The share of income Californians spend on housing is higher than in any other state in the nation, says one study, reporting 20 percent of recent homebuyers spend more than half their income on housing.
Only 14 percent of Californians can afford the median-priced home, down from 18 percent a year ago.
And only a little over half of California's residents, 57 percent, own their own home, compared to 70 percent nationwide, says yet another study.
That grizzly on California's state flag says it all -- the cost of housing in California is a real bear, leaving many potential buyers twisting in the wind.
Even as sales plummeted 21 percent in May, the median price of a single-family home in California was up 8 percent to $564,430, according to the California Association of Realtors.
May was the first time since November 2001 that the median price did not increase by double digits, but that's little consolation for home buyers who bite the bullet and others who wish they could.
Home prices rise in California even as sales skid because the progressive go-to state is the land of opportunity. In 2005 alone, nearly a million people were drawn to the state like the Mother Lode once beckoned prospectors.
The Public Policy Institute of California says the Golden State attracts more legal immigrants to the United States than any other state -- about 200,000 in 2005 alone. Three times as many people, 600,000 of them, migrated from other states.
Years after the technology sector went bust, California's economy is humming along attracting seasonal laborers, speculative workers testing the waters and more career-minded people in it for the long haul.
More than a third of the arrivals from other states go west for work in an economy generating jobs in everything from apple picking and biotech to VoIP (Voice over Internet Protocol) and xhtml (Extensible Hyper Text Markup Language). If Internet technology isn't to their liking up north, they can slip down south and wait for a role in the entertainment industry while bussing tables for celebs.
May unemployment rates in many of the state's major metropolitan counties -- Orange, San Diego, San Bernardino, Santa Barbara and Riverside counties in the south; and Santa Clara (Silicon Valley), San Mateo, San Francisco and Sacramento counties in the north -- were all below the national average of 4.6 percent.
And then there's always more sunshine days than Florida, a coastline to die for, mountains, rivers, valleys and some of the most diverse geography on the planet.
What's not to like?
The pox on the state.
With the influx of people come an insatiable demand for housing in a state with a perennial shortage of shelter. Market fundamentals apply. When the housing market slows, prices continue to rise because fewer shoppers with more choice get smart and get picky.
Buyers go for cream-of-the-crop housing as a hedge against inevitable price drops. If prices do fall and a homeowner needs to sell, well, you get the picture. With more top notch homes going into escrow the median price just keeps on rising.
"The best homes always sell. If there is a choice of two properties I will choose the best, either the one in best condition or the one that is the least expensive, or a combination of the two. The same holds if there are 10 properties. I will still choose the best," said Steve Suchow, an associate broker with RE/MAX Valley Properties in San Jose.
That doesn't mean values will hold, as more and more experts predict an inevitable plummet in home prices reflecting fewer sales.
It's California's normal take on the cycle of supply and demand.
"If history repeats itself -- and it generally does -- we could see prices dropping 3 percent to 5 percent over the next 12 months. Prices are determined by supply and demand. With demand softening as interest rates continue to rise and supply continuing to increase every week, prices have nowhere to go but down. This is not necessarily a bad thing. The sellers have been steering the ship these last two and a half years. It seems that the buyers are now taking a turn at the helm," said Suchow.
