Through the Roof : While...
For most of the past decade, Beverly Nuffer lived alone in Fullerton. But recently, Nuffer’s 39-year-old son, David--joining the ranks of state residents overwhelmed by the skyrocketing cost of housing in California--returned to share her three-bedroom house.
“Apartments are just too costly these days,” Beverly Nuffer said, noting that her son has lived with roommates just about all his adult life because of the high cost of housing in the state. “It takes a lot of money to live on your own.”
For many Californians, finding shelter the past decade has meant doubling up with friends or moving in with relatives as soaring housing costs claimed a bigger chunk of income.
According to a recent Census Bureau report, median California household income rose 96% to $35,798 between 1980 and 1990. By contrast, the median mortgage payment in the state jumped 162% and the median monthly rent 119%.
While the median California mortgage--which includes real estate taxes, insurance, utilities and monthly condominium fees--was $1,077 in 1990, the national median stood at $702. California’s median rent was $620, compared to a nationwide median of $424. (The median figure means that half of all rents or homes in the category are higher and half lower than the amount shown. The median value is usually lower than the average value.)
As a result of the big increase in housing costs, a growing number of California families spent a quarter or more of their income on housing--a commonly used measure of affordability.
“You’ve got a situation now where people can’t afford to go out and get a place of their own; in fact, many people are moving back home with their parents,” said Joseph Carreras, acting housing program manager for the Southern California Assn. of Governments, a regional planning body in Los Angeles.
The doubling up at home is evident even in the priciest communities.
In Ventura County, one of the nation’s wealthiest, the median household of three people in 198 was already well above the national median of 2.75. Yet the median household size grew slightly to 3.02 people by 1990 as the county’s median home value more than tripled to $245,300 during the decade.
Household sizes rose more dramatically in Los Angeles and Orange counties, where the median Los Angeles home value increased to $226,400 from $88,019 in 1980 and the median Orange County home value to $252,700 from $108,138. The rise in home values during the decade coincided with an 8.2% jump in the median household size in Los Angeles County--to 2.91 people--and a 3.2% increase in Orange County--to 2.87 people per household.
Still, state residents--particularly those in fast-growing Southern California--enjoyed more modern accommodations than the average American as builders added 2.1 million housing units in the state during the decade.
Riverside County, the nation’s fastest-growing county, led the construction boom, erecting nearly half of its total housing units between 1980 and March, 1990, according to the Census Bureau.
Despite the 1980s construction boom, builders didn’t come close to satisfying housing demand. California’s exploding population, which grew by slightly more than 6 million people to 29,760,021, created such overcrowded housing conditions that local lawmakers from Santa Ana to Dana Point tried to impose legal limits on the number of people who may live in each unit.
“Everybody likes to write articles about how Joe and Mary are moving to Oregon and California is losing all its business and people to other states--well it’s just not happening,” said James Z. Pugash, executive vice president of Hearthstone Advisors, a San Francisco-based real estate investment firm. “The rate of growth may be slowing,” but the state’s population swelled through the 1980s and continues to grow and support high home values, Pugash said.
If the 1980s were kind to anyone, it was to residents lucky enough to buy a home at the beginning of the decade.
“It was a stretch to buy our home in May, 1980--we had to borrow from relatives and everything; but it has been the best investment we ever made,” said Barbara Williams, a Placentia businesswoman who is also a member of the Placentia Yorba Linda school board. She estimates that her four-bedroom home is worth more than two times what it cost in 1980.
As the decade wore on, however, it took more aggressive economic sacrifices for most Californians to keep a roof over their heads.
Robert S. Bruchmann suffered a “big shock” when he moved his family to Southern California from Tennessee in 1983 and went house hunting.
“We had a 4,800-square-foot home on 2.5 acres in Tennessee that we sold for $121,000,” explained Bruchmann, vice president of the Newport Beach construction consulting firm Hill International Inc. “We moved into a home (in Orange County) that was less than half that size but cost twice the money.”
Trading up was even more daunting, said Bruchmann, who sold his first California house and now owns two.
“There was a period in the 1980s, from about 1984 to 1987, when (housing) appreciation was so rapid you could never save enough for a down payment,” Bruchmann recalled. Initially, he said, he, his wife and two daughters had to make lots of financial sacrifices, including cutting back on entertainment, clothing and automobile expenses.
Yet as high as home values ratcheted up during the 1980s, it was renters--not homeowners--who faced the toughest challenge making financial ends meet.
Even with rent control laws in many cities, a higher percentage of renters spent 25% of their income on housing than homeowners, the Census Bureau reported.
The percentage of California renters spending 25% or more of their income on rent rose to 58.1% in 1990 from 51.2% in 1980. By contrast, just 40.5% of California homeowners spent at least 25% of their income on housing costs in 1990.
“Renters are paying proportionately more for housing, especially at lower income levels--and that doesn’t even take into account special tax breaks which make (actual) home-owner expenditures even lower” than renters’, said Dowell Myers, an associate professor at USC who is the author of the recent book “Analysis with Local Census Data: Portraits of Change.”
