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Going the distance for a home

By Mary Lynne Vellinga Bee Staff Writer*

First of three parts

Just after dawn, a bus cuts through thick tule fog on Highway 99, ferrying a full load of commuters from Yuba City to downtown Sacramento, 40 miles away.

Though crowded, the bus is quiet as Patrick McCormack settles into his seat. Some of his fellow passengers pull out books or headphones; others just lean back in the reclining seats and try to make up for lost sleep.

McCormack hates getting up at 5 a.m., but it's a sacrifice he's willing to make to own a home.

"I was pretty much outpriced in Sacramento," said McCormack, 27, a tax representative for the state Board of Equalization.

Drawn-out commutes like McCormack's have been endured for decades by workers in the Bay Area and Los Angeles. But for years, even as it grew, Sacramento remained small enough and inexpensive enough that most people could afford to live near their jobs.

No more. Today, the capital region is repeating the classic pattern in which ever-expanding concentric circles of suburbia attract workers willing to embrace a long commute in exchange for an affordable mortgage payment.

The dispersal of residents from the region's job centers promises to profoundly change previously isolated rural communities. By worsening rush-hour traffic, it also threatens the laid-back lifestyle that drew so many people to this area and kept them here.

The median price of existing homes in Sacramento County broke through the $200,000 barrier for the first time last year. Placer County's median-priced existing homes, meanwhile, now top $300,000.

In January 2002, half of those living in the Sacramento region were able to afford the median-priced home, according to the California Association of Realtors. By April of this year, that proportion had fallen to 42 percent, compared with 59 percent nationally.

Many people have tried to outrun escalating prices. The local real estate maxim is: For every extra mile you're willing to drive from an employment center, you can cut $1,000 to $1,500 from the price of a house.

Four years ago, first-time buyers looking for new or nearly new suburban houses could go to North Natomas, Elk Grove or Lincoln. Now they are reaching north to Wheatland and Yuba City.

Sacramento has spawned its own edge cities, such as Roseville and Folsom, where home prices have exceeded the finances of many. These suburban hubs, which employ thousands of low-paid service workers, are spinning off their own satellites of cheaper housing.

"It's kind of like salmon going upstream; people seek quality of life wherever they can find it, and then they make the sacrifices to support it," said Keith Martin, transit manager for Yuba-Sutter Transit, which runs seven round-trip buses to Sacramento daily and plans to add five more.

Tendency to spread out

Early on weekday mornings, a thick stream of cars heads south on Highways 70 and 99, traveling through miles of orchards and farmland en route from Yuba City to the office parks of Roseville and the highrises of downtown Sacramento.

The drive alone can be nerve-wracking. The highways are only two lanes wide for long stretches. In the winter, fog turns the commute into a white-knuckle ordeal.

McCormack is happy to watch his fellow commuters from a comfortable seat on the bus. "I wouldn't live in Yuba City if I had to drive it," he said.

Plenty of people have little choice but to drive, however. Yuba-Sutter Transit runs buses to downtown Sacramento, but not to suburban job centers such as Roseville, where, Martin said, the office buildings are too spread out to be served efficiently.

The outward housing migration of the region's workers is expected to continue for decades. Thousands more homes are planned for Yuba and Sutter counties. Elk Grove is seeking to expand south of the Cosumnes River nearly to Galt.

Driving this continuous expansion is the most basic of modern American society's expectations: homeownership. Since World War II ushered in the era of suburban growth, Americans have viewed buying a house as a doorway to adulthood.

The federal mortgage interest deduction also gives homeowners a financially preferred status. Studies show that homeowners generally enjoy more financial security, have greater access to credit and even experience greater life satisfaction than renters.

"I guess it's the whole American thing -- to get a house and buy a car," said Sarah Reese, 25, who recently bought a house in tiny Wheatland.

Changing expectations of what constitutes an acceptable house also contribute to the movement out of town. Sacramento still has some neighborhoods with houses priced under $200,000, such as Oak Park, Fruitridge and Meadowview. But these neighborhoods tend to have some rough edges. The houses there are smaller than newer models. And they often need work.

If buyers want two or more bathrooms, a family room, a two-car garage and a modern kitchen, but don't want to pay a fortune, they are almost certain to find themselves at open houses in the suburbs.

Suburban housing tracts being built today also offer amenities -- walking trails, many parks, good schools -- sometimes lacking in older neighborhoods.

So even though planners say the only way to limit urban sprawl while keeping prices reasonable is to live closer together, the urge to spread out remains strong.

Newcomers, old-timers

For McCormack, the decision to move to Yuba City was purely financial.

He bought his 1,700-square-foot house in a new Yuba City subdivision in October for $165,000. For that price, he has space many families would envy -- four bedrooms and two bathrooms.

"That same house in Sacramento would probably have been about $225,000," he said.

Today it would be far more.

Armed with a degree in finance, McCormack believes people should buy as much house as they can possibly afford. So far, it's worked for him. Only six months after he moved in, the identical house across the street went on the market for $200,000.

"You're looking at 20 percent (appreciation) a year," McCormack said. "You're not going to get that anywhere else."

There are drawbacks to living far from the city center, of course. Yuba City can be somewhat lacking in excitement for a single professional like McCormack. For night life, he usually commutes back to Old Sacramento. One recent evening, he went to a bowling alley not far from home and bowled one game -- by himself.

"It was a busy bowling alley," he said. "I think that's where all the native people go."

The arrival of McCormack and thousands of other commuters expected to settle in rural Sutter and Yuba counties promises to bring dramatic change.

Yuba City is experiencing its first substantial population growth since the housing price spike of the late 1980s and early 1990s, which also sent Sacramentans scurrying north. The market retreated shortly thereafter when regionwide housing prices fell. Now, buyers are back.

