It is a measure of the importance of housing to our region's, nation's and world's economies that today's turmoil in global finance markets can trace its beginnings to California's housing shortage beginning in the millennium.
More importantly, the fact we are poised on the cusp of recovery speaks volumes of the success we enjoy when government and private enterprise form partnerships to deal with important issues.
The latest news locally is uniformly positive. According to the latest data from the major industry tracking firms DataQuick and the Construction Industry Research Board (CIRB) home sales in San Bernardino County are up nearly 88 percent, San Bernardino County home builders have constructed nearly 2,400 new single- and multi-family homes in the first eight months of this year and median home prices are returning to roughly the same level they would have been had the market not begun overheating in the early 2000s.
In addition, San Bernardino County homebuilders are building a much healthier balance of single-family and multi-family new home communities than in previous years. The relative shortage of multi-family homes such as condominiums, townhomes and apartment homes, was one of the key factors in causing the market to overheat in the first place by reducing the most affordable housing options for those demographics that needed them the most.
We are fortunate here in our county to be part of a recovering economy thanks in large part to the willingness of local and county authorities to partner with the homebuilding industry to streamline community development processes to reduce or defray many of the costs of building new home communities - costs that otherwise result in increased consumer costs and reduced competition among homebuilders.
However, given the magnitude of the impact of the correcting housing market, we still have much to do to beyond our own borders to restore order and help revive confidence in global financial markets.
In the wake of the disruption of the housing market nationwide that followed the correction here in Southern California, the flow of credit has been seriously curtailed for home buyers, student loans, housing and other business sectors, Congress passed the $700 billion rescue package approved by lawmakers in early October that was absolutely essential to prevent a collapse in our financial system that would have inflicted devastating damage to our economy.
Policymakers continue to adjust to the rapidly changing landscape. The latest response by U.S. and global leaders was to inject cash into the world's banks and guarantee their debt. The administration announced it would purchase up to $250 billion in non-voting shares of banks to encourage them to begin lending again.
This marks an important turning point in the effort to restart the banking system. In the weeks and months ahead, this rescue plan should help stabilize financial markets, get bad mortgages off banks' balance sheets and pave the way for home values to stabilize and consumer confidence to start building back up again.
The rescue package builds off this summer's historic housing stimulus bill, which includes a first-time home buyer tax credit and much-needed FHA reform. Some have criticized the tax credit on the basis of its payback provisions. But a $7,500 no-interest loan is a step in the right direction. To help Americans understand how it works, the National Association of Home Builders (NAHB) has a Web site in English or Spanish at www.federalhousingtaxcredit.com.
It's important to keep your eye on the big picture. Over the long-term, both San Bernardino County and the nation definitely are on a growth path. Our population will rise by about 35 million over the next 10 years, and all of those people will need someplace to live.
Consider these facts:
America currently has about 105 million occupied housing units.
About 70 million of those are owner-occupied.
Total equity (value of homes minus mortgage debt) amounts to $9 trillion.
37 percent of all homeowners own their home outright, with no mortgage debt.
94 percent of those who have mortgages are making their payments on time every month.
It's going to take time to get credit markets and the banking system functioning again, to get the housing market moving, and to rebuild confidence. But once we turn the corner, the longer-term outlook is very promising.
Frank Williams is CEO of the Building Industry Association (BIA) Baldy View Chapter, which represents homebuilders and industry associates in San Bernardino County and the easternmost portion of Los Angeles County.