However, the percentage of homeowners spending at least 25% of their income on housing grew faster than the percentage of renters. In Los Angeles, the percentage of homeowners spending 25% or more of their income on housing costs jumped more than 13 percentage points to 40.6% in 1990. The percentage of renters spending 25% or more of their income on rent during the same period rose 8.2 percentage points to 59%.
Residents of some areas with high housing costs had an easier time making ends meet than in others because they had deeper pockets.
For instance, although Los Angeles County’s median home value was just 7.7% lower than in Ventura County and 10.3% below Orange County, the $34,965 median household income in Los Angeles County was more than 20% lower than the $45,922 median income in Orange County and the $45,612 median income in Ventura County. In other words, although housing costs in the three counties varied only slightly, Los Angeles County households generally had far less income for housing than their neighbors in Orange and Ventura counties.
The breathtaking rise in California housing costs and the sluggish growth in household incomes has left the state with the lowest rate of homeownership in the nation and caused some demographers and housing experts to wonder “how come--when there was plenty of money from lenders--we didn’t build enough housing,” said Pugash of Hearthstone Advisors in San Francisco.
In part, the answer lies in restrictions on housing construction imposed by many California communities as residents became increasingly vocal about preserving the environment and limiting growth during the 1980s. Construction slowed further toward the end of the decade when banks and thrifts--under pressure from federal regulators--began to restrict credit granted to real estate developers in order to shore up the nation’s ailing financial system. Even if a sufficient number of housing units had been built during the 1980s, the average household size in California may still have increased because of cultural and demographic trends in the 1980s, experts say.
David M. Heer, associate director of the Population Research Laboratory at USC, said the huge influx of Latino and Asian immigrants in the 1980s contributed to the increase in household size in California. That’s because extended families living in the same household are more common among the two ethnic groups than among other U.S. families.
California Housing Costs 1. Median Home Cost 1980: $84,745 1990: $195,500 2. Mortgage Payments 1980: $411 1990: $1,077 3. Percent Spending 25%-Plus on Housing 1980: 28.4% 1990: 40.5% 4. Median Rent 1980: $283 1990: $620 5. Percent Spending 25%-Plus on Rent 1980: 51.2% 1990: 58.1% 6. Household Size 1980: 2.68 1990: 2.79 Key: 1. Median market value of owner-occupied housing units 2. Mortgage payment includes real estate taxes, insurance, utilities and monthly condominium and mobile home fees. 3. Percent of homeowners who spend 25% or more of their income on housing costs. 4. Median gross rent 5. Percent of renters who spend 25% or more of their income on rent 6. Average number of occupants per housing unit SOURCE: Census Bureau
Southland Housing Costs Below are Census Bureau figures on how personal income and housing costs changed in each of the six Southland counties between 1980 and 1990.
Percent Los Angeles County 1990 1980 change Median household income $34,965 $17,551 +99 Median home cost $226,400 $88,019 +157 Mortgage payment* $1,137 $401 +184 Owners spending 25%-plus on housing 40.6% 27.4% +48 Median rent $626 $277 +126 Renters spending 25%-plus on rent 59.0% 50.8% +16 Household size 2.91 2.69 +8
Percent Orange County 1990 1980 change Median household income $45,922 $22,557 +104 Median home cost $252,700 $108,138 +137 Mortgage payment* $1,317 $497 +165 Owners spending 25%-plus on housing 44.7% 32.7% +37 Median rent $790 $358 +121 Renters spending 25%-plus on rent 59.5% 54.4% +9 Household size 2.87 2.78 +3
Percent Riverside County 1990 1980 change Median household income $33,081 $16,037 +106 Median home cost $139,100 $67,697 +105 Mortgage payment* $1,050 $407 +158 Owners spending 25%-plus on housing 45.4% 32.7% +39 Median Rent $572 $270 +112 Renters spending 25%-plus on rent 59.3% 55.2% +7 Household size 2.85 2.69 +6
Percent San Diego County 1990 1980 change Median household income $33,022 $17,106 +93 Median home cost $186,700 $90,990 +105 Mortgage payment* $1,132 $446 +154 Owners spending 25%-plus on housing 43.2% 32.4% +33 Median rent $611 $281 +117 Renters spending 25%-plus on rent 60.3% 56.3% +7 Household size 2.69 2.62 +3
Percent Ventura County 1990 1980 change Median household income $45,612 $21,236 +115 Median home cost $245,300 $93,257 +163 Mortgage payment* $1,305 $467 +179 Owners spending 25%-plus on housing 46.3% 33.2% +39 Median rent $754 $317 +138 Renters spending 25%-plus on rent 60.6% 53.0% +14 Household size 3.02 3.00 +1
Percent San Bernardino County 1990 1980 change Median household income $33,443 $17,463 +92 Median home cost $129,200 $63,400 +104 Mortgage payment* $960 $391 +146 Owners spending 25%-plus on housing 42.4% 30.6% +39 Median rent $556 $260 +114 Renters spending 25%-plus on rent 57.2% 52.2% +10 Household size 2.97 2.82 +5
*Mortgage payment includes real estate taxes, insurance, utilities and monthly condominium and mobile home fees.
