40% of Area Homeowners Reap Reward of High Equity
When Ramsey DeGeare bought the tan stucco ranch house in Costa Mesa, he was making $2 an hour as a plumber, his fellow homeowners on Colleen Place were barbers and salesmen, and Kennedy was in the White House.
Today, he’s practically a fossil in his own front yard--a blue-collar homeowner in an Orange County neighborhood that’s rapidly going to professionals.
DeGeare’s $42,000 annual income hovers just under the median here, and it barely qualifies him to be a renter in the county’s tony southern environs. But it’s more than enough to cover his $167.19 monthly mortgage bill, pay for the camper, the mobile home at Lake Hemet and three to four dinners a week with wife, Loretta, at Norm’s or Denny’s.
Like 40% of Orange County’s homeowners, Ramsey and Loretta DeGeare reap the benefits of low payments and high equity that come with owning a home for more than a decade: A few small luxuries and large dose of financial peace of mind.
Neighbors Pay More
DeGeare’s new neighbors--attorneys, stockbrokers, real estate agents--don’t share his good financial fortune, however. While DeGeare paid just $16,500 for his two-bedroom home 25 years ago, his neighbors are forking over as much as $270,000 for the privilege of living in comparable homes in the quiet cul-de-sac today.
Moreover, more than 80% of these long-term owners live in single-family homes, which are strongly preferred by Orange County residents.
According to The Times Orange County housing survey, fewer than 10% of long-term owners cut back on luxuries or necessities and only 5% consider themselves overextended. What’s more, a full 81% of these households need only one income to survive.
The reason is simple: While the median Orange County mortgage payment and rental bill are $715 per month, according to the poll, owners who have lived at their current addresses 11 years or more have a median monthly mortgage bill of only $352. In contrast, those who bought within the past two years have a median monthly payment of $1,039.
While long-term owners have lower mortgage payments, they also have lower incomes. The survey showed that the median household income for owners of more than a decade is $50,000, compared to $56,000 for owners of less than two years.
But longtime home ownership is their shield against financial strain.
Take Lily and Francis Hawkins of Garden Grove. After 46 years of marriage, the 65-year-old couple has an annual income of $30,000--which is even less than the median income for Orange County’s renters.
Every time Hawkins writes out her monthly mortgage check for $259, she feels “pretty gosh darn good,” she said, and so she should. Their three-bedroom house cost them only $30,000 in 1974; similar homes in her neighborhood are selling for up to $150,000.
Average Rent Is $932
If the Hawkins were renting, they could never afford a house in Orange County like the one they own, because the average monthly rent for three bedrooms is a whopping $932, according to the 1988 Orange County Apartment Survey, compiled by the Research Network, a real estate research firm.
And if the Hawkins were trying to buy now, it wouldn’t be in Orange County. For a prospective buyer who works in Orange County and earns an annual income of $40,000 or less “is called a commuter and is liable to go forever on the commuter route,” said Ken Agid, a real estate consultant with the Marketing Department in Irvine.
“It’s very tempting to sell,” Lily Hawkins said. “Our neighbors have gotten $140,000-plus for their homes. But I don’t know where we’d go. We have to keep a roof over our heads.”
It’s a sentiment the DeGeares echo wholeheartedly. Although Ramsey DeGeare considers himself “probably the happiest man you’ll meet for a long time,” if for some reason he lost his home of 25 years, he’d be in deep trouble.
Feeling Trapped
“I could never afford to buy in this neighborhood again,” DeGeare said. “I can’t buy an empty lot in Costa Mesa now. I could hardly rent a garage for my mortgage payment.”
Lucile Crooks of Huntington Harbour also is “trapped” in her 3,000-square-foot home near the waterfront but for a different reason.
Crooks paid about $100,000 in cash for her four-bedroom, 2 1/2-bath home 12 years ago. She modernized the two-story home soon after she moved in and now pays $498 monthly on a home-improvement loan.
“My house value has increased so incredibly that I couldn’t afford the taxes from selling,” she said. “Why would I sell and see most of my equity go back into taxes? I’m by myself now. My children have all moved out, and I’m trapped.”
Homes in Crooks’ neighborhood have been selling for between $350,000 and $400,000. If she sold now, she said, “I couldn’t afford to rent an apartment for what I’m paying.”
But by staying in her home of 12 years, Crooks is in good shape. The high school English teacher earns an annual $40,000 to $60,000--she will not be more specific--and has been able to travel and help her daughters with their wedding plans.
“I’m thinking about going to Alaska toward the end of the summer,” Crooks said, “and I went to England a few years ago. I can do just about whatever I want.”
HOMEOWNERS AND RENTERS IN ORANGE COUNTY Median Monthly Mortgage/Rental Payments
Not including taxes, insurance or utilities.
By length of homeownership.
The median monthly payment for homeowners and renters is identical but strains renters more because they earn less money.
New homeowners are paying three times what longtime homeowners pay.
All Homeowners: $715 2 Yrs.: $1,039 3-10 Yrs.: $890 11+ Yrs.: $352 Renters: $715
All Homeowners 2 Yrs. 3-10 Yrs. 11+ Yrs. Renters $0-500 38% 18% 18% 70% 20% $501-1,000 30 29 41 19 69 $1,001-1,500 20 31 25 6 11 Over $1,500 12 22 15 5 N/A*
*Not available Median Income All Homeowners: $52,000 2 Yrs.: $56,000 3-10 Yrs.: $53,000 11+ Yrs.: $50,000 Renters: $34,000 Mortgage/Rental Payments: Financial Strain
All Homeowners 2 Yrs. 3-10 Yrs. 11+ Yrs. Renters Needs more than one salary 29 46% 40% 19% 51% Cut back on luxuries 15 19 26 9 40 Cut back on necessities 10 10 15 8 29 Financially overextended 7 7 10 5 19
“What type of housing do you own?” By length of homeownership.
Attached Home Single Family Detached Home 11+ Yrs. 18% 82% 3-10 Yrs. 31% 69% 2 Yrs. 36% 64%
NOTE: Percentages may not add up to 100% because of rounding. Source: Times Orange County Poll, June, 1988
