Bay Area housing is “persistently and pervasively” unaffordable for working families, according to new research published by the Urban Land Institute (ULI) Terwilliger Center for Workforce Housing.

The report, “Priced Out: Persistence of the Workforce Housing Gap in the San Francisco Bay Area,” examines the availability of for-sale and renal housing to workforce households. Approximately 30 percent of the metro area’s 2.7 million households fall in this category. The study found that only 15 percent of the existing for-sale housing stock in the Bay Area is affordable to workforce households earning the median family income. This compares to between 50 and 60 percent in many of the Bay Area’s peer metropolitan regions.

The study suggests  “if current trends are any indication, housing production between 2009 and 2025 will leave unmet additional demand for at least 6,000 for-sale housing units appropriate for workforce households. Demand for new rental housing is projected to exceed supply by almost 23,000 units resulting in a total shortage of almost 29,000 workforce housing units.
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Although released last week, the study cites figures from mid 2009. This raises the question: With home prices in many parts of the greater Bay Area under $300,000 and sliding, is it still so unaffordable?

Check out the report (www.bayareaburden.org) and an interesting calculator that factors the time/cost of transportation into the total cost of housing.

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John Burns is talking to The Real Story today about how resales affect the supply side of the market. John, CEO of John Burns Real Estate Consulting, has been looking at the data and reports that migration overall is down tremendously during this downturn. People are staying put—and hoping that in doing so, will be able to get more out of their home’s price when they do bring it to market months from now.

Last year, as the housing market was in freefall, homeowners were listing their homes at unrealistic prices, hoping to still get some of that equity they had planned on out of their home. This year, home sellers are more realistic: first, the people in the resales market are transferees, retirees—people who are moving on for a purpose; second, they have priced their homes realistically so that they will sell.

According to the latest numbers, John sees price stabilization and some appreciation in the East Bay. Why? There’s not a lot of inventory in the market, and people are in the buying mood, seeing the end of the Federal Tax Benefit coming at the end of April. But lending guidelines are tougher, and the people making home purchases right now are looking at homes priced in the range of four times their income—the traditional rule of thumb for homebuying and making monthly payment. In contrast, at the height of the boom, people were getting loans for homes that were six or even eight times their income—with no proof necessary.

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When The Real Story asks Stan Humphries what worries him most about the current market, he talks about not one, but five factors that could each in itself be enough of a storm cloud to darken the horizon for months to come: New  foreclosures on their way. Negative equity. Increasing interest rates. Weakened demand as tax credits are withdrawn. Unemployment.

He is concerned that we can experience a recovery without job growth, as we have seen in recent downturns. If the economy witnesses strong growth in its GDP, it can live with anemic job growth. His good news is that in late 2009, the numbers of temp workers notched up a bit. This is usually seen as a precursor to permanent placements, so we will be watching that index closely in the months to come.

Another anomaly of this market: not only has the rate of homeownership declined, but rental vacancy rates have picked up. Why? Household compression is the name of the game, with not just extended families moving in together, but non-related families looking for other families to share their homes and expenses. As we see foreclosures being snapped up by would-be rental entrepreneurs, will they all see tenants for their properties or will household compression keep rental vacancy rates high, and these new investments less attractive?

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Stan Humphries, Chief Economist for Zillow.com, has seen the company’s real estate data base services grow and broaden to serve buyers, sellers, and now, renters. Today he talks to The Real Story about how federal support programs helped to stabilize the declining market in 2009, and how the withdrawal of that support could affect the 2010 recovery.

Stan talks about the purchase of mortgage-backed securities and the creation of tax credits, and how those programs affected demand when all other indicators gave the home buying public no reason to venture into real estate. He sees a limit, however, to how much we can subsidize the market in order to stabilize it.

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The Real Story received some good advice for home sellers from Stan Humphries, Chief Economist for Zillow.com. Stan is of the “educate-yourself-first” school of real estate sales, inviting prospective sellers to get up to speed on the listings and the sales not just for a local area, but for the micro market, all the way down to the streets around one’s home. In that way, sellers can get an up-to-the-minute snapshot on how their market is doing and develop a realistic approach toward the sale of their home.

Armed with that level of information, a home seller can do a better job of engaging a real estate professional to represent the property. According to Stan, pricing a house well is critical in this buyer’s market — but that doesn’t mean giving the home away. He reminds us that foreclosures are usually discounted about 28% below that of a resale home, and that the market for a foreclosure is rarely looking at resale properties. That resale buyer is looking for value — a feeling that extends beyond the price point and satisfies the buyer’s real need to feel that the condition, location, amenities and “extras” make this a fair deal, no matter if the market still has some adjusting to do.

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Stan Humphries, Chief Economist from Zillow.com, reminds us today that just because foreclosures aren’t front-page news anymore, no one should downplay the fact that they are going to remain one of the biggest factors in keeping us from a true real estate recovery.

Not only should we expect to see three million or more foreclosures come to market in 2010 (about the same number as in 2009), but we should take a hard look at the underlying reasons for foreclosures:  our unemployment rates are high nation-wide, coupled with the fact that 21%–that’s 1 in 5—of America’s home owners are underwater. These are the kind of ingredients to put even more homes in the “60-days delinquent” pipeline.  Stan believes that the banks are holding back on their already-foreclosed-upon properties, tucking them away so that they do not flood the market and cause further price erosion.

But here’s the kicker—if one looks at the sales figures that look so improved statewide last November, 40% of those sales were foreclosures. In the Central Valley, make that number 60% foreclosures.  And in Las Vegas, a whopping 70% of the transactions were foreclosure sales.

Coming up next, the resets of the Option ARMS (adjustable rate mortgages) and the Alt A loans (which needed less documentation than the other loan products in the marketplace).  Foreclosures are here to stay for now, and will effect price stabilization for months to come.