"The benefits of homeownership are substantial and concrete. Homeowners participate more fully in their communities - they volunteer, donate to local churches and support neighborhood small businesses. Also, homeownership has proven to be a sound long-term investment for families. But perhaps most importantly, increasing access to homeownership is good for our economy.”
Gov. Arnold Schwarzenegger, San Francisco Chronicle, Feb. 24, 2008
To raise public awareness of the importance of the homebuilding industry's role in our state economy, CBIA has launched a new Web advertisement campaign. Thank you for clicking on the link. We invite you to learn more about the problem - and how you can help.
Housing is the Heart of California's Economy
- The housing industry is one of California’s most important economic engines. According to the Sacramento Regional Research Institute, new homebuilding contributed more than $68 billion to California’s economy and supported more than 500,000 jobs in the state in 2005.
- Since that time, new home construction has declined by more than 50 percent, sending aftershocks through the economy and causing significant distress to schools, local government and state government budgets.
- Stimulus is required to revitalize the industry, protect the economy and preserve homeownership.
New Home Sales Slow to Historic Lows Causing Shockwaves to State’s Economy
- Housing production has declined dramatically and the forecast for 2008 shows a minimal increase to 128,400 homes.
- Additionally, land values have collapsed, eroding property tax revenues and causing significant declines in sales tax revenue to the state. Most recent California Department of Finance numbers show that year-to-date sales tax revenue is down over $200 million.
- As a result, economic activity has decreased by more than $20 billion in just 24 months.
Slowdown Impacting Public Services
- Continued decline of the housing market and the economy threatens all of the progress California has made during the last decade. In addition to the decline in property taxes, payroll taxes and development impact fees, local families stop spending money, resulting in a precipitous drop in sales tax revenues.
- According to the Legislative Analyst’s Office, California is facing a $16 billion budget deficit. Already, the legislature adopted mid-year programmatic cuts of over $1 billion dollars. At the local level, cities, counties, special districts and school districts are feeling the pain of the housing slump. Transportation sales tax revenues are down, school districts are issuing pink slips to teachers and city and county staff are being laid off.
Solutions: Expanding Homeownership and Reviving the Economy
California’s economic health depends upon the homebuilding industry and policy makers at all levels must work together to expand homeownership.
California must plan for the future to ensure that the dream of homeownership can remain available for all Californians. To read about long term common sense reform proposals that will deliver government revenues, create jobs and protect working people and families, visit the Government Affairs page.