Home costs squeezing out middle class
Sky-high prices scare off many professionals

By RHONDA PARKS MANVILLE
NEWS-PRESS STAFF WRITER

	LEN WOOD / NEWS-PRESS PHOTO Financial analyst Kristi Granquist accepted a high-paying job at Raytheon last year, but she can't afford to buy a home here and she's not able to save up much, either, because of high rental prices. She says she may try to transfer to a Raytheon office in a more affordable area when she's ready to buy a home.

It's always been tough for the middle class to afford housing in Santa Barbara.

But with the median home price officially listed at over $1 million, even the highest-paid professionals are being squeezed out of the South Coast housing market, with doctors, professors and engineers increasingly choosing jobs elsewhere.

"Ten years ago, even seven years ago, being in Santa Barbara was one of our biggest assets," said Sansum-Santa Barbara Medical Foundation Clinic CEO Kurt Ransohoff. "Now it's our greatest liability."

One look at South Coast real estate ads, and job candidates — particularly those from out of state — are canceling their interviews, officials said. Others show up hopeful that they can find something in their price range and leave stunned by sticker shock.

On the South Coast, patients have already lost beloved medical specialists, and the duties of executives are being parsed out to managers in the ranks.

"My oncologist is leaving because she can't afford to live here any longer, and nobody else can, either," said Marjorie Clausen of Santa Barbara, who has rheumatoid arthritis. "When an oncologist can't afford to live here, it's time for Santa Barbara to come to its senses. What good is a hospital if there are no doctors?"

In some cases, less desirable candidates are being hired because the best and the brightest are going elsewhere, several executives said. And some top jobs are taking 18 months to fill, when it used to take no more than two months.

"Unless you have a candidate coming from Monterey, San Francisco, Marin County or Rancho Palos Verdes, where the prices are also high and they have some equity in a house, people just can't afford to come here any longer," said Dr. Elliot Schulman, medical director for the county Health Department.

"A professional who accepts a job should have a reasonable expectation of having housing," he said. "That's no longer the case here. It's just obscene."

Highly trained professionals are increasingly saying "no thanks" to job offers here, raising the question of how hospitals, colleges, and high-tech firms will fare in the future. Most businesses offer a variety of incentives to attract top wage earners, such as housing assistance programs, loans, and in the case of UCSB, faculty housing.

The shortage of professionals could reach crisis proportions, say analysts for UCSB's Economic Forecast Project.

"The demand for land will continue to go up, no matter what the prices, and it won't be the job you have that matters, but the wealth," said analyst Dan Hamilton. "Eventually the people here will realize that they need to become active in local politics and change things so that the doctors can come back, because medical care is important. But it's often hard to come up with new land-use policies unless there is a crisis."

Dr. Schulman said the crisis is here now. As the county's top medical official, he has a salary of over $150,000. And yet, today he couldn't afford to buy the modest Goleta tract house that he purchased years ago, now worth more than $1 million.

Medical facilities on the South Coast have been especially hard hit by the housing crisis, because there is a national shortage of doctors and nurses and candidates have their pick of good jobs. Santa Barbara suffers not only from higher home prices, but also lower pay than neighboring communities like Ventura, in part because of lower Medicare reimbursement rates here.

Medical professionals often reject Santa Barbara offers in favor of jobs in Florida, New Jersey, Kansas City and Wisconsin, where their salary will buy a very nice house and even property, several executives said.

"We even offer some incentives, such as paying a little bit more if they choose to buy," said Dr. Ransohoff of Sansum. "That worked when the prices for homes were $300,000 to $400,000. But now, with home prices at over $1 million, it's just not enough."

Cottage Hospital finds itself with a similar problem.

Five executive positions remain unfilled because candidates can't get past the high cost of the mortgages here. The turnover rate is high because many employees leave after five years to take jobs in communities where they can buy a house.

"Cottage is renowned in the health care field and people want to work here," said Patrice Ryan, vice president of Human Resources at Cottage Health System "But when they see the cost of housing, they say 'no way.' Housing is our most formidable obstacle."

The cost of housing was not enough to keep Ms. Ryan from accepting her job in 2001, but she felt the pinch when she sold her house in Simi Valley in 2002 and bought a smaller house in Goleta for twice as much.

She said she loves her home and her job and never second-guessed her decision, although today she couldn't afford the house she bought two years ago.

Like Dr. Lynch, she's more concerned about the overall impact on health care in Santa Barbara than on her own personal situation. She is a member of the Coastal Housing Partnership and the Housing Trust Fund, both of which seek to address the affordable housing dilemma in Santa Barbara.

"There is a sense in Santa Barbara that this is paradise, but what is paradise when individuals are faced with giving up so much to live here?" she asked. "Santa Barbara is a wonderful community, very socially conscious and aware, but this problem is like a runaway train."

Cottage Hospital hopes to become more competitive in its recruitment of nurses and managers by developing 81 condo units for hospital workers on the site of now-closed St. Francis Hospital across town. UCSB and other major employers like Raytheon are also offering a variety of incentives to attract workers to the South Coast, but recruitment remains a challenge, especially for candidates outside of coastal California, said Raytheon's Ron Colman.

"We have very high-paying jobs and we keep our salaries up, but you can only go so high," he said. "We are looking for other ways to keep our employees, such as telecommuting, satellite offices and flexible work hours."

Raytheon financial analyst Kristi Granquist, 24, said housing was not a major concern when she accepted the job at Raytheon, because she wanted to work for a good company that offered opportunities for advancement.

But the rental housing here is so expensive that she can't even save for a house, and she suspects that eventually she'll seek a transfer to a more affordable Raytheon office when she's ready to buy.

The prices here, she said, "are absolutely shocking, even for a condo."

At UCSB, recruiting young professors remains tough, but the university has the benefit of competing for candidates who are likely to be seeking work in other high-priced university housing markets like Berkeley, Boston, New York and Chicago, said Executive Vice Chancellor Gene Lucas.

"Still, it's one of our biggest issues when it comes time to recruiting or retaining people," despite loan programs and offers of faculty housing, he said. "We have only limited things we can do for faculty in a market like this."

As prices go up, Santa Barbara is likely to see more of a "hollowing out" of its middle class, said Mr. Hamilton, the UCSB Economical Forecast Project analyst.

"Even upper medium jobs no longer pay enough to afford a mortgage, so we will have to revise the definition of what middle class is," he said. "At these prices, even the upper middle class will be leaving," meaning that the population that remains is more likely to be at the extreme edges of the economic spectrum, either very rich or very poor.

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