Only 22% Can Buy Typical County Home, Report Says

The American Dream became increasingly less affordable for the average Orange County resident in May, as rising prices and a falling supply put the typical home out of reach for all but 22% of local households, the California Assn. of Realtors reported Thursday.

The number of households that could afford the median-priced house has slid steadily downward since January, when 30% of all households could afford to buy.

Although interest rates have stabilized, skyrocketing home prices and a rapidly decreasing number of new homes being built shot the median price for an existing house up to $202,760 in May--the first time that the median price crossed the $200,000 mark, according to association statistics.

‘Buying Frenzy’ Like the Late 1970s

The result is what one analyst called a “buying frenzy . . . reminiscent of the late 1970s,” when prospective purchasers snapped up everything in sight in fear that the market would tighten further.

Even the defeat of Measure A--the slow-growth initiative that opponents said would have drastically curbed construction--did nothing to curtail the county’s frenzied buying.

“Even though the initiative did not pass, a lot of people have the attitude that they’d better buy now, because they won’t be able to afford tomorrow,” said Larry I. Smith, executive vice president of residential operations for Market Profiles, a real estate consulting firm.

To afford the average $1,565 monthly mortgage payment required after buying a median-priced home with a 20% down payment, a county household would need an annual income of at least $62,611.

In April, 23% of all households could afford the median-priced home of $198,031; in May, 1987, 28% of all households could afford the median-priced home of $171,153, the association said.

Although Orange County has the highest median home price in the state, the San Francisco Bay Area is the most difficult place to buy a home. In May, just 15% of all households had the annual income of $58,747 needed to afford a home with a median price of $190,246.

L.A. Affordability Rate 21%

In Los Angeles, only 21% of all households could afford the median-priced home; in San Diego, the rate was 28%. Median-priced homes in those cities cost $173,982 and $142,256, respectively.

“Any increase in supply or slowing in demand could help improve affordability,” said Roger Cruzen, a spokesman for the California Assn. of Realtors.

“But we could very well see it remain at this very low level. In recent months, the price has done nothing but continue to go up, and the affordability level has done nothing but continue to go down.”

AFFORDABILITY INDEX FOR EXISTING HOMES

Only 22% of Orange County households could afford to buy the median-priced resale home in the county in May, compared to 23% in April and 28% in May, 1987.

Median Selling Price

May April May ’88 ’88 ’87 Orange County $202,760 $198,031 $171,153 United States 88,600 87,300 85,400 California 160,073 157,033 141,140 S.F. Bay Area 190,246 188,976 170,499 Los Angeles 173,982 170,457 149,659 San Diego 142,256 137,560 129,225 Riverside/ San Bernardino 104,025 101,270 95,326

Monthly Mtg. Pymt.

May April May ’88 ’88 ’87 Orange County $1,565 $1,526 $1,332 United States 684 673 665 California 1,236 1,210 1,099 S.F. Bay Area 1,469 1,457 1,327 Los Angeles 1,343 1,314 1,165 San Diego 1,098 1,060 1,006 Riverside/ San Bernardino 803 781 742

Minimum Annual Income

May April May ’88 ’88 ’87 Orange County $62,611 $61,059 $53,288 United States 27,359 26,917 26,589 California 49,429 48,418 43,943 S.F. Bay Area 58,747 58,267 53,084 Los Angeles 53,724 52,557 46,596 San Diego 43,928 42,414 40,234 Riverside/ San Bernardino 32,122 31,224 29,679

Source: California Assn. of Realtors Percent Qualified

May April May ’88 ’88 ’87 Orange County 22% 23% 28% United States 48% 49% 49% California 28% 29% 32% S.F. Bay Area 15% 15% 18% Los Angeles 21% 23% 26% San Diego 28% 30% 31% Riverside/ San Bernardino 44% 46% 47%