Can’t Afford a Median-Priced Home in County? Join the Growing Crowd

The number of Orange County families able to afford a median-priced home has dropped far below the national norm, creating the widest gap between the two groups in 11 years.

The median price of Orange County resale homes was an estimated $174,517 in the fourth quarter of 1987, Chapman College’s Center for Economic Research reported Friday.

At that price, a family needed an income of $45,856 to qualify for a home loan, according to Chapman College researchers. But the median income for Orange County families was $43,870, about 96% of the amount needed.

Orange County home prices climbed 4% during the last three months of 1987, while prices dropped 1% nationally to a median of $84,300.

So even though the national median family income of $30,963 was much lower than Orange County’s, it was 16% more than a family needed in order to afford a home at the national median price.

A median income of $43,870 means that half of all families in the county had annual incomes below that figure, while half had higher incomes.

Since 1977, when Chapman College researchers began calculating housing affordability, the gap between the county and national medians has never been wider.

The reason is that housing prices in Orange County have continued to rise faster than the national average, pushed up by heavy demand and a diminishing supply of land.

“It’s a pattern that’s re-emerged just in the last year,” said James L. Doti, dean of the college’s School of Business and Management. He added:

“It’s not surprising, given the fact that the production of homes in Orange County has not kept pace with the increase in employment and demand. And that means higher prices.”

In a similar study, the California Assn. of Realtors reported recently that only a quarter of all Orange County families earn enough to qualify for a loan on a median-priced, single-family resale home here, while 50% of all families nationally could afford the U.S. median price.

And a study released this week by the U.S. League of Savings Institutions characterized the local housing market as probably the most expensive in the country, higher than traditionally pricey markets such as those in New York and San Francisco. The study included 25 urban markets nationwide and most of the nation’s largest cities.

Chapman College projects another 10% increase in home prices for this year and says the gap between prices and family income in Orange County will remain wide.