Fewer Families Can Buy Median-Priced Home : Realtors’ Affordability Index Matches 4-Year Low Here of 16% in November
Fewer than one in six Orange County families could afford to buy a typical, single-family, resale house in November, matching a 4-year low set just 2 months earlier.
The California Assn. of Realtors said Monday that 16% of the county’s families could afford to buy a median-priced home, which cost $230,701 in November, 1988.
November’s affordability index, down from 17% the previous month, tied a 16% low set in September, 1988, and reflects the tremendous increase in home prices over the past year.
In November, 1987, when the median price was $178,870, 26% of families could afford to buy.
To buy a median-priced home in November, 1988, a county family needed a minimum annual income $72,580 to qualify for monthly mortgage payments of $1,815.
That’s assuming a 20% down payment and an average mortgage rate--a composite of both fixed and variable-rate mortgages--of 9.48%, according to the trade group.
The affordability index is based on a comparison of the median price of single-family, detached homes on the resale market and the median incomes of county residents.
The association survey excludes more expensive new homes and less costly condominiums. It also overlooks pockets of lower-priced housing around the county.
But it does provide an indicator of which direction the trend is moving: The percentage of residents who can afford to buy a house has been moving downward through most of the last year.
Home buyers statewide also faced a crunch in November, 1988, though not as severe as in Orange County and some of the state’s other urban areas.
Just 21% of residents statewide could afford a median-priced home in November, the lowest that number has been since the trade association began charting the monthly changes in January, 1984.
Before that, the association only charted the number on a yearly basis. The annual percentage fell to the low teens in the recession years of the early 1980s, when interest rates soared.
The trade association said it expects the affordability figures to drop further from November’s levels as interest rates increase this year.
A California family needed an annual income of $55,838 to afford the statewide median home price of $177,485 in November.
By comparison, 48% of families nationwide could afford a median-priced home at $87,900.
In California, San Francisco remained the market with the lowest percentage of people able to afford a home, at just 11% in November.
Back in Orange County, some real estate agents have taken a closer--and, they contend, more realistic--look at the affordability problem.
According to the East Orange County Board of Realtors, such surveys should also include condominiums, not single-family homes only. About 25% of multiple-listings sales are condos.
The board also says the trade association’s countywide survey obscures more affordable neighborhoods.
Using just the local statistics, Realtor Richard C. Poucher calculated that 29.5% of county families could afford a median-priced house or condo in the board’s market: Santa Ana, Orange, Tustin and Villa Park. The median price was $178,000 in November.
For December, the percentage slipped slightly to 28.5%, according to Poucher. Countywide figures are not yet available for December.
The four cities account for about 20% of the county’s population and 30% of its area, the board said.
AFFORDABILITY INDEX FOR EXISTING HOMES Sixteen percent of Orange County households could afford to buy the median-priced resale home in the county in November, 1988, compared to 17% in October, 1988, and 26% in November, 1987.
Median Monthly Selling Price Mortgage Payment Nov. Oct. Nov. Nov. Oct. Nov. 1988 1988 1987 1988 1988 1987 Orange County $230,701 $226,792 $178,870 $1,815 $1,775 $1,389 United States 87,900 88,100 83,700 691 689 650 California 177,485 175,295 142,310 1,396 1,372 1,105 S.F. Bay Area 225,561 229,223 176,694 1,774 1,794 1,372 Los Angeles 191,771 192,050 150,744 1,508 1,503 1,171 San Diego 159,477 155,275 130,573 1,254 1,215 1,014 Riverside/ 112,360 113,220 95,869 884 886 745 San Bernardino
Minimum Percent Annual Income Qualified Nov. Oct. Nov. Nov. Oct. Nov. 1988 1988 1987 1988 1988 1987 Orange County $72,580 $70,980 $55,566 16% 17% 26% United States 27,654 27,573 26,001 48 48 50 California 55,838 54,863 44,208 21 22 32 S.F. Bay Area 70,963 71,741 54,890 11 10 17 Los Angeles 60,332 60,107 46,828 16 16 26 San Diego 50,173 48,597 40,562 22 24 30 Riverside/ 35,349 35,435 29,782 39 39 47 San Bernardino
Source: California Assn. of Realtors