"We're just selling everything we can get ahold of," said real estate agent Gayle Everhart. "I don't know who told everyone to come in this direction."

Yuba City, population 48,000, issued about 600 building permits in 2002, up from 43 in 1999.

"Last year was the biggest year this city has ever had," said City Administrator Jeff Foltz.

Foltz is working to update the city's general plan for growth to allow it to more than double its geographic size and population -- to 100,000 people -- in the next 20 years.

Yuba City leaders have welcomed the growth. But Everhart, the real estate agent, worries about its effect on longtime residents. Competition from commuters already has driven up prices, making it harder for people who grew up in the area to buy homes.

Yuba City is the seat of Sutter County, one of the poorest, least job-rich places in the Sacramento region. Still heavily dependent on agriculture, Sutter County has double-digit unemployment. The median household yearly income was $38,375, according to the 2000 census, compared with $65,858 in Placer County and $43,816 in Sacramento County.

"We don't have the jobs to afford the big prices," Everhart said.

Small town's growth pains

The changes brought by growth could be even more profound in Wheatland, the Yuba County hamlet of 2,275 about 20 miles up Highway 65 from Roseville.

Incorporated in 1874, Wheatland's physical appearance -- tiny downtown, charming Victorians -- belies its new role as feeder suburb. The City Hall, which shares space in a 700-square-foot building with the volunteer Fire Department, still closes for lunch.

But drive a few blocks from Big Al's Market and you'll find row after row of new stucco houses in Wheatland Ranch, a subdivision under construction by Forecast Homes. Another 1,100 homes are proposed.

The biggest issue in the town these days is traffic, according to Mayor Gary Ulman. Wheatland may be growing, but the two-lane stretch of Highway 65 that runs right through town is not. Yuba City residents add to the congestion, commuting on Highway 65 to jobs in Roseville.

"From 5:30 to 9 a.m. and from 2:30 in the afternoon to 6:30 at night, it is almost impossible for the citizens of Wheatland to get on or off Highway 65, or even to cross Highway 65," Ulman said.

Eventually, the California Department of Transportation plans to build a bypass. As a stopgap, it has agreed to install two traffic lights, the town's first ever.

But, Ulman said, state funding for the traffic lights won't materialize for at least two years. He worries that California's budget woes will jeopardize the project altogether. He said he's looking "under every rock" for alternative sources of money.

Sarah Reese figures the heavy traffic and two-lane road are part of the reason she could afford a new house in Wheatland while those in Lincoln and Roseville were out of reach.

Reese, 25, sells cosmetics in the Roseville Galleria shopping mall. Her husband, Josh, works for his father's Roseville landscaping business.

The couple lived with Josh's father in Roseville for several months while they looked for a home. When prices in Wheatland started rising, they figured they'd better act. In January, they squeaked into Wheatland Ranch, paying $194,000 for a three-bedroom, 1,370-square-foot house.

Even the Wheatland houses "are all over $200,000 now," said Reese. "We got in just in time."

Reese likes the newness of her home. And she's thrilled that she no longer has to share a bathroom with Sterling, her 5-year-old son. "I don't have to clean the toys out of the tub every time I take a bath," she said.

But the house's remote location has its downsides. Much of Reese's life remains centered 20 miles south in Roseville. She commutes back on weekends and off hours to shop at the Roseville WinCo and Target.

"As of now, I haven't done a whole lot in Wheatland," she said. "There's not a ton going on. There are no theaters or even shopping. I assume it will come."

Already, there are small signs of change: talk of a new strip mall, a sign on a vacant building announcing the imminent arrival of a fitness center. Reese says she can't afford to join a gym, but is eager for such portents of civilization.

Pressure from the Bay

The Reeses have been both victims and beneficiaries of the region's rising home prices. They previously owned a two-bedroom, one-bath house in Sacramento County near Howe and Marconi avenues. They bought the 1,000-square-foot house in 2001 for $117,000 and sold it a year later for $148,000. In the three days it was on the market, they received three offers.

Reese puzzles over the huge jump in housing prices. She wonders how people can afford to spend so much.

"They can't all be wealthy doctors," she said. "I'm assuming they're all from the Bay Area."

She's at least partly right.

Home prices in the Sacramento region may seem high by local and national standards, but they're still at least a third less than those in San Jose and San Francisco. This gap is a powerful draw.

A 2002 survey of 533 buyers conducted by Sacramento-area housing consultant John Schleimer found that 28 percent came from the Bay Area, and another 13 percent from other parts of California. Many chose to move here without first lining up a job.

Schleimer said the outside demand "is putting a strain on our supply."

The median price for an existing home in Sacramento County hit a record $230,000 in May, up 21 percent from the previous year, according to DataQuick Information Systems. In fast-growing Placer County, the median resale price last month reached $303,000, and in Yolo County it was $266,000. Nationally, resale homes' median price -- meaning half the homes sell for more and half for less -- is about $162,000.

Prices for new homes are even higher. The median price for such a home in the Sacramento region rose to $339,990 in the first three months of this year, up 15.3 percent from a year ago, according to The Gregory Group, a local real estate information firm.

Historically low interest rates have helped cushion the impact of higher home prices, but monthly payments are nonetheless on the rise.

This effect is exaggerated because relaxed lending standards introduced in the mid-1990s allowed borrowers to buy houses with little or no money down -- but higher payments.

Not long ago, lenders frowned on borrowers whose mortgage payment, credit card payments and car payments combined exceeded 42 percent of their income, said Valerie Dreher, a broker with Evans Mortgage.

"Now we don't even blink at 50 percent," she said. "That's kind of scary, especially if people start losing their jobs."

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Going the distance for a home

By Mary Lynne Vellinga* Bee Staff Writer

By Mary Lynne Vellinga Bee Staff Writer*