Only 28% of Households in County Now Qualify for Loan on Median-Priced Home
For those who have been house hunting recently it will come as no surprise: It gets harder every day to qualify for a home mortgage in Orange County.
According to the California Assn. of Realtors, the median resale home price in the county set a national record high in February of $179,999, and only 28% of the county’s households earned at least the minimum annual income of $55,457 needed to qualify for a mortgage of that size.
That was down from 30% who qualified in January, when the median-priced resale home in the county was $173,333, and down from 32% in February, 1987, when the median selling price of existing single-family homes was $164,000 and the minimum annual income to qualify for a loan was $50,566.
The realtors association’s “housing affordability index,” released Monday, is based on the February average of fixed- and adjustable-rate mortgages in the state, the median selling prices of existing homes as reported by a number of local boards of realtors in six regions, and the assumption that mortgage loans would be for 80% of the selling price with 30% of the buyer’s income used to make the monthly payment--$1,386 in Orange County.
The median prices used to compute the index were reported late last month and do not include prices for condominiums or any new housing.
According to the association’s report, the average mortgage interest rate in California in the first week of February was 9.20%, down from 9.24% in January and from 9.21% a year earlier.
But if mortgage rates have remained relatively stable over the past year, the association’s monthly survey shows that housing prices, especially in the coastal counties, have risen sharply, far outstripping increases in annual family income and thus reducing the number of residents able to qualify for loans on median-priced housing.
The median selling price and minimum qualifying income in Orange County, for example, each rose 10% between February, 1987, and February, 1988, while the median family income, according to the annual Orange County Economic Outlook report by Chapman College, rose only 4%, to $43,264 from $41,537.
Still, while Orange County’s median selling price for resale homes was the highest in the state and nation in February, the county “affordability index” was not the lowest.
That distinction belongs to the San Francisco Bay area, where only 19% of all households earned enough to qualify for a loan on the $175,454 median-priced home. Los Angeles County, with only 26% of its households qualified to buy February’s median-priced home, was in next-to-last place on the list.
AFFORDABILITY INDEX FOR EXISTING HOMES
Median Monthly Minimum Pe Selling Price Mtg. Pymt. Annual Income Qua Feb. ’88 Feb. ’87 ’88 ’87 ’88 ’87 ’88 United States $ 88,300 85,000 $ 680 655 $27,205 26,208 48% California 147,665 129,376 1,137 997 45,495 39,890 32% Orange County 179,999 164,000 1,386 1,264 55,457 50,566 28% S.F. Bay Area 175,454 N.A. 1,351 N.A. 54,057 N.A. 19% Los Angeles 156,653 134,821 1,207 1,039 48,264 41,569 26% San Diego 133,432 120,141 1,028 926 41,110 37,043 31% Riverside/ San Brdino. 94,840 90,150 730 695 29,220 27,796 49%
rcent lified ’87 United States 49% California 37% Orange County 32% S.F. Bay Area N.A. Los Angeles 31% San Diego 35% Riverside/ San Brdino. 50%
Source: California Assn. of Realtors
