.

17 Percent Change % 10% Decreasing Federal Funding for CDBG Housing Nationwide Total cuts : $2160 M HOME Homeless Assistance +$240M Housing for the Elderly Housing for Persons with Disabilities Total 0% -10% -20% -30% -$960M -$2160M -40% -50% -60% -$825M -$441M -$174M -70% *Percent change measured for the enacted national budget. New National Housing Trust Fund dollars will be available in 2016.

18 Allocation (in millions) Federal Subsidies Shrinking, Making Production of Affordable Housing More Difficult CDBG Allocations by County (2005 and 2012) $35 $30 $25 $20 $15 $10 $5 $- County CDBG 2005 CDBG 2012 Source: Carolina Reid, What s Happening with Housing?? February 13, Slide 17.

19 Shrinking California State Sources of Capital State Housing Bonds (Prop. 46 & Prop. 1C) Redevelopment Funds for Affordable Housing Veteran's Housing and Homelessness Prevention Affordable Housing and Sustainable Communities FY2007/2008 FY2014/2015 Difference $776,281,035 $344,651,658 ($431,629,377) $1,079,157,125 $0 ($1,079,157,125) - $75,000,000 $75,000,000 - $125,000,000 $125,000,000 Total $1,855,438,160 $419,651,658 ($1,310,786,502) Source: 2007 data from How California is Failing to Meet the Needs of Low Income Households, CA Housing Partnership, 2014, 2014 data from California Department of Housing and Community Development